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These new conclusions are in contrast to conclusions reached as a result of previous evaluations carried out under the supervision and with the
participation of management, including the former chief executive officer and former chief financial officer. In particular, these conclusions
differ from the conclusions stated in our 2002 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2003 and June 30, 2003 that our disclosure controls and procedures were so effective as at December 31, 2002, March 31, 2003 and
June 30, 2003, respectively. They also differ from the conclusions based upon the re-evaluations carried out in December 2003 under the
supervision and with the participation of management, including the former president and chief executive officer and former chief financial
officer, as stated in our amended 2002 Annual Report on Form 10-K/A, or the 2002 Form 10-K/A, and amended Quarterly Reports on Form
10-Q for the quarters ended March 31, 2003 and June 30, 2003, or the 2003 Form 10-Q/As, that our disclosure controls and procedures were so
effective as at December 31, 2002, March 31, 2003 and June 30, 2003, respectively, after taking into account the First Restatement and the
identification of certain material weaknesses. These new conclusions also differ from the conclusions stated in our Quarterly Report on Form
10-Q for the quarter ended September 30, 2003 that our disclosure controls and procedures were so effective as at September 30, 2003, after
taking into account the First Restatement and the identification of certain material weaknesses.
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A
dditional Background
This section provides additional information with respect to the identified material weaknesses and other deficiencies, as well as certain
additional background information regarding the First Restatement and the Second Restatement.
In this report, unless otherwise indicated, the terms “material weakness” and “reportable condition” have the meanings as formerly set forth
under standards established by the AICPA, which were applicable with respect to 2003. The AICPA then defined a (i) “reportable condition”
as a matter that comes to an auditor’s attention that represents a significant deficiency in the design or operation of internal control that could
adversely affect an entity’s ability to initiate, record, process and report financial data consistent with the assertions of management in the
financial statements and (ii) “material weakness” as a reportable condition in which the design or operation of one or more of the internal
control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions.
In May 2003, we commenced certain balance sheet reviews at the direction of certain members of former management that led to the
Comprehensive Review, which resulted in the First Restatement. Each of the former members of management terminated for cause had
responsibility for their respective positions at the time of the Comprehensive Review and First Restatement. As disclosed in our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2003, the Comprehensive Review was initiated “[I]n light of a period of unprecedented
industry adjustment and subsequent restructuring actions, including workforce reductions and asset write-downs . . . . The amounts under
review were recorded when our balance sheet
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First Restatemen
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