UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
|X| Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 2003
OR
|_| Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____________ to
____________.
Commission file number 0-4366
Regan Holding Corp.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 68-0211359
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2090 Marina Avenue, Petaluma, California 94954
- ---------------------------------------- ----------
(Address of principal executive offices) (ZIP Code)
707-778-8638
----------------------------------------------------
(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 |_|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes |_| No |X|
Applicable Only To Corporate Issuers:
Indicate the number of shares outstanding of the registrant's common
stock, as of May 9, 2003:
Common Stock-Series A 24,128,000
Common Stock-Series B 560,000
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
REGAN HOLDING CORP. AND SUBSIDIARIES
Consolidated Balance Sheet
March 31, December 31,
2003 2002
------------ ------------
(Unaudited)
Assets
Cash and cash equivalents $ 7,790,000 $ 4,793,000
Trading investments 4,322,000 4,261,000
Available-for-sale investments 4,398,000 4,890,000
Accounts receivable, net of allowance of $771,000
and $760,000 at March 31, 2003 and December 31, 2002 3,020,000 3,122,000
Prepaid expenses and deposits 911,000 2,122,000
------------ ------------
Total current assets 20,441,000 19,188,000
------------ ------------
Net fixed assets 25,445,000 25,841,000
Deferred tax assets 1,550,000 1,715,000
Goodwill 1,170,000 1,170,000
Intangible assets, net 309,000 332,000
Other assets 1,605,000 1,649,000
------------ ------------
Total non current assets 30,079,000 30,707,000
------------ ------------
Total assets $ 50,520,000 $ 49,895,000
============ ============
Liabilities, redeemable common stock,
and shareholders' equity
Liabilities
Accounts payable and accrued liabilities $ 7,247,000 $ 8,754,000
Income taxes payable 3,217,000 2,327,000
Current portion of note payable 110,000 109,000
------------ ------------
Total current liabilities 10,574,000 11,190,000
------------ ------------
Deferred compensation payable 4,300,000 4,241,000
Other liabilities 199,000 190,000
Note payable, less current portion 7,170,000 7,199,000
------------ ------------
Total non current liabilities 11,669,000 11,630,000
------------ ------------
Total liabilities 22,243,000 22,820,000
------------ ------------
Redeemable common stock, Series A and B 9,766,000 10,115,000
------------ ------------
Shareholders' equity
Preferred stock, no par value: Authorized: 100,000,000 shares
No shares issued or outstanding -- --
Series A common stock, no par value:
Authorized: 45,000,000 shares, issued and outstanding:
20,495,000 at March 31, 2003 and December 31, 2002 3,324,000 3,324,000
Common stock committed 25,000 25,000
Paid-in capital 6,499,000 6,499,000
Retained earnings 8,686,000 7,135,000
Accumulated other comprehensive loss (23,000) (23,000)
------------ ------------
Total shareholders' equity 18,511,000 16,960,000
------------ ------------
Total liabilities, redeemable common stock and shareholders' equity $ 50,520,000 $ 49,895,000
============ ============
See notes to financial statements.
2
REGAN HOLDING CORP. AND SUBSIDIARIES
Consolidated Statement of Operations
(Unaudited)
For the Three Months Ended
March 31,
----------------------------
2003 2002
------------ ------------
Revenue
Marketing allowances $ 7,877,000 $ 5,028,000
Commissions 5,045,000 4,009,000
Administrative fees 3,584,000 2,626,000
Other income 284,000 181,000
------------ ------------
Total revenue 16,790,000 11,844,000
------------ ------------
Expenses
Selling, general and administrative 12,287,000 11,300,000
Depreciation and amortization 1,080,000 1,049,000
Other 900,000 817,000
------------ ------------
Total expenses 14,267,000 13,166,000
------------ ------------
Operating income (loss) 2,523,000 (1,322,000)
Other income
Investment income, net 90,000 47,000
Interest expense (6,000) (8,000)
------------ ------------
Total other income, net 84,000 39,000
------------ ------------
Income (loss) before income taxes 2,607,000 (1,283,000)
Provision for (benefit from) income taxes 1,056,000 (485,000)
------------ ------------
Net income (loss) $ 1,551,000 $ (798,000)
============ ============
Basic earnings (loss) per share:
Earnings (loss) available to common shareholders $ 0.06 $ (0.03)
Weighted average shares outstanding 24,744,000 25,341,000
Diluted earnings (loss) per share:
Earnings (loss) available to common shareholders $ 0.06 $ (0.03)
Weighted average shares outstanding 27,612,000 25,341,000
See notes to financial statements.
3
REGAN HOLDING CORP. AND SUBSIDIARIES
Consolidated Statement of Shareholders' Equity
(Unaudited)
Series A
Common Stock Common
------------------------------------- Stock Paid-in Retained
Shares Amount Committed Capital Earnings
---------------- ---------------- ---------------- ---------------- ----------------
Balance December 31, 2002 20,495,000 $ 3,324,000 $ 25,000 $ 6,499,000 $ 7,135,000
Comprehensive income,
net of tax:
Net income 1,551,000
Net unrealized
gains on investments
Less: reclassification
adjustment for gains
included in net income
Total comprehensive income
---------------- ---------------- ---------------- ---------------- ----------------
Balance March 31, 2003 20,495,000 $ 3,324,000 $ 25,000 $ 6,499,000 $ 8,686,000
================ ================ ================ ================ ================
Accumulated Other
Comprehensive
Loss Total
------------ ------------
Balance December 31, 2002 $ (23,000) $ 16,960,000
Comprehensive income,
net of tax:
Net income 1,551,000
Net unrealized
gains on investments (1,000) (1,000)
Less: reclassification
adjustment for gains
included in net income 1,000 1,000
------------
Total comprehensive income 1,551,000
------------ ------------
Balance March 31, 2003 $ (23,000) $ 18,511,000
============ ============
See notes to financial statements.
4
REGAN HOLDING CORP. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
For the Three Months Ended
March 31,
---------------------------------
2003 2002
----------- -----------
Cash flows from operating activities:
Net income (loss) $ 1,551,000 $ (798,000)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,080,000 1,049,000
Losses on write-off of fixed assets 11,000 159,000
Provision for bad debts 25,000 64,000
Amortization of premium or discount on investments 18,000 20,000
Realized (gains) losses on sales of investments, net (2,000) 49,000
Unrealized losses on trading securities, net 234,000 --
Changes in operating assets and liabilities:
Purchases of trading securities, net (295,000) (4,633,000)
Accounts receivable 77,000 662,000
Prepaid expenses and deposits 1,211,000 (923,000)
Income taxes receivable and payable 890,000 5,000
Deferred tax assets 164,000 (497,000)
Accounts payable and accrued liabilities (1,507,000) 311,000
Deferred compensation payable 59,000 277,000
Other operating assets and liabilities 53,000 (149,000)
----------- -----------
Net cash provided by (used in) operating activities 3,569,000 (4,404,000)
----------- -----------
Cash flows from investing activities:
Purchases of available-for-sale securities (529,000) (959,000)
Proceeds from sales and maturities of available-for-sale securities 1,006,000 7,962,000
Purchases of fixed assets (672,000) (1,901,000)
Acquisition of prospectdigital assets -- (225,000)
----------- -----------
Net cash provided by (used in) investing activities (195,000) 4,877,000
----------- -----------
Cash flows from financing activities:
Proceeds from loans payable -- 1,338,000
Payments toward note payable (28,000) --
Repurchases of redeemable common stock (349,000) (550,000)
Voluntary repurchases of common stock -- (108,000)
----------- -----------
Net cash provided by (used in) financing activities (377,000) 680,000
----------- -----------
Net increase in cash and cash equivalents 2,997,000 1,153,000
Cash and cash equivalents, beginning of period 4,793,000 1,376,000
----------- -----------
Cash and cash equivalents, end of period $ 7,790,000 $ 2,529,000
=========== ===========
See notes to financial statements.
5
REGAN HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accompanying Consolidated Financial Statements are prepared in
conformity with accounting principles generally accepted in the United
States of America and include the accounts of Regan Holding Corp. (the
"Company") and its wholly owned subsidiaries. All intercompany
transactions have been eliminated.
The statements are unaudited but reflect all adjustments, consisting only
of normal recurring adjustments, which are, in the opinion of management,
necessary for a fair statement of the Company's consolidated financial
position and results of operations. The results for the three months ended
March 31, 2003 are not necessarily indicative of the results to be
expected for the entire year. These unaudited Consolidated Financial
Statements should be read in conjunction with the audited Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K
for the year ended December 31, 2002 filed by the Company with the
Securities and Exchange Commission on March 31, 2003.
2. Stock Options
The Company has a stock-based employee compensation plan and accounts for
this plan under the recognition and measurement principles of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations. No stock-based employee
compensation cost is reflected in net income (loss), as all options
granted under the plan had an exercise price equal to the fair market
value of the underlying common stock on the date of grant.
The following table illustrates the effect on net income (loss) and
earnings (loss) per share if the Company had applied the fair value
recognition provisions of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation," to stock-based employee
compensation:
For the Three Months Ended March 31,
------------------------------------
2003 2002
------------- -----------
Net income (loss), as reported: $ 1,551,000 $ (798,000)
Deduct: Total stock-based employee compensation expense
determined under fair value method for all awards, net
of related tax effects (110,000) (116,000)
------------- -----------
Pro forma net income (loss) $ 1,441,000 $ (914,000)
============= ===========
Earnings (loss) per share:
Basic - as reported $ 0.06 $ (0.03)
Basic - pro forma $ 0.06 $ (0.04)
Diluted - as reported $ 0.06 $ (0.03)
Diluted - pro forma $ 0.05 $ (0.04)
6
3. Earnings (Loss) Per Share
Earnings Per-share
(Loss) Shares Amount
----------- ---------- ------
For the three months ended March 31, 2003
Income available to common shareholders $ 1,551,000 24,744,000 $ 0.06
Effect of dilutive securities - employee and
producer stock options 2,868,000
----------- ---------- ------
Diluted earnings per share $ 1,551,000 27,612,000 $ 0.06
=========== =========== ======
For the three months ended March 31, 2002
Basic and diluted loss available to
common shareholders $ (798,000) 25,341,000 $(0.03)
=========== =========== ======
The diluted loss per share calculation for the three months ended March
31, 2002 excludes antidilutive stock options of 4.1 million.
4. Segment Information
Revenue Net Income (Loss)
--------------------------------- ---------------------------------
For the Three Months Ended March 31,
---------------------------------------------------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Legacy Marketing Group $ 16,278,000 $ 11,347,000 $ 2,090,000 $ (286,000)
Legacy Financial Services, Inc. 582,000 546,000 (268,000) (223,000)
Imagent Online, LLC 40,000 20,000 (154,000) (170,000)
Values Financial Network, Inc. 2,000 2,000 (141,000) (133,000)
Other 48,000 33,000 24,000 14,000
Intercompany Eliminations (160,000) (104,000) -- --
------------ ------------ ------------ ------------
Total $ 16,790,000 $ 11,844,000 $ 1,551,000 $ (798,000)
============ ============ ============ ============
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
Certain statements contained in this document, including Management's
Discussion and Analysis of Financial Condition and Results of Operations, that
are not historical facts, constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results or performance of Regan Holding
Corp. and its businesses to be materially different from that expressed or
implied by such forward-looking statements. These risks, uncertainties and
factors include, among other things, the following: general economic and
business conditions; political and social conditions; government regulations,
especially regulations affecting the insurance industry; demographic changes;
the ability to adapt to changes resulting from acquisitions or new ventures; and
various other factors referred to in Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Regan Holding Corp. assumes no obligation to update forward-looking
statements to reflect actual results or changes in or additions to the factors
affecting such forward-looking statements.
Regan Holding Corp. Consolidated
We had consolidated net income of $1.6 million during the first quarter of
2003, compared to consolidated net losses of $798,000 during the first quarter
of 2002. This favorable change of $2.4 million is primarily due to recognition
of income at Legacy Marketing Group ("Legacy Marketing") in the first quarter of
2003 compared to losses during the same period of 2002, partially offset by
increased losses at Legacy Financial Services, Inc. ("Legacy Financial").
Legacy Marketing
During the first quarter of 2003, Legacy Marketing had net income of $2.1
million, compared to net losses of $286,000 during the same period in 2002. The
improved results are due to increased revenues, partially offset by increased
expenses.
During the first quarter of 2003, Legacy Marketing commissions and
marketing allowances increased $3.9 million (45%) from the first quarter of
2002, due to an increase in sales of fixed annuity insurance products. Legacy
Marketing's sales increase was driven by sales of declared rate and equity index
annuities, reflecting a shift in the marketplace toward more traditional fixed
income-based annuities. In addition, sales on behalf of Investors Insurance
Corporation, which began in the second quarter of 2002, contributed $2.6 million
of commissions and marketing allowances during the first quarter of 2003. The
overall increase in commissions and marketing allowances during the first
quarter of 2003 was offset in part by the effect of discontinuing several
annuity products issued by Transamerica Life Insurance and Annuity Company.
Legacy Marketing will continue to administer these annuity products and to
accept additional premium payments, subject to applicable additional deposit
rules for these products. The discontinued products accounted for approximately
9% and 43% of our total consolidated revenue for the quarters ended March 31,
2003 and 2002. We expect that sales of recently introduced Transamerica products
will partially offset the effect of the discontinued Transamerica products.
Legacy Marketing also discontinued marketing life insurance products
issued by American National Insurance Company effective during the first quarter
of 2003. These products accounted for a nominal amount of revenue during each of
the quarters ending March 31, 2003 and 2002. In April 2003, American National
reduced the crediting rates of several annuity products marketed by Legacy
Marketing. As a result, we expect that sales of annuity products on behalf of
American National will decrease during the remainder of 2003. It is possible
that in the short term, overall consolidated revenues may also decline. Legacy
Marketing will continue to market annuity products and administer American
National life insurance products and annuity products, including acceptance of
renewal premium. In addition, Legacy Marketing is developing new annuity
products with American National that may result in increased sales in the long
term.
Administrative fees increased $958,000 (36%) during the first quarter of
2003 compared to the same period in 2002, primarily due to increases in the
number of policies issued and administered.
As of March 31, 2003, Legacy Marketing sold and administered products on
behalf of four unaffiliated insurance carriers: American National, Transamerica,
Investors Insurance Corporation, and John Hancock Variable Life Insurance
8
Company. Legacy Marketing also performs administrative services for IL Annuity
and Insurance Company products. As indicated below, the agreements with these
carriers generated a significant portion of our total consolidated revenue
(sales on behalf of Investors Insurance Corporation began in the second quarter
of 2002):
Three Months Ended
March 31,
------------------
2003 2002
---- ----
American National 38% 11%
Transamerica 26% 64%
Investors Insurance Corporation 18% --
IL Annuity 7% 16%
John Hancock 5% 3%
Our consolidated revenues are derived primarily from sales and
administration of the following annuity product series:
Three Months Ended
March 31,
------------------
2003 2002
---- ----
BenchMark(SM) series (sold on behalf of American
National) 37% 9%
SelectMark(R) series (sold on behalf of Transamerica) 26% 64%
MarkOne(SM) series (sold on behalf of Investors
Insurance Corporation) 18% --
VisionMark(R) series (sold on behalf of IL Annuity) 5% 16%
AssureMark(SM) series (sold on behalf of John Hancock) 5% 3%
We expect that sales of the BenchMark(SM) series sold on behalf of
American National will decrease during the remainder of 2003, as a result of the
reduced crediting rates mentioned above.
Legacy Marketing's expenses increased $1.1 million (9%) primarily
attributable to increases in selling, general and administrative expenses.
Selling, general and administrative expenses increased $1 million (10%)
primarily due to increases in compensation, insurance, and sales promotion and
support expenses. Compensation increased primarily due to salary increases,
accruals for incentive based compensation based on our consolidated first
quarter results, temporary help due to increased business volume, and benefits.
Increased insurance expenses reflected rising prices for disability insurance
coverage. Sales promotion and support expenses increased primarily due to
increased agent appointment fees and commissions, partially offset by decreased
incentive trip expenses.
Legacy Financial
Legacy Financial incurred net losses of $268,000 during the first quarter
of 2003 compared to net losses of $223,000 during the first quarter of 2002,
primarily due to increased expenses partially offset by increased revenues.
Legacy Financial revenue increased $36,000 (7%) primarily due to increases
in insurance premiums billed to Legacy Financial's distribution network of
registered representatives.
Legacy Financial's expenses increased $100,000 (11%), primarily due to
increases in insurance costs.
Imagent Online, LLC
Imagent had net losses of $154,000 during the first quarter of 2003
compared to net losses of $170,000 during the first quarter of 2002. The reduced
losses are primarily due to a 100% increase in subscription revenues from
$20,000 to $40,000. Expenses were relatively flat during the first quarter of
2003 compared to the same period last year.
Values Financial Network, Inc.
During the first quarter of 2003, Values Financial Network, Inc. incurred
net losses of $141,000, compared to net losses of $133,000 during the first
quarter of 2002. Revenues were unchanged during the first quarter of 2003
compared
9
to the same period last year. Expenses increased 7% from $220,000 to $235,000
primarily due to increased direct marketing costs and technology consulting
fees, partially offset by reduced compensation costs resulting from lower
headcount.
Other Segments
During the first quarter of 2003, combined net income from our other
subsidiaries was $24,000, compared to combined net income of $14,000 during the
first quarter of 2002. The favorable change of $10,000 is primarily due to
increased advisory fee revenues.
Liquidity and Capital Resources
Net cash provided from operating activities was $3.6 million for the first
quarter of 2003, primarily due to improved operating results.
Net cash used by investing activities was $195,000 due to acquisitions of
fixed assets, partially offset by net maturities of short-term investment-grade
securities.
Net cash used by financing activities was $377,000 primarily due to
repurchases of our common stock.
We intend to continue to retain any earnings for use in our business and
do not anticipate paying any cash dividends in the foreseeable future.
Item 4. Controls and Procedures
The Company maintains disclosure controls and procedures designed to
ensure that information required to be disclosed in reports filed under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the specified time periods. In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and executed, can provide only
reasonable assurance of achieving the desired control objectives. Within the 90
days prior to the date of this report, the Company's Chief Executive Officer and
Chief Financial Officer evaluated, with the participation of Company's
management, the effectiveness of the Company's disclosure controls and
procedures. Based on that evaluation, which disclosed no significant
deficiencies or material weakness, the Company's Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective. There were no significant changes in the Company's
internal controls or in other factors that could significantly affect internal
controls subsequent to the evaluation.
10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Index to Exhibits
Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Exhibit 99.2 Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the first quarter of 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.
REGAN HOLDING CORP.
Date: May 14, 2003 Signature: /s/ R. Preston Pitts
-------------------------------------
R. Preston Pitts
President and Chief Operating Officer
Date: May 14, 2003 Signature: /s/ G. Steven Taylor
-------------------------------------
G. Steven Taylor
Chief Financial Officer
12
CERTIFICATIONS
I, Lynda L. Regan, Chief Executive Officer of Regan Holding Corp., certify that:
(1) I have reviewed this quarterly report on Form 10-Q for the
period ending March 31, 2003 of Regan Holding 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 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 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 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 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 other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 14, 2003
/s/ Lynda L. Regan
Lynda L. Regan
Chairman and Chief Executive Officer
13
I, G. Steven Taylor, Chief Financial Officer of Regan Holding Corp., certify
that:
(1) I have reviewed this quarterly report on Form 10-Q for the
period ending March 31, 2003 of Regan Holding 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 Regan Holding Corp. as of, and for, the periods presented in this quarterly
report;
(4) The other certifying officer[s] and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for Regan Holding Corp. and we have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to Regan Holding Corp., 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 Regan Holding Corp.'s
disclosure controls and procedures as of a date within 90 days prior to the
filing 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 other certifying officer[s] and I have disclosed, based on
our most recent evaluation, to Regan Holding Corp.'s auditors and the audit
committee of Regan Holding Corp.'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 Regan Holding
Corp.'s ability to record, process, summarize and report financial data and have
identified for Regan Holding Corp.'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 Regan Holding
Corp.'s internal controls; and
(6) The other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 14, 2003
/s/ G. Steven Taylor
G. Steven Taylor
Chief Financial Officer
14