10-Q 1 form10q93002.txt GLOBAL3RDQTR200210-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 2002 Commission File No. 333-27665 CONTINENTAL GLOBAL GROUP, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 31-1506889 -------- ---------- (State or other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) CO-REGISTRANTS AND SUBSIDIARY GUARANTORS Continental Conveyor & Equipment Company Delaware 34-1603197 Goodman Conveyor Company Delaware 34-1603196 Continental Conveyor & Equipment Continental Global Group, Inc. Company Goodman Conveyor Company 438 Industrial Drive 438 Industrial Drive Route 178 South Winfield, Alabama 35594 Winfield, Alabama 35594 Belton, South Carolina 29627 (205) 487-6492 (205) 487-6492 (864) 338-7793

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) 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 twelve 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 the number of shares outstanding of each of the issuer's classes of common stock as of the latest practical date. As of October 31, 2002, there were 100 shares of the registrant's common stock outstanding. INDEX CONTINENTAL GLOBAL GROUP, INC.

Part I. Financial Information Item 1. Financial Statements (Unaudited) 1 Continental Global Group, Inc. Condensed Consolidated Balance Sheets

See notes to condensed consolidated financial statements. 2 Continental Global Group, Inc. Condensed Consolidated Statements of Operations

See notes to condensed consolidated financial statements. 3 Continental Global Group, Inc. Condensed Consolidated Statements of Cash Flows

See notes to condensed consolidated financial statements. 4 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 A. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. For further information, refer to the consolidated financial statements and footnotes of Continental Global Group, Inc. and subsidiaries for the year ended December 31, 2001, included in the Form 10-K filed by the Company on March 29, 2002. Certain amounts from the prior year financial statements have been reclassified to conform to current year presentation. These reclassifications had no impact on operating income or net loss. B. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. C. Derivative Instruments At September 30, 2002, the Company is party to a foreign currency forward contract maturing during 2002. The counterparty to the contract is a major U.S. commercial bank. Management believes that losses related to credit risk is remote. The Company entered into the foreign currency forward contract to hedge certain firm sales commitments denominated in a foreign currency. The fair value of the Company's foreign currency forward contract is estimated based on the quoted market price of a comparable contract. The fair value of the forward contract is included in other current assets on the September 30, 2002 balance sheet. There was no hedge ineffectiveness recognized in the statement of operations during the current quarter. Based on the maturity of the contract and the nature of the hedging relationship, the unrecognized amounts in accumulated other comprehensive loss will be reclassified into the statement of operations during 2002 at the time the firm commitment is recognized. 5 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 D. Inventories Inventories, which consist of raw materials, manufactured and purchased parts, and work in process, are stated at the lower of cost or market. Since inventory records are maintained on a job order basis, it is not practical to segregate inventories into their major classes. The cost for approximately 62% and 67% of inventories at September 30, 2002 and December 31, 2001, respectively, is determined using the last-in, first-out (LIFO) method with the remainder determined using the first-in, first-out (FIFO) method. Had the FIFO method of inventory (which approximates replacement cost) been used to cost all inventories, inventories would have increased by approximately $1,140,000 at September 30, 2002 and December 31, 2001. E. Comprehensive Loss The components of comprehensive loss for the three months and nine months ended September 30, 2002 and 2001 are as follows:

F. Income Taxes Income taxes are provided using the liability method in accordance with FASB Statement No. 109, "Accounting for Income Taxes". For tax reporting purposes, the Company is included in the consolidated federal tax return of N.E.S. Investment Co. However, for financial reporting purposes, the Company's tax provision has been calculated on a stand-alone basis. The Company has subsidiaries located in Australia, the United Kingdom, and South Africa, which are subject to income taxes in their respective countries. 6 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 G. Segment Information While the Company primarily manages its operations on a geographical basis, the Company operates in two principal business segments: conveyor equipment and manufactured housing products. The conveyor equipment business markets its products in four main business areas. The mining equipment business area includes the design, manufacture and testing (and, outside the United States, installation and maintenance) of complete belt conveyor systems and components for mining application primarily in the coal industry. The conveyor components business area manufactures and sells components for conveyor systems primarily for resale through distributor networks. The engineered systems business area uses specialized project management and engineering skills to combine mining equipment products, purchased equipment, steel fabrication and other outside services for sale as complete conveyor equipment systems that meet specific customer requirements. The bulk conveyor equipment business area designs and manufactures a complete range of conveyor equipment sold to transport bulk materials, such as cement, lime, food products and industrial waste. The Company's manufactured housing products business manufactures and/or refurbishes axle components sold directly to the manufactured housing industry. As part of this segment the Company also sells mounted tire and rim assemblies to the manufactured housing industry. During 2001, the Company acquired certain assets in Alabama from Lippert Tire & Axle, Inc. The Company's existing Alabama operations of its manufactured housing products segment have been combined with the Lippert operations. Included in the other category is primarily the manufacture and sale of air filtration equipment for use in enclosed environments, principally in the textile industry. The manufacturing requirements for these products are generally compatible with conveyor equipment production and thus maximize utilization of the Company's manufacturing facilities for its primary products. 7 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 G. Segment Information (Continued)

8 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 H. Guarantor and Non-Guarantor Subsidiaries The Company's domestic subsidiaries, Continental Conveyor & Equipment Company (CCE) and Goodman Conveyor Company (GCC), and certain of its Australian subsidiaries, all of which are wholly owned, are the guarantors of the Senior Notes. The guarantees are full, unconditional, and joint and several. Separate financial statements of these guarantor subsidiaries are not presented as management has determined that they would not be material to investors. The Company's United Kingdom and South African subsidiaries are not guarantors of the Senior Notes. Summarized consolidating balance sheets as of September 30, 2002 and December 31, 2001 for the Company, the guarantor subsidiaries, and the non-guarantor subsidiaries are as follows (in thousands):

9 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 H. Guarantor and Non-Guarantor Subsidiaries (Continued)

10 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 H. Guarantor and Non-Guarantor Subsidiaries (Continued) Summarized consolidating statements of operations for the three months and nine months ended September 30, 2002 and 2001, respectively, for the Company, the guarantor subsidiaries, and the non-guarantor subsidiaries are as follows (in thousands):

11 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 H. Guarantor and Non-Guarantor Subsidiaries (Continued)

Summarized consolidating cash flow statements for the nine months ended September 30, 2002 and 2001, respectively, for the Company, the guarantor subsidiaries, and the non-guarantor subsidiaries are as follows (in thousands):

12 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 H. Guarantor and Non-Guarantor Subsidiaries (Continued)

I. Goodwill and Other Intangibles In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". SFAS No. 142 was effective January 1, 2002 and applies to all goodwill and other intangible assets recognized in the Company's statement of financial position, regardless of when those assets were initially recognized. Under SFAS No. 142, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests. Other intangible assets will continue to be amortized over their useful lives. 13 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 I. Goodwill and Other Intangibles (Continued) On January 1, 2002, the Company adopted SFAS No. 142. This Statement requires goodwill and other intangibles that have indefinite lives to be tested for impairment at least annually, using a two step process. The first step identifies if there is impairment using a fair-value-based test and the second step determines the amount of the impairment. Step one, which was completed in the second quarter of 2002, indicated potential impairment and, therefore, step two is in process to determine the amount of the impairment. Based on findings from step one, the Company expects to record a non-cash impairment write-down related to the goodwill from the acquisition of the Company's Australian subsidiary, which is part of the Company's conveyor equipment segment. This transition adjustment, which will be recorded in the fourth quarter of 2002 upon completion of the step two analysis, will be reported as a cumulative effect of a change in accounting principle. The following table reflects the consolidated results adjusted as though the adoption of SFAS No. 142 had occurred in the first quarter of 2001:

The carrying amounts and related accumulated amortization balances of the Company's other intangible assets as of September 30, 2002 and December 31, 2001 are listed below:

The change in goodwill reflected on the balance sheet from December 31, 2001 to September 30, 2002 resulted entirely from foreign currency translation. Unamortized intangible assets consist primarily of intangible assets related to a minimum pension liability for the Company's pension plan. Estimated amortization expense related to other intangible assets for each of the next five fiscal years is: 2002 $ 113,146 2003 27,810 2004 26,360 2005 26,360 2006 17,117 ---------------- Total $ 210,793 ================ 14 Continental Global Group, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) September 30, 2002 J. New Accounting Pronouncements In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which addresses financial accounting and reporting for costs associated with exit or disposal activities. The provisions of this Statement, which is effective for exit or disposal activities that are initiated after December 31, 2002, is not expected to have a material impact on the Company's financial position, results of operations, or cash flows. 15 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Consolidated Financial Statements and related notes included in the Company's Form 10-K dated March 28, 2002. General The Company, through its subsidiaries, is primarily engaged in the manufacture and distribution of bulk material handling and replacement equipment, primarily for use in the mining industry. The Company is a holding company organized under the Delaware General Corporation law and conducts all of its business through its direct and indirect operating subsidiaries. The Company's direct operating subsidiaries are Continental Conveyor and Equipment Company and Goodman Conveyor Company. The Company also owns indirectly all of the capital stock of (i) Continental Conveyor & Equipment Pty. Ltd., an Australian holding company that owns all of the capital stock of four Australian operating companies; (ii) Continental Conveyor Ltd., a U.K. operating company; and (iii) Continental MECO (Pty.) Ltd., a South African operating company. In July 2001, the Company acquired certain assets in Alabama from Lippert Tire & Axle, Inc ("Lippert acquisition"). The Company's existing Alabama operations of its manufactured housing products segment have been combined with the Lippert operations. Mr. C. E. Bryant, Jr. has announced his retirement as of December 31, 2002. Effective November 4, 2002, the Company's Board of Directors appointed Mr. Robert W. Hale as President and CEO to succeed Mr. Bryant. Mr. Bryant will continue as a consultant to the Company. Results of Operations The following table sets forth, on a comparative basis, selected income statement data as a percentage of net sales for the three months and nine months ended September 30, 2002 and 2001.

16 Three months ended September 30, 2002, compared to three months ended September 30, 2001: Net Sales --------- Net sales were approximately $52.6 million for both the three months ended September 30, 2002 and 2001. In the domestic operations of the Company's conveyor equipment segment, net sales for the quarter decreased $5.6 million due to continued lower capital spending by the Company's major customers in the coal industry. In the foreign operations of the Company's conveyor equipment segment, net sales for the quarter increased $3.2 million. This increase was primarily attributable to increased sales at the Company's Australian and United Kingdom subsidiaries resulting from the shipment of new mining projects in the backlog at June 30, 2002. Net sales for the quarter in the Company's manufactured housing segment increased $2.4 million due to the Lippert acquisition and shipments to new customers. Gross Profit ------------ Gross profit for the quarter increased $0.7 million, or 10%, from $7.2 million in 2001 to $7.9 million in 2002. Gross profit in the domestic operations of the Company's conveyor equipment segment decreased $1.4 million due to lower sales volume. Gross profit in the foreign operations of the Company's conveyor equipment segment increased $1.5 million due to higher sales volume and improved margins at the Company's Australian subsidiary. Gross profit in the Company's manufactured housing segment increased $0.5 million due to increased sales and improved margins resulting from the Lippert acquisition and the subsequent consolidation in the fourth quarter of 2001 of the existing operations into the acquired facility. Gross profit in the other segment increased $0.1 million. Gross profit as a percentage of sales increased from 13.8% in 2001 to 15.0% in 2002. This increase resulted from improved margins in the Australian subsidiary and the manufactured housing segment. In addition to improved margins on contracts, the gross profit percentage in the Australian subsidiary increased from 2001 to 2002 due to physical inventory adjustments made in 2001 that did not recur in 2002. SG&A Expenses ------------- SG&A expenses for the quarter increased $0.2 million, or 4%, from $5.2 million in 2001 to $5.4 million in 2002. The increase occurred in the foreign operations of the Company's conveyor equipment segment and was primarily due to increased marketing and insurance costs. Operating Income ---------------- Operating income for the quarter increased $0.5 million, or 29%, from $1.7 million in 2001 to $2.2 million in 2002. This increase resulted from the $0.7 million increase in gross profit offset by the $0.2 million increase in SG&A expenses. Nine months ended September 30, 2002, compared to nine months ended September 30, 2001: Net Sales --------- Net sales for the nine-month period increased $0.7 million, or less than 1%, from $143.5 million in 2001 to $144.2 in 2002. Net sales in the domestic operations of the Company's conveyor equipment segment decreased $18.6 million due to lower capital spending by the Company's major customers in the coal industry. Net sales in the foreign operations of the Company's conveyor equipment segment increased $7.1 million. This increase in sales occurred in Australia and the United Kingdom and was the result of new mining projects for conveyor equipment. Net sales in the Company's manufactured housing segment increased $12.4 million due to the Lippert acquisition and shipments to new customers. Net sales in the other segment decreased $0.2 million. 17 Gross Profit ------------ Gross profit for the nine-month period increased $0.9 million, or 4%, from $23.4 million in 2001 to $24.3 million in 2002. Gross profit in the domestic operations of the Company's conveyor equipment segment decreased $3.8 million due to lower sales volume. Gross profit in the foreign operations of the Company's conveyor equipment segment increased $3.2 million due to increased sales and improved margins at the Company's Australian subsidiary. Gross profit in the Company's manufactured housing segment increased $1.5 million due to increased sales and improved profit margins resulting from the Lippert acquisition and the subsequent consolidation of the existing operations into the acquired facility. SG&A Expenses ------------- SG&A expenses for the nine-month period increased $1.0 million, or 6%, from $15.6 million in 2001 to $16.6 million in 2002. SG&A expenses in the domestic and foreign operations of the Company's conveyor equipment segment increased $0.4 million and $0.6 million, respectively. The increase in the domestic operations resulted from higher advertising and travel expenses and increased general liability insurance costs. The increase in the foreign operations resulted from increased marketing and insurance costs. Operating Income ---------------- Operating income for the nine-month period increased $0.3 million, or 4%, from $6.8 million in 2001 to $7.1 million in 2002. This increase resulted from the $0.9 million increase in gross profit and a $0.4 million decrease in amortization expense, offset by the $1.0 million increase in SG&A expenses. Backlog ------- Backlog at September 30, 2002 was $37.2 million, a decrease of $4.1 million, or 10%, from $41.3 million at December 31, 2001 and a decrease of $17.8 million or 32%, from $55.0 million at June 30, 2002. The decrease from June was attributable to decreases of $11.1 million and $6.7 million in the domestic and foreign operations of the Company's conveyor equipment segment, respectively. Management believes that approximately 55% of the backlog will be shipped in 2002. Liquidity and Capital Resources Net cash provided by (used in) operating activities was $4.2 million and $(0.4) million for the nine months ending September 30, 2002 and 2001, respectively. The net cash provided by operating activities in 2002 resulted from a net loss of $4.1 million offset by a net decrease in operating assets and liabilities of $6.5 million and non-cash expenses such as depreciation, amortization, and deferred income taxes of $1.8 million. The net cash used in operating activities in 2001 resulted from a net loss of $4.2 million offset by a net decrease in operating assets and liabilities of $2.6 million and non-cash expenses of $1.2 million. Net cash used in investing activities was $1.0 million and $2.3 million for the nine months ending September 30, 2002 and 2001, respectively. The net cash used in investing activities in 2002 represents net purchases of property, plant, and equipment. The net cash used in investing activities in 2001 resulted from net purchases of property, plant, and equipment of $0.7 and the acquisition of a business for $1.6 million. 18 Net cash provided by (used in) financing activities was $(1.3) million and $2.2 million for the nine months ending September 30, 2002 and 2001, respectively. Net cash used in financing activities in 2002 represents a net decrease in borrowings on notes payable of $0.6 million and principal payments on long-term obligations of $0.7 million. Net cash provided by financing activities in 2001 resulted from a net increase in borrowings on notes payable of $3.0 million offset by principal payments on long-term obligations of $0.8 million. The Company's primary capital requirements consist of capital expenditures and debt service. The Company expects current financial resources, existing lines of credit, and funds from operations to be adequate to meet anticipated cash requirements. At September 30, 2002, the Company had cash and cash equivalents of approximately $16.6 million and approximately $9.1 million available for use under its domestic credit facility, representing approximately $25.7 million of liquidity. International Operations The Company transacts business in a number of countries throughout the world and has facilities in the United States, Australia, the United Kingdom, and South Africa. As a result, the Company is subject to business risks inherent in non-U.S. operations, including political and economic uncertainty, import and export limitations, exchange controls and currency fluctuations. The Company believes that the risks related to its foreign operations are mitigated by the relative political and economic stability of the countries in which its largest foreign operations are located. As the U.S. dollar strengthens and weakens against foreign currencies in which the Company transacts business, its financial results will be affected. The principal foreign currencies in which the Company transacts business are the Australian dollar, the British pound sterling, and the South African rand. The fluctuation of the U.S. dollar versus other currencies resulted in increases (decreases) to stockholder's equity (deficit) of approximately $0.6 million and $(1.1) million for the nine months ended September 30, 2002 and 2001, respectively. New Accounting Pronouncements In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets". SFAS No. 142 was effective January 1, 2002 and applies to all goodwill and other intangible assets recognized in the Company's statement of financial position, regardless of when those assets were initially recognized. Under SFAS No. 142, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests. Other intangible assets will continue to be amortized over their useful lives. On January 1, 2002, the Company adopted SFAS No. 142. This Statement requires goodwill and other intangibles that have indefinite lives to be tested for impairment at least annually, using a two step process. The first step identifies if there is impairment using a fair-value-based test and the second step determines the amount of the impairment. Step one, which was completed in the second quarter of 2002, indicated potential impairment and, therefore, step two is in process to determine the amount of the impairment. Based on findings from step one, the Company expects to record a non-cash impairment write-down related to the goodwill from the acquisition of the Company's Australian subsidiary, which is part of the Company's conveyor equipment segment. This transition adjustment, which will be recorded in the fourth quarter of 2002 upon completion of the step two analysis, will be reported as a cumulative effect of a change in accounting principle. 19 In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which addresses financial accounting and reporting for costs associated with exit or disposal activities. The provisions of this Statement, which is effective for exit or disposal activities that are initiated after December 31, 2002, is not expected to have a material impact on the Company's financial position, results of operations, or cash flows. Cautionary Statement for Safe Harbor Purposes This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements within the meaning of the federal securities laws. As a general matter, forward-looking statements are those focused upon future plans, objectives or performance as opposed to historical items and include statements of anticipated events or trends and expectations and beliefs relating to matters that are not historical in nature. Such forward looking statements are subject to uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the control of the Company, that could cause actual results of the Company to differ materially from those matters expressed in or implied by such forward-looking statements. 20 Item 3. Quantitative and Qualitative Disclosures about Market Risk The following table provides information about the Company's Senior Notes. The table presents principal cash flows and interest rate by expected maturity date.

The Company's interest income and expense are most sensitive to changes in the general level of U.S. interest rates. In this regard, changes in U.S. interest rates affect the interest earned on the Company's cash equivalents as well as interest paid on its debt. To mitigate the impact of fluctuations in U.S. interest rates, the Company generally borrows on a long-term basis to maintain a debt structure that is fixed rate in nature. A portion of the Company's operations consists of manufacturing and sales activities in foreign jurisdictions. The Company manufactures and sells its products in the United States, Australia, the United Kingdom, and South Africa. As a result, the Company's financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which the Company distributes its products. The Company's operating results are exposed to changes in exchange rates between the U.S. dollar and the Australian dollar, the British pound sterling, and the South African rand. Item 4. Controls and Procedures Within the 90-day period prior to the date of this report, the Company carried out an evaluation, under the supervision of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic filings with the Securities and Exchange Commission. 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 time of such evaluation. 21 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Refer to the index of exhibits. (b) No reports on Form 8-K were filed during the quarter ended September 30, 2002. 22 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. CONTINENTAL GLOBAL GROUP, INC. By: /s/ Jimmy L. Dickinson Jimmy L. Dickinson Vice President and Chief Financial Officer (As duly authorized representative and as Principal Financial and Accounting Officer) CONTINENTAL CONVEYOR & EQUIPMENT COMPANY By: /s/ Jimmy L. Dickinson Jimmy L. Dickinson Vice President - Finance (As duly authorized representative and as Principal Financial and Accounting Officer) GOODMAN CONVEYOR COMPANY By: /s/ J. Mark Etchberger J. Mark Etchberger Controller (As duly authorized representative and as Principal Financial and Accounting Officer) Date: November 13, 2002 23 CERTIFICATIONS I, Robert W. Hale, and I, Jimmy L. Dickinson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Continental Global Group, Inc.; 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 date 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; 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 functions): 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 weaknesses 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 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. 24

25 Continental Global Group, Inc. Form 10-Q Index of Exhibits Exhibit Number Description of Exhibit 3.1 (a) Certificate of Incorporation of Continental Global Group, * Inc., as currently in effect. (b) Certificate of Amendment of Certificate of Incorporation of Continental Global Group, Inc. (Filed as Exhibit 3.1(b) to the Company's Form 10-Q for the quarter ended September 30, 2000, and is incorporated herein by reference.) 3.2 By-Laws of Continental Global Group, Inc., as currently * in effect. 3.3 Certificate of Incorporation of Continental Conveyor & * Equipment Company, as currently in effect. 3.4 By-Laws of Continental Conveyor & Equipment Company, as * currently in effect. 3.5 Certificate of Incorporation of Goodman Conveyor Company, * as currently in effect. 3.6 By-Laws of Goodman Conveyor Company, as currently in effect. * 4.1 Indenture, dated as of April 1, 1997, among Continental * Global Group, Inc., Continental Conveyor & Equipment Company, Goodman Conveyor Company, and the Trustee (containing, as exhibits, specimens of the Series A Notes and the Series B Notes). 10.1 Amended and Restated Credit Facility and Security Agreement, dated as of July 25, 2002, among Bank One, NA, Continental Conveyor & Equipment Company, and Goodman Conveyor Company. 10.2 Management Agreement, dated as of April 1, 1997, between * Continental Global Group, Inc. and Nesco, Inc. Certain instruments with respect to long-term debt have not been filed as exhibits as the total amount of securities authorized under any one of such instruments does not exceed 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees to furnish to the Commission a copy of each such instrument upon request. * Incorporated by reference from Form S-4 Registration Number 333-27665 filed under the Securities Act of 1933.

GOODMAN CONVEYOR CO 10-Q