10-Q 1 c83682e10vq.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended January 31, 2004 Commission File Number 0-23248 SigmaTron International, Inc. -------------------------------------------------------------------------------- (Exact Name of Registrant, as Specified in its Charter) Delaware 36-3918470 -------------------------------------------------------------------------------- (State or other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 2201 Landmeier Road, Elk Grove Village, Illinois 60007 -------------------------------------------------------------------------------- (Address of Principal Executive Offices) Registrant's Telephone Number, Including Area Code: (847) 956-8000 No Change -------------------------------------------------------------------------------- (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 [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] On March 5, 2004 there were 3,748,754 shares of the Registrant's Common Stock outstanding. SigmaTron International, Inc. Index
PART 1. FINANCIAL INFORMATION: Page No. -------- Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets - January 31, 2004 and April 30, 2003 3 Condensed Consolidated Statements of Operations - Three and Nine Months Ended January 31, 2004 and 2003 4 Condensed Consolidated Statements of Cash Flows - Nine Months Ended January 31, 2004 and 2003 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosures about Market Risk 11 Item 4. Controls and Procedures 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12
SIGMATRON INTERNATIONAL, INC. Condensed Consolidated Balance Sheets
JANUARY 31, 2004 April 30, UNAUDITED 2003 ------------ ------------ Current assets: Cash $ 6,758,677 $ 424,844 Accounts receivable, less allowance for doubtful accounts of $120,000 at January 31, 2004 and April 30, 2003, respectively 11,427,909 13,632,888 Inventories 13,862,791 14,108,025 Prepaid and other assets 2,690,646 793,065 Income taxes receivable 2,635,650 146,822 Deferred income taxes 214,142 214,142 Other receivables 179,168 48,772 ----------- ----------- Total current assets 37,768,983 29,368,558 Property, machinery and equipment, net 22,700,817 19,096,970 Other assets 1,230,152 1,352,853 ----------- ----------- Total assets $61,699,952 $49,818,381 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 7,034,490 $ 7,919,775 Accrued expenses 4,996,252 4,953,505 Income taxes payable 0 1,422,212 Notes payable - building 430,000 250,000 Capital lease obligations 672,004 985,281 ----------- ----------- Total current liabilities 13,132,746 15,530,773 Notes payable - banks 829,479 1,476,443 Notes payable- building 4,648,715 3,108,417 Capital lease obligations, less current portion 458,032 939,967 Subordinated debenture payable 1,050,000 1,050,000 Deferred income taxes 1,185,061 1,185,061 ----------- ----------- Total long-term liabilities 8,171,287 7,759,888 ----------- ----------- Total liabilities 21,304,033 23,290,661 Minority interest in affiliate 396,886 218,560 ----------- ----------- STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 500,000 shares authorized, none issued and outstanding - - Common stock, $.01 par value; 6,000,000 shares authorized, 3,748,754 and 2,933,984 shares issued and outstanding at January 31, 2004 and April 30, 2003, respectively 37,488 29,340 Capital in excess of par value 19,039,432 9,560,341 Retained earnings 20,922,113 16,719,479 ----------- ----------- Total stockholders' equity 39,999,033 26,309,160 ----------- ----------- Total liabilities, minority interest and stockholders' $61,699,952 $49,818,381 =========== ===========
See accompanying notes. 3 SIGMATRON INTERNATIONAL, INC. Condensed Consolidated Statements Of Operations Unaudited
THREE MONTHS Three Months NINE MONTHS Nine Months ENDED Ended ENDED Ended JANUARY 31, 2004 January 31, 2003 JANUARY 31, 2004 January 31, 2003 -------------------------------------------------------------------------- Net sales $ 23,906,176 $ 27,879,095 $ 75,266,852 $ 77,010,647 Cost of products sold 19,459,181 22,810,115 60,547,366 63,694,707 ------------ ------------ ------------ ------------ Gross profit 4,446,995 5,068,980 14,719,486 13,315,940 Selling and administrative expenses 2,372,841 2,396,446 7,401,512 7,083,586 ------------ ------------ ------------ ------------ Operating income 2,074,154 2,672,534 7,317,974 6,232,354 Interest expense - Banks and capital lease obligation 95,409 226,716 302,830 944,747 Interest income (78,951) (66,563) (233,786) (235,052) ------------ ------------ ------------ ------------ Income before income tax expense 2,057,696 2,512,381 7,248,930 5,522,659 Minority interest in income (loss) of related entity 50,446 (111,905) 178,324 13,862 Income tax expense 814,410 981,340 2,757,532 2,112,284 ------------ ------------ ------------ ------------ Net income $ 1,192,840 $ 1,642,946 $ 4,313,074 $ 3,396,513 ============ ============ ============ ============ Net income per common share - Basic $ 0.33 $ 0.57 $ 1.30 $ 1.18 ============ ============ ============ ============ Net income per common share - Assuming dilution $ 0.33 $ 0.49 $ 1.22 $ 1.02 ============ ============ ============ ============ Weighted average shares of common stock outstanding Basic 3,621,451 2,881,227 3,317,420 2,881,227 ============ ============ ============ ============ Diluted 3,655,200 3,355,227 3,521,565 3,319,394 ============ ============ ============ ============
See accompanying notes. 4 SIGMATRON INTERNATIONAL, INC. Condensed Consolidated Statements of Cash Flows Unaudited
NINE MONTHS Nine Months ENDED Ended JANUARY 31, January 31, 2004 2003 ------------ ------------ OPERATING ACTIVITIES: Net income $ 4,313,074 $ 3,396,513 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,965,458 965,799 Loss on disposal of fixed assets - 330,901 Equity in net income of SMTU (110,440) (106) Changes in operating assets and liabilities: Accounts receivable 2,204,979 (1,278,015) Inventories 245,234 (371,594) Prepaid expenses and other assets (1,905,276) (499,919) Refundable income taxes (2,488,828) - Minority interest in affiliate 178,326 13,861 Income taxes payable (1,422,212) 859,144 Trade accounts payable (885,285) 2,281,080 Accrued expenses 42,747 517,719 ----------- ----------- Net cash provided by operating activities 2,137,777 6,215,383 INVESTING ACTIVITIES: Purchases of property, machinery and equipment (5,569,305) (1,647,958) ----------- ----------- Net cash used in investing activities (5,569,305) (1,647,958) FINANCING ACTIVITIES: Proceeds from exercise of options 4,310,086 - Tax benefit of options exercised 5,177,153 - Net proceeds under note payable obligation 1,720,298 1,762,849 Net payments under line of credit (646,964) (6,186,050) Net payments under capital lease obligations (795,212) (486,604) ----------- ----------- Net cash provided by (used) in financing activities 9,765,361 (4,909,805) Change in cash 6,333,833 (342,380) Cash at beginning of period 424,844 347,380 ----------- ----------- Cash at end of period $ 6,758,677 $ 5,000 =========== =========== Supplementary disclosures of cash flow information Cash paid for interest $ 220,028 $ 727,174 Cash paid for income taxes, (net of refunds) 1,295,830 1,027,443 Acquisition of buildings financed under notes 3,600,000 1,950,000
See accompanying notes. 5 SigmaTron International, Inc. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) January 31, 2004 NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of SigmaTron International, Inc., and its wholly-owned subsidiaries (collectively, the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The Company adopted the provisions of FASB Interpretation No. 46, ("FIN 46") Consolidation of Variable Interest Entities as of November 1, 2003 as it relates to its 42.5% owned affiliate SMT Unlimited L.P. ("SMTU") and consolidated SMTU from the earliest date reported. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three month and nine month period ended January 31, 2004 are not necessarily indicative of the results that may be expected for the year ending April 30, 2004. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended April 30, 2003. NOTE B - INVENTORIES The components of inventory consist of the following:
January 31, April 30, 2004 2003 ------------ ------------ Finished products $ 3,366,601 $ 3,984,576 Work-in-process 1,709,895 1,282,689 Raw materials 8,786,295 8,840,760 ----------- ----------- $13,862,791 $14,108,025 =========== ===========
NOTE C - LINE OF CREDIT In January, 2004 the Company amended its loan and security agreement that provides for a revolving line-of-credit facility. The maximum borrowing limit under the revolving line-of-credit facility has been reduced from (i) $20,000,000 to $13,000,000. The reduction in the maximum borrowing limit was implemented to reduce fees associated with the agreement. At January 31, 2004 there was approximately $12,900,000 of unused credit available under the terms of the agreement. There was no outstanding loan balance under the loan and security 6 agreement as of January 31, 2004. At January 31, 2004, the Company was in compliance with its financial covenants under the agreement. NOTE D - STOCK INCENTIVE PLANS The Company maintains various stock incentive plans. The Company accounts for these plans under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. The Company recognizes compensation cost for restricted shares and restricted stock units to employees. As of January 31, 2004 there are no issued restricted shares or restricted stock units issued. No compensation cost is recognized for stock option grants. All options granted under the Company's plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," to stock-based compensation. The following table also provides the amount of stock-based compensation cost included in net earnings as reported.
Three Months Ended Nine Months Ended --------------------------- ------------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Net Income, as reported $1,192,840 $1,642,946 $4,313,074 $3,396,513 Deduct: total stock-based employee compensation expense determined under fair based method for awards granted, modified, or settled, net of related tax effects (66,632) (102,243) (199,896) (306,729) ---------- ---------- ---------- ---------- Pro forma net income $1,126,208 $1,540,703 $4,113,178 $3,089,784 ========== ========== ========== ==========
Three Months Ended Nine Months Ended -------------------- --------------------- 2004 2003 2004 2003 ------- ------- -------- ------- Earnings per share Basic - as reported $ .33 $ .57 $ 1.30 $ 1.18 Basic - pro forma .31 .53 1.24 1.07 Diluted - as reported .33 .49 1.22 1.02 Diluted - pro forma .31 .46 1.17 .93 ====== ====== ======= =======
8 Options to purchase stock at exercise prices greater than the average fair market value of the Company's stock for periods presented are excluded from the calculation of diluted income because their inclusion would be anti-dilutive. For the three and nine month periods ended January 31, 2004 and 2003, all options were dilutive and included in the diluted income per share calculations. NOTE E - INCOME TAXES The Company has recorded tax expense at an anticipated effective rate of approximately 39% for all periods. In addition, the Company has recorded a tax benefit of approximately $5,175,000 associated with tax deductible compensation arising from the exercise of stock options in the first nine months of fiscal 2004. The benefit was recorded as a reduction of taxes payable and an increase in additional paid in capital. NOTE F - VARIABLE INTEREST ENTITIES As disclosed in our second quarter Form 10-Q, the Company has subsequently evaluated the impact of adopting FIN 46 as it relates to our 42.5% owned affiliate SMTU. The Company determined it was the primary beneficiary under the interpretive guidance of FIN 46 and, consequently, SMTU is consolidated for all periods presented and reflects a minority interest of 57.5%. The effects of consolidating SMTU into the Condensed Consolidated Balance Sheet was to increase current assets, property, machinery and equipment and other assets by approximately $4,550,000 and a net increase in long-term debt, other liabilities and minority interests by approximately $4,550,000. The consolidation of SMTU had no impact on net income for the three and nine months ended January 31, 2004. The cumulative effect on the Condensed Consolidated Statement of Operations as of the beginning of the fiscal year was insignificant. CRITICAL ACCOUNTING POLICES Management Estimates and Uncertainties - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made in preparing the consolidated financial statements include depreciation and amortization periods, the allowance for doubtful accounts and reserves for inventory. Actual results could materially differ from these estimates. Revenue Recognition - Revenues from sales of product including the Company's contract manufacturing business are recognized when the product is shipped. In general it is the Company's policy to recognize revenue and related costs when the order has been shipped from our facilities, which is also the same point that title passes under the terms of the purchase order. Periodically inventory is held on consignment and revenue is recognized when the product is consumed by the Company's customer. Based on the Company's history 8 of providing contract manufacturing services, we believe that collectibility is reasonably assured. Inventories - Inventories are stated at the lower of cost (first-in, first-out method) or market. Cost includes labor, material and manufacturing overhead. Provisions are based on assumptions about future product life cycles, product demand and market conditions. When required, provisions are made to reduce excess inventories to their estimated net realizable values. It is possible that estimates of net realizable values can change in the near term. Impairment of Long-Lived Assets - The Company reviews long-lived assets for impairment, including its investment and assets related to its affiliate SMTU whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future net cash flow the asset is expected to generate. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset, if any, exceeds its fair market value. The Company has adopted SFAS No. 144, which establishes a single accounting model for the impairment or disposal of long-lived assets, including discontinued operations. NEW ACCOUNTING STANDARDS In January 2003, FIN 46 is an interpretation of Accounting Research Bulletin No. 51 and revises the requirements for consolidation by business enterprises of variable interest entities. FIN 46 applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period ending after December 15, 2003, to variable interest entities in which an enterprise holds a variable interest acquired before February 1, 2003. FIN 46 applies to public enterprises as of the beginning of the applicable interim or annual period and to nonpublic enterprises as of the end of the applicable annual period. It may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year restated. The Company adopted FIN 46 as of November 1, 2003 as it relates to its 42.5% owned affiliate SMTU. The accompanying financial statements also include the financial position and results of operations and cash flows for the Company's 42.5% owned affiliate, SMTU, with the remaining 57.5% reflected as a "minority interest." Previously the Company had reflected such investment on the equity method. However, as discussed in Note F, the Company adopted the provision of FIN 46 for its investment in SMTU and has restated all periods presented. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NOTE: To the extent any statements in this quarterly statement may be deemed to be forward looking, such statements should be evaluated in the context of the risks and uncertainties 9 inherent in the Company's business, including the Company's continued dependence on certain significant customers; the continued market acceptance of products and services offered by the Company and its customers; the activities of competitors, some of which may have greater financial or other resources than the Company; the variability of the Company's operating results; the availability and cost of necessary components; the continued availability and sufficiency of the Company's credit arrangements; changes in U.S., Mexican, Chinese or Taiwan regulations affecting the Company's business; the continued stability of the Mexican and Chinese economic, labor and political conditions; the ability of the Company to manage its growth; expansion to include manufacturing in China; and securing financing for the operation in China. These and other factors which may affect the Company's future business and results of operations are identified throughout the Company's Annual Report on Form 10-K and risk factors contained therein and may be detailed from time to time in the Company's filings with the Securities and Exchange Commission. These statements speak as of the date of this report and the Company undertakes no obligation to update such statements in light of future events or otherwise. RESULTS OF OPERATIONS: Net sales decreased for the three month period ended January 31, 2004 to $23,906,176 from $27,879,095 for the three month period ended January 31, 2003. Net sales for the nine months ended January 31, 2004 decreased to $75,266,852 from $77,010,647 for the same period in the prior fiscal year. Sales decreased for the three and nine months ended January 31, 2004 primarily due to a decrease in revenues from existing customers. In particular in the three month period the Company recorded lower revenues from its Las Vegas operation and had price reductions to customers. Sales can be misleading as an indication of the Company's financial performance. Gross profit margins can vary considerably among customers and products depending on the type of services rendered by the Company, specifically the variation of orders for turnkey services versus consignment services. Variations in the number of turnkey orders compared to consignment orders can lead to significant fluctuations in the Company's revenue levels and margins. Further, customers' orders can be delayed, rescheduled or canceled at any time, which can significantly impact the operating results of the Company. In addition, the ability to replace such delayed or lost sales in a short period of time cannot be assured. Gross profit decreased in absolute dollars during the three month period ended January 31, 2004 to $4,446,995 compared to $5,068,980 for the same period in the prior fiscal year. Gross profits increased as a percentage to net sales to 18.6% for the three month period ended January 31, 2004 from 18.1% for the same period in the prior fiscal year. Gross profit increased for the nine month period ended January 31, 2004 to $14,719,486 or 19.6% of net sales, compared to $13,315,940 or 17.3% of net sales for the same period in the prior fiscal year. The fluctuation in the Company's gross margin for the three and nine month period is the result of a number of factors including labor cost and overhead efficiencies, product mix, increased capacity utilization and component pricing. Management continues to re-evaluate and align its overhead structure with current customer requirements. While the Company's focus remains on expanding its customer base and increasing gross margins, there can be no assurance that gross margins will remain stable or increase in future quarters. 10 Selling and administrative expenses decreased by $23,605 to $2,372,841for the three month period ended January 31, 2004 compared to $2,396,446 in the same period last year. Selling and administrative expenses increased to $7,401,512 or 9.8% of net sales for the nine month period ended January 31, 2004 compared to $7,083,586 or 9.2% of net sales in the same period last year. The increase for the nine month period ended January 31, 2004 is primarily due to increases in legal, advertising and bonus expense. Interest expense for bank debt and capital lease obligations for the three month period ended January 31, 2004 was $95,409 compared to $226,716 for the same period in the prior year. Interest expense for the nine month period ended January 31, 2004 decreased to $302,830 from $944,747 compared to the same period in the prior year. This decrease was attributable to a decrease in the amount outstanding under the credit facility and interest rates. As a result of the factors described above, net income decreased to $1,192,840 for the three month period ended January 31, 2004 compared to $1,642,946 for the same period in the prior year. Basic and dilutive earnings per share for the third fiscal quarter of 2004 were $0.33 compared to basic and dilutive earnings per share of $0.57 and $0.49, respectively, for the same period in the prior year. For the nine months ended January 31, 2004, the Company recorded net income of $4,313,074 compared to $3,396,513 for the same period in the prior fiscal year. Basic and dilutive earnings per share for the nine month period ended January 31, 2004 were $1.30 and $1.22, respectively, compared to basic and dilutive earnings per share of $1.18 and $1.02, respectively, for the same period in the prior year. LIQUIDITY AND CAPITAL RESOURCES: During the third quarter of fiscal 2004 the Company financed operations through cash provided by operating activities. During the nine month period, cash provided by operating activities was primarily related to net income of $4,313,074. In addition, the Company has recorded a tax benefit of approximately $5,175,000 associated with tax deductible compensation arising from the exercise of stock options in the first nine months of fiscal 2004. The benefit was recorded as a reduction of taxes payable and an increase in additional paid in capital. The Company used $5,569,305 for investing activities in the nine months ended January 31, 2004, which included $3,600,000 for the purchase of the Company's corporate headquarters and its Midwestern manufacturing facility, which was financed. The Company anticipates additional expenditures for the startup of the China manufacturing operation during fiscal 2004, which will result in additional cash being used for investing activities. Capital raised from the exercise of stock options for the nine month period ended January 31, 2004 was approximately $4,300,000. In addition, the Company has recorded a tax benefit of approximately $5,175,000 associated with tax deductible compensation arising from the exercise of stock options in the first nine months of fiscal 2004. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable 11 ITEM 4. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the President and Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness, as of the end of the fiscal quarter covered by this report, of the design and operation of the Company's "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures, as of the end of such fiscal quarter, were effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in Securities and Exchange Commission rules and forms. (b) Changes in Internal Controls During the period covered by this report, there have been no changes to the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 10.21 - Amended Loan and Security Agreement between SigmaTron International, Inc. and LaSalle Bank, dated January 31, 2004. Exhibit 31.1 - Certification of Principal Executive Officer of the Company Pursuant to Rule 13a-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2 - Certification of Principal Financial Officer of the Company Pursuant to Rule 13a-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32.1 - Certification by the Principal Executive Officer of SigmaTron International, Inc. Pursuant to Rule 13a-14(b) under the Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). Exhibit 32.2 - Certification by the Principal Financial Officer of SigmaTron International, Inc. Pursuant to Rule 13a-14(b) under the Exchange Act and Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). 12 (b) Reports on Form 8-K: The Company filed a report on Form 8-K on March 8, 2004 to announce financial results for the quarter ended January 31, 2004. 13 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. SIGMATRON INTERNATIONAL, INC. /s/ Gary R. Fairhead 3/11/04 ----------------------------------------- ------------------ Gary R. Fairhead Date President and CEO (Principal Executive Officer) /s/ Linda K. Blake 3/11/04 ----------------------------------------- ------------------ Linda K. Blake Date Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer)