The Liberty Corporation
 

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 March 31, 2003
     
o   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 1-5846

THE LIBERTY CORPORATION


(Exact name of registrant as specified in its charter)
     
South Carolina   57-0507055
(State or other jurisdiction of
incorporation or organization)
  (IRS Employer
identification No.)

135 South Main Street, Greenville, SC 29601


(Address of principal executive offices)

Registrant’s telephone number, including area code: 864/241-5400

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   o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes   x    No   o

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock as of the latest practicable date.

     
    Number of shares Outstanding
Title of each class   as of March 31, 2003

 
Common Stock   19,175,041

 


 

PART I, ITEM 1

THE LIBERTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED AND CONDENSED BALANCE SHEETS
                       
(In 000’s)   March 31,   December 31,
          2003   2002
         
 
          (Unaudited)        
ASSETS
               
Current assets:
               
 
Cash and cash equivalents
  $ 50,088     $ 67,917  
 
Receivables (net of allowance for doubtful accounts)
    34,232       42,069  
 
Program rights
    2,967       4,433  
 
Prepaid and other current assets
    2,710       2,982  
 
Income taxes receivable
    4,839       2,370  
 
Deferred income taxes
    5,508       5,508  
 
   
     
 
     
Total current assets
    100,344       125,279  
Property, plant, and equipment
               
 
Land
    5,639       5,639  
 
Buildings and improvements
    57,989       52,638  
 
Furniture and equipment
    156,984       157,401  
 
Less: Accumulated depreciation
    (120,999 )     (120,409 )
 
   
     
 
 
    99,613       95,269  
Intangible assets subject to amortization (net of $812 and $751 accumulated amortization in 2003 and 2002, respectively)
    308       369  
FCC licenses and network affiliations
    304,285       304,285  
Goodwill
    101,387       101,387  
Investments and other assets
    45,920       44,162  
 
   
     
 
     
Total assets
  $ 651,857     $ 670,751  
 
   
     
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current liabilities:
               
 
Accounts payable and accrued expenses
  $ 17,103     $ 24,433  
 
Program contract obligations
    3,000       4,486  
 
   
     
 
   
Total current liabilities
    20,103       28,919  
Unearned revenue
    5,212       5,637  
Deferred income taxes
    91,863       91,647  
Other liabilities
    7,325       6,312  
 
   
     
 
     
Total liabilities
    124,503       132,515  
 
   
     
 
Shareholders’ equity
               
 
Common stock
    83,000       92,978  
 
Unearned stock compensation
    (3,528 )     (3,802 )
 
Retained earnings
    447,640       448,887  
 
Unrealized investment gains (losses)
    242       173  
 
   
     
 
   
Total shareholders’ equity
    527,354       538,236  
 
   
     
 
     
Total liabilities and shareholders’ equity
  $ 651,857     $ 670,751  
 
   
     
 

See Notes to Consolidated and Condensed Financial Statements.

2


 

THE LIBERTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
                       
          Three Months Ended
          March 31,
         
(In 000’s, except per share data)   2003   2002
         
 
          (Unaudited)
REVENUES
               
Station revenues (net of commissions)
  $ 40,575     $ 39,510  
Cable advertising and other revenues
    3,354       3,316  
 
   
     
 
 
Net revenues
    43,929       42,826  
EXPENSES
               
Operating expenses
    29,199       26,857  
Amortization of program rights
    1,716       1,852  
Depreciation and amortization of intangibles
    4,300       4,720  
Corporate, general, and administrative expenses
    3,242       2,805  
 
   
     
 
 
Total operating expenses
    38,457       36,234  
     
Operating income
    5,472       6,592  
Net investment income (loss)
    (104 )     2  
 
   
     
 
     
Income before income taxes and the cumulative effect of a change in accounting principle
    5,368       6,594  
Provision for income taxes
    2,013       2,506  
 
   
     
 
     
Income before the cumulative effect of a change in accounting principle
    3,355       4,088  
 
   
     
 
Cumulative effect of a change in accounting principle (net of income taxes of $29,045)
          (47,388 )
   
NET INCOME (LOSS)
  $ 3,355     $ (43,300 )
 
   
     
 
BASIC EARNINGS PER COMMON SHARE:
               
From income before the cumulative effect of a change in accounting principle
  $ 0.17     $ 0.21  
Cumulative effect of a change in accounting principle
          (2.42 )
 
   
     
 
Basic earnings (loss) per common share
  $ 0.17     $ (2.21 )
 
   
     
 
DILUTED EARNINGS PER COMMON SHARE:
               
From income before the cumulative effect of a change in accounting principle
  $ 0.17     $ 0.21  
Cumulative effect of a change in accounting principle
          (2.40 )
 
   
     
 
Diluted earnings (loss) per common share
  $ 0.17     $ (2.19 )
 
   
     
 
Dividends per common share
  $ 0.24     $ 0.22  

See Notes to Consolidated and Condensed Financial Statements.

3


 

THE LIBERTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
                     
        Three Months Ended March 31,
       
(In 000’s)   2003   2002
       
 
        (Unaudited)
OPERATING ACTIVITIES
               
Net income (loss)
  $ 3,355     $ (43,300 )
Less: Cumulative effect of a change in accounting principle
          47,388  
 
   
     
 
   
Income before cumulative effect of a change in accounting principle
    3,355       4,088  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
               
 
Loss on sale of operating assets
    340        
 
Realized investment losses
    550       21  
 
Depreciation
    4,239       4,175  
 
Amortization of intangibles
    61       545  
 
Amortization of program rights
    1,716       1,852  
 
Cash paid for program rights
    (1,736 )     (1,939 )
 
Provision for deferred income taxes
    216       2,748  
Changes in operating assets and liabilities:
               
 
Receivables
    7,837       4,939  
 
Other assets
    (1,311 )     2,405  
 
Accounts payable and accrued expenses
    (5,827 )     (897 )
 
Accrued income taxes
          (313 )
 
Unearned revenue
    (425 )     (546 )
 
Other liabilities
    1,013       11  
 
All other operating activities
    (333 )     477  
 
   
     
 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    9,695       17,566  
INVESTING ACTIVITIES
               
Purchase of property, plant, and equipment
    (8,918 )     (4,213 )
Investments acquired
    (4,000 )     (6,500 )
Proceeds from sale of investment properties
    1,686       959  
 
   
     
 
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    (11,232 )     (9,754 )
FINANCING ACTIVITIES
               
Dividends paid
    (4,602 )     (4,322 )
Stock issued for employee benefit and compensation programs
    631       242  
Repurchase of common stock
    (12,321 )      
 
   
     
 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    (16,292 )     (4,080 )
INCREASE (DECREASE) IN CASH
    (17,829 )     3,732  
Cash at beginning of period
    67,917       35,489  
 
   
     
 
CASH AT END OF PERIOD
  $ 50,088     $ 39,221  
 
   
     
 

See Notes to Consolidated and Condensed Financial Statements.

4


 

THE LIBERTY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS
March 31, 2003
(Unaudited)

1.   BASIS OF PRESENTATION
 
    The accompanying unaudited consolidated and condensed financial statements of The Liberty Corporation and Subsidiaries have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 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. The information included is not necessarily indicative of the annual results that may be expected for the year ended December 31, 2003, but it does reflect all adjustments (which are of a normal and recurring nature) considered, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The December 31, 2002 financial information was derived from the Company’s previously filed 2002 Form 10-K. For further information, refer to the consolidated financial statements and footnotes thereto included in The Liberty Corporation annual report on Form 10-K for the year ended December 31, 2002.
 
2.   STATEMENT NO. 142 GOODWILL AND OTHER INTANGIBLE ASSETS
 
    During the second quarter of 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 142 “Goodwill and Other Intangible Assets”. Statement No. 142 requires that goodwill and certain other identified intangibles no longer be amortized to earnings, but instead be reviewed for impairment. The amortization of goodwill and certain other identified intangibles ceased upon adoption of the Statement, which for the Company was January 1, 2002. In connection with the adoption of Statement No. 142, the Company reduced the carrying value of its FCC licenses by $76.4 million ($47.4 million after-tax) as a cumulative effect of a change in accounting principle.
 
    At March 31, 2003 and December 31, 2002, the Company’s intangible assets not subject to amortization were comprised of FCC licenses and network affiliations. At March 31, 2003 and December 31, 2002, the Company’s intangible assets subject to amortization were comprised of leases acquired through station purchases for space on certain of its towers, non-compete agreements, and loan costs associated with the Company’s unused line of credit.
 
3.   COMPREHENSIVE INCOME
 
    The components of comprehensive income, net of related income taxes, for the three month periods ended March 31, 2003 and 2002, respectively, are as follows:
                 
    Three Months Ended
    March 31,
   
(In 000’s)   2003   2002
   
 
Net income (loss)
  $ 3,355     $ (43,300 )
Unrealized gains on securities
    69       504  
 
   
     
 
Comprehensive income (loss)
  $ 3,424     $ (42,796 )
 
   
     
 

5


 

4.   SEGMENT REPORTING
 
    The Company operates primarily in the television broadcasting and cable advertising businesses. The Company currently owns and operates fifteen television stations, primarily in the Southeast and Midwest. Each of the stations is affiliated with a major network, with eight NBC affiliates, five ABC affiliates, and two CBS affiliates. The Company evaluates segment performance based on income before income taxes, excluding unusual, or non-operating items.
 
    The following table summarizes financial information by segment for the three month periods ended March 31, 2003 and 2002:
                   
      Three Months Ended
(In 000’s)   March 31,
     
      2003   2002
     
 
Revenues (net of commissions)
               
 
Broadcasting
  $ 40,575     $ 39,510  
 
Cable advertising
    3,281       3,180  
 
Other
    73       136  
 
   
     
 
Total net revenues
  $ 43,929     $ 42,826  
 
   
     
 
Income before income taxes and cumulative effect of a change in accounting principle
               
 
Broadcasting
  $ 9,118     $ 9,769  
 
Cable advertising
    (26 )     16  
 
Corporate and other
    (3,724 )     (3,191 )
 
   
     
 
Total income before income taxes and cumulative effect of a change in accounting principle
  $ 5,368     $ 6,594  
 
 
   
     
 

    There were no material changes in assets by segment from those disclosed in the Company’s 2002 annual report. The goodwill that appears on the face of the balance sheet arose through the acquisition of certain television stations, and therefore has been assigned in its entirety to the Broadcasting segment.

6


 

5.   EARNINGS PER SHARE
 
    The calculation of basic and diluted earnings per common share from continuing operations is as follows:
                   
      Three Months Ended
(In 000’s except per share data) March 31,
     
      2003   2002
     
 
Numerator – Earnings:
               
Income before the cumulative effect of change in accounting principle
  $ 3,355     $ 4,088  
Effect of dilutive securities
           
 
   
     
 
Numerator for basic and diluted earnings per common share
  $ 3,355     $ 4,088  
 
   
     
 
Denominator – Average Shares Outstanding:
               
Denominator for basic earnings before the cumulative effect of a change in accounting principle per common share – weighted average shares
    19,243       19,633  
Effect of dilutive securities:
               
 
Stock options
    94       115  
 
   
     
 
Denominator for diluted earnings before the cumulative effect of a change in accounting principle per common share
    19,337       19,748  
 
   
     
 
Basic earnings before the cumulative effect of a change in accounting principle per common share
  $ 0.17     $ 0.21  
Diluted earnings before the cumulative effect of a change in accounting principle per common share
  $ 0.17     $ 0.21  

6.   EQUITY COMPENSATION
 
    In accordance with the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”, the Company has elected to follow Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) and related interpretations in accounting for its equity compensation plans and does not recognize compensation expense for its stock-based compensation plans other than for awards of restricted shares. Expense is recognized over the vesting period of the restricted shares.
 
    Under APB No. 25, because the exercise price of the Company’s employee stock options at least equals the market price of the underlying stock on the date of the grant, no compensation expense is recognized. Pro forma information regarding net income and earnings per share is

7


 

    required by SFAS No. 123, and has been determined as if the Company had accounted for its employee stock options under the fair value method of that statement.
 
    The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.
 
    For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting periods. The Company’s pro forma information is as follows:
                   
(In $000’s, except per share amounts) For the Three Months
      Ended March 31,
     
      2003   2002
     
 
Stock-based compensation cost included in net income (net of taxes)
  $ 507     $ 137  
Net income (loss):
               
 
As reported
  $ 3,355     $ (43,300 )
Pro forma compensation expense (net of taxes)
    (180 )     (228 )
 
   
     
 
 
Pro forma net income (loss)
  $ 3,175     $ (43,528 )
Basic earnings (loss) per share:
               
 
As reported
  $ 0.17     $ (2.21 )
 
Pro forma
    0.16       (2.22 )
Diluted earnings (loss) per share:
               
 
As reported
  $ 0.17     $ (2.19 )
 
Pro forma
    0.16       (2.21 )

7.   CREDIT FACILITY
 
    On March 21, 2001, the Company entered into a $100 million unsecured 364-day revolving credit facility with a bank. On May 20, 2002, the Company renewed the facility for an additional year on substantially similar terms. No amounts have been drawn on this facility since inception. The Company is currently negotiating with a bank for a renewal of the facility on substantially the same terms.
 
8.   RECLASSIFICATIONS
 
    Certain reclassifications have been made in the previously reported financial statements to make the prior year amounts comparable to those of the current year.

8


 

PART I, ITEM 2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Unaudited)

The Liberty Corporation is a holding company with operations primarily in the television broadcasting industry. The Company’s television broadcasting subsidiary, Cosmos Broadcasting, consists of fifteen network-affiliated stations located in the Southeast and Midwest, along with other ancillary businesses. Eight of the Company’s television stations are affiliated with NBC, five with ABC, and two with CBS.

SEASONALITY OF TELEVISION REVENUES

The Company’s revenues are usually subject to seasonal fluctuations. The advertising revenues of the stations are generally highest in the second and fourth quarters of each year, due in part to increases in consumer advertising in the spring and retail advertising in the period leading up to and including the holiday season. Additionally, advertising revenues in even-numbered years tend to be higher as they benefit from advertising placed by candidates for political offices and demand for advertising time in Olympic broadcasts.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002

Total net revenue increased $1.1 million, on a year-over-year basis. Station net revenue increased $1.1 million for the same period. Cable and other net revenue was essentially level with that of the prior year period. Political revenue for the first quarter of 2003 was $0.7 million as compared to $1.6 million in the first quarter of 2002. Local revenue was up one percent and national revenue was up six percent on a year-over-year basis. Sales in the automotive category were up approximately eight percent, while most other advertising categories tracked by the Company were off modestly from their 2002 levels.

Operating expenses, which include amortization of program rights, were $30.9 million for the first quarter of 2003, an increase of $2.2 million over the $28.7 million reported for the first quarter of 2002. The increase in operating expenses is mainly attributable to increases in medical costs and planned annual increases in employee compensation.

Depreciation and amortization was $4.3 million for the first quarter of 2003, a decrease of $0.4 million over the $4.7 million reported for the first quarter of 2002.

Net investment income for the first quarter of 2003 was a loss of $0.1 million. During the first quarter of 2003, interest earned on cash balances and notes receivable was offset by an impairment of one of the Company’s strategic investments. The Company fully reserved this investment due to the investee company receiving a “going-concern” opinion on its 2002 audited financial statements.

9


 

Capital, Financing and Liquidity

At March 31, 2003, the Company had cash of $50.1 million and an unused line of credit of $100 million. The Company anticipates that its primary sources of cash, those being current cash balances, operating cash flow, and the available line of credit will be sufficient to finance the operating requirements of its stations and their anticipated capital expenditures, for both the next 12 months and the foreseeable future thereafter.

Cash Flows

The Company’s net cash flow provided by operating activities was $9.7 million for the first three months of 2003 compared to $17.6 million for the same period of the prior year. The Company’s net cash used in investing activities was $11.2 million for the three month period ended March 31, 2003, as compared to $9.8 million for the same period of 2002. The increase in net cash used in investing activities is attributable to higher levels of fixed asset purchases related to digital television broadcasting. Net cash used in financing activities for the three months ended March 31, 2003 was $16.3 million compared to $4.1 million for the first three months of 2002. The increase in net cash used in financing activities is due mainly to repurchase activity in the Company’s stock buy-back program during the first quarter of 2003 that was not present during the same period of 2002.

Forward Looking Information

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information contained herein or in any other written or oral statements made by, or on behalf of the Company, is or may be viewed as forward-looking. The words “expect,” “believe,” “anticipate” or similar expressions identify forward-looking statements. Although the Company has used appropriate care in developing any such forward-looking information, forward-looking information involves risks and uncertainties that could significantly impact actual results. These risks and uncertainties include, but are not limited to, the following: changes in national and local markets for television advertising; changes in general economic conditions, including the performance of financial markets and interest rates; competitive, regulatory, or tax changes that affect the cost of or demand for the Company’s products; and adverse litigation results. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise.

10


 

PART I, ITEM 4
CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company’s periodic SEC filings. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to this evaluation.

11


 

PART II, ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K

a.   A list of the exhibits filed with this report is included in the Index to Exhibits filed herewith.
 
b.    

  1.   The Company filed a current report on Form 8-K dated February 4, 2003 with respect to the press release announcing its fourth quarter 2002 operating results.
 
  2.   The Company filed a current report on Form 8-K dated February 4, 2003 with respect to the Company declaring a regular quarterly dividend of 24 cents per share on its common stock, payable on April 2, 2003 to shareholders of record on March 14, 2003.
 
  3.   The Company filed a current report on Form 8-K dated March 24, 2003 with respect to the Regulation FD disclosure of the certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

INDEX TO EXHIBITS

     
EXHIBIT 11   Consolidated Earnings Per Share Computation (included in Note 5 of Notes to Consolidated and Condensed Financial Statements)

12


 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

     
THE LIBERTY CORPORATION   Date: May 6, 2003

   
(Registrant)  
     
/s/ Howard L. Schrott    

   
Howard L. Schrott
Chief Financial Officer
   
     
/s/ Martha G. Williams    

   
Martha G. Williams Vice President, General Counsel and Secretary    

13


 

CERTIFICATIONS

I Hayne Hipp, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of The Liberty Corporation;

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: May 6, 2003    
     
/s/ Hayne Hipp    

   
Hayne Hipp
Chief Executive Officer
   

14


 

I Howard Schrott, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of The Liberty Corporation;

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: May 6, 2003    
     
/s/ Howard L. Schrott    

   
Howard L. Schrott
Chief Financial Officer
   

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