SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-8488
For the fiscal year ended December 31, 2006
FORM 10-K
TWENTY SERVICES, INC.
(Exact name of registrant as specified in its charter)
| ALABAMA | 63-0372577 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
| 20 Cropwell Drive - Suite 100 Pell City, Alabama | 35128 | |
| Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (205) 884-7932
Securities registered pursuant to Section 12(g) of the Act:
| Title of each class: | COMMON STOCK | |||
| 7% Cumulative Preferred Stock * |
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 (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 ninety (90) days.
YES x NO ¨
Indicate by check mark whether the Registrant is a large accelerated filer, or a non-accelerated filer.
Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act:
YES ¨ NO x
As of December 31, 2006, the Registrant had issued and outstanding 1,283,068 shares of common stock, par value of $0.10 per share, and as of December 31, 2006, the aggregate market value of the voting stock of the Registrant held by non-affiliates of the Registrant, based upon the book value of such shares as of such date, was approximately $4,030,000.
Documents incorporated by reference: NONE
| * | Includes 7% Cumulative Series A-1980 Preferred Stock, 7% Cumulative Series A-1981 Preferred Stock, 7% Cumulative Series A-1982 Preferred Stock, and 7% Cumulative Series A-1985 Preferred Stock. |
| 1. | BUSINESS. |
(a) General Development of Business. Since its inception in 1955, Twenty Services, Inc. (hereinafter sometimes referred to as the “Registrant” or “Company”), has been engaged principally in the general finance business, including the purchase and sale of real estate. In October 1980, the stockholders of the Registrant authorized the Board of Directors to redeploy the Registrant’s assets and reinvest the proceeds derived from such redeployment in a business other than the general finance business. During 1982 and 1983, the Company and an affiliate of Twenty Services Holding, Inc. (“Holding”), the owner of approximately 56% of the Registrant’s outstanding common stock, acquired an interest in the common stock of The Statesman Group, Inc., an insurance holding company based in Des Moines, Iowa (“Statesman”). The investment in Statesman was sold in 1994. The Registrant invested the proceeds in equities and fixed income securities that offer attractive returns commensurate with the risk assumed. In 1995, the Company acquired an interest in the common stock of American Equity Investment Life Holding Company, an insurance holding company based in Des Moines, Iowa (“American Equity”). As of the date of this Annual Report on Form 10-K the Registrant owns 237,000 shares of common stock of American Equity Investment Life Holding Company.
Depending upon the financial condition of the Registrant, the opportunities available to the Registrant and other matters, the Registrant may acquire majority interests in, and thereafter direct the operations of, other corporations or business entities engaged in one or more active businesses. The Registrant will continue to engage in certain aspects of the general finance business, including extending credit to certain persons and collecting its loan receivables. As of the date of this annual report on Form 10-K, the Registrant does not believe that the composition of its investments and the nature of its business activities render it subject to the Investment Act of 1940, and the Board of Directors of the Registrant intend that any future acquisitions by and/or business activities of the Registrant will be structured in a manner so that the Registrant will not become subject to the Investment Company Act of 1940.
(b) Financial Information Regarding Industry Segments.
The Registrant is not required to supply information respecting industry segments. However, for certain information respecting the general finance and other business activities of the Registrant, see the Financial Statements of Twenty Services, Inc., including the notes thereto, which are included elsewhere herein.
(c) Narrative Description of Business.
General Finance Business. As stated above, the Registrant historically has engaged in the general finance business which has consisted of (i) extending credit to finance various real estate projects, including the purchase of single-family dwellings and commercial real estate, and to finance home improvements (the “Real Estate Loans”), and (ii) extending credit for business and miscellaneous purposes (the “Business and Miscellaneous Loans”).
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Loan Portfolio. The following tabulation sets forth the outstanding balances of the Registrant’s loan portfolio as of December 31 of each year indicated below (including, if appropriate, unearned interest), classified according to the types of loans comprising the Registrant’s loan portfolio:
| Type of Loans |
2006 | 2005 | 2004 | 2003 | ||||||||
| Real Estate |
$ | — | $ | — | $ | — | $ | 28,490 | ||||
| Business and Miscellaneous |
$ | 28,212 | $ | 11,628 | 60,595 | 69,670 | ||||||
| Total: |
$ | 28,212 | $ | 11,628 | $ | 60,595 | $ | 98,160 | ||||
Of the Registrant’s aggregate loan portfolio as of December 31, 2006 100% was secured .
Interest Income. The following tabulation sets forth certain information respecting the Registrant’s net interest income for each of the years indicated:
| 2006 | 2005 | 2004 | |||||||
| Interest Income |
$ | 99,333 | $ | 69,832 | $ | 68,183 | |||
| Net Interest Income |
$ | 99,333 | $ | 69,832 | $ | 68,183 | |||
The Registrant utilizes the interest (actuarial) method in recognizing income attributable to interest charges. Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 90 days or more and resumed when the loan becomes contractually current.
Other Business Activities. As described above, the Registrant’s stockholders have authorized the Registrant to redeploy the Registrant’s assets by conversion of such assets into cash and the reinvestment of the proceeds thereof in other business entities. The Registrant intends to invest in equities and fixed income securities that offer attractive returns commensurate with the risk assumed. In December 1996, the Company acquired a 19.75% interest in a newly formed insurance holding company, American Equity Investment Life Holding Company. The Chairman of the Des Moines, Iowa based company is also the Chairman of the Board of the Registrant. American Equity acquired a block of individual and group insurance policies in 1995 and 1996. In 1996, 1997, 1998 and 1999 American Equity obtained additional equity financing from other investors which reduced the Company’s interest therein to 1.64%.
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Competition. With respect to the general finance business, the Registrant is in direct competition with banks and other finance companies located within and without the State of Alabama. Many of these firms are substantially larger than the Registrant, have more capital available for lending activities, pursue more actively new loan activity and enjoy a distinct competitive advantage over the Registrant.
In 2003 American Equity made an initial public offering which decreased the Company’s interest therein to less than one percent. However, the offering had the effect of increasing the value of the Company’s investment by approximately $750,000.
Employees. During 2006 and 2005, the Registrant employed two (2) persons to fill two (2) positions; one (l) of such positions was an executive position, and one (l) of such positions was a clerical/administrative position.
At February 2007, the Registrant employed two (2) persons to fill two (2) positions; one (l) of such positions was an executive position and one (l) of such positions was a clerical/administrative position.
The Registrant considers its relationship with its employees to be good.
Certain Government Regulations. The Registrant is subject to federal and state regulations relating to consumer credit financing and is subject to periodic examinations by officials of the State of Alabama charged with the responsibility of enforcing such regulations. The last examination of the Registrant by officials of the State of Alabama occurred on September 14, 2006. As a result of such examination, the Registrant was found to be in compliance with the regulations described above, and the Board of Directors of the Registrant believes that the Registrant presently is in compliance with such regulations. No material monetary claim has been made by any borrower against the Registrant respecting failure to comply with such regulations.
The Registrant is not subject in any material way to regulations relating to the discharge of materials into the environment.
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Other Matters. The Registrant’s business is not seasonal.
No material portion of the contracts or subcontracts of the Registrant is subject to renegotiation by the United States Government.
The business of the Registrant is not dependent upon any raw materials, and as of the date of this annual report on Form 10-K, the Registrant does not own any material patent, trademark, license, franchise or concession. During the last two (2) years, the Registrant has not spent any money on research and development activities.
Due to the nature of its business, the Registrant does not have backlogs of orders believed to be firm. In addition, except as described in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Registrant does not follow any specified practice with respect to working capital.
The Registrant is not dependent upon a single customer or related customers or a very few customers, the loss of any one (l) or more of which would have a materially adverse effect upon its business.
Financial Information Regarding Foreign and Domestic Operations and Export Sales.
All of the Registrant’s business activities have been conducted within the southeastern portion of the United States.
| 2. | PROPERTIES. |
The Registrant maintains its principal executive office in an office facility located in Pell City, Alabama for which it pays aggregate annual rentals of $7,200. The Registrant believes its office facilities are adequate for its present needs.
The Registrant maintains its accounting records on a personal computer which is in compliance with the Y2K.
| 3. | LEGAL PROCEEDINGS. |
As of the date of this annual report on Form 10-K, the Registrant is not a party of any legal proceedings.
| 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
During the period ended December 31, 2006 no matter was submitted to a vote of the security holders of the Registrant.
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PART II
| 5. | MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS. |
(a) Market Information. No broker or dealer makes an active market in the shares of Common Stock or the Series A-Preferred Stock of the Registrant. Thus, there is no established trading market for the Common Stock or the Series A-Preferred Stock of the Registrant.
(b) Holder of Records. As of December 31, 2006 there were 1,645 holders of record of the outstanding Common Stock of the Registrant, and 976 holders of record of the outstanding Series A-Preferred Stock of the Registrant.
(c) Dividends. During the past two (2) years, no dividends have been paid respecting the shares of Common Stock of the Registrant. Under Alabama law, cash dividends may be paid only out of earned surplus (or retained earnings) of the Registrant.
As of December 31, 2006, the Registrant has issued and outstanding 505,110 shares of Series A-Preferred Stock, consisting of four (4) series of such Preferred Stock issued in 1980, 1981, 1982 and 1985. The holders of the Series A-Preferred Stock are entitled to cumulative dividends at the rate of $.07 per share per annum before any dividend may be declared or paid respecting the shares of Common Stock of the Registrant. During 2006 and 2005, the Registrant paid a dividend of $.07 per share respecting the outstanding Series A-Preferred Stock.
The Registrant intends, to the extent that future earnings and its capital surplus permit, to pay dividends respecting the shares of Series A-Preferred Stock. The Registrant believes it is unlikely that dividends will be paid in the future respecting the shares of Common Stock of the Company, although such payment will depend upon the future earnings and business prospects of the Registrant.
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| 6 | SELECTED FINANCIAL DATA |
The following tabulation sets forth certain financial information respecting the Registrant.
| 2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
| Revenues |
$ | 146,328 | $ | 144,610 | $ | 142,812 | $ | 156,883 | $ | 180,862 | ||||||||||
| Net Income (Loss) |
$ | (246 | ) | $ | (11,913 | ) | $ | 5,921 | $ | (72,643 | ) | $ | 287,342 | |||||||
| Earnings (Loss) per Common Share: Net Income (Loss) |
$ | (.05 | ) | $ | (.05 | ) | $ | (.02 | ) | $ | (.15 | ) | $ | .20 | ||||||
| Total Assets |
$ | 5,086,593 | $ | 5,145.847 | $ | 4,684,581 | $ | 4,581,539 | $ | 3,363,346 | ||||||||||
| Dividends Declared: |
||||||||||||||||||||
| Common Stock |
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
| Preferred Stock |
$ | 35,357 | 1 | $ | 35,357 | 2 | $ | 35,357 | 3 | $ | 35,357 | 4 | $ | 35,357 | 5 | |||||
| Total |
$ | 35,357 | $ | 35,357 | $ | 35,357 | $ | 35,357 | $ | 35,357 | ||||||||||
| Book Value Per Common Share Outstanding |
$ | 3.14 | $ | 3.14 | $ | 2.90 | $ | 2.51 | $ | 1.77 | ||||||||||
| 1 | Reflects dividend respecting Preferred Stock declared on February 28, 2007. |
| 2 | Reflects dividend respecting Preferred Stock declared on February 28, 2006. |
| 3 | Reflects dividend respecting Preferred Stock declared on February 27, 2005. |
| 4 | Reflects dividend respecting Preferred Stock declared on February 28, 2004. |
| 5 | Reflects dividend respecting Preferred Stock declared on February 28, 2003. |
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| 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
Liquidity and Capital Resources. During 2006 the Registrant’s liquidity remained virtually unchanged. The Company has no notes payable nor long term debt and does not anticipate the need for borrowing in the near future. The Registrant has sufficient cash and temporary cash investments to meet its short term liquidity needs. Should long term liquidity needs exceed cash and temporary cash investments, then the Registrant would dispose of marketable securities as it deems appropriate. Current trends and known demands and commitments do not create a need for liquidity in excess of the Company’s current abilities to generate liquidity.
The Company anticipates that its operating activities and investing activities will continue to generate positive net cash flows and that its financing activities will continue to use cash flows.
Results of Operations. The Registrant reported a net loss of $246 in 2006 as compared to a net loss of $11,913 in 2005. The change was due primarily to losses on sales of securities of $39,500 in 2005. General and administrative expenses decreased from $161,541 in 2005 to $148,081 in 2006. The decrease was due primarily to the decreased costs related to servicing shareholders.
Impact of Inflation. Inflation has an impact upon the Registrant’s financial position. Inflationary pressures generally increase the cost of borrowed funds to the Registrant, rendering it less economic for the Registrant to borrow money for re-lending purposes.
| 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
The financial statements of the Registrant are set forth at page F-3 through F-20 hereof and are incorporated herein by reference.
| 9. | DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
There has been no disagreement between the Registrant and its independent certified public accountants respecting any matter of disclosure, during the past twenty-four (24) months.
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Part III
| 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. |
(a)-(e) - Identification of Directors and Executive Officers and Other Matters. The following tabulation sets forth certain information respecting the persons who are serving as the directors and executive officers of the Registrant as of February 27th, 2007.
| Names and Positions with the |
Age |
Material Occupations And Positions During The last five (5) years | ||
| David J. Noble Chairman of the Board |
75 | Chairman of the Board of Directors, Twenty Services, Inc. Pell City, Alabama (finance business), since 1980 and 1979. Chairman of the Board of Directors, Treasurer and Director, Twenty Services Holding, Inc. Pell City, Alabama (holding company) since 1979; Chairman of the Board of Directors and President of American Equity Investment Life Holding Company Des Moines, Iowa since 1995. | ||
| Dr. A. J. Strickland, III Vice-Chairman of |
65 | Director and Vice-Chairman of the Board of Directors of Twenty Services, Inc., Pell City, Alabama (general finance business), since 1977; Director, Twenty Services Holding, Inc., Pell City, Alabama (holding company), since 1979; Professor of Strategic Management - School of Commerce, University of Alabama, Tuscaloosa, Alabama since 1980; | ||
continued
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PART III (CONTINUED)
| Names and Positions with the Registrant |
Age |
Material Occupations And Positions During the last five (5) years | ||
| Dr. A.J. Strickland, III | 65 | Director, American Equity Investment Life Holding Company, Des Moines, Iowa, since 1995. | ||
| Jack C. Bridges | 79 | Executive Vice-President, Twenty Services, Inc. Pell City, Alabama since April 1997. | ||
There is no family relationship between any of the persons named above. Directors of the Registrant are elected at each annual meeting of the stockholders of the Registrant and serve until their successors have been elected and qualified. Executive officers of the Registrant are elected at a meeting of the Board of Directors immediately following each annual meeting of the stockholders of the Registrant. Mr. Noble was elected director of the Registrant in November 1979 pursuant to a resolution adopted by the Board of Directors of the Registrant stating that if Twenty Services Holding, Inc. acquired approximately 20% of the outstanding Common Stock of the Registrant, the Registrant would make available to nominees of Twenty Services, Inc. Holding, Inc. two (2) places on the Registrant’s Board of Directors.
(F) Involvement in Certain Legal Proceedings.
During the past ten (10) years, no officer or director of the Registrant has been involved in any event of the type described in Item 3(f) of the Regulations S-K of the Securities Exchange Act of 1934.
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| 11. | EXECUTIVE COMPENSATION |
Current Remuneration. During 2006 no officer or director of the Registrant received aggregate direct remuneration from the Registrant in excess of $60,000. The following tabulation sets forth certain information concerning all remuneration paid by the Registrant to all officers and directors of the Registrant during the year ended December 31, 2006.
| Name of Individuals or Number of Persons In Group |
Capacities which served |
Salaries and Directors’ Fees | |||
| All directors and officers as a group (three (3) persons) |
Directors and Officers |
$ | 37,200 | ||
REMUNERATION IN THE FUTURE. As of December 31, 2006 no officer or director of the Registrant has any contract or other arrangement with the Registrant relating to any future remuneration, except that as long as such officers and directors continue to serve in such capacity, they will receive from the Registrant the customary fees and salaries at a rate to be agreed upon by the Registrant and such persons.
Directors’ Remuneration. All directors of the Registrant receive $300 per month.
Options, Warrants, or Rights. The Registrant does not maintain any plan pursuant to which persons are entitled to acquire any equity securities of the Registrant.
Termination of Employment. Except as otherwise described in Item 11 of this annual report on Form 10-K, there are no plans or arrangements relating to payments to be made to any officer, or director of the Registrant, which resulted or will result from any person’s resignation, retirement, or termination or employment with the Registrant.
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| 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
(a) Security Ownership of Certain Beneficial Owners.
As of the date of this annual report on Form 10-K, the only person who owns of record and directly more than 5% of the Registrant’s outstanding voting securities is Twenty Services Holding, Inc., a Delaware corporation, whose principal business address is 20 Cropwell Drive, Suite 100, Pell City, Alabama. As of such date, Twenty Services Holding, Inc. and an affiliate of Holding own 725,267 shares of Common Stock of the Registrant and approximately 57% of the combined outstanding shares of Common Stock and Series A Preferred Stock of the Registrant. Except as otherwise required by Alabama law and except for certain rights accorded by the Registrant’s Certificate of Incorporation in the event that dividends respecting the Series A-Preferred stock are not paid, the holders of the Series A-Preferred Stock are not entitled to vote respecting matters coming before any meeting of the stockholders of the Registrant.
By virtue of his ownership of Common Stock of Twenty Services Holding, Inc., Mr. David J. Noble, the Chairman of the Board or Directors of the Registrant, indirectly and beneficially, owns approximately 52% of the outstanding Common Stock of the Registrant.
(b) Security Ownership of Management. The following tabulation sets forth certain information regarding the shares of equity securities of the Registrant.
| Title of Class |
Name of Beneficial Owner |
Approximate Amount and Nature of Beneficial Owner |
Percent of Class |
||||
| Common Stock |
David J. Noble |
668,183 Indirect(1) |
52.29 | % | |||
| Common Stock |
A.J. Strickland ,III |
49,638 Indirect(1) |
3.88 | % | |||
| Common Stock |
All directors and executive officers as a group (3) persons | 717,821 Indirect(1) |
56.18 | % |
| (l) | Reflects each person’s interest in the shares of common stock of the Registrant owned by Twenty Services Holding, Inc. based upon such person’s ownership of the outstanding shares of common stock of Twenty Services Holding, Inc. as of February 27, 2007, excluding 6,000 shares of common stock of Twenty Services Holding, Inc. held by the Registrant. Twenty Services Holding, Inc. owns 725,267 shares or approximately 57% of the outstanding shares of common stock. |
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As of February 27, 2007, all officers and directors of the Registrant as a group beneficially owned, based upon their ownership of the outstanding common stock of Twenty Services Holding, Inc. (“Holding”), and excluding adjustment for the shares of common stock of Holding, held by the Registrant, 717,821 shares of common stock of the Registrant, or approximately 56% of the outstanding common stock of the Registrant as of such date.
(c) Changes in Control. There are no arrangements known to the Registrant which subsequently could result in a change of control of the Registrant.
| 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. |
There were no transactions during 2006 nor are there any currently proposed transactions between any pension, retirement, savings or similar plan of the Registrant and its affiliates, on the other hand, and the Registrant and its affiliates, any officer, director or principal stockholder of the Registrant, or any person who has been nominated as a director of the Registrant, on the other hand.
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PART IV
| 14. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. |
(a) (l) - (a) (2) - Financial Statements and Financial Statement Schedules. The financial statements and the financial statement schedules required to be filed as part of this report are listed in the accompanying Index to Financial Statements and Financial Statement Schedules, and are set forth at the pages shown in such Index.
(a) (d) - Exhibits. The Certificate of Incorporation of the Registrant, as amended, the By Laws of the Registrant, as amended, and Resolutions of the Board of Directors of the Registrant creating the 7% Cumulative Series A-1980 Preference Stock, the 7% Cumulative Series A-1981 Preference Stock, the 7% Cumulative Series A-1985 Preference Stock, which were filed as exhibits to the Registrant’s Annual Report on Form 10-K for the years ended December 31, 1980, December 31, 1981, December 31, 1982 and 1985, and the Registrant’s report on Form 8-K dated as of April 10 1984, are incorporated by reference.
(b) Reports on Form 8-K. No report on Form 8-K was filed during the year.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
| TWENTY SERVICES, INC. | ||
| By: | /s/ Jack C. Bridges | |
| Jack C. Bridges | ||
| Executive Vice-President | ||
Dated: March 21, 2007
| SIGNATURE |
CAPACITY |
DATE | ||
| /s/ David J. Noble David J. Noble |
Chairman and Director and Principal Executive Officer of The Registrant |
March 21, 2007 | ||
| /s/ Dr. A. J .Strickland, III Dr. A. J .Strickland, III |
Vice-Chairman and Director of The Registrant |
March 21, 2007 | ||
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TWENTY SERVICES, INC.
Financial Statements
and
Financial Statement Schedule
For the Years Ended
December 31, 2006, 2005 and 2004
Index to Financial Statements and Financial Statement Schedule
December 31, 2006, 2005 and 2004
| Index to Financial Statements and Financial Statement Schedule |
F-1 | |
| F-2 | ||
| F-3 | ||
| F-4 | ||
| F-5 | ||
| F-6 | ||
| F-7 -F-12 | ||
| Financial Statement Schedule: |
||
| F-13 | ||
| F-14 | ||
F-1
The Shareholders and the Board of Directors
Twenty Services, Inc.
We have audited the accompanying balance sheets of Twenty Services, Inc. (the Company) as of December 31, 2006 and 2005, and the related statements of operations, comprehensive income, cash flows and changes in stockholders’ equity for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Twenty Services, Inc. at December 31, 2006, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules of marketable securities for the years ended December 31, 2006 and 2005 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
| /s/ BKR Borland Benefield |
| BKR Borland Benefield Birmingham, Alabama February 10, 2007 |
F-2
Balance Sheets
| December 31, | ||||||||
| 2006 | 2005 | |||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 210,422 | $ | 59,310 | ||||
| Marketable securities |
4,825,352 | 5,073,403 | ||||||
| Accounts receivable |
1,505 | 1,506 | ||||||
| Notes receivable, net of allowance |
28,212 | 11,628 | ||||||
| Other assets |
21,102 | — | ||||||
| Total Assets |
$ | 5,086,593 | $ | 5,145,847 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Liabilities |
||||||||
| Accounts payable and accrued liabilities |
$ | 102,939 | $ | 96,862 | ||||
| Deferred tax liability |
464,805 | 475,158 | ||||||
| Total liabilities |
567,744 | 572,020 | ||||||
| Stockholders’ Equity |
||||||||
| Preferred stock |
50,511 | 50,511 | ||||||
| Common stock |
128,307 | 128,307 | ||||||
| Additional paid-in capital |
1,716,074 | 1,716,074 | ||||||
| Retained earnings |
1,323,891 | 1,351,705 | ||||||
| Accumulated other comprehensive income |
1,640,288 | 1,655,038 | ||||||
| Less: Investment in Twenty Services Holding, Inc. |
(60,000 | ) | (60,000 | ) | ||||
| Preferred treasury stock |
(14,798 | ) | (12,370 | ) | ||||
| Common treasury stock |
(265,424 | ) | (255,438 | ) | ||||
| Net stockholders’ equity |
4,518,849 | 4,573,827 | ||||||
| Total Liabilities and Stockholders’ Equity |
$ | 5,086,593 | $ | 5,145,847 | ||||
See accompanying notes to financial statements.
F-3
Statements of Operations
| For the Years Ended December 31, | ||||||||||||
| 2006 | 2005 | 2004 | ||||||||||
| Revenue |
||||||||||||
| Interest |
$ | 99,333 | $ | 69,832 | $ | 68,183 | ||||||
| Dividends |
43,682 | 65,116 | 74,466 | |||||||||
| Other |
3,313 | 9,662 | 163 | |||||||||
| Total revenue |
146,328 | 144,610 | 142,812 | |||||||||
| Operating Expenses |
||||||||||||
| General and administrative |
148,081 | 161,541 | 153,480 | |||||||||
| Total operating expenses |
148,081 | 161,541 | 153,480 | |||||||||
| Other Income (Loss) |
||||||||||||
| Loss on sale of marketable securities |
(2,525 | ) | (12,829 | ) | (9,486 | ) | ||||||
| Total other income (loss) |
(2,525 | ) | (12,829 | ) | (9,486 | ) | ||||||
| Income (Loss) Before Income Taxes |
(4,278 | ) | (29,760 | ) | (20,154 | ) | ||||||
| Income Tax Benefits |
4,032 | 17,847 | 26,075 | |||||||||
| Net Income (Loss) |
$ | (246 | ) | $ | (11,913 | ) | $ | 5,921 | ||||
| Loss Per Common Share |
$ | (0.02 | ) | $ | (0.04 | ) | $ | (0.02 | ) | |||
See accompanying notes to financial statements.
F-4
Statements of Changes in Stockholders’ Equity
For the Years Ended December 31, 2006, 2005 and 2004
| Preferred Stock $.10 |
Common Stock $.10 |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Income |
Investment in Twenty Services Holding, Inc. |
Preferred Treasury Stock |
Common Treasury Stock |
Total | |||||||||||||||||||||||||
| Balance - December 31, 2003 |
$ | 50,511 | $ | 128,307 | $ | 1,716,074 | $ | 1,430,061 | $ | 1,151,221 | $ | (60,000 | ) | $ | (7,586 | ) | $ | (191,274 | ) | $ | 4,217,314 | ||||||||||||
| Comprehensive Income |
|||||||||||||||||||||||||||||||||
| Net Income |
— | — | — | 5,921 | — | — | — | — | 5,921 | ||||||||||||||||||||||||
| Change in Unrealized Cumulative Gains/Losses on Available-for-Sale Securities, Net of Deferred Income Tax of ($51,485) |
— | — | — | — | 120,132 | — | — | — | 120,132 | ||||||||||||||||||||||||
| Total comprehensive income |
126,053 | ||||||||||||||||||||||||||||||||
| Purchase of Treasury Stock |
— | — | — | — | — | — | (1,782 | ) | (39,988 | ) | (41,770 | ) | |||||||||||||||||||||
| Dividends on Preferred Stock, ($.07 Per Share) |
— | — | — | (37,863 | ) | — | — | — | — | (37,863 | ) | ||||||||||||||||||||||
| Balance - December 31, 2004 |
50,511 | 128,307 | 1,716,074 | 1,398,119 | 1,271,353 | (60,000 | ) | (9,368 | ) | (231,262 | ) | 4,263,734 | |||||||||||||||||||||
| Comprehensive Income |
|||||||||||||||||||||||||||||||||
| Net Loss |
— | — | — | (11,913 | ) | — | — | — | — | (11,913 | ) | ||||||||||||||||||||||
| Change in Unrealized Cumulative Gains/Losses on Available-for-Sale Securities, Net of Deferred Income Tax of ($137,848) |
— | — | — | — | 383,685 | — | — | — | 383,685 | ||||||||||||||||||||||||
| Total comprehensive income |
371,772 | ||||||||||||||||||||||||||||||||
| Purchase of Treasury Stock |
— | — | — | — | — | — | (3,002 | ) | (24,176 | ) | (27,178 | ) | |||||||||||||||||||||
| Dividends on Preferred Stock, ($.07 Per Share) |
— | — | — | (34,501 | ) | — | — | — | — | (34,501 | ) | ||||||||||||||||||||||
| Balance - December 31, 2005 |
50,511 | 128,307 | 1,716,074 | 1,351,705 | 1,655,038 | (60,000 | ) | (12,370 | ) | (255,438 | ) | 4,573,827 | |||||||||||||||||||||
| Comprehensive Income |
|||||||||||||||||||||||||||||||||
| Net Loss |
— | — | — | (246 | ) | — | — | — | — | (246 | ) | ||||||||||||||||||||||
| Change in Unrealized Gains on Available-for-Sale Securities, Net of Deferred Income Tax of $6,321 |
— | — | — | — | (14,750 | ) | — | — | — | (14,750 | ) | ||||||||||||||||||||||
| Total Comprehensive Income |
— | — | — | — | — | — | — | — | (14,996 | ) | |||||||||||||||||||||||
| Purchase of Treasury Stock |
— | — | — | — | — | — | (2,428 | ) | (9,986 | ) | (12,414 | ) | |||||||||||||||||||||
| Dividends on Preferred Stock ($.07 Per Share) |
— | — | — | (27,568 | ) | — | — | — | — | (27,568 | ) | ||||||||||||||||||||||
| Balance - December 31, 2006 |
$ | 50,511 | $ | 128,307 | $ | 1,716,074 | $ | 1,323,891 | $ | 1,640,288 | $ | (60,000 | ) | $ | (14,798 | ) | $ | (265,424 | ) | $ | 4,518,849 | ||||||||||||
See accompanying notes to financial statements.
F-5
Statements of Cash Flows
| For the Years Ended December 31, | ||||||||||||
| 2006 | 2005 | 2004 | ||||||||||
| Cash Flows From Operating Activities |
||||||||||||
| Interest and dividends received |
$ | 143,016 | $ | 134,948 | $ | 142,649 | ||||||
| Other income |
3,313 | — | 163 | |||||||||
| Cash paid to suppliers and employees |
(176,410 | ) | (132,868 | ) | (129,870 | ) | ||||||
| Net Cash Flows From Operating Activities |
(30,081 | ) | 2,080 | 12,942 | ||||||||
| Cash Flows From Investing Activities |
||||||||||||
| Principal collected on loans |
6,790 | 60,492 | 37,415 | |||||||||
| Loans made to customers |
(20,000 | ) | (9,507 | ) | — | |||||||
| Principal collected on held-to-maturity securities |
299 | 272 | 252 | |||||||||
| Proceeds from sale of available-for-sale securities |
1,723,056 | 237,256 | 799,075 | |||||||||
| Purchases of available-for-sale securities |
(1,498,900 | ) | (625,000 | ) | (397,018 | ) | ||||||
| Net Cash Flows From Investing Activities |
211,245 | (336,487 | ) | 439,724 | ||||||||
| Cash Flows From Financing Activities |
||||||||||||
| Preferred stock dividends paid |
(17,639 | ) | (31,708 | ) | (30,261 | ) | ||||||
| Purchase of treasury stock |
(12,414 | ) | (27,178 | ) | (41,770 | ) | ||||||
| Net Cash Flows From Financing Activities |
(30,053 | ) | (58,886 | ) | (72,031 | ) | ||||||
| Net Increase (Decrease) in Cash and Cash Equivalents |
151,111 | (393,293 | ) | 380,635 | ||||||||
| Cash and Cash Equivalents - Beginning of Year |
59,310 | 452,603 | 71,968 | |||||||||
| Cash and Cash Equivalents - End of Year |
$ | 210,421 | $ | 59,310 | $ | 452,603 | ||||||
| Reconciliation of Net Income to Net Cash From Operating Activities |
||||||||||||
| Net income (loss) |
$ | (246 | ) | $ | (11,913 | ) | $ | 5,921 | ||||
| Adjustments to reconcile net income to net operating activities |
||||||||||||
| Noncash other income |
— | (9,662 | ) | — | ||||||||
| Loss on sale of marketable securities |
2,525 | 12,829 | 9,486 | |||||||||
| Net change in deferred income taxes |
(4,032 | ) | (17,847 | ) | (26,075 | ) | ||||||
| Increase (decrease) in accounts payable and accrued liabilities |
(28,328 | ) | 28,673 | 23,610 | ||||||||
| Net Cash Flows From Operating Activities |
$ | (30,081 | ) | $ | 2,080 | $ | 12,942 | |||||
See accompanying notes to financial statements.
F-6
Notes to Financial Statements
For the Years Ended December 31, 2006, 2005 and 2004
Note 1 – Accounting Policies
Income Recognition - Interest income from finance receivables is recognized using the interest (actuarial) method. Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 90 days or more and resumed when the loan becomes contractually current.
Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Credit Losses - Provisions for credit losses are charged to income in amounts sufficient to maintain the allowance at a level considered adequate to cover the losses of principal and interest in the existing portfolio. The Company’s charge-off policy is based on a loan-by-loan review for all receivables that are charged off when they are deemed uncollectible.
Cash Equivalents - Holdings of highly liquid investments with original maturities of three months or less and investments in money market funds are considered to be cash equivalents.
Marketable Securities - On January 1, 1995, the Company adopted the provisions of Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities.”
Management determines the appropriate classification of its investment in debt and equity securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company’s securities are classified in two categories and accounted for as follows:
| • | Securities Held-to-Maturity. Bonds, notes, certain preferred stocks and other debt securities for which the Company has the positive intent and ability to hold to maturity are reported at cost, adjusted for amortization of premiums and accretion of discounts which are recognized in interest income using methods which approximate level yields over the period to maturity. |
| • | Securities Available-for-Sale. Bonds, notes and certain preferred stocks not classified as held-to-maturity and common stocks are reported at fair value. |
Declines in the fair value of individual held-to-maturity and available-for-sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The write-downs are included in earnings as realized losses.
Unrealized holding gains and losses, net of deferred income taxes, on securities available-for-sale are reported as a net amount in a separate component of stockholders’ equity until realized.
Realized gains and losses on the sale of securities available-for-sale are determined using the specific-identification method.
Income Taxes - Deferred income taxes are recognized for the effects of temporary differences between financial statement and tax reporting.
Earnings Per Common Share - Earnings per common share are determined by dividing net income (loss), after giving effect to preferred stock dividends, by the weighted average number of common shares outstanding during the year. The weighted average number of common shares outstanding for each of the years ended December 31, 2006, 2005 and 2004 was 1,283,068.
F-7
TWENTY SERVICES, INC.
Notes to Financial Statements (Continued)
For the Years Ended December 31, 2006, 2005 and 2004
Note 2 – Nature of Operations, Risks, and Uncertainties
The Company is primarily engaged in the general finance business. The Company grants commercial and personal real estate loans and general business and personal loans to customers located primarily in Alabama. The majority of the loan portfolio is secured by various types of collateral including mortgages and security interests in equipment and other property with a significant concentration in loans collateralized by residential real estate.
Note 3 – Fair Values of Financial Instruments
Statement of Financial Accounting Standards (SFAS) No. 107, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. The following sets forth a comparison of fair values and carrying values of the Company’s financial instruments subject to the provisions of SFAS No. 107.
| 2006 | 2005 | |||||||||||
| Carrying Value |
Fair Value |
Carrying Value |
Fair Value | |||||||||
| Cash and Temporary |
||||||||||||
| Investments |
$ | 210,422 | $ | 210,422 | $ | 59,310 | $ | 59,310 | ||||
| Marketable Securities |
4,825,352 | 4,825,352 | 5,073,403 | 5,073,403 | ||||||||
| Finance Receivables, Net |
28,212 | 28,212 | 11,628 | 11,628 | ||||||||
The following methods and assumptions were used by the Company in estimating the fair values of financial instruments:
| • | Short-term financial instruments are carried at their carrying amounts reported in the balance sheet that are reasonable estimates of fair values due to the relatively short period to maturity of the instruments. This approach applies to cash and temporary investments, finance receivables, notes receivable from related parties and other receivables. |
| • | Marketable securities are valued at quoted market values. |
F-8
TWENTY SERVICES, INC.
Notes to Financial Statements (Continued)
For the Years Ended December 31, 2006, 2005 and 2004
Note 4 – Marketable Securities
The amortized cost and aggregate fair values of investments in securities are as follows:
| Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value | |||||||||
| December 31, 2006 |
||||||||||||
| Available-for-sale securities |
||||||||||||
| Equity securities |
$ | 1,114,131 | $ | 2,354,017 | $ | 6,228 | $ | 3,461,920 | ||||
| Debt securities |
1,365,610 | 29,781 | 34,301 | 1,361,090 | ||||||||
| Total available-for-sale securities |
$ | 2,479,741 | $ | 2,383,798 | $ | 40,529 | $ | 4,823,010 | ||||
| Held-to-maturity securities Obligations of U.S. Government Corporations and Agencies |
$ | 2,342 | $ | — | $ | — | $ | 2,342 | ||||
| December 31, 2005 |
||||||||||||
| Available-for-sale securities |
||||||||||||
| Equity securities |
$ | 1,839,544 | $ | 2,365,054 | $ | 15,314 | $ | 4,189,284 | ||||
| Debt securities |
866,878 | 35,149 | 20,549 | 881,478 | ||||||||
| Total available-for-sale securities |
$ | 2,706,422 | $ | 2,400,203 | $ | 35,863 | $ | 5,070,762 | ||||
| Held-to-maturity securities Obligations of U.S. Government Corporations and Agencies |
$ | 2,641 | $ | — | $ | — | $ | 2,641 | ||||
F-9
TWENTY SERVICES, INC.
Notes to Financial Statements (Continued)
For the Years Ended December 31, 2006, 2005 and 2004
Note 4 – Marketable Securities (continued)
The amortized cost and aggregate fair value of debt securities at December 31, 2006 and 2005, by contractual maturity, are as follows. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call prepayment penalties.
| Available-for-Sale | Held-to-Maturity | |||||||||||
| Amortized Cost |
Market Value |
Amortized Cost |
Market Value | |||||||||
| December 31, 2006 |
||||||||||||
| Corporate Due In: |
||||||||||||
| After 10 Years |
$ | 376,110 | $ | 392,714 | $ | — | $ | — | ||||
| U.S. Government Corporations and Agencies Due In: |
||||||||||||
| 6-10 Years |
— | — | 2,342 | 2,342 | ||||||||
| After 10 Years |
989,500 | 968,376 | — | — | ||||||||
| Total |
$ | 1,365,610 | $ | 1,361,090 | $ | 2,342 | $ | 2,342 | ||||
| December 31, 2005 |
||||||||||||
| Corporate Due In: |
||||||||||||
| After 10 Years |
$ | 376,878 | $ | 400,096 | $ | — | $ | — | ||||
| U.S. Government Corporations and Agencies Due In: |
||||||||||||
| 6-10 Years |
— | — | 2,641 | 2,641 | ||||||||
| After 10 Years |
490,000 | 481,382 | — | — | ||||||||
| Total |
$ | 866,878 | $ | 881,478 | $ | 2,641 | $ | 2,641 | ||||
Proceeds from the sale of available-for-sale securities were $1,723,056 for the year ended December 31, 2006. A net loss of $2,525 was realized. There were no sales of held-to-maturity securities for the year ended December 31, 2006.
Proceeds from the sale of available-for-sale securities were $237,256 for the year ended December 31, 2005. A net loss of $12,829 was realized. There were no sales of held-to-maturity securities for the year ended December 31, 2005.
Note 5 – Finance Receivables and Allowance for Credit Losses
Finance receivables consisted of the following at December 31:
| 2006 | 2005 | |||||
| Finance Receivables, Net |
$ | 28,212 | $ | 11,628 | ||
At December 31, 2006, contractual maturities of finance receivables were as follows:
| 2007 | |||
| Business and Other |
$ | 28,212 | |
F-10
TWENTY SERVICES, INC.
Notes to Financial Statements (Continued)
For the Years Ended December 31, 2006, 2005 and 2004
Note 6 – Income Taxes
Temporary differences giving rise to the deferred tax liability (benefit) consist primarily of gains and losses on investments recognized for financial reporting purposes that are not recognized for tax purposes and of unused operating and capital loss carryforwards that may be applied against future taxable income.
The provision for income taxes was as follows for the years ended December 31:
| 2006 | 2005 | 2004 | |||||||
| Current |
|||||||||
| Deferred Tax Benefits |
$ | 4,032 | $ | 17,847 | $ | 26,075 | |||
Deferred tax assets and liabilities at December 31 consisted of the following:
| 2006 | 2005 | |||||||
| Deferred Tax Assets |
||||||||
| Net operating and capital loss carryforwards |
$ | 237,633 | $ | 233,844 | ||||
| Other |
300 | 300 | ||||||
| Total deferred tax assets |
237,933 | 234,144 | ||||||
| Deferred Tax Liability |
||||||||
| Net unrealized gain on available for sale securities |
(702,738 | ) | (709,302 | ) | ||||
| Net Deferred Tax Liability |
$ | (464,805 | ) | $ | (475,158 | ) | ||
The Company has available at December 31, 2006, approximately $760,000 of unused operating and capital loss carryforwards that may be applied against future taxable income and that expire in various years from 2007 to 2025.
Note 7 – Stockholders’ Equity
The preferred stock has a cumulative dividend of $.07 per share and is redeemable at the Company’s option of $1.05 per share. In the event of liquidation, the preferred stockholders receive $1.05 per share before any distributions are made to common stockholders. The 2003 dividend (approximately $38,000) was declared February 2004 and paid in March 2004. The 2004 dividend (approximately $34,000) was declared February 2005 and paid in March 2005. The 2005 dividend (approximately $28,000) was declared February 2006 and paid in March 2006.
Note 8 – Investment in Twenty Services Holding, Inc.
The Company owns 6,000 shares of common stock of Twenty Services Holding, Inc. (the Holding Company), a holding company that owns approximately 54% of the Company’s outstanding common stock. The amount paid for the Holding Company’s common stock of $60,000 has been deducted from stockholders’ equity in the accompanying balance sheet.
Note 9 – Concentration of Credit Risk
The Company maintains an investment account with a brokerage firm. Balances are insured up to $500,000 (with a limit of $100,000 for cash) by the Securities Investor Protection Corporation with excess protection coverage provided by the Customer Asset Protection Company. At December 31, 2006, the Company had $4,325,352 in cash and securities that were above insured amounts.
F-11
TWENTY SERVICES, INC.
Notes to Financial Statements (Continued)
For the Years Ended December 31, 2006, 2005 and 2004
Note 10 – Treasury Stock
The Company purchased 3,994 shares of common stock for an aggregate purchase price of $9,986, or $2.50 per share, and 9,712 shares of its preferred stock for an aggregate purchase price of $2,428 or $0.25 per share, during the year ended December 31, 2006. The shares are held as common treasury stock and preferred treasury stock.
The Company purchased 9,670 shares of common stock for an aggregate purchase price of $24,176, or $2.50 per share, and 12,008 shares of its preferred stock for an aggregate purchase price of $3,002 or $0.25 per share, during the year ended December 31, 2005 The shares are held as common treasury stock and preferred treasury stock.
The Company purchased 16,256 of its common stock for an aggregate purchase price of $39,988, or $2,50 per share, and 7,128 shares of its preferred stock for an aggregate purchase price of $1,782, or $0.25 per share, during the year ended December 31, 2004. The shares are held as common treasury stock and preferred treasury stock.
F-12
Schedule I - Marketable Securities
For the Year Ended December 31, 2006
| Name of issuer and title of each issue |
Number of of bonds |
Cost of each issue |
Market of each issue at balance |
Amount at which of equity security issues | |||||||
| Equity Securities Available-for-Sale: |
|||||||||||
| American Equity Investment Life Holding Company (AEL) |
237,000 | $ | 790,000 | $ | 3,088,110 | $ | 3,088,110 | ||||
| AMF Bowling Worldwide, Ser A Warrants - exp 3/9/09 |
524 | 3,668 | — | — | |||||||
| AMF Bowling Worldwide, Ser B Warrants - exp 3/9/09 |
512 | 2,560 | — | — | |||||||
| Royal Bank of Scotland 6.125% Ser R Non-Cum Callable 12/30/11 |
4,000 | 100,000 | 100,000 | 100,000 | |||||||
| J. P. Morgan & Chase Co. |
3,000 | 107,903 | 144,900 | 144,900 | |||||||
| Blackrock Preferred and Equity Advantage Trust |
2,000 | 50,000 | 50,100 | 50,100 | |||||||
| Public Storage $2.45 Dep Shs Repstg 1/1000 A Sh of Eq. |
3,000 | 60,000 | 78,810 | 78,810 | |||||||
| Total Equity Securities Available-for-Sale |
1,114,131 | 3,461,920 | 3,461,920 | ||||||||
| Debt Securities Available-for-Sale: |
|||||||||||
| Federal Natl Mtg Assn Notes Callable Cpn 6.375% Due 9/21/26 |
400,000 | 399,500 | 396,716 | 396,716 | |||||||
| Aetna, Inc. Notes Cpn 7.625% Due 8/15/26 |
150,000 | 155,399 | 182,418 | 182,418 | |||||||
| Federal Home Loan Bank Bonds Callable Cpn 5.540% Due 4/23/18 |
90,000 | 90,000 | 87,308 | 87,308 | |||||||
| Federal Natl Mtg Assn Notes Callable Cpn 5.75% Due 2/17/22 |
400,000 | 400,000 | 384,352 | 384,352 | |||||||
| JPM Capital Trust I Company GTD Cpn 7.540% Due 1/15/27 |
120,000 | 121,783 | 124,546 | 124,546 | |||||||
| Land O Lakes Cap Trst I 144 B/E Cpn 7.45% Due 3/15/28 |
100,000 | 98,927 | 85,750 | 85,750 | |||||||
| Federal Natl Mtg Assn Notes Callable Cpn 6.125% Due 12/20/21 |
100,000 | 100,000 | 100,000 | 100,000 | |||||||
| Total Debt Securities Available-for-Sale |
1,365,609 | 1,361,090 | 1,361,090 | ||||||||
| Debt Securities Held-to-Maturity – |
|||||||||||
| GNMA Mortgage Backed Certificates, Due 2012 |
— | — | 2,342 | ||||||||
| Total |
$ | 2,479,740 | $ | 4,823,010 | $ | 4,825,352 | |||||
F-13
Schedule I - Marketable Securities
For the Year Ended December 31, 2005
| Name of issuer and title of each issue |
Number of of bonds |
Cost of each issue |
Market of each issue at balance |
Amount at which of equity security issues | |||||||
| Equity Securities Available-for-Sale: |
|||||||||||
| American Equity Investment Life Holding Company (AEL) |
237,000 | $ | 790,000 | $ | 3,092,850 | $ | 3,092,850 | ||||
| Aegon N.V. 6.5% Non-Cum Perpetual PFd Call Starting 12/15/10 |
2000 | 50,000 | 49,760 | 49,760 | |||||||
| Ace Ltd 7.8% Cum Perp Dep Shs Callable 5/30/08 |
1,000 | 25,403 | 26,100 | 26,100 | |||||||
| AMF Bowling Worldwide, Ser A Warrants - exp 3/9/09 |
524 | 3,668 | — | — | |||||||
| AMF Bowling Worldwide, Ser B Warrants - exp 3/9/09 |
512 | 2,560 | — | — | |||||||
| Bank of America 6% 11/3/34 |
2,000 | 50,006 | 48,240 | 48,240 | |||||||
| Equity Office Prop 7.75% Cum Perp Pfd Callable 7/29/07 |
2,000 | 50,000 | 50,920 | 50,920 | |||||||
| Innkeepers USA 8% Cum PFD Perp REIT Callable |
8,000 | 200,000 | 195,440 | 195,440 | |||||||
| J. P. Morgan & Chase Co. |
3000 | 107,903 | 119,070 | 119,070 | |||||||
| Lehman Bros. 6.25% CAP VI DE 1/18/2054 |
70000 | 175,000 | 172,480 | 172,480 | |||||||
| Public Storage $2.45 Dep Shs Repstg 1/1000 A Sh of Eq. |
3,000 | 60,000 | 83,010 | 83,010 | |||||||
| Realty Income Corp. 8.25% Sr Unsecd Nts Due 2008 mon. |
6000 | 150,004 | 161,334 | 161,334 | |||||||
| SL Green Realty 7.625% Cum Perp Reit PFD Ser C Callable 12/12/08 |
2000 | 50,000 | 50,380 | 50,380 | |||||||
| Wachovia Pfd Fnd 7.25% Non Cum Perp Exch Pfd Call 12/31/22 |
5000 | 125,000 | 139,700 | 139,700 | |||||||
| Total Equity Securities Available-for-Sale |
1,839,544 | 4,189,284 | 4,189,284 | ||||||||
| Debt Securities Available-for-Sale: |
|||||||||||
| Aetna, Inc. Notes Cpn 7.625% Due 8/15/26 |
150,000 | 156,151 | 186,243 | 186,243 | |||||||
| Federal Home Loan Bank Bonds Callable Cpn 5.540% Due 4/23/18 |
90,000 | 90,000 | 88,550 | 88,550 | |||||||
| Federal Natl Mtg Assn Notes Callable Cpn 5.75% Due 2/17/22 |
400,000 | 400,000 | 392,832 | 392,832 | |||||||
| JPM Capital Trust I Company GTD Cpn 7.540% Due 1/15/27 |
120,000 | 121,795 | 126,853 | 126,853 | |||||||
| Land O Lakes Cap Trst I 144 B/E Cpn 7.45% Due 3/15/28 |
100,000 | 98,932 | 87,000 | 87,000 | |||||||
| Total Debt Securities Available-for-Sale |
866,878 | 881,478 | 881,478 | ||||||||
| Debt Securities Held-to-Maturity – |
|||||||||||
| GNMA Mortgage Backed Certificates, Due 2012 |
— | — | 2,641 | ||||||||
| Total |
$ | 2,706,422 | $ | 5,070,762 | $ | 5,073,403 | |||||
F-14