UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 0-17691
Krupp Insured Plus-III Limited Partnership
Massachusetts 04-3007489
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
One Beacon Street, Boston, Massachusetts 02108
(Address of principal executive offices) (Zip Code)
(617) 523-0066
(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 by Rule 12b-2 of the Exchange Act).
Yes |_| No |X|
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. When used in this Form 10-Q, the words "believes," "anticipates,"
"expects," "plans," "intends," "estimates," "continue," "may" or "will" (or the
negative of such words) and similar expressions are intended to identify
forward-looking statements. Such statements are subject to a number of risks and
uncertainties, including but not limited to the following: federal, state or
local regulations; adverse changes in general economic or local conditions;
prepayments of mortgages; failure of borrowers to pay participation interests
due to poor operating results of properties underlying the mortgages; uninsured
losses and potential conflicts of interest between the Partnership and its
Affiliates, including the General Partners. The Company's filings with the
Securities and Exchange Commission, including its Annual Report on Form 10-K for
the year ended December 31, 2001, contain additional information concerning such
risk factors. Actual results in the future could differ materially from those
described in any forward-looking statements as a result of the risk factors set
forth above, and the risk factors described in the Annual Report.
-2-
KRUPP INSURED PLUS-III LIMITED PARTNERSHIP
BALANCE SHEETS
-------
ASSETS
September 30, December 31,
2002 2001
------------ ------------
Participating Insured Mortgages ("PIMs")(Note 2) $ 12,920,891 $ 27,762,795
Mortgage-Backed Securities and insured
mortgage ("MBS")(Note 3) 10,498,500 11,407,452
------------ ------------
Total mortgage investments 23,419,391 39,170,247
Cash and cash equivalents 1,380,705 1,900,744
Interest receivable and other assets 159,230 275,094
Prepaid acquisition fees and expenses, net of
accumulated amortization of $955,545 -- 36,194
Prepaid participation servicing fees, net of
accumulated amortization of $319,934 and
$293,743, respectively 8,730 34,921
------------ ------------
Total assets $ 24,968,056 $ 41,417,200
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities $ 15,939 $ 17,877
------------ ------------
Partners' equity (deficit) (Note 4):
Limited Partners
(12,770,261 Limited Partner interests outstanding) 25,003,625 41,486,071
General Partners (199,061) (217,863)
Accumulated comprehensive income 147,553 131,115
------------ ------------
Total Partners' equity 24,952,117 41,399,323
------------ ------------
Total liabilities and Partners' equity $ 24,968,056 $ 41,417,200
============ ============
The accompanying notes are an integral
part of the financial statements.
-3-
KRUPP INSURED PLUS-III LIMITED PARTNERSHIP
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
-------
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------- -----------------------
2002 2001 2002 2001
-------- -------- ---------- ----------
Revenues:
Interest income - PIMs:
Basic interest $258,595 $569,759 $ 880,393 $1,941,397
Participation interest -- -- 1,339,172 25,000
Interest income - MBS 197,883 221,734 609,225 679,593
Other interest income 7,492 28,960 49,464 87,858
-------- -------- ---------- ----------
Total revenues 463,970 820,453 2,878,254 2,733,848
-------- -------- ---------- ----------
Expenses:
Asset management fee to an affiliate 44,279 74,621 142,563 244,092
Expense reimbursements to affiliates 26,817 24,987 72,898 71,332
Amortization of prepaid fees and expenses 8,730 39,188 62,385 174,823
General and administrative 29,095 68,217 108,252 119,951
-------- -------- ---------- ----------
Total expenses 108,921 207,013 386,098 610,198
-------- -------- ---------- ----------
Net income 355,049 613,440 2,492,156 2,123,650
Other comprehensive income:
Net change in unrealized gain
on MBS 1,001 61,029 16,438 58,584
-------- -------- ---------- ----------
Total comprehensive income $356,050 $674,469 $2,508,594 $2,182,234
======== ======== ========== ==========
Allocation of net income (Note 4):
Limited Partners $344,397 $595,036 $2,417,391 $2,059,940
======== ======== ========== ==========
Average net income per Limited
Partner interest (12,770,261
Limited Partner interests
outstanding) $ .03 $ .05 $ .19 $ .16
======== ======== ========== ==========
General Partners $ 10,652 $ 18,404 $ 74,765 $ 63,710
======== ======== ========== ==========
The accompanying notes are an integral
part of the financial statements.
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KRUPP INSURED PLUS-III LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
-------
For the Nine Months
Ended September 30,
---------------------------
2002 2001
------------ -----------
Operating activities:
Net income $ 2,492,156 $ 2,123,650
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of prepaid fees and expenses 62,385 174,823
Shared Appreciation Interest (1,004,379) (15,000)
Changes in assets and liabilities:
Decrease in interest receivable and other assets 115,864 52,914
Increase (decrease) in liabilities (1,938) 132,548
------------ -----------
Net cash provided by operating activities 1,664,088 2,468,935
------------ -----------
Investing activities:
Principal collections on PIMs including Shared Appreciation
Interest of $1,004,379 in 2002 and $15,000 in 2001 15,846,283 6,835,529
Principal collections on MBS 925,390 794,941
------------ -----------
Net cash provided by investing activities 16,771,673 7,630,470
------------ -----------
Financing activities:
Quarterly distributions (3,120,800) (6,768,186)
Special distributions (15,835,000) (3,140,502)
------------ -----------
Net cash used for financing activities (18,955,800) (9,908,688)
------------ -----------
Net increase (decrease) in cash and cash equivalents (520,039) 190,717
Cash and cash equivalents, beginning of period 1,900,744 1,910,212
------------ -----------
Cash and cash equivalents, end of period $ 1,380,705 $ 2,100,929
============ ===========
Non cash activities:
Increase in Fair Value of MBS $ 16,438 $ 58,584
============ ===========
The accompanying notes are an integral
part of the financial statements.
-5-
KRUPP INSURED PLUS-III LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
-------
1. Accounting Policies
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted in this report on Form 10-Q pursuant to the Rules and Regulations
of the Securities and Exchange Commission. However, in the opinion of the
general partners, Krupp Plus Corporation and Mortgage Services Partners
Limited Partnership, (collectively the "General Partners") of Krupp
Insured Plus-III Limited Partnership (the "Partnership"), the disclosures
contained in this report are adequate to make the information presented
not misleading. See Notes to Financial Statements included in the
Partnership's Form 10-K for the year ended December 31, 2001 for
additional information relevant to significant accounting policies
followed by the Partnership.
In the opinion of the General Partners of the Partnership, the
accompanying unaudited financial statements reflect all adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the Partnership's financial position as of September 30, 2002, its results
of operations for the three and nine months ended September 30, 2002 and
2001 and its cash flows for the nine months ended September 30, 2002 and
2001.
The results of operations for the three and nine months ended September
30, 2002 are not necessarily indicative of the results which may be
expected for the full year. See Management's Discussion and Analysis of
Financial Condition and Results of Operations included in this report.
2. PIMs
At September 30, 2002, the Partnership's remaining PIM had a fair market
value of $13,849,645 and a gross unrealized gain of $928,754. Fair value
assumes that the GNMA MBS portion of the PIM could be sold at prices that
MBS with similar interest rates are currently being sold at. Fair value
does not include any value for the participation features. The PIM matures
in 2031.
The Partnership received a prepayment of the Royal Palm Place PIM. On
January 2, 2002, the Partnership received $1,004,379 of Shared
Appreciation Interest and $334,793 of Minimum Additional Interest. On
February 25, 2002, the Partnership received $14,764,062 representing the
principal proceeds on the first mortgage. On March 19, 2002, the
Partnership paid a special distribution of $1.24 per Limited Partner
interest from the principal proceeds and Shared Appreciation Interest
received.
3. MBS
At September 30, 2002, the Partnership's MBS portfolio had an amortized
cost of $2,458,784 and gross unrealized gains of $147,553. At September
30, 2002, the Partnership's insured mortgage loan had an amortized cost of
$7,892,163 and a gross unrealized gain of $474,872. The portfolio has
maturities ranging from 2016 to 2035.
Continued
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KRUPP INSURED PLUS-III LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS, Continued
-------
4. Changes in Partners' Equity
A summary of changes in Partners' Equity for the nine months ended
September 30, 2002 is as follows:
Accumulated Total
Limited General Comprehensive Partners'
Partners Partners Income Equity
------------ --------- -------- ------------
Balance at December 31, 2001 $ 41,486,071 $(217,863) $131,115 $ 41,399,323
Net income 2,417,391 74,765 -- 2,492,156
Special distribution (15,835,000) -- -- (15,835,000)
Quarterly distributions (3,064,837) (55,963) -- (3,120,800)
Change in unrealized gain on MBS -- -- 16,438 16,438
------------ --------- -------- ------------
Balance at September 30, 2002 $ 25,003,625 $(199,061) $147,553 $ 24,952,117
============ ========= ======== ============
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
financial statements and accompanying notes contained in the Partnership's 2001
Annual Report on Form 10-K and in this Form 10-Q.
Certain statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this Form 10-Q constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. These forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the Partnership's actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by these forward-looking statements. These factors include, among other
things, federal, state or local regulations; adverse changes in general economic
or local conditions; prepayments of mortgages; failure of borrowers to pay
participation interests due to poor operating results at properties underlying
the mortgages; uninsured losses and potential conflicts of interest between the
Partnership and its Affiliates, including the General Partners.
Liquidity and Capital Resources
At September 30, 2002, the Partnership had liquidity consisting of cash and cash
equivalents of approximately $1.4 million as well as the cash flow provided by
its investments in the remaining PIM and MBS. The Partnership anticipates that
these sources will be adequate to provide the Partnership with sufficient
liquidity to meet its obligations as well as to provide distributions to its
investors.
The most significant demands on the Partnership's liquidity is the quarterly
distributions paid to investors, which are approximately $1.0 million. Funds for
quarterly distributions come from the monthly principal and basic interest
payments received on the remaining PIM and MBS, the principal prepayments of
MBS, interest earned on the Partnership's cash and cash equivalents and cash
reserves. The portion of distributions attributable to the principal collections
and cash reserves reduces the capital resources of the Partnership. As the
capital resources decrease, the total cash flows to the Partnership also will
decrease and over time will result in periodic adjustments to the distributions
paid to investors. The General Partners periodically review the distribution
rate to determine whether an adjustment is necessary based on projected future
cash flows. In general, the General Partners try to set a distribution rate that
provides for level quarterly distributions. To the extent that quarterly
distributions do not fully utilize the cash available for distributions and cash
balances increase, the General Partners may adjust the distribution rate or
distribute such funds through a special distribution. Based on current
projections, the General Partners have determined that the Partnership will
reduce its distribution rate of $0.08 per Limited Partner interest per quarter
to $0.04 per Limited Partner interest per quarter effective with the February
2003 distribution.
The Partnership received a prepayment of the Royal Palm Place PIM. On January 2,
2002, the Partnership received $1,004,379 of Shared Appreciation Interest and
$334,793 of Minimum Additional Interest. On February 25, 2002, the Partnership
received $14,764,062 representing the principal proceeds on the first mortgage.
On March 19, 2002, the Partnership paid a special distribution of $1.24 per
Limited Partner interest from the principal proceeds and Shared Appreciation
Interest received.
In addition to providing insured and guaranteed monthly principal and basic
interest payments from the GNMA MBS portion of the PIM, the Partnership's
remaining PIM investment also may provide additional income through a
participation interest in the underlying property. The Partnership may receive a
share in any operating cash flow that exceeds debt service obligations and
capital needs or a share in any appreciation in value when the property is sold
or refinanced. However, this participation is neither guaranteed nor insured,
and it is dependent upon whether property operations or its terminal value meet
certain criteria.
The Partnership's only remaining PIM investment is backed by the first mortgage
loan on Harbor Club. Presently, the General Partners do not expect Harbor Club
to pay the Partnership any participation interest or to be sold or refinanced
during 2002. However, if favorable market conditions provide the borrower an
opportunity to sell the property, there are no contractual obligations remaining
that would prevent a
-8-
prepayment of the underlying first mortgage. Harbor Club operates in Ann Arbor,
Michigan, which is a very competitive market with many newer apartment
properties. Although Harbor Club has maintained occupancy rates in the mid 90%
range for the past two years, most cash flow generated by the property is used
for capital replacements and improvements that help it maintain its market
position. For fiscal year 2001, the property generated surplus cash and the
Partnership has billed the borrower approximately $83,000 in participation
interest. The Partnership received a letter from the borrower proposing that the
surplus cash be used for repairs and maintenance to the property. The
Partnership has not agreed to this proposal. The Partnership intends to send a
default notice to the borrower and is evaluating its options.
The Partnership has the option to call its remaining PIM by accelerating the
maturity of the loan. If the call feature is exercised then the insurance
feature of the loan would be canceled. Therefore, the Partnership will determine
the merits of exercising the call option as economic conditions warrant. Such
factors as the condition of the asset, local market conditions, the interest
rate environment and availability of financing will affect this decision.
Critical Accounting Policy
The Partnership's critical accounting policy relates primarily to revenue
recognition related to the participation feature of the Partnership's PIM
investments. The Partnership's policy is as follows:
Basic interest on PIMs is recognized based on the stated coupon rate of the GNMA
MBS. The Partnership recognizes interest related to the participation features
when the amount becomes fixed and the transaction that gives rise to such amount
is consummated. Consummation of a transaction could be the sale or refinancing
of the underlying real estate, which results in a cash payment to the
Partnership or a cash payment to the Partnership from Surplus Cash relative to
the participation feature
Results of Operations
Net income decreased during the three months ended September 30, 2002 when
compared to the same period in 2001 due primarily to decreases in basic interest
income on PIMs, interest income on MBS and other interest income net of
decreases in asset management fees, amortization expense and general and
administrative expenses. Basic interest income on PIMs decreased due to the
payoff of the Royal Palm Place PIM in the first quarter of 2002. Interest income
on MBS decreased due to lower principal balances which resulted from on-going
repayments and prepayments. Other interest income decreased due to lower average
cash balances available for short-term investing and lower interest rates earned
on those balances in the three month period when compared to the same period in
2001. Asset management fees decreased due to the decline in the Partnership's
asset base as a result of principal collections and prepayments. Amortization
expense decreased due to the full recognition of prepaid acquisition fees and
expenses associated with the Harbor Club PIM in 2001. General and administrative
expenses decreased due to a delay in the billing of the third quarter 2001
processing costs. Due to the delay, an estimate of these costs was recorded.
This estimate was approximately $13,000 too high and was adjusted in the fourth
quarter of 2001.
Net income increased during the nine months ended September 30, 2002 when
compared to the same period in 2001 primarily due to an increase in
participation income. This was partially offset by a decrease in basic interest
income on PIMs. Participation income increased due to the payoff of the Royal
Palm Place PIM in the first quarter of 2002. Basic interest income on PIMs
decreased due to the Royal Palm Place PIM payoff noted above and the Casa Marina
PIM payoff in June of 2001.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Assessment of Credit Risk
The Partnership's investments in MBS are guaranteed and/or insured by the
Government National Mortgage Association ("GNMA"), Fannie Mae, the Federal Home
Loan Mortgage Corporation ("FHLMC") or the Department of Housing and Urban
Development ("HUD") and therefore the certainty of their cash flows and the risk
of material loss of the amounts invested depends on the creditworthiness of
these entities.
-9-
Fannie Mae is a federally chartered private corporation that guarantees
obligations originated under its programs. FHLMC is a federally chartered
corporation that guarantees obligations originated under its. These obligations
are not guaranteed by the U.S. Government or the Federal Home Loan Bank Board.
However, Fannie Mae and FHLMC are two of the largest corporations in the United
States with significant experience in mortgage securitizations. In addition,
their MBS instruments carry the highest credit rating given to financial
instruments. GNMA guarantees the full and timely payment of principal and basic
interest on the securities it issues, which represent interests in pooled
mortgages insured by HUD. Obligations insured by HUD, an agency of the U.S.
Government, are backed by the full faith and credit of the U.S. Government.
At September 30, 2002, the Partnership includes in cash and cash equivalents
approximately $1.0 million of commercial paper, which is issued by entities with
a credit rating equal to one of the top two rating categories of a nationally
recognized statistical rating organization.
Interest Rate Risk
The Partnership's primary market risk exposure is to interest rate risk, which
can be defined as the exposure of the Partnership's net income, comprehensive
income or financial condition to adverse movements in interest rates. At
September 30, 2002, the Partnership's remaining PIM and MBS comprise the
majority of the Partnership's assets. Decreases in interest rates may accelerate
the prepayment of the Partnership's investments. The Partnership does not
utilize any derivatives or other instruments to manage this risk as the
Partnership plans to hold its PIM investment to expected maturity while it is
expected that substantially all of the MBS will prepay over the same time period
thereby mitigating any potential interest rate risk to the disposition value of
any remaining MBS
The Partnership monitors prepayments and considers prepayment trends, as well as
distribution requirements of the Partnership, when setting regular distribution
policy. For MBS, the Partnership forecasts prepayments based on trends in
similar securities as reported by statistical reporting entities such as
Bloomberg. For its remaining PIM, the Partnership continues to monitor the
borrower for any indication of a prepayment.
Item 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Within the 90 days prior to the date of this Quarterly Report on Form 10-Q, the
Principal Executive Officer and Chief Accounting Officer of Krupp Plus
Corporation, a general partner of the Partnership, carried out an evaluation of
the effectiveness of the design and operation of the Partnership's disclosure
controls and procedures. Based upon that evaluation, the Principal Executive
Officer and the Chief Accounting Officer concluded that the Partnership's
disclosure controls and procedures were effective as of the date of their
evaluation in timely alerting them to material information relating to the
Partnership required to be included in this Quarterly Report on Form 10-Q.
(b) Changes in Internal Controls
There were no significant changes in the Partnership's internal controls or in
other factors that could significantly affect such internal controls subsequent
to the date of the evaluation described in paragraph(a) above.
-10-
KRUPP INSURED PLUS-III LIMITED PARTNERSHIP
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(99.1) Principal Executive Officer Certification pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
(99.2) Chief Accounting Officer Certification pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section906
of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None
-11-
SIGNATURE
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.
Krupp Insured Plus-III Limited Partnership
(Registrant)
BY: /s/ Robert A. Barrows
------------------------------------------
Robert A. Barrows
Treasurer and Chief Accounting Officer of
Krupp Plus Corporation, a General Partner.
DATE: November 11, 2002
-12-
Certifications
I, Douglas Krupp, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Krupp Insured
Plus - III Limited Partnership;
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 "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: November 11, 2002
/s/ Douglas Krupp
----------------------------------
Douglas Krupp
Principal Executive Officer
-13-
Certifications
I, Robert A. Barrows, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Krupp Insured
Plus - III Limited Partnership;
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 "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: November 11, 2002
/s/ Robert A. Barrows
----------------------------------
Robert A. Barrows
Chief Accounting Officer
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