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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended March 31, 2003

OR

For the transition period from                               to                              

Commission File Number 1-5231

McDONALD'S CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

Registrant's Telephone Number, including Area Code: (630) 623-3000
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report.

        Indicate by check ü  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 ý    No o

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

1,272,313,710
(Number of shares of common stock
outstanding as of March 31, 2003)

McDONALD'S CORPORATION

INDEX

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEET

See notes to condensed consolidated financial statements.

3

CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

See notes to condensed consolidated financial statements.

4

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

See notes to condensed consolidated financial statements.

5

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Basis of Presentation

        The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company's December 31, 2002 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. The results for the quarter ended March 31, 2003 do not necessarily indicate the results that may be expected for the full year.

        The results of operations of restaurant businesses purchased and sold were not material to the condensed consolidated financial statements for periods prior to purchase and sale.

Comprehensive Income

        The following table presents the components of comprehensive income for the first quarter ended March 31, 2003 and 2002:

Significant Charges

        In first quarter 2002, the Company recorded $43.0 million (pre and after tax) of asset impairment charges in other operating expense, primarily related to the impairment of assets in certain existing restaurants in Chile and other Latin American markets and the closing of 32 underperforming restaurants in Turkey, as a result of continued economic weakness.

        In fourth quarter 2002, the Company recorded $810.2 million of pretax charges ($656.9 million after tax) primarily related to: restructuring certain markets in the Middle East and Latin America; eliminating approximately 600 positions; reallocating resources and consolidating certain home office facilities; management's decision to close 719 underperforming restaurants (202 were closed in 2002 and 517 will close in 2003) primarily in the U.S. and Japan; and the write-off of software development costs.

        The following table presents the activity included in accrued restructuring and restaurant closing costs in the Consolidated balance sheet.

Per Common Share Information

        Diluted net income per common share is calculated using net income divided by diluted weighted-average shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of stock options, calculated using the treasury stock method, of 0.7 million shares and 15.5 million shares for the first quarter 2003 and 2002, respectively. Stock options that were not included in diluted weighted-average shares because they would have been antidilutive were 208.1 million shares and 106.1 million shares for the first quarter 2003 and 2002, respectively.

6

Stock-Based Compensation

        The Company accounts for stock options as prescribed by Accounting Principles Board Opinion No. 25 and includes pro forma information, as provided by Statement of Financial Accounting Standards (SFAS) No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation.

        Pro forma net income and net income per common share were determined as if the Company had accounted for its employee stock options under the fair value method of SFAS No. 123. The fair value of these options was estimated at the date of grant using an option pricing model. The model was designed to estimate the fair value of exchange-traded options that, unlike employee stock options, can be traded at any time and are fully transferable. In addition, such models require the input of highly subjective assumptions including the expected volatility of the stock price. For pro forma disclosures, the options' estimated fair value was amortized over their vesting period.

Variable Interest Entities

        The Company and six unaffiliated companies that supply the "McDonald's System" (McDonald's franchisees, suppliers and the Company) are equal owners of System Capital Corporation (SCC). SCC's purpose is to provide funding to the McDonald's System and to build equity within SCC that will benefit the McDonald's System. The Company has determined that it will not be required to consolidate or disclose information about SCC in accordance with Financial Accounting Standard Board Interpretation No. 46, Consolidation of Variable Interest Entities when the Interpretation becomes effective on July 1, 2003.

Changes in Accounting Standards

Asset retirement obligations—2003

        Effective January 1, 2003, the Company adopted SFAS No. 143, Accounting for Asset Retirement Obligations. The Statement requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Upon initial recognition of a liability, the cost is capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset. In first quarter 2003, the Company recorded a charge of $36.8 million after tax ($0.03 per diluted share) related to lease obligations in certain international markets to reflect the cumulative effect of this accounting change. The adoption of the new rule will not have a material effect on the Company's ongoing results of operations or financial position.

Goodwill—2002

        Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, which eliminates the amortization of goodwill (and intangible assets deemed to have indefinite lives) and instead subjects it to annual impairment tests. The Company performed the initial required goodwill impairment test as of January 1, 2002, and recorded a charge of $98.6 million after tax ($0.07 per diluted share) in first quarter 2002 for the cumulative effect of this accounting change. The impaired goodwill was primarily in Argentina, Uruguay and other markets in Latin America and the Middle East, where economies had weakened significantly.

7

Segment Information

        The Company operates in the food service industry and primarily operates and franchises quick-service restaurant businesses under the McDonald's brand (McDonald's restaurants). The Company also operates other restaurant concepts under its Partner Brands: Boston Market, Chipotle Mexican Grill and Donatos Pizzeria. In addition, the Company has a minority ownership in Pret A Manger.

        The following table presents the Company's revenues and operating income by geographic segment. APMEA represents McDonald's restaurant operations in Asia Pacific, the Middle East and Africa.

8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

OPERATING RESULTS

n/m Not meaningful

9

CONSOLIDATED OPERATING RESULTS

The Company operates in the food service industry and primarily operates and franchises quick-service restaurant businesses under the McDonald's brand (McDonald's restaurants). The Company also operates other restaurant concepts under its Partner Brands.

Net Income and Diluted Net Income Per Common Share

        Income before the cumulative effect of accounting changes increased $12.5 million or 4%, and diluted income per common share before the cumulative effect of accounting changes increased $0.02 or 7% for the quarter. First quarter 2002 results included asset impairment charges of $43.0 million or $0.04 per diluted share. Net income, which included the cumulative effect of the accounting changes, increased $74.3 million, and diluted net income per common share increased $0.06 for the quarter.

        Weighted average shares outstanding were lower compared with the prior year due to shares repurchased during 2002. In addition, outstanding stock options had a less dilutive effect than in the prior year.

Impact of Foreign Currencies on Reported Results

        While changing foreign currencies affect reported results, McDonald's lessens exposures, where practical, by financing in local currencies, hedging certain foreign-denominated cash flows and by purchasing goods and services in local currencies. Foreign currency translation had a positive impact on both the consolidated revenue growth rate and operating income growth rate for the quarter, primarily due to the stronger Euro and British Pound. The following table presents the effect of foreign currency translation on consolidated reported results for the quarter.

Cumulative Effect of Accounting Changes and 2002 Asset Impairment Charges

        Effective January 1, 2003, the Company adopted SFAS No. 143, "Accounting for Asset Retirement Obligations." The Statement requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time the obligations are incurred. Upon initial recognition of a liability, the cost is capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset. In first quarter 2003, the Company recorded a charge of $36.8 million after tax ($0.03 per diluted share) related to lease obligations in certain international markets to reflect the cumulative effect of this accounting change.

        Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," which eliminated the amortization of goodwill and instead subjects it to annual impairment tests. As a result of the initial required goodwill impairment test, the Company recorded a charge of $98.6 million after tax ($0.07 per diluted share) in first quarter 2002 to reflect the cumulative effect of this accounting change. The impaired goodwill was primarily in Argentina, Uruguay and other markets in Latin America and the Middle East, where economies had weakened significantly.

        The Company also recorded $43.0 million (pre and after tax) of asset impairment charges in first quarter 2002, primarily related to the impairment of assets in certain existing restaurants in Chile and other Latin American markets and the closing of 32 underperforming restaurants in Turkey, as a result of continued economic weakness.

Systemwide Sales and Revenues

        Systemwide sales include sales by all restaurants, whether operated by the Company, by franchisees or by affiliates operating under joint-venture agreements. Management believes that Systemwide sales information is useful in analyzing the Company's revenues because franchisees and affiliates pay rent, service fees and/or royalties that generally are based on a percent of sales with specified minimum payments. These fees received from franchisees and affiliates along with sales from Company-operated restaurants are reported as revenues.

10

*

Excluding the effect of foreign currency translation on reported results.

n/a Not applicable

        Systemwide sales and revenues may grow at different rates during a given period, primarily due to a change in the mix of Company-operated, franchised and affiliated restaurants. For example, this mix is impacted by purchases and sales of restaurants between the Company and franchisees. For the quarters ended March 31, 2003 and 2002, Company-operated restaurants generated about 30% of Systemwide sales and about 75% of revenues.

*

Excluding the effect of foreign currency translation on reported results.

n/a Not applicable

        On a global basis, Systemwide sales and revenues were relatively flat for the quarter in constant currencies as restaurant expansion offset negative comparable sales. Comparable sales were affected by world events and weak economic conditions in many nations, severe winter weather, and the shift in Easter school holidays from March to April in Europe.

        U.S. sales increased for the quarter due to expansion, partly offset by negative comparable sales. U.S. revenues increased at a higher rate than sales for the quarter due to a higher percentage of Company-operated restaurants.

        In Europe, constant currency sales decreased for the quarter due to negative comparable sales, partly offset by expansion. Expansion and slightly positive comparable sales in France were more than offset by negative comparable sales in Germany, where the economy remains weak, and in the U.K., where consumer confidence continues to decline. Europe's revenue growth rate was lower than the sales growth rate, primarily due to a higher percentage of franchised restaurants.

        Constant currency sales results in APMEA declined for the quarter due to negative comparable sales, partly offset by expansion mainly in China. Negative comparable sales in this segment also reflect changes in consumer behavior as a result of events in the Persian Gulf and, to a lesser extent, concerns about SARS (Severe Acute Respiratory Syndrome). We expect results in APMEA to continue to be impacted by these issues in the near term.

        In Latin America, constant currency sales increased for the quarter, primarily due to positive comparable sales, despite the impact of the temporary closure of restaurants in Venezuela through mid-February, due to the national strike. Positive comparable sales in Brazil, Puerto Rico and Mexico led the sales results for the segment. Revenues increased at a higher rate than sales for the quarter, partly due to a higher percentage of Company-operated restaurants in 2003.

        The sales and revenue increases in Partner Brands were due to expansion and positive comparable sales at Chipotle Mexican Grill.

11

Combined Operating Margins

        The following combined operating margin information represents margins for McDonald's restaurant business only and excludes Partner Brands.

        Combined operating margin dollars decreased $17.6 million or 2% for the quarter (8% in constant currencies). The U.S. and Europe segments accounted for more than 80% of the combined margin dollars in both years.

        Consolidated food & paper costs decreased as a percent of sales for the quarter, while payroll costs and occupancy & other operating expenses increased as a percent of sales.

        The U.S. Company-operated margin percent decreased for the quarter, primarily due to negative comparable sales. Food & paper costs, payroll costs and occupancy & other operating expenses all increased as a percent of sales for the quarter.

        The Company-operated margin percent in Europe and APMEA decreased for the quarter, primarily due to negative comparable sales. Payroll and occupancy & other costs as a percent of sales increased for the quarter for both segments. In Latin America, Company-operated margins decreased for the quarter, primarily due to higher commodity and utility costs.

        The decline in the consolidated franchised margin percent for the quarter reflects negative comparable sales, higher short-term financial support to franchisees, primarily in the U.S., and higher occupancy costs due, in part, to an increased proportion of leased sites.

Selling, General & Administrative Expenses

        Selling, general & administrative expenses increased 3% for the quarter (flat in constant currencies).

Other Operating (Income) Expense, Net

        Equity in earnings of unconsolidated affiliates decreased for the quarter due to a net loss from our Japanese affiliate in 2003 compared with income in 2002. The team service system payments were made to U.S. owner/operators in first quarter 2002 to facilitate the introduction of the team service front counter system.

12

Operating Income

        Consolidated operating income increased $33.3 million or 5% for the quarter. Results in 2002 included $43.0 million of asset impairment charges.

(1)

Excluding the effect of foreign currency translation on reported results and excluding $43.0 million of asset impairment charges in 2002.

(2)

Includes $15.9 million of asset impairment charges in Turkey.

(3)

Includes $27.1 million of asset impairment charges.

n/a Not applicable

n/m Not meaningful

        U.S. operating income increased 1% for the quarter, primarily due to $21.6 million of payments made to U.S. owner/operators in first quarter 2002 and lower selling, general & administrative expenses, partly offset by lower combined operating margin dollars.

        Europe's operating income decreased 7% for the quarter in constant currencies, primarily due to weak results in Germany and the U.K., partly offset by positive results in France.

        APMEA's adjusted operating income decreased 27% for the quarter in constant currencies, primarily due to weak results in Japan, Australia, China and South Korea.

        Latin America's adjusted operating results declined significantly for the quarter as most markets in the segment continue to experience difficult economic conditions. In addition, Latin America's results for the quarter were negatively impacted by the national strike in Venezuela.

INTEREST, NONOPERATING EXPENSE AND INCOME TAXES

Interest expense increased for the quarter primarily due to stronger foreign currencies and higher average debt levels in first quarter 2003 compared with first quarter 2002. The increase in average debt levels was primarily due to non-cash items, including the impact of changes in exchange rates on foreign currency-denominated debt and SFAS No. 133 fair value adjustments.

        Nonoperating expense for the quarter reflected foreign currency translation losses in 2003 compared with foreign currency translation gains in 2002.

        The first quarter effective income tax rate was 33.5% compared with 34.5% in 2002. The higher effective income tax rate in 2002 was due to the asset impairment charges recorded in 2002 that were not tax-effected for financial reporting purposes.

CASH FLOWS AND FINANCIAL POSITION

For the first quarter 2003, cash provided by operations totaled $552.1 million and exceeded capital expenditures by $247.9 million. Cash provided by operations was slightly higher than in 2002, while capital expenditures decreased 18% for the three months primarily due to lower restaurant openings in 2003, partly offset by stronger foreign currencies. See the following OUTLOOK section for the Company's expectations regarding capital expenditures and other uses of cash from operations in 2003.

13

OUTLOOK

The Company is focused on delivering improved results over the long term. As previously announced, the Company will not be providing an earnings per share target by quarter or for the year. Instead, the Company is providing the following outlook on key components influencing earnings per share and will continue to communicate its strategies and priorities as well as actual results throughout the year.

The information provided below is as of May 2003 and excludes any impact from changes in foreign currency exchange rates.

•

McDonald's expects sales from new restaurants to add approximately two to three percentage points to sales growth in 2003. Most of this anticipated growth will be a result of restaurants opened in 2002 rather than in 2003, as the majority of restaurants are opened in the last few months of the year.

In 2002, the Company opened 1,363 traditional restaurants and 392 satellite McDonald's restaurants. Net of closings, worldwide restaurant additions totaled 1,015, with 781 net traditional and 234 net satellite restaurants. In 2003, the Company expects to open about 620 traditional restaurants and 340 satellite McDonald's restaurants, for a total of 960 new restaurants worldwide. Net of planned closings, worldwide restaurant additions are expected to total 360, with 200 net traditional and 160 net satellite restaurants. McDonald's expects new restaurants to add approximately one percentage point to sales growth in 2004.

•

Worldwide comparable sales were -2.1% and -1.3% for full years 2002 and 2001. McDonald's strategies for 2003 are designed to reverse the negative comparable sales trend through a heightened focus on restaurant level execution and marketing. Our outlook remains cautious until we see improved performance in our key markets. As a guideline, generally, one percentage point of comparable sales in the U.S. impacts annual earnings per share by 1.5 cents, and one percentage point of comparable sales in Europe impacts annual earnings per share by about one cent, assuming no change in profit margins.



•

McDonald's expects the total amount of selling, general & administrative expenses in 2003 to be relatively flat compared with 2002.



•

A significant part of McDonald's operating income is from outside the U.S., and more than 60% of total debt is denominated in foreign currencies. The Euro and the British Pound are the most significant currencies impacting our business. If the Euro and the British Pound both move 10% (compared with 2002 average rates), McDonald's annual reported earnings per share would change by about 4 cents to 5 cents. Through year-to-date March 2003, foreign currency translation benefited diluted earnings per share by $0.02.



•

McDonald's expects to decrease its debt level in 2003 by $300 million to $700 million. In December 2002, we moved our fixed percentage of debt from 45% to about 60%. The weighted average interest rate for debt was 4.2% for first quarter 2003.



•

McDonald's expects the effective income tax rate for full year 2003 to be in the range of 33.5% to 34.5%.



•

McDonald's expects capital expenditures for 2003 to be $1.2 billion, $800 million less than in 2002. McDonald's also plans to use cash from operations to strengthen the balance sheet by paying down debt ($300 million to $700 million) and returning cash to shareholders through dividends and share repurchase (combined $500 million to $1 billion).



•

In the coming 12 to 18 months, plans call for the Company to be well on its way toward a 2005 goal of annual Systemwide sales growth of 3% to 5%, operating income growth of 6% to 7%, and return on incremental invested capital in the high teens.(1)

(1)

Return on incremental invested capital is defined as the change in operating income plus depreciation divided by the change in gross assets, and excludes the impact of changes in foreign currency exchange rates.

FORWARD-LOOKING STATEMENTS

Certain forward-looking statements are included in this report. They use such words as "may," "will," "expect," "believe," "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this report. These forward-looking statements involve a number of risks and uncertainties. The following are some of the factors that could cause actual results to differ materially from those expressed in or underlying our forward-looking statements: effectiveness of operating initiatives; success in advertising and promotional efforts; changes in global and local business and economic conditions, including their impact on consumer confidence; consumer response to the occurrence of severe acute respiratory syndrome (SARS); fluctuations in currency exchange and interest rates; food, labor and other operating costs; political or economic instability in local markets, including the effects of war and terrorist activities; competition, including pricing and marketing initiatives and new product offerings by the Company's competitors; consumer preferences or perceptions concerning the Company's product offerings;

14

spending patterns and demographic trends; availability of qualified restaurant personnel; severe weather conditions; existence of positive or negative publicity regarding the Company or its industry generally; effects of legal claims; cost and development of capital; changes in future effective tax rates; changes in governmental regulations; and changes in applicable accounting policies and practices. The foregoing list of important factors is not all inclusive.

        The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

FIRST QUARTER HIGHLIGHTS

FINANCIAL INFORMATION

*

Comparable sales represent the percent change in constant currency sales from the same period in the prior year for restaurants in operation at least thirteen months. Comparable sales information is for the McDonald's restaurant business only.

*

Restaurant margin information represents margins for the McDonald's restaurant business only.

15

Item 3. Quantitative and Qualitative Disclosures About Market Risk

        There were no material changes to the disclosure made in the Annual Report on Form 10-K for the year ended December 31, 2002 regarding this matter.

Item 4. Controls and Procedures

        Within the 90-day period prior to the filing of this report, an evaluation was conducted under the supervision and with the participation of the Company's management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the CEO and CFO have concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Such officers also confirm that there have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation referred to above.

PART II—OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits

16

17

*

Denotes compensatory plan.

**

Other instruments defining the rights of holders of long-term debt of the registrant and all of its subsidiaries for which consolidated financial statements are required to be filed and which are not required to be registered with the Commission, are not included herein as the securities authorized under these instruments, individually, do not exceed 10% of the total assets of the registrant and its subsidiaries on a consolidated basis. An agreement to furnish a copy of any such instruments to the Commission upon request has been filed with the Commission.

18

(b)

Reports on Form 8-K

        The following reports on Form 8-K were filed during the last quarter covered by this report, and subsequently through May 13, 2003.

19

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CERTIFICATIONS

I, James R. Cantalupo, Chairman and Chief Executive Officer of McDonald's Corporation, certify that:

(1)

I have reviewed this quarterly report on Form 10-Q of McDonald's 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 have:



(a)

Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



(b)

Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing of this quarterly report (the Evaluation Date); and



(c)

Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

20

(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 weakness 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 13, 2003

I, Matthew H. Paull, Corporate Executive Vice President and Chief Financial Officer of McDonald's Corporation, certify that:

(1)

I have reviewed this quarterly report on Form 10-Q of McDonald's 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 have:



(a)

Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



(b)

Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing of this quarterly report (the Evaluation Date); and



(c)

Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

21

(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 weakness 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 13, 2003

22

QuickLinks

Item 1. Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures

Item 6. Exhibits and Reports on Form 8-K