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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number: 000-51955
 SUMMIT HOTEL PROPERTIES, LLC
  South Dakota
 20-0617340
 2701 South Minnesota Avenue, Suite 6
Sioux Falls, SD 57105
 (605) 361-9566
 þ o
  o o þ
 o þ




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TABLE OF CONTENTS
 PagePART IItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of March 31, 2007 (Unaudited) and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations for the three months ended March 31,
2007 and 2006 (Unaudited)
    
    
    4Condensed Consolidated Statements of Changes in Members Equity for the three months
ended March 31, 2007 (Unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the three months ended March 31,
2007 and 2006 (Unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    22Item 4. Controls and Procedures
    
    
    23PART IIItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    24First Modification to Loan AgreementLoan AgreementCertification of Chief Executive OfficerCertification of Chief Financial Officer1350 Certification of Chief Executive Officer1350 Certification of Chief Financial Officer
  2




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PART I
FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 SUMMIT HOTEL PROPERTIES, LLC
 
 CONDENSED CONSOLIDATED BALANCE SHEET 
MARCH 31, 2007 AND DECEMBER 31, 2006
 (Unaudited)
    
    
    (Audited)2007
    
    
    2006ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    7,431,284
    
    
    $
    7,999,443Restricted cash
    
    
    2,075,587
    
    
    
    2,479,940Trade receivables
    
    
    4,511,898
    
    
    
    3,151,673Prepaid expenses and other
    
    
    1,074,818
    
    
    
    1,761,769Assets held for sale
    
    
    3,110,559
    
    
    
    3,110,559Total current assets
    
    
    18,204,146
    
    
    
    18,503,384PROPERTY AND EQUIPMENT, NET
    
    
    361,229,895
    
    
    
    331,706,663OTHER ASSETSDeferred charges and other assets, net
    
    
    4,214,350
    
    
    
    4,400,900Restricted cash
    
    
    220,675
    
    
    
    1,348,538Total other assets
    
    
    4,435,025
    
    
    
    5,749,438TOTAL ASSETS
    
    $
    383,869,066
    
    
    $
    355,959,485LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    12,213,000
    
    
    $
    12,030,000Lines of credit and notes payable
    
    
    39,432,635
    
    
    
    14,905,265Accounts payable
    
    
    4,400,803
    
    
    
    1,303,471Related party accounts payable
    
    
    1,719,541
    
    
    
    2,825,398Accrued expenses
    
    
    7,790,392
    
    
    
    8,044,929Total current liabilities
    
    
    65,556,371
    
    
    
    39,109,063LONG-TERM DEBT, NET OF CURRENT PORTION
    
    
    211,708,812
    
    
    
    210,139,609COMMITMENTS AND CONTINGENCIESMINORITY INTERESTS
    
    
    (1,178,263
    )
    
    
    (1,511,494
    )MEMBERS EQUITY
    
    
    107,782,146
    
    
    
    108,222,307TOTAL LIABILITIES AND MEMBERS EQUITY
    
    $
    383,869,066
    
    
    $
    355,959,485
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SUMMIT HOTEL PROPERTIES, LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) 
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
 2007
    
    
    2006REVENUESRoom revenues
    
    $
    30,442,438
    
    
    $
    27,736,756Other hotel operations revenues
    
    
    577,195
    
    
    
    508,06331,019,633
    
    
    
    28,244,819COSTS AND EXPENSESDirect hotel operations
    
    
    9,484,319
    
    
    
    8,601,036Other hotel operating expenses
    
    
    3,334,350
    
    
    
    3,234,601General, selling and administrative
    
    
    5,352,371
    
    
    
    5,028,668Repairs and maintenance
    
    
    2,743,803
    
    
    
    2,231,050Depreciation and amortization
    
    
    4,051,265
    
    
    
    3,892,65624,966,108
    
    
    
    22,988,011INCOME FROM OPERATIONS
    
    
    6,053,525
    
    
    
    5,256,808OTHER INCOME (EXPENSE)Interest income
    
    
    81,142
    
    
    
    104,384Interest (expense)
    
    
    (3,430,536
    )
    
    
    (3,073,353
    )(Loss) on disposal of assets
    
    
    (46,110
    )
    
    
    (18,792
    )(3,395,504
    )
    
    
    (2,987,761
    )INCOME BEFORE MINORITY INTERESTS
    
    
    2,658,021
    
    
    
    2,269,047MINORITY INTERESTS IN OPERATIONS OF
CONSOLIDATED PARTNERSHIPS
    
    
    333,231
    
    
    
    220,990INCOME FROM CONTINUING OPERATIONS
    
    
    2,324,790
    
    
    
    2,048,057(LOSS) INCOME FROM DISCONTINUED OPERATIONS
    
    
    (27,330
    )
    
    
    177,977NET INCOME BEFORE INCOME TAXES
    
    
    2,297,460
    
    
    
    2,226,034STATE INCOME TAX (EXPENSE)
    
    
    (72,426
    )
    
    
    (111,738
    )NET INCOME
    
    $
    2,225,034
    
    
    $
    2,114,296BASIC AND DILUTED EARNINGS PER
CAPITAL UNIT
    
    $
    1,431.05
    
    
    $
    1,369.70WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING FOR CALCULATION OF
BASIC AND DILUTED EARNINGS PER
CAPITAL UNIT
    
    
    1,554.83
    
    
    
    1,543.62
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SUMMIT HOTEL PROPERTIES, LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS EQUITY (UNAUDITED) 
FOR THE THREE MONTHS ENDED MARCH 31, 2007
 # of CapitalUnits
    
    
    Class A
    
    
    Class A-1
    
    
    Class B
    
    
    Class C
    
    
    TotalBALANCES, JANUARY 1, 2007
    
    
    1,554.83
    
    
    $
    88,253,669
    
    
    $
    11,035,274
    
    
    $
    4,972,353
    
    
    $
    3,961,011
    
    
    $
    108,222,307Net Income
    
    
    
    
    
    
    2,225,034
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,225,034Distributions to members
    
    
    
    
    
    
    (2,402,346
    )
    
    
    (262,849
    )
    
    
    
    
    
    
    
    
    
    
    (2,665,195
    )BALANCES, MARCH 31, 2007
    
    
    1,554.83
    
    
    $
    88,076,357
    
    
    $
    10,772,425
    
    
    $
    4,972,353
    
    
    $
    3,961,011
    
    
    $
    107,782,146
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SUMMIT HOTEL PROPERTIES, LLC
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
 2007
    
    
    2006OPERATING ACTIVITIESNet income
    
    $
    2,225,034
    
    
    $
    2,114,296Adjustments to reconcile net income to
net cash from operating activities:Depreciation and amortization
    
    
    4,086,706
    
    
    
    4,055,575Minority interests in operations of consolidated partnership
    
    
    333,231
    
    
    
    220,990Loss on disposal of assets
    
    
    46,110
    
    
    
    18,792Changes in current assets and liabilities:Trade receivables
    
    
    (1,360,225
    )
    
    
    (972,552
    )Prepaid expenses and other
    
    
    686,951
    
    
    
    (372,869
    )Accounts payable
    
    
    1,991,475
    
    
    
    (779,721
    )Accrued expenses
    
    
    (254,513
    )
    
    
    510,571NET CASH FROM OPERATING ACTIVITIES
    
    
    7,754,769
    
    
    
    4,795,082INVESTING ACTIVITIESAcquisitions and construction in progress
    
    
    (29,684,839
    )
    
    
    (18,957,984
    )Purchases of other property & equipment
    
    
    (3,951,202
    )
    
    
    (2,392,490
    )Proceeds from asset dispositions
    
    
    212,030
    
    
    
    48,810Restricted cash fundings
    
    
    1,532,216
    
    
    
    (517,896
    )NET CASH (USED FOR) INVESTING ACTIVITIES
    
    
    (31,891,795
    )
    
    
    (21,819,560
    )FINANCING ACTIVITIESProceeds from issuance of long-term debt
    
    
    6,340,000
    
    
    
    10,200,000Principal payments on long-term debt
    
    
    (4,587,797
    )
    
    
    (894,956
    )Financing fees on long-term debt
    
    
    (45,511
    )
    
    
    (363,606
    )Net change in notes payable
    
    
    24,527,370
    
    
    
    (3,055,418
    )Proceeds from equity contributions
    
    
    
    
    
    
    12,467,877Distributions to members
    
    
    (2,665,195
    )
    
    
    (2,573,891
    )NET CASH FROM FINANCING ACTIVITIES
    
    
    23,568,867
    
    
    
    15,780,006NET (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (568,159
    )
    
    
    (1,244,472
    )CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD
    
    
    7,999,443
    
    
    
    7,339,976CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    7,431,284
    
    
    $
    6,095,504SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:Cash payments for interest
    
    $
    3,470,201
    
    
    $
    3,073,353Cash payments for state income taxes
    
    $
    142,426
    
    
    $
    
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SUMMIT HOTEL PROPERTIES, LLC
 
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2007
 NOTE 1  SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS
 Basis of Presentation
   Use of Estimates
  Recent Accounting Pronouncements
 Fair Value
Measurement
 The Fair
Value Option for Financial Assets and Financial Liabilities
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SUMMIT HOTEL PROPERTIES, LLC  NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  MARCH 31, 2007
 Assets Held for Sale
    2007
    
    
    2006Land
    
    $
    1,048,864
    
    
    $
    1,048,864Building
    
    
    2,048,055
    
    
    
    2,048,055Furniture, fixtures and equipment
    
    
    322,834
    
    
    
    322,8343,419,753
    
    
    
    3,419,753Less accumulated depreciation
    
    
    309,194
    
    
    
    309,194$
    3,110,559
    
    
    $
    3,110,559
 Discontinued Operations
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SUMMIT HOTEL PROPERTIES, LLC  NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  MARCH 31, 2007
  2007
    
    
    2006REVENUES
    
    $
    200,617
    
    
    $
    1,129,787COSTS AND EXPENSESDirect hotel operations
    
    
    83,226
    
    
    
    358,043Other hotel operating expenses
    
    
    30,070
    
    
    
    181,643General, selling and administrative
    
    
    35,878
    
    
    
    199,130Repairs and maintenance
    
    
    5,212
    
    
    
    58,603Depreciation and amortization
    
    
    35,441
    
    
    
    162,919189,827
    
    
    
    960,338INCOME FROM OPERATIONS
    
    
    10,790
    
    
    
    169,449OTHER INCOME (EXPENSE)Interest income
    
    
    1,545
    
    
    
    8,528Interest (expense)
    
    
    (39,665
    )
    
    
    State income tax (expense)
    
    
    
    
    
    
    Gain (loss) on disposal of assets
    
    
    
    
    
    
    (38,120
    )
    
    
    8,528(LOSS) INCOME FROM DISCONTINUED OPERATIONS
    
    $
    (27,330
    )
    
    $
    177,977
 Acquisitions
 Business Combinations
 
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SUMMIT HOTEL PROPERTIES, LLC  NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)  MARCH 31, 2007
 Accrued Expenses
  2007
    
    
    2006Accrued taxes
    
    $
    3,976,109
    
    
    $
    3,810,350Accrued salaries and benefits
    
    
    1,169,291
    
    
    
    1,517,101Accrued interest
    
    
    880,488
    
    
    
    901,438Other accrued expenses
    
    
    1,764,504
    
    
    
    1,816,040$
    7,790,392
    
    
    $
    8,044,929
 Note Obligations
  Subsequent Events
      10




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
  Overview
   11




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Critical Accounting Policies
 Property and Equipment
  Impairment of Long-Lived Assets
    Consolidation Policy
  12




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Revenue Recognition
  Results of Operations
     13




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Three Months Ended March 31, 2007 Compared with Three Months Ended March 31, 2006
 Revenues
   Three Months Ended
    
    Three Months EndedMarch 31,
    
    March 31,2007
    
    2006
    
    Increase/(Decrease)All Company HotelsRevPAR
    
    $
    63.06
    
    
    $
    59.52
    
    
    $
    3.54Average Daily Rate
    
    $
    96.92
    
    
    $
    88.52
    
    
    $
    8.40Occupancy Rate
    
    
    65.06
    %
    
    
    67.23
    %
    
    
    (2.17
    )%
  Hotel Operating Expenses
  Depreciation
  14




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Management Expense
  Repairs and Maintenance
  Net Income
  Seasonality and Diversification
  15




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Liquidity and Capital Resources
 Cash From Operating Activities
   Cash From Investing Activities
   Cash From Financing Activities
   16




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1 2 3 4
     17




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Uses of Cash
   18




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Additional Information Concerning Sources and Uses of Cash
     19




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Location
    
    # Rooms
    
    Franchise
    
    Status
    
    Opening Date (1)Jackson, MS (2)
    
    
    100
    
    
    Residence Inn
    
    Under Construction
    
    
    09/07Ft. Collins, CO (2)
    
    
    120
    
    
    Hilton Garden Inn
    
    Under Construction
    
    
    08/07Flagstaff, AZ (2)
    
    
    150
    
    
    Courtyard by Marriott
    
    Future Construction
    
    
    06/09Ft. Worth, TX (2)
    
    
    105
    
    
    Hampton Inn & Suites
    
    Under Construction
    
    
    08/07Denver, CO (2)
    
    
    124
    
    
    SpringHill Suites
    
    Under Construction
    
    
    11/07Bloomington, MN (2)
    
    
    113
    
    
    Cambria Suites
    
    Under Construction
    
    
    11/07Bloomington, MN (2)
    
    
    146
    
    
    Hampton Inn & Suites
    
    Under Construction
    
    
    11/07Boise, ID (2)
    
    
    119
    
    
    Cambria Suites
    
    Construction Completed
    
    
    04/07Baton Rogue, LA (2)
    
    
    127
    
    
    Cambria Suites
    
    Under Construction
    
    
    02/08Jacksonville, FL(2)
    
    
    136
    
    
    Aloft
    
    Future Construction
    
    TBDJacksonville, FL(2)
    
    
    119
    
    
    TBA
    
    Future Construction
    
    TBDSan Antonio, TX (2)
    
    
    126
    
    
    Cambria Suites
    
    Future Construction
    
    TBDSan Antonio, TX (2)
    
    
    123
    
    
    TBA
    
    Future Construction
    
    TBDSan Antonio, TX (2)
    
    
    136
    
    
    Aloft
    
    Future Construction
    
    TBDSan Antonio, TX (2)
    
    
    119
    
    
    Cambria Suites
    
    Future Construction
    
    TBDHouston, TX (2)
    
    
    118
    
    
    Cambria Suites
    
    Future Construction
    
    TBD
 
 (1)
    
    The opening date is estimated and is subject to change.(2)
    
    Number of units and franchise indicate our plans as of March 31, 2007, which are
subject to change.  20




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Recent Developments
 Recent Loan Transactions
  Acquisitions and Dispositions
  Location
    
    # Rooms
    
    Franchise
    
    Property Purchased
    
    Status
    
    Closing Date (1)Coeur dAlene, ID
    
    
    69
    
    
    Fairfield Inn
    
    Hotel
    
    Sold
    
    
    4/24/07San Antonio, TX(2)
    
    
    126
    
    
    Cambria Suites
    
    Land
    
    Purchased
    
    
    1/12/07San Antonio, TX(2)
    
    
    123
    
    
    TBA
    
    Land
    
    Purchased
    
    
    1/12/07San Antonio, TX(2)
    
    
    136
    
    
    Aloft
    
    Land
    
    Purchased
    
    
    1/22/07San Antonio, TX(2)
    
    
    119
    
    
    Cambria Suites
    
    Land
    
    Purchased
    
    
    1/22/07Houston, TX(2)
    
    
    118
    
    
    Cambria Suites
    
    Land
    
    Purchased
    
    
    2/15/07Irving, TX(2)
    
    
    124
    
    
    AmeriSuites
    
    Hotel
    
    Purchased
    
    
    5/2/07Irving, TX(2)
    
    
    128
    
    
    AmeriSuites
    
    Hotel
    
    Purchased
    
    
    5/2/07El Paso, TX
    
    
    100
    
    
    Hampton Inn
    
    Land
    
    Under Contract
    
    TBDEl Paso, TX
    
    
    120
    
    
    Courtyard
    
    Land
    
    Under Contract
    
    TBDPortland, OR
    
    
    120
    
    
    Residence
    
    Land
    
    Under Contract
    
    TBDPortland, OR
    
    
    127
    
    
    Hyatt Place
    
    Land
    
    Under Contract
    
    TBDFort Smith, AR
    
    
    23
    
    
    Aspen Addition
    
    Land
    
    Under Contract
    
    TBDRidgeland, MS
    
    
    92
    
    
    Staybridge Suites
    
    Hotel
    
    Under Contract
    
    
    6/5/07Boise, ID
    
    
    N/A
    
    
    
    N/A
    
    
    Land
    
    Under Contract to Sell
    
    
    8/1/07
 
 (1)
    
    For properties under contract, the closing date is estimated.(2)
    
    Number of units and franchise indicate our plans as of March 31, 2007, which are
subject to change.  21




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Wholly-Owned Subsidiary
  Commitments and Contingencies
   Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   22




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Item 4. Controls and Procedures
  
 PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  23




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Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  ExhibitNumber
    
    Description of Exhibit10.1
    
    First Modification to Loan Agreement dated April 24, 2007 between Summit Hotel
Properties, LLC and ING Life Insurance and Annuity Company regarding loan dated June 15,
2006.10.2
    
    Loan Agreement between Summit Hotel Properties, LLC and General Electric Capital
Corporation, dated April 30, 2007.31.1
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934  Chief
Executive Officer.31.2
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934  Chief
Financial Officer.32.1
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Executive Officer.32.2
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Financial Officer.
 24




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SIGNATURES
  SUMMIT HOTEL PROPERTIES, LLCDate:      May 15, 2007
    By:
    /s/ Kerry W. BoekelheideKerry W. BoekelheideChief Executive Officer and ManagerDate:  May 15, 2007
    By:
    /s/ Christopher D. BillsChristopher D. BillsChief Financial Officer and Manager 25




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EXHIBIT INDEX
 10.1
    
    First Modification to Loan Agreement dated April 24, 2007 between Summit Hotel
Properties, LLC and ING Life Insurance and Annuity Company regarding loan dated June 15,
2006.10.2
    
    Loan Agreement between Summit Hotel Properties, LLC and General Electric Capital
Corporation, dated April 30, 2007.31.1
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934  Chief
Executive Officer.31.2
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934  Chief
Financial Officer.32.1
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Executive Officer.32.2
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Financial Officer.
 26