##### Table of Contents





United States
 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 quarterly period ended
    September 30, 2008
  Commission file number
    1-13805
  Harris Preferred Capital
    Corporation
    Maryland(State or other jurisdiction
    of incorporation or organization)

# 36-4183096(I.R.S. Employer
    Identification No.)111 West Monroe Street, Chicago, Illinois(Address of principal executive offices)

60603(Zip Code)   Registrants telephone number, including area code:
 (312) 461-2121
  Securities registered pursuant to Section 12(b) of the
    Act:
  Name of each exchange onTitle of each class

which registered73/8%
    Noncumulative Exchangeable Preferred Stock,
    Series A, par value $1.00 per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act: None
   þ o
   12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o    Rule 12b-2
 þ




---



##### 





HARRIS
    PREFERRED CAPITAL CORPORATION
  TABLE OF
    CONTENTS
   
 Part I


FINANCIAL INFORMATIONItem 1.


Financial Statements:Consolidated Balance Sheets


2Consolidated Statements of Income and
    Comprehensive Income


3Consolidated Statements of Changes in
    Stockholders Equity


4Consolidated Statements of Cash Flows


5Notes to Consolidated Financial Statements


6Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


7Item 3.


Quantitative and Qualitative Disclosures about
    Market Risk


22Item 4.


Controls and Procedures


22PART II


OTHER INFORMATIONItem 6.


Exhibits


23Signatures


24EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATION




---



##### Table of Contents



Part I.
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  HARRIS
    PREFERRED CAPITAL CORPORATION
  CONSOLIDATED
    BALANCE SHEETS
  September 30,


December 31,


September 30,2008


2007


2007(unaudited)


(audited)


(unaudited)(in thousands, except share data)AssetsCash on deposit with Harris N.A.

$
289


$
356


$
5,201Securities purchased from Harris N.A. under agreement to resell


16,810



16,509



9,421Notes receivable from Harris N.A.


4,481



5,335



5,531Securities available-for-sale:Mortgage-backed


446,962



369,244



379,555U.S. Treasury


19,996



99,950



89,936Other assets


1,791



1,529



1,597Total assets

$
490,329


$
492,923


$
491,241Liabilities and Stockholders EquityAccrued expenses

$
55


$
129


$
75Dividends payable






3,000



4,609Total liabilities

$
55


$
3,129


$
4,684Commitments and contingencies

$



$



$
Stockholders Equity73/8%
    Noncumulative Exchangeable Preferred Stock, Series A
    ($1 par value); liquidation value of $250,000,000;
    20,000,000 shares authorized, 10,000,000 shares issued
    and outstanding

$
250,000


$
250,000


$
250,000Common stock ($1 par value); 1,000 shares authorized,
    issued and outstanding


1



1



1Additional paid-in capital


240,733



240,733



240,733Earnings in excess of distributions


1,233



67



2,324Accumulated other comprehensive loss  net unrealized
    losses on available-for-sale securities


(1,693
)


(1,007
)


(6,501
)Total stockholders equity

$
490,274


$
489,794


$
486,557Total liabilities and stockholders equity

$
490,329


$
492,923


$
491,241   The accompanying notes are an integral part of these
    financial statements.
 2




---



##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATIONCONSOLIDATED STATEMENTS OF INCOME
    AND COMPREHENSIVE INCOME
    (Unaudited)
  Nine Months EndedQuarter Ended September 30


September 302008


2007


2008


2007(in thousands, except share data)Interest income:Securities purchased from Harris N.A. under agreement to resell

$
101


$
1,002


$
909


$
2,860Notes receivable from Harris N.A.


73



89



233



278Securities available-for-sale:Mortgage-backed


5,097



4,549



14,885



13,671U.S. Treasury


3



75



19



223Total interest income

$
5,274


$
5,715


$
16,046


$
17,032Operating expenses:Loan servicing fees paid to Harris N.A.

$
4


$
5


$
11


$
14Advisory fees paid to Harris N.A.


53



36



155



103General and administrative


77



54



237



181Total operating expenses

$
134


$
95


$
403


$
298Net income

$
5,140


$
5,620


$
15,643


$
16,734Preferred dividends


4,610



4,609



13,827



13,827Net income available to common stockholder

$
530


$
1,011


$
1,816


$
2,907Basic and diluted earnings per common share

$
530


$
1,011


$
1,816


$
2,907Net income

$
5,140


$
5,620


$
15,643


$
16,734Other comprehensive income  net unrealzied loss:On available-for-sale securitiesNet unrealized holding gains (losses) arising during the period


1,926



4,209



(686
)


1,553Less reclassification adjustment for realized (gains) losses
    included in net income














Comprehensive income

$
7,066


$
9,829


$
14,957


$
18,287   The accompanying notes are an integral part of these
    financial statements.
 3




---



##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (Unaudited)
  Nine Months Ended September 302008


2007(in thousands)Balance at January 1

$
489,794


$
482,609Net income


15,643



16,734Other comprehensive income (loss)


(686
)


1,553Dividends  common stock


(650
)


(512
)Dividends (preferred stock $0.4609 per share)


(13,827
)


(13,827
)Balance at September 30

$
490,274


$
486,557   The accompanying notes are an integral part of these
    financial statements.
 4




---



##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS

(Unaudited) Nine Months Ended September 302008


2007(in thousands)Operating Activities:Net Income

$
15,643


$
16,734Adjustments to reconcile net income to net cash provided by
    operating activities:Net (increase) decrease in other assets


(262
)


70Net decrease in accrued expenses


(74
)


(47
)Net cash provided by operating activities

$
15,307


$
16,757Investing Activities:Repayments of notes receivable from Harris N.A.

$
854


$
981Purchases of securities available-for-sale


(211,608
)


(258,795
)Proceeds from maturities of securities available-for-sale


213,158



254,880Net cash provided by (used in) investing activities

$
2,404


$
(2,934
)Financing Activities:Cash dividends paid on common stock

$
(3,650
)

$
(512
)Cash dividends paid on preferred stock


(13,827
)


(13,827
)Net cash used in financing activities

$
(17,477
)

$
(14,339
)Net increase (decrease) in cash and cash equivalents

$
234


$
(516
)Cash and cash equivalents at beginning of period


16,865



15,138Cash and cash equivalents at end of period

$
17,099


$
14,622   The accompanying notes are an integral part of these
    financial statements.
   5




---



##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
  NOTES
    TO CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Basis of
    Presentation    Form 10-K.
    2.
    Commitments
    and Contingencies    3.
    Securities    September 30,


September 30,2008


2007Amortized


Unrealized


Unrealized


Fair


Amortized


Unrealized


Unrealized


FairCost


Gains


Losses


Value


Cost


Gains


Losses


Value(in thousands)Available-for-Sale SecuritiesMortgage-backed

$
448,654


$
1,489


$
3,181


$
446,962


$
386,058


$
452


$
6,955


$
379,555U.S. Treasury


19,997







1



19,996



89,934



2






$
89,936Total Securities

$
468,651


$
1,489


$
3,182


$
466,958


$
475,992


$
454


$
6,955


$
469,491    6




---



##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
  4.
    Fair
    Value Measurements  No. FAS 157-2, FSP 157-2
    Fair Value


Fair Value Measurements Using9/30/08


Level 1


Level 2


Level 3(in thousands)Available-for-sale securities

$
466,958


$
19,996


$
446,962


$
   5.
    Fair
    Value Option    Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-Looking
    Information
  Form 10-Q Form 10-K Form S-11 No. 333-40257),
 7




---



##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
  Results
    of Operations
  Third
    Quarter 2008 Compared with Third Quarter 2007
             8




---



##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
    Nine
    Months Ended September 30, 2008 compared with
    September 30, 2007
          Liquidity
    Risk Management
   9




---



##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
          Market
    Risk Management
    Accounting
    Pronouncements
  No. FAS 157-2, FSP 157-2
     10




---



##### Table of Contents



HARRIS
    PREFERRED CAPITAL CORPORATION
    Other
    Matters
    Financial
    Statements of Harris N.A.
   11




---



##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CONDITION
  September 30


December 31


September 302008


2007


2007(unaudited)


(audited)


(unaudited)(in thousands except share data)ASSETSCash and demand balances due from banks

$
5,653,314


$
1,179,134


$
1,362,213Money market assets:Interest-bearing deposits at banks


833,011



949,803



936,792Federal funds sold and securities purchased under agreement to
    resell


1,403,085



1,520,183



769,393Total cash and cash equivalents

$
7,889,410


$
3,649,120


$
3,068,398Securities
    available-for-sale
    at fair value (amortized cost of $8.2 billion,
    $9.3 billion and $11.2 billion at September 30,
    2008, December 31, 2007 and September 30, 2007,
    respectively)


8,192,457



9,288,595



11,178,434Trading account assets


1,240,223



288,785



207,927Loans


27,771,882



25,534,487



25,273,204Allowance for loan losses


(514,991
)


(367,525
)


(315,640
)Net loans

$
27,256,891


$
25,166,962


$
24,957,564Loans held for sale


23,051



62,695



50,279Premises and equipment


533,973



485,510



490,297Bank-owned insurance


1,292,934



1,246,156



1,236,095Goodwill and other intangible assets


803,079



544,525



550,866Other assets


732,427



747,935



1,213,403Total assets

$
47,964,445


$
41,480,283


$
42,953,263LIABILITIESDeposits in domestic offices  noninterest-bearing

$
12,492,356


$
6,478,464


$
5,706,170 interest-bearing


22,865,888



21,905,547



23,376,406Deposits in foreign offices   interest-bearing


1,332,890



1,149,167



855,978Total deposits

$
36,691,134


$
29,533,178


$
29,938,554Federal funds purchased


135,700



182,625



327,330Securities sold under agreement to repurchase


906,836



1,613,529



4,068,896Short-term borrowings


336,802



707,540



690,101Short-term senior notes


75,000



80,000



410,000Accrued interest, taxes and other expenses


213,213



257,415



278,457Accrued pension and post-retirement


54,928



88,415



165,508Other liabilities


342,931



589,989



704,742Minority interest  preferred stock of subsidiary


250,000



250,000



250,000Long-term notes  senior


2,096,500



2,096,500



2,096,500Long-term notes  subordinated


292,750



292,750



292,750Long-term notes  secured


2,375,000



2,000,000



Total liabilities

$
43,770,794


$
37,691,941


$
39,222,838STOCKHOLDERS EQUITYCommon stock ($10 par value); authorized
    40,000,000 shares; issued and outstanding 17,149,512 at
    September 30, 2008 and 15,514,761 shares at
    December 31, 2007 and September 30, 2007

$
171,495


$
155,148


$
155,148Surplus


2,171,386



1,780,609



1,779,230Retained earnings


1,890,968



1,879,907



1,887,690Accumulated other comprehensive loss


(40,198
)


(27,322
)


(91,643
)Total stockholders equity

$
4,193,651


$
3,788,342


$
3,730,425Total liabilities and stockholders equity

$
47,964,445


$
41,480,283


$
42,953,263   The accompanying notes to consolidated financial statements
    are an integral part of these statements.
 12




---



##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
 (Unaudited)
  Quarter Ended September 30,


Nine Months Ended September 30,2008


2007


2008


2007(in thousands)Interest IncomeLoans

$
361,763


$
411,104


$
1,110,630


$
1,230,717Money market assets:Deposits at banks


4,373



5,680



13,977



15,772Federal funds sold and securities purchased under agreement to
    resell


3,722



13,252



14,968



23,178Trading accounts assets


5,338



2,651



12,406



7,149Securities
    available-for-sale:U.S. Treasury and federal agency


56,053



115,986



194,466



344,553State and municipal


13,576



9,606



38,609



26,097Other


2,972



6,313



14,078



18,926Total interest income

$
447,797


$
564,592


$
1,399,134


$
1,666,392Interest ExpenseDeposits

$
128,360


$
261,062


$
458,096


$
736,328Short-term borrowings


18,098



53,714



56,356



200,032Short-term notes  senior


2,569



5,678



14,857



17,999Long-term notes  senior


15,662



29,468



52,361



57,496Long-term notes  subordinated


2,387



4,353



8,524



12,843Long-term notes  secured


14,782







51,506



Minority interest  dividends on preferred stock of
    subsidiary


4,609



4,609



13,828



13,828Total interest expense

$
186,467


$
358,884


$
655,528


$
1,038,526Net Interest Income

$
261,330


$
205,708


$
743,606


$
627,866Provision for loan losses


130,198



13,000



282,721



26,800Net Interest Income after Provision for Loan Losses

$
131,132


$
192,708


$
460,885


$
601,066Noninterest IncomeTrust and investment management fees

$
22,216


$
23,044


$
67,612


$
69,030Money market and bond trading (losses) gains


(1,704
)


1,435



(1,658
)


8,521Foreign exchange


2,350



550



4,750



2,625Service charges and fees


48,964



42,661



139,455



124,438Equity securities gains


5,908



2,108



44,280



2,108Securities gains (losses), net


19



142



10,947



(5,683
)Bank-owned insurance


13,412



14,428



40,067



39,214Letter of credit fees


4,100



4,203



11,846



13,985Other


16,860



14,748



51,934



43,032Total noninterest income

$
112,125


$
103,319


$
369,233


$
297,270Noninterest ExpensesSalaries and other compensation

$
103,188


$
90,241


$
309,531


$
270,654Pension, profit sharing and other employee benefits


24,760



26,504



79,822



86,627Net occupancy


25,014



21,994



74,058



65,230Equipment


17,467



16,215



49,723



48,520Marketing


13,662



9,881



34,998



27,906Communication and delivery


8,277



6,993



23,723



20,841Expert services


11,373



7,005



31,635



21,391Contract programming


7,987



5,868



23,574



21,615Legal


6,535



3,523



12,401



7,018Outside information processing


8,479



7,576



23,785



19,674Intercompany services, net


7,071



11,428



19,615



34,615Restructuring (reversal) charge










(141
)


13,376Visa indemnification charge (reversal), net


7,000







(10,000
)


Other


49,523



23,518



102,578



65,889Amortization of intangibles


7,745



6,332



22,186



19,115Total noninterest expenses

$
298,081


$
237,078


$
797,488


$
722,471(Loss) income before income taxes

$
(54,824
)

$
58,949


$
32,630


$
175,865Applicable income tax (benefit) expense


(29,407
)


12,020



(16,744
)


36,375Net (loss) income

$
(25,417
)

$
46,929


$
49,374


$
139,490   The accompanying notes to consolidated financial statements
    are an integral part of these statements.
 13




---



##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF COMPREHENSIVE INCOME
 (Unaudited)
  Nine Months EndedQuarter Ended September 30,


September 30,2008


2007


2008


2007(in thousands)Net (loss) income

$
(25,417
)

$
46,929


$
49,374


$
139,490Other comprehensive income (loss):Cash flow hedges:Net unrealized loss on derivative instruments, net of tax
    benefit for the quarter of $11,827 in 2008 and $7,160 in 2007
    and net of tax benefit for the
    year-to-date
    period of $8,979 in 2008 and $7,305 in 2007


(21,963
)


(13,295
)


(16,672
)


(13,568
)Less reclassification adjustment for realized loss included in
    net income, net of tax benefit for the quarter of $1,070 in 2008
    and $1,063 in 2007 and net of tax benefit for the
    year-to-date
    period of $3,949 in 2008 and $3,246 in 2007


1,987



1,973



7,333



6,029Pension and postretirement medical benefit plans:Net gain and net prior service cost included in net income, net
    of tax expense for the quarter of $0 in 2008 and $717 in 2007
    and net of tax expense for the
    year-to-date
    period of $511 in 2008 and $2,149 in 2007






1,330



949



3,990Less reclassification adjustment for amortization included in
    net income, net of tax expense for the quarter of $108 in 2008
    and $0 in 2007 and net of tax expense for the
    year-to-date
    period of $323 in 2008 and $0 in 2007


200







599



Unrealized gain on
    available-for-sale
    securities:Unrealized holding gain arising during the period, net of tax
    expense for the quarter of $1,670 in 2008 and $23,929 in 2007
    and net of tax expense for the
    year-to-date
    period of $1,086 in 2008 and $3,229 in 2007


3,088



44,440



2,031



5,851Less reclassification adjustment for realized gain included in
    net income, net of tax expense for the quarter of $7 in 2008 and
    $50 in 2007 and net of tax (benefit) expense for the
    year-to-date
    period of $3,831 in 2008 and ($1,989) in 2007


(12
)


(92
)


(7,116
)


3,694Other comprehensive (loss) income

$
(16,700
)

$
34,356


$
(12,876
)

$
5,996Comprehensive (loss) income

$
(42,117
)

$
81,285


$
36,498


$
145,486   The accompanying notes to consolidated financial statements
    are an integral part of these statements.
 14




---



##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (Unaudited)
  2008


2007(in thousands)Balance at January 1

$
3,788,342


$
3,346,413Net income


49,374



139,490Contributions to capital surplus


387,669



278,260Issuance of common stock


16,347



12,114Stock option exercise


1,329



3,191Tax benefit from stock option exercise


1,779



7,776Dividends  ($2.22 in 2008 and $4.06 in 2007 per
    common share)


(38,000
)


(63,000
)Adjustment to initially apply FIN 48






185Adjustment to initially apply EITF
    06-4


(313
)


Other comprehensive (loss) income


(12,876
)


5,996Balance at September 30

$
4,193,651


$
3,730,425   The accompanying notes to consolidated financial statements
    are an integral part of these statements.
 15




---



##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (Unaudited)
  Nine Months Ended September 30,2008


2007(in thousands)Operating Activities:Net Income

$
49,374


$
139,490Adjustments to reconcile net income to net cash used in
    operating activities:Provision for loan losses


282,721



26,800Depreciation and amortization, including intangibles


71,295



25,851Deferred tax benefit


(31,321
)


(10,000
)Tax benefit from stock options exercise


1,779



7,961Net securities (gains) losses


(10,947
)


5,683Equity securities gains, net


(44,280
)


(2,108
)Increase in bank-owned insurance


(27,978
)


(32,152
)Trading account net cash purchases


(1,166,067
)


(530,621
)Net decrease (increase) in accrued interest receivable


37,138



(15,163
)Net (increase) decrease in prepaid expenses


(7,999
)


4,619Net (decrease) increase in accrued interest payable


(51,797
)


59,312Net increase in other accrued expenses


12,383



29Origination of loans held for sale


(345,399
)


(254,531
)Proceeds from sale of loans held for sale


388,505



241,184Net gains on loans held for sale


(3,462
)


(2,481
)Net losses (gains) on sale of premises and equipment


520



(973
)Net increase (decrease) in undistributed loan principal


54



(5,749
)Recoveries on charged-off loans


33,963



24,915Net change in pension and post retirement benefits


(31,105
)


(3,504
)Net decrease in foreign exchange contracts


(49,142
)


(37,027
)Net increase (decrease) in marked to market hedging derivatives


18,569



(27,862
)Net Visa indemnification charge (Note 5)


10,000



Other, net


16,415



37,066Net cash used in operating activities

$
(846,781
)

$
(349,261
)Investing Activities:Proceeds from sales of securities
    available-for-sale

$
1,263,951


$
7,768,788Proceeds from maturities of securities
    available-for-sale


8,950,521



14,928,974Purchases of securities
    available-for-sale


(8,860,258
)


(22,889,426
)Net (increase) decrease in loans


(851,787
)


938,726Purchases of premises and equipment


(65,496
)


(35,439
)Sales of premises and equipment


14,058



Proceeds from Visa redemption


37,800



Acquisition, net of cash acquired


(229,551
)


(211,748
)Net cash provided by investing activities

$
259,238


$
499,875Financing Activities:Net increase (decrease) in deposits

$
5,519,315


$
(1,129,344
)Net (decrease) increase in Federal funds purchased and
    securities sold under agreement to repurchase


(807,229
)


290,973Net decrease in other short-term borrowings


(607,590
)


(571,578
)Net (decrease) increase in short-term notes  senior


(5,000
)


310,000Proceeds from issuance long-term notes  senior






1,100,000Proceeds from issuance long-term notes  secured


375,000



Net proceeds from stock options exercise


1,329



3,191Excess tax expense from stock options exercise


(181
)


(840
)Capital contributions for acquisitions


404,016



290,374Cash dividends paid on common stock


(38,000
)


(63,000
)Cash dividends paid on preferred stock


(13,827
)


(13,827
)Net cash provided by financing activities

$
4,827,833


$
215,949Net increase in cash and cash equivalents

$
4,240,290


$
366,563Cash and cash equivalents at January 1


3,649,120



2,701,835Cash and cash equivalents at September 30


7,889,410



3,068,398   The accompanying notes to consolidated financial statements
    are an integral part of these statements.
 16




---



##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Basis of
    Presentation            2.
    Legal
    Proceedings    3.
    Cash
    Flows      4.
    Restructuring
    Charge   17




---



##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
          5.
    Visa
    Indemnification Charge            6.
    Fair
    Value Measurements   18




---



##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  No. FAS 157-2, FSP 157-2 FSP 157-3, FSP 157-3
  7.
    Fair
    Value Option    8.
    Accounting
    for Endorsement Split-Dollar Life Insurance
    Arrangements  No. 06-04,
  9.
    Auction
    Rate Securities Purchase Program   19




---



##### Table of Contents



HARRIS
    N.A. AND SUBSIDIARIES
  FINANCIAL
    REVIEW
  Third
    Quarter 2008 Compared with Third Quarter 2007
  Summary
                 20




---



##### Table of Contents



Nine
    Months Ended September 30, 2008 Compared with
    September 30, 2007
  Summary
           21




---



##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk    available-for-sale
  Oct. 1, 2008 to


Year Ending December 31,








Fair Value atDec. 31, 2008


2009


2010


2011


2012


Thereafter


Total


September 30, 2008(in thousands except percentages)Mortgage-BackedAmortized cost

$



$
50,760


$
43,671


$
23,802


$



$
330,421


$
448,654


$
446,962Average Yield






4.10
%


4.57
%


4.00
%






4.86
%


4.69
%U.S. TreasuryAmortized cost

$
19,997






















$
19,997


$
19,996Average Yield


6.59
%






















6.59
%   sub-prime
  Item 4T.
    Controls
    and Procedures  (a)
    Evaluation
    of Disclosure Controls and Procedures    (b)
    Changes
    in Internal Control over Financial Reporting   22




---



##### Table of Contents



Part II.
    OTHER INFORMATION  Items 1,
    1A, 2, 3, 4 and 5 are being omitted from this Report because
    such items are not applicable to the reporting period.
  Item 6.
    Exhibits  31.1 Certification of Pamela C. Piarowski pursuant to
    rule 13a-14(a)
  31.2 Certification of Paul R. Skubic pursuant to
    rule 13a-14(a)
  32.1 Certification pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002
 23




---



##### Table of Contents



SIGNATURES     Paul
    R. Skubic
      Pamela
    C. Piarowski
    24