10-Q 1 q.txt FIRST QUARTER 10-Q 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 7/31/02 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 1-8266 DATARAM CORPORATION ___________________________________________________________________________ (Exact name of registrant as specified in its charter) New Jersey 22-1831409 __________________________________ _____________________________________ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) P.O. Box 7528, Princeton, NJ 08543 ____________________________________________________________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (609) 799-0071 ____________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) 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 _____ _____ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Common Stock ($1.00 par value): As of September 3, 2002, there were 8,420,519 shares outstanding. PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Dataram Corporation and Subsidiaries Consolidated Balance Sheets July 31, 2002 and April 30, 2002 (Unaudited) July 31, 2002 April 30, 2002 Assets Current Assets: Cash and cash equivalents $ 4,371,243 $ 3,656,150 Trade receivables, less allowance for doubtful accounts and sales returns of $320,000 6,279,292 11,477,098 Inventories 4,465,536 5,435,069 Income tax receivable 662,000 700,000 Other current assets 486,433 531,680 __________ __________ Total current assets 16,264,504 21,799,997 Property and equipment, at cost: Land (held for sale) 875,000 875,000 Machinery and equipment 17,233,036 17,150,925 __________ __________ 18,108,036 18,025,925 Less: accumulated depreciation and amortization 9,779,050 8,816,049 __________ __________ Net property and equipment 8,328,986 9,209,876 Other assets 438,626 407,626 Goodwill 11,144,000 11,144,000 __________ __________ $ 36,176,116 $ 42,561,499 ========== ========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 3,507,477 $ 6,598,601 Accrued liabilities 2,249,027 1,688,119 __________ __________ Total current liabilities 5,756,504 8,286,720 Deferred income taxes 646,000 647,000 Long-term debt 1,500,000 3,800,000 __________ __________ Total liabilities 7,902,504 12,733,720 Stockholders' Equity: Common stock, par value $1.00 per share. Authorized 54,000,000 shares; issued and outstanding 8,465,219 at July 31, 2002 8,493,819 at April 30, 2002 8,465,219 8,493,819 Additional paid in capital 4,408,397 4,405,296 Retained earnings 14,920,217 16,829,242 Accumulated other comprehensive income - 479,779 99,422 foreign currency translation adjustment __________ __________ Total stockholders' equity 28,273,612 29,827,779 __________ __________ $ 36,176,116 $ 42,561,499 ========== ========== See accompanying notes to consolidated financial statements. Dataram Corporation and Subsidiaries Consolidated Statements of Operations Three Months Ended July 31, 2002 and 2001 (Unaudited) 2002 2001 Revenues $ 14,281,078 $ 22,570,281 Costs and expenses: Cost of sales 10,739,518 15,624,829 Engineering and development 381,208 594,182 Selling, general and administrative 4,537,000 6,056,119 Restructuring charges 740,000 1,200,000 Intangible asset amortization 0 297,000 __________ __________ 16,397,726 23,772,130 Loss from operations (2,116,648) (1,201,849) Interest income 12,000 95,656 Interest expense (55,876) (250,169) __________ __________ Loss before income taxes (2,160,524) (1,356,362) Income tax provision (benefit) (338,000) 405,000 __________ __________ Net loss $ (1,822,524) $ (1,761,362) ========== ========== Net loss per share of common stock Basic $ (.21) $ (.21) ========== ========== Diluted $ (.21) $ (.21) ========== ========== Weighted average number of common shares outstanding Basic 8,483,139 8,524,195 ========== ========== Diluted 8,483,139 8,524,195 ========== ========== See accompanying notes to consolidated financial statements. Dataram Corporation and Subsidiaries Consolidated Statements of Cash Flows Three Months Ended July 31,2002 and 2001 (Unaudited) 2002 2001 Cash flows from operating activities: Net loss $ (1,822,524) $ (1,761,362) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,004,000 1,503,100 Bad debt expense (recovery) 48,874 (59,877) Changes in assets and liabilities: Decrease in trade receivables 5,148,932 6,331,862 Decrease in inventories 969,533 1,550,326 Decrease in income tax receivable 38,000 0 (Increase) decrease in other current assets 45,247 (722,974) Increase in other assets (31,000) (31,466) Decrease in accounts payable (3,091,124) (4,292,907) Increase(decrease) in accrued liabilities 560,908 (215,551) Increase in income taxes payable 0 472,000 Decrease in deferred income taxes 1,000 0 __________ __________ Net cash provided by operating activities 2,871,846 2,773,151 __________ __________ Cash flows from investing activities: Additions to property and equipment, net (125,111) (474,869) __________ __________ Cash flows from financing activities: Payments under revolving line of credit (2,300,000) 0 Principal payment on short-term portion of debt 0 (500,000) Principal payments under capital lease obligations 0 (313,000) Proceeds from sale of common shares under stock option plan (including tax benefits) 28,125 201,675 Purchase and subsequent cancellation of common stock (140,124) (51,243) __________ __________ Net cash used in financing (2,411,999) (662,568) activities __________ __________ Effect of foreign currency translation on cash and cash equivalents 380,357 0 __________ __________ Net increase in cash and cash equivalents 715,093 1,635,714 Cash and cash equivalents at beginning of period 3,656,150 10,235,321 __________ __________ Cash and cash equivalents at end of period $ 4,371,243 $ 11,871,035 ========== ========== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 55,876 $ 282,169 Income taxes $ 21,000 $ 230,000 See accompanying notes to consolidated financial statements. Notes to Consolidated Financial Statements July 31, 2002 and 2001 (Unaudited) Basis of Presentation The information for the three months ended July 31, 2002 and 2001, is unaudited but includes all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to state fairly the financial information set forth therein in accordance with accounting principles generally accepted in the United States of America. The interim results are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should be read in conjunction with the audited financial statements for the year ended April 30, 2002 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. Comprehensive Income (loss) Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS No. 130") requires that items defined as other comprehensive income, such as unrealized investment gains and losses and translation gains and losses, be separately classified in the consolidated financial statements and that the accumulated balance of other comprehensive income (loss) be reported separately from retained earnings and additional paid in capital in the equity section of the consolidated balance sheet. Comprehensive loss for the three months ended July 31, 2002 and 2001 was $1,442,000 and $1,847,000, respectively. Principles of consolidation The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The Company's foreign subsidiaries' functional currency is the U.S. dollar as the majority of revenues are received in U.S. dollars and a majority of expenditures are made in U.S. dollars. The Company and its foreign subsidiaries report in U.S. dollars. For subsidiaries that maintain their accounts in currencies other than the U.S. dollar, the Company uses the current method of translation whereby the statements of earnings are translated using the average exchange rate and the assets and liabilities are translated using the period end exchange rate. Foreign currency translation gains or losses are recorded as a separate component of accumulated other comprehensive income or loss. Foreign currency translation gains or losses are included in the consolidated statement of earnings. For the three month periods ended July 31, 2002 and 2001. the Company had no foreign currency transaction gains or losses. Restructuring charges In fiscal 2003's first quarter, the Company initiated a restructuring of its operations which resulted in a workforce reduction of approximately 24% and certain other cost efficiencies. The Company recorded a restructuring charge of $740,000, in the quarter ended July 31, 2002 which primarily relates to severance payments. As of July 31, 2002, the Company had paid out approximately $314,000 of the charges with the majority of the balance expected to be paid in the Company's current fiscal year. Also, in the first quarter of the prior fiscal year, the Company initiated a restructuring of its operations which resulted in a workforce reduction of approximately 25%. The Company recorded a restructuring charge of $1,200,000, in the quarter ended July 31, 2001 which primarily related to severance payments. All of the payments associated with the restructuring have been paid. Cash and cash equivalents Cash and cash equivalents consist of unrestricted cash, money market preferred stock and commercial paper with original maturities of three months or less. Inventory valuation Inventories are valued at the lower of cost or market, with costs determined by the first-in, first-out method. Inventories at July 31, 2002 and April 30, 2002 consist of the following categories: July 31, 2002 April 30, 2002 ________________ ______________ Raw material $ 2,586,000 $ 3,118,000 Work in process 261,000 182,000 Finished goods 1,619,000 2,135,000 ________________ ______________ $ 4,466,000 $ 5,435,000 ================ ============== Financial information by geographic location The Company operates in one business segment and develops, manufactures and markets a variety of memory systems for use with servers, workstations, desktop and notebook computers which are manufactured by various companies. Revenues for the three month period ended July 31, 2002 by geographic region is as follows: Three months ended July 31, 2002 ________________ United States $ 9,077,000 Europe 3,950,000 Other (principally Asia Pacific Region) 1,254,000 ________________ Consolidated $ 14,281,000 ================ Long-lived assets (which consist of property and equipment, and goodwill) and total assets by geographic region as of July 31, 2002 is as follows: Long-lived assets Total assets _________________ ______________ United States $ 4,823,000 $ 16,460,000 Europe 14,547,000 18,244,000 Other 103,000 1,472,000 _________________ ______________ Consolidated $ 19,473,000 $ 36,176,000 ================= ============== Long-term Debt On April 16, 2001 the Company entered into a $10,000,000 term note ("term note") and a $15,000,000 revolving credit line ("credit line") with a commercial bank (together, referred to as the "credit facility"). The credit facility contains financial covenants as defined in the agreement, which were amended in January 2002 and which the Company was in compliance with at July 31, 2002. The term note was due in twenty quarterly installments of $500,000 until March 31, 2006. The Company repaid the term loan in its entirety in January, 2002. As of July 31, 2002, the amount borrowed under the revolving credit line is $1,500,000 and $13,500,000 remains available for borrowing The revolving credit line is scheduled to expire in April 2004. Significant Accounting Pronouncements In June 2001, the FASB issued SFAS No. 143, "Accounting for Retirement Obligations" (SFAS 143). SFAS 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. It also provides accounting guidance for legal obligations associated with the retirement of tangible long-lived assets. SFAS 143 is effective for fiscal years beginning after June 15, 2002, with early adoption permitted. The Company currently is evaluating the provisions of SFAS 143, but expects that the provisions will not have a material impact on its operations and financial position upon adoption. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 supersedes SFAS 121, but retains its fundamental provisions for the (a) recognition and measurement of impairment of long-lived assets to be held and used, and (b) measurement of long-lived assets to be disposed of by sale. SFAS 144 also supersedes the accounting / reporting provisions of APB No. 30 for segments of a business to be disposed of, but retains the requirement to report discontinued operations separately from continuing operations and extends that reporting to a component of an entity that either has been disposed of or is classified as held for sale. SFAS 144 became effective for us on May 1, 2002. The adoption of this statement did not have a material impact on our consolidated financial statements. In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections" (SFAS 145). SFAS 145 updates, clarifies and simplifies existing accounting pronouncements. SFAS 145 rescinds Statement No.4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB No. 30 will now be used to classify those gains and losses because Statement No. 4 has been rescinded. Statement No. 44 was issued to establish accounting requirements for the effects of transition to provisions of the Motor Carrier Act of 1980. Because the transition has been completed, Statement No. 44 is no longer necessary. SFAS 145 amends Statement No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. This amendment is consistent with FASB's goal of requiring similar accounting treatment for transactions that have similar economic effects. SFAS 145 also makes technical corrections to existing pronouncements. While those corrections are not substantive in nature, in some instances, they may change accounting practice. The Company adopted SFAS 145 effective May 1, 2002. The adoption of SFAS 145 did not have a material impact on our consolidated financial statements. In July 2002, the Financial Accounting Standards Board issued SFAS no. 146, Accounting for Costs Associated with Exit or Disposal Activities ("FAS 146"). FAS 146 reconsiders all of the guidance contained in EITF 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). FAS 146 applies to costs associated with (a) certain termination benefits (so - called one-time termination benefits), (b) costs to terminate a contract that is not a capital lease, and (c) other associated costs including costs to consolidate facilities or relocate employees. FAS 146, which may be adopted early, is effective for exit and disposal activities initiated after December 31, 2002. The Company is currently evaluating FAS 146 and is unable, at this time, to determine the impact, if any, that might exist as a result of adopting this standard. Concentration of credit risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents in financial institutions and brokerage accounts. To the extent that such deposits exceed the maximum insurance levels, they are uninsured. The Company performs ongoing evaluations of its customers' financial condition, as well as general economic conditions and, generally, requires no collateral from its customers. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities and Exchange Act of 1934, as amended. Actual results could differ materially from those projected in the forward looking statements. Liquidity and Capital Resources The Company's cash and working capital position remain strong. As of July 31, 2002, cash and equivalents amounted to $4.4 million and working capital amounted to $10.5 million, reflecting a current ratio of 2.8 compared to cash and equivalents of $3.7 million and working capital of $13.5 million and a current ratio of 2.6 as of April 30, 2002. During the quarter ended July 31, 2002, the Company purchased and retired 38,600 shares of its common stock under its existing open market repurchase plan at a total cost of $140,000. As of July 31, 2002, the total number of shares authorized for purchase under the program is 159,150 shares. Management expects that the Company will continue to repurchase shares in fiscal 2003. On April 16, 2001 the Company entered into a $10,000,000 term note ("term note") and a $15,000,000 revolving credit line ("credit line") with a commercial bank (together, referred to as the "credit facility"). On January 21, 2002 the Company amended and restated its credit facility. The credit facility contains financial covenants as defined in the agreement which the Company was in compliance with at July 31, 2002. The term note was due in twenty quarterly installments of $500,000 until March 31, 2006. The Company repaid the term loan in its entirety in January, 2002. As of July 31, 2002, the amount borrowed under the revolving credit line is $1,500,000 and $13,500,000 remains available for borrowing. The revolving credit line is scheduled to expire in April 2004. Management believes that the Company's operating cash flows and availability under borrowings will be sufficient to meet short term liquidity needs including contractual obligations as the Company does not expect any unforeseen demands beyond general operating requirements for cash. Management further believes that its working capital together with internally generated funds from its operations and its bank line of credit are adequate to finance the Company's long term operating needs and future capital requirements. On July 29, 2002, the Company entered into an agreement to sell its undeveloped land for a price of $3.0 million. The agreement provides for closing to occur no later than 30 months from the date of the contract. Additionally, the agreement is subject to certain contingencies and as such may be terminated prior to closing. The land is carried at cost on the Company's balance sheet at a value of $875,000 and is shown as an asset held for sale. The resulting gain on the sale will be recorded upon consummation of the transaction and when all contingencies have been satisfied. Future minimum lease payments under noncancellable operating leases (with initial or remaining lease terms in excess of one year) as of April 30, 2002 are as follows: Operating leases Year ending April 30: ________________ 2003 $ 1,312 2004 1,108 2005 1,127 2006 1,113 2007 855 Thereafter 2,214 Total minimum lease payments $ 7,729 Results of Operations Revenues for the three month period ending July 31, 2002 were $14,281,000 compared to revenues of $22,570,000 for the comparable prior year period. The decrease in revenues was the result of decreased demand of our memory products, driven by the continued economic slow down. During the quarter ended July 31, 2002, the price of Dynamic Random Access Memory (DRAM) chips, the primary raw material used in the Company's products, declined by approximately 27%. As a result of this decline, average selling prices for the Company's products in this year's first quarter have declined by approximately 29% from the comparable prior year period, which has unfavorably impacted revenues. Cost of sales for the first quarter were 75% of revenues versus 69% for the same prior year period. The increase in cost of sales as a percentage of revenues is attributable to the fact that the Company's average selling prices for its products did not decline at the same rate that its primary raw material (DRAM) costs declined. Additionally, the Company also has manufacturing capacity that is not being fully utilized, therefore all fixed cost are not being absorbed at current production levels. Engineering and development costs in fiscal 2003's first quarter were $381,000 versus $594,000 for the same prior year period. The decrease in expense is primarily attributable to the reduced number of employees as a result of the restructurings. The Company intends to maintain its commitment to the timely introduction of new memory products as workstations and computers are introduced. Selling, general and administrative costs in fiscal 2003's first quarter increased to 32% of revenues from 27% for the same prior year period. Three month total expenditures decreased by $1,519,000 from the comparable prior year period. The majority of selling, general and administrative costs are fixed, therefore as revenue decreases the percent to revenue of these cost increases. The reduction of total expenses is mainly the result of the aforementioned reduction in workforce. In fiscal 2002's first quarter and again in fiscal 2003's first quarter, the Company initiated restructurings of its operations which resulted in workforce reductions of approximately 25% and 24%, respectively as well as certain other cost efficiencies. The Company recorded a restructuring charge of $740,000 in the quarter ended July 31, 2002, which primarily relates to severance payments. As of July 31, 2002, the Company had paid out approximately $314,000 of the charges with the majority of the balance expected to be paid in the Company's current fiscal year. In fiscal 2002's first quarter, the Company recorded a restructuring charge of $1,200,000, which primarily related to severance payments. All of the payments associated with that restructuring have been paid. Intangible asset amortization recorded in fiscal 2003's first quarter was nil versus $297,000 in fiscal 2002's first quarter. The Company conducted an evaluation of its intangible assets in the third quarter of fiscal 2002. The evaluation resulted in a one-time charge of $5,300,000, which reduced the carrying value of its intangible assets to zero. Other income (expense), net totaled ($44,000) and ($155,000) for fiscal 2003 and 2002 first quarter, respectively. Other income (expense), net in fiscal 2003's first quarter consisted of interest expense of $56,000 and interest income of $12,000. Fiscal 2002's first quarter other income (expense), net of $155,000 consisted of interest expense of $250,000 and interest income of $96,000. Income tax expense (benefit) in fiscal 2003's first quarter was a benefit of ($338,000) versus income tax expense of $405,000 in the comparable prior year period. In fiscal 2003 the tax benefit has only been recognized on the loss realized in the United States. For fiscal 2002, income tax expense was recognized on income realized in the United States and no income tax benefit was recognized for losses incurred in international subsidiaries. Critical Accounting Policies The Company's accounting policies are described in Note 1 to the notes to the April 30, 2002 Consolidated Financial Statements filed on the Company's most recent Form 10-K and there have been no material changes to such policies. Internal Controls During the period covered by this interim report, the Company's chief executive officer and its chief financial officer have evaluated the effectiveness of the Company's disclosure controls and procedures and have determined that they are adequate to insure a fair presentation, in all material respects, of the financial position, results of operations and statements of cash flows of the Company and there have been no material changes to such controls and procedures. The information provided in this interim report may include forward- looking statements relating to future events, such as the development of new products, the commencement of production or the future financial performance of the Company. Actual results may differ from such projections and are subject to certain risks including, without limitation, risks arising from: changes in the price of memory chips, changes in the demand for memory systems for workstations and servers, increased competition in the memory systems industry, delays in developing and commercializing new products and other factors described in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission which can be reviewed at http://www.sec.gov. PART II: OTHER INFORMATION ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits 27 (a). Press Release reporting results of First Quarter, Fiscal Year 2003 (Attached). B. Reports on Form 8-K No reports on Form 8-K have been filed during the current quarter. 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. DATARAM CORPORATION Date: September 5, 2002 By: MARK E. MADDOCKS ______________________ _____________________ Mark E. Maddocks Vice President, Finance (Principal Financial Officer) CERTIFICATIONS ______________ I, Robert Tarantino, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Dataram 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: September 5, 2002 ROBERT TARANTINO _______________________ Robert Tarantino President and Chief Executive Officer I, Mark Maddocks, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Dataram 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: September 5, 2002 MARK MADDOCKS _______________________ Mark Maddocks Vice President, Finance Page 8 of 8