-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BcF/GJYeYOb4EvOwwizPUXdA/c0ym23OG1j8UbIBourzxcrcP/nvXB5644Tk/idt FpOvi4dYEC8ia1zlUL4eEg== 0000052234-04-000009.txt : 20040402 0000052234-04-000009.hdr.sgml : 20040402 20040402163859 ACCESSION NUMBER: 0000052234-04-000009 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINMILL & CO INC CENTRAL INDEX KEY: 0000052234 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 131897916 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09667 FILM NUMBER: 04714495 BUSINESS ADDRESS: STREET 1: 11 HANOVER SQ CITY: NEW YORK STATE: NY ZIP: 10005 BUSINESS PHONE: 2127850900 MAIL ADDRESS: STREET 1: 11 HANOVER SQ CITY: NEW YORK STATE: NY ZIP: 10005 FORMER COMPANY: FORMER CONFORMED NAME: BULL & BEAR GROUP INC DATE OF NAME CHANGE: 19920703 10-K 1 winco1203.txt 2003 ANNUAL REPORT As filed with the Securities and Exchange Commission on March 31, 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-KSB (Mark One) X Annual Report Pursuant to Section 13 or 15(d) of the ------- Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended December 31, 2003 or ------- Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the Transition Period From ___________ to ___________ Commission File Number 0-9667 WINMILL & CO. INCORPORATED (Exact name of registrant as specified in its charter) Delaware 13-1897916 (State of incorporation) (I.R.S. Employer Identification No.) 11 Hanover Square, New York, New York 10005 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 1-212-785-0900 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - ------------------- ----------------------------------------- None None Securities registered pursuant to Section 12(g) of the Act: Class A Common Stock, Par Value $.01 Per Share - ---------------------------------------------- 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 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 90 days. Yes X No ______. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part IV of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] No voting stock was held by non-affiliates of the registrant as of March 15, 2004. The number of shares outstanding of each of the registrant's classes of common stock, as of March 15, 2004: Class A Non-Voting Common Stock, par value $.01 per share - 1,493,367 shares Class B Voting Common Stock, par value $.01 per share - 20,000 PART I ------ Item Page 1. Business 1 2. Properties 4 3. Legal Proceedings 4 4. Submission of Matters to a Vote of Security Holders 4 PART II ------- 5. Market for Company's Common Equity and Related Stockholder Matters 5 6. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 7. Financial Statements and Supplementary Data 8 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 22 8A. Controls and Procedures 22 PART III -------- 9. Directors and Executive Officers 23 10. Executive Compensation 25 11. Security Ownership of Certain Beneficial Owners and Management 32 12. Certain Relationships and Related Transactions 32 13. Exhibits, Consolidated Financial Statements and Schedules, and Reports on Form 8-K 33 14. Principal Accountant Fees and Services 36 PART I ------ Item 1. Business Winmill & Co. Incorporated, a Delaware corporation (the "Company"), is a holding company with three wholly owned subsidiaries: CEF Advisers, Inc., ("CEF"), Investor Service Center, Inc. ("ISC") and Midas Management Corporation ("MMC") and two publicly held affiliates: Bexil Corporation (Amex Symbol: BXL) and Tuxis Corporation (Amex Symbol: TUX); MMC and CEF act as investment managers to open-end and closed-end management investment companies (the "Funds") registered under the Investment Company Act of 1940 (the "Act"). The open-end Funds managed by MMC are Midas Dollar Reserves, Inc., Midas Fund, Inc., and Midas Special Equities Fund, Inc. The closed-end Funds managed by CEF are Foxby Corp. (Amex Symbol: FXX); and Global Income Fund, Inc. (Amex Symbol: GIF). ISC was organized in 1985 and is registered with the SEC as a broker/dealer and is a member of the NASD. ISC acts as the principal distributor for the open-end Funds and engages in proprietary securities trading. The businesses of Bexil and Tuxis are, respectively, insurance services and real estate. CEF acted as investment manager of Bexil and Tuxis until July 31, 2001 and November 30, 2001, respectively, when the investment management agreements with CEF were terminated. Commencing August 1, 2001, Bexil's officers (who are substantially identical to those of CEF) assumed the internal management of Bexil's affairs, including portfolio management, subject to the oversight and final direction of the Board of Directors of Bexil. Commencing December 1, 2001, the officers of Tuxis (who are substantially identical to those of CEF) assumed the internal management of Tuxis' affairs, including portfolio management, subject to the oversight and final direction of the Board of Directors of Tuxis. Compensation of Bexil and Tuxis personnel, initially set in the aggregate amount of $200,000 each per year, may be changed from time to time at the discretion of the Board of Directors of each of Bexil and Tuxis. This amount was increased to $460,000 per year for Bexil and to $350,000 per year for Tuxis effective January 1, 2004. Bexil and Tuxis are paying compensation directly to certain officers of the Company whose compensation from the Company was partly reduced, reflecting the increased time such officers spend on the business of Bexil and Tuxis. As of December 31, 2003, the Company owned approximately 25.3% and 20.2% of the outstanding shares of Bexil and Tuxis, respectively. Bexil and Tuxis have received shareholder approval to change from registered investment companies to operating companies. Effective January 6, 2004, the SEC issued an order declaring that Bexil ceased to be a registered investment company. The Company has granted certain of its subsidiaries, the Funds, Tuxis, and Bexil, a non-exclusive license to use certain service marks owned by the Company, under certain terms and conditions on a royalty free basis. Such license may be withdrawn from a Fund in the event the investment manager of the Fund is not a subsidiary of the Company or in other cases, at the discretion of the Company. -1- Investment Management and Distribution Business - ----------------------------------------------- The Company is engaged, through its subsidiaries, in the business of managing investment companies registered under the Act. The Funds and their respective net assets as of December 31, 2003 were approximately as follows: Global Income Fund, Inc. $ 28,711,848 Foxby Corp. 7,150,989 Midas Dollar Reserves, Inc. 18,637,774 Midas Fund, Inc. 67,122,903 Midas Special Equities Fund, Inc. 18,044,218 --------------- Total Net Assets $ 139,667,732 =============== The fund management industry along with the entire financial services sector of the economy has been rapidly changing to meet the increasing needs of investors. Competition for management of financial resources has increased as banks, insurance companies and broker/dealers have introduced products and services traditionally offered by independent fund management companies. There are also many fund management groups with substantially more resources than the Company. While the Company's business is not seasonal, it is affected by the financial markets, which in turn, are dependent upon current and future economic conditions. Drastic material declines in the securities markets can have a significant effect on the Company's business. Volatile stock markets may affect management and distribution fees earned by the Company's subsidiaries. If the market value of securities owned by the Funds declines, assets under management will decline and shareholder redemptions may occur, either by transfer out of the equity Funds and into the money market Fund, Midas Dollar Reserves, which has lower management and distribution fee rates than the equity Funds, or by redemptions out of the Funds entirely. Lower asset levels in the Funds may also cause or increase reimbursements to the Funds pursuant to the expense limitations described below. In general, investment management services are rendered to the Funds pursuant to written contractual agreements. Such agreements relate to the general management of the affairs of each Fund, in addition to supervising the acquisition and sale of each Fund's portfolio investments. As provided in the agreements, CEF and MMC may receive management fees ranging from 1.0% to 0.5% (and generally declining thereafter on higher net asset levels) per annum of the Funds' average daily or average weekly net assets payable monthly. The Act requires that such contractual agreements be initially approved by the Funds' Board of Directors, including a majority of all of the directors who are not "interested persons" (as defined in the Act), and by the vote of a majority of the outstanding shares of the Fund (as defined in the Act). Agreements, if approved, may be for a term of up to two years, and thereafter their continuance must be approved at least annually by a majority of the directors of the Fund, including a majority of those directors of the Fund who are not "interested persons", or by such a vote of "disinterested" directors and the vote of a majority of the outstanding shares of the Fund. In addition, all such agreements are subject to termination on 60 days' notice by majority vote of the Board of Directors or the shareholders and are subject to automatic termination in the event of assignment. Depending on the assets of the Fund involved and other factors, the termination of any agreements for investment management services between any of the Funds, CEF, and MMC or the termination of the relationship of the Company with the management of Bexil and Tuxis may have a serious adverse impact upon the Company. Under the investment management contracts, CEF and MMC are required to reimburse the Funds for certain expenses to the extent that such expenses exceed limitations prescribed by any state in which shares of the Funds are qualified for sale, although currently the Funds are not subject to any such limits. In addition, from time to time CEF and MMC may waive or reimburse management and distribution fees or absorb certain Fund expenses to increase a Fund's performance. -2- Each of the open-end Funds has adopted a plan of distribution pursuant to Rule 12b-1 under the Act (the "Plan"). Pursuant to the Plans, ISC may receive as compensation amounts ranging from one-quarter of one percent to one percent per annum of the Funds' average daily net assets for distribution and service activities. The service fee portion is intended to cover services provided to shareholders in the Funds and the maintenance of shareholder accounts. The distribution fee portion is to cover all other activities and expenses primarily intended to result in the sale of the Funds' shares. The Act requires that a plan of distribution be initially approved by the Fund's Board of Directors, including a majority of the directors who are not "interested persons" and who have no financial interest in the Plan, and by the vote of a majority of the outstanding shares of the Fund. If approved, a plan of distribution may be for a term of one year, and thereafter it must be approved at least annually by the entire Board of Directors and by a majority of the "disinterested" directors. In addition, all plans of distribution are subject to termination at any time by majority vote of the disinterested directors or shareholders. CEF and MMC are registered with the SEC as investment advisers under the Investment Advisers Act of 1940. ISC is registered with the SEC as a broker/dealer under the Securities Exchange Act of 1934 and is a member of the NASD. The Funds, Tuxis, and Bexil are registered with the SEC under the Act (although Bexil was deregistered effective January 6, 2004). The activities of CEF and MMC and of the Funds are subject to regulation under Federal and state securities laws. The provisions of these laws, including those relating to the contractual arrangements between the Funds and their investment managers, are primarily designed to protect the shareholders of the Funds, Tuxis and Bexil, and not the shareholders of the Company. Forward-Looking Information - --------------------------- Information or statements provided by or on behalf of the Company from time to time, including those within this Form 10-KSB Annual Report, may contain certain "forward-looking information", including information relating to anticipated growth in revenues or earnings per share, anticipated changes in the amount and composition of assets under management, anticipated expense levels, and expectations regarding financial market conditions. The Company cautions readers that any forward-looking information provided by or on behalf of the Company is not a guarantee of future performance and that actual results may differ materially from those in forward-looking information as a result of various factors, including but not limited to those discussed below. Further, such forward-looking statements speak only as of the date on which such statements are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. The Company's future revenues may fluctuate due to factors such as: the total value and composition of assets under management and related cash inflows or outflows in mutual funds; fluctuations in the financial markets resulting in appreciation or depreciation of assets under management; the relative investment performance of the Company's sponsored investment products as compared to competing products and market indices; the expense ratios and fees of the Company's sponsored products and services; investor sentiment and investor confidence in mutual funds; the ability of the Company to maintain investment management fees at current levels; competitive conditions in the mutual funds industry; the introduction of new mutual funds and investment products; the ability of the Company to contract with the Funds for payment for services offered to the Funds and Fund shareholders; the continuation of trends in the retirement plan marketplace favoring defined contribution plans and participant-directed investments; the amount and timing of income from the Company's proprietary securities trading portfolio; and the performance of its publicly traded affiliates. -3- The Company's future operating results are also dependent upon the level of operating expenses, which are subject to fluctuation for the following or other reasons: changes in the level of advertising expenses in response to market conditions or other factors; the level of expenses assumed by the Company for the Funds as a result of expense waiver or reimbursement of management or distribution fees or absorption of certain expenses to increase a Fund's performance; variations in the level of compensation expense incurred by the Company, including performance-based compensation based on the Company's financial results, as well as changes in response to the size of the total employee population, competitive factors, or other reasons; expenses and capital costs, including depreciation, amortization and other non-cash charges, incurred by the Company to maintain its administrative and service infrastructure; and unanticipated costs that may be incurred by the Company from time to time to protect investor accounts and client goodwill. The Company's operating results will also depend on the results of its holdings in Bexil and Tuxis. The Company's revenues are substantially dependent on revenues from the Funds, which could be adversely affected if the independent directors of one or more of the Funds determined to terminate or renegotiate the terms of one or more investment management agreements. The Company's business is also subject to substantial governmental regulation, and changes in legal, regulatory, accounting, tax, and compliance requirements may have a substantial effect on the Company's business and results of operations, including but not limited to effects on the level of costs incurred by the Company and effects on investor interest in mutual funds in general or in particular classes of mutual funds. Item 2. Properties The principal office of the Company is located at 11 Hanover Square, New York, New York 10005. For the office of 3,800 rentable square feet, the rent is approximately $84,300 per annum plus $12,800 per annum for electricity. The lease expires on September 30, 2008. Item 3. Legal Proceedings From time to time, the Company and/or its subsidiaries are threatened or named as defendants in litigation arising in the normal course of business. As of December 31, 2003, neither the Company nor any of its subsidiaries was involved in any other litigation that, in the opinion of management, would have a material adverse impact on the consolidated financial statements. Item 4. Submission of Matters to a Vote of Security Holders During Fourth Quarter of the Year Ended December 31, 2003 NONE -4- PART II ------- Item 5. Market for the Company's Common Equity and Related Stockholder Matters The Company's Class A Common Stock (non-voting) trades on the Nasdaq SmallCap Market tier of the Nasdaq Stock Market under the symbol WNMLA. The Company's Class B Common Stock (voting) has no public trading market. There are approximately 208 holders of record of Class A Common Stock and 1 holder of Class B Common Stock as of December 31, 2003. In addition, there are an indeterminate number of beneficial owners of Class A Common Stock that are held in "street name." No dividends have been paid on either class of Common Stock in the past five years and the Company does not expect to pay any such dividends in the foreseeable future. The high and low sales prices of the Class A Common Stock during each quarterly period over the last two years were as follows: 2003 2002 --------------------- --------------------- High Low High Low ---- --- ---- --- First Quarter $1.7400 $1.4800 $1.6700 $1.4800 Second Quarter $2.2700 $1.4800 $1.8500 $1.4200 Third Quarter $3.7000 $2.0500 $1.7000 $1.4600 Fourth Quarter $4.1500 $3.3200 $1.7500 $1.4200 Equity Compensation Plan Information - ------------------------------------
Number of Number of Class A Weighted- Class A shares shares to be issued average price remaining available upon exercise of of outstanding for future issuance outstanding options options, warrants under equity warrants and rights and rights compensation plans ------------------- ----------------- ------------------- Equity Compensation Plans approved by security holders 74,000 $ 1.50 33,500 Equity Compensation Plans not approved by security holders - - - ------- ------ ------ Total 74,000 $ 1.50 33,500 ======= ====== ======
Purchases Of Equity Securities By The Issuer
Total Maximum Number of Number (or Shares Approximate (or Units) Dollar Value) Purchased of Shares Total Average as Part of (or Units) that Number of Price Publicly May Yet Be Shares Per Price Annouced Purchased (or Units) Share Plans or Under the Plans Period Purchased (Unit or) Programs or Programs - ------ ---------- --------- ---------- --------------- 09/01/03 - 09/30/03 59,354 (a) $3.62 - - 10/01/03 - 10/31/03 45,282 (a) $3.75 - - 11/01/03 - 11/30/03 198,017 (a) $4.13 - - ------- Total 302,653 $3.97 - - =======
(a) These shares were purchased by the Company as satisfaction of certain notes receivable held by officers of the Company, as part of the exercise of stock options held by officers of the Company and in other transactions. -5- Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations 2003 Compared to 2002 - --------------------- Declines in the securities markets can have a significant effect on the Company's business. Volatile stock markets may affect management and distribution fees earned by the Company's subsidiaries. If the market value of securities owned by the Funds declines, shareholder redemptions may occur, either by transfer out of the equity Funds and into the money market fund, which has lower management and distribution fee rates than the equity Funds, or by transfer out of the Funds entirely. Lower net asset levels in the Funds may also cause or increase reimbursements to the Funds pursuant to expense limitations as described in Note 9 of the financial statements. Total revenues increased $889,785 or 49%, which was primarily due to a increase in net unrealized appreciation of publicly held affiliates and unrealized and realized gains on proprietary trading. Offsetting this was a decrease in management, distribution and other fees and dividends, interest and other of $159,579 or 10%. In the twelve months ended December 31, 2003 the Company had net realized and unrealized gains of $1,211,157 from the publicly held affiliates and proprietary securities trading as compared to a gain of $161,794 in the twelve months ended December 31, 2002. Management, distribution and other fees decreased $9,984 due to lower average net assets in the Funds. Average net assets under management were $125 million and $127 million for the twelve months ended December 31, 2003 and 2002, respectively. Total expenses decreased $130,787 or 8% over this period of last year. General and administrative expenses decreased $47,811 or 6% due to lower employee costs. Marketing expense decreased $51,529 or 10% due to lower fulfillment and printing costs. Expense reimbursement to the Funds decreased $26,715 or 15%. Professional fees decreased $15,535 or 17%. Amortization and depreciation expense increased $10,803 or 19%. Net income for the year was $730,616 or $.45 per share on a diluted basis as compared to net income of $137,326 or $.08 per share on a diluted basis for last year. 2002 Compared to 2001 - --------------------- Declines in the securities markets can have a significant effect on the Company's business. Volatile stock markets may affect management and distribution fees earned by the Company's subsidiaries. If the market value of securities owned by the Funds declines, shareholder redemptions may occur, either by transfer out of the equity Funds and into the money market fund, which has lower management and distribution fees rates than the equity Funds, or by transfer out of the Funds entirely. Lower net asset levels in the Funds may also cause or increase reimbursements to the Funds pursuant to expense limitations as described in Note 9 of the financial statements. Total revenues decreased $99,638 or 5% which was primarily due to the decrease in management, distribution and other fees, consulting fee and dividends and interest income offset by an increase in realized and unrealized gains on investments. Management, distribution and other fees decreased $289,531 or 16% due to lower net assets in the Funds and the termination of the investment management agreement with Bexil and Tuxis effective July 31, 2001 and November 30, 2001 respectively. Average net assets under management were less in the twelve months ended December 31, 2002 verses December 31, 2001. Total net assets under management were approximately $116 million at December 31, 2001, $125 million at March 31, 2002, $123 million at June 30, 2002, $129 million at September 30, 2002 and $129 million at December 31, 2002. Net realized and unrealized gains on proprietary securities trading were $161,794. Consulting fees decreased $246,923 which was due to the termination of the Company's consulting agreement with Bull & Bear Securities, Inc. ("BBSI") during the second quarter of 2001. -6- Total expenses decreased $600,182 or 27% over this period of last year. General and administrative expenses decreased $143,924 or 16% due to lower employee costs. Marketing expense decreased $225,579 or 31% due to lower fulfillment and printing costs. Expense reimbursement to the Funds decreased $104,659 or 37%. Professional fees decreased $89,289 or 49%. Net income for the period was $137,326 or $.08 per share on a diluted basis as compared to net loss of $199,065 or $(.12) per share on a diluted basis for last year. Liquidity and Capital Resources The following table reflects the Company's consolidated working capital, total assets, long-term debt and shareholders' equity as of the dates indicated. December 31, ---------------------------------- 2003 2002 ---- ---- Working Capital $7,297,939 $ 6,768,292 Total Assets $8,939,235 $ 8,106,436 Long-Term Debt $ - $ - Shareholders' Equity $8,280,041 $ 7,889,020 For the year ended 2003, working capital, total assets and shareholders' equity increased $529,647, $832,799 and $391,021, respectively. Working capital, total assets and shareholders' equity increased primarily due to the realized and unrealized losses from proprietary securities trading. For the year ended 2002, working capital decreased $295,149 primarily due to a reduction in cash from the purchase of additional investments. Total assets and shareholders' equity increased by $69,651 and $140,174. Total assets and shareholders' equity increased primarily due to net income recorded for the year. Management knows of no contingencies that are reasonably likely to result in a material decrease in the Company's liquidity or that are likely to adversely affect the Company's capital resources. This includes the restrictions placed on the transfer of funds to ISC as a result of its regulatory net capital requirements. At December 31, 2003, the amount subject to these restrictions was $100,000 or 1.1% of total assets. Effects of Inflation and Changing Prices - ---------------------------------------- Since the Company derives revenue primarily from investment management and distribution services from the Funds and proprietary securities trading, it is not possible for it to discuss or predict with accuracy the impact of inflation and changing prices on its revenues from continuing operations. -7- Item 7. Financial Statements and Supplementary Data Financial Statements required by Regulation S-X and Supplementary Financial Information required by Regulation S-B are presented herein. FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES --------------------------------------------- TABLE OF CONTENTS ----------------- Page Report of Independent Certified Public Accountants 9 Consolidated Balance Sheet, December 31, 2003 10 Consolidated Statements of Income, Years ended December 31, 2003 and 2002 11 Consolidated Statements of Changes in Shareholders' Equity, Years ended December 31, 2003 and 2002 12 Consolidated Statements of Cash Flows, Years ended December 31, 2003 and 2002 13 Notes to Consolidated Financial Statements 15 -8- REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors and Shareholders of Winmill & Co. Incorporated We have audited the accompanying consolidated balance sheet of Winmill & Co. Incorporated and subsidiaries as of December 31, 2003, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the two years in the period ended December 31, 2003. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 consolidated financial position of Winmill & Co. Incorporated and subsidiaries at December 31, 2003, and the consolidated results of their operations and their consolidated cash flows for each of the two years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. TAIT, WELLER & BAKER Philadelphia, Pennsylvania January 23, 2004 -9- WINMILL & CO. INCORPORATED CONSOLIDATED BALANCE SHEET December 31, 2003
ASSETS Current Assets: Cash and cash equivalents $ 1,108,426 Marketable securities (Note 2) 6,486,697 Management, distribution and other fees receivable 121,813 Dividends, interest and other receivables 96,000 Prepaid expenses and other current assets 136,827 Refundable income taxes 7,370 ------------ Total Current Assets 7,957,133 ------------ Equipment, furniture and fixtures, net 65,015 Intangible assets, net 581,796 Other assets (Note 10) 335,291 ------------ 982,102 Total Assets $ 8,939,235 ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accrued professional fees $ 97,075 Accrued payroll and other related costs 25,000 Accrued other expenses 76,351 Other current liabilities 1,568 Deferred income taxes 459,200 ------------ Total Current Liabilities 659,194 ------------ Shareholders' Equity (Notes 4, 5, and 6) Common Stock, $.01 par value Class A, 10,000,000 shares authorized; 1,493,667 shares issued 14,933 Class B, 20,000 shares authorized; 20,000 shares issued and outstanding 200 Additional paid-in capital 5,884,414 Retained earnings 2,380,494 ------------ Total Shareholders' Equity 8,280,041 ------------ Total Liabilities and Shareholders' Equity $ 8,939,235 ============
See accompanying notes to consolidated financial statements. -10- WINMILL & CO. INCORPORATED CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31,
2003 2002 ---- ---- Revenues: Management, distribution and other fees $ 1,459,747 $ 1,469,731 Realized and unrealized gains (losses) from investments 1,211,157 161,794 Dividends, interest and other 29,649 179,243 ------------- ------------ 2,700,553 1,810,768 ------------- ------------ Expenses: General and administrative 725,016 772,827 Marketing 441,876 493,405 Expense reimbursements to the Funds (Note 9) 153,001 179,716 Professional fees 76,500 92,035 Depreciation and amortization 67,962 57,159 ------------- ------------ 1,464,355 1,595,142 ------------- ------------ Income before income taxes 1,236,198 215,626 Income taxes (Note 8) 505,582 78,300 ------------- ------------ Net Income $ 730,616 $ 137,326 ============= ============ Per Share Data: Basic Net income $ .46 $ .08 ======= ====== Diluted Net income $ .45 $ .08 ======= ====== Average Shares Outstanding: Basic 1,596,946 1,638,403 ========= ========= Diluted 1,631,344 1,649,129 ========= =========
See accompanying notes to consolidated financial statements. -11- WINMILL & CO. INCORPORATED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Years Ended December 31, 2003 and 2002
Number of Shares Amount ---------------- --------------------------------------------------------------------- Notes Receivable For Additional Common Treasury Class A Class B Class A Class B Paid-In Stock Retained Stock Common Common Common Common Capital Issued Earnings Class A --------- ------- ------- ------- ----------- ---------- ---------- --------- Balance, December 31, 2001 1,628,320 20,000 $16,283 $ 200 $6,807,985 $(597,736) $1,512,552 $ - Net income - - - - - - 137,326 - Other comprehensive income Unrealized losses on investments - - - - - - - - ---------- -------- ------- ----- ----------- ---------- ----------- --------- Comprehensive income Repayment of notes receivable - - - - - 70,695 - - Purchase of treasury stock (39,800) - - - - - - (58,108) ---------- -------- ------- ----- ----------- ---------- ----------- --------- Balance, December 31, 2002 1,588,520 20,000 16,283 200 6,807,985 (527,041) 1,649,878 (58,108) Net income - - - - - - 730,616 - Other comprehensive income Unrealized gains on marketable securities - - - - - - - - ---------- -------- ------- ----- ----------- ---------- ----------- --------- Comprehensive income Issuance of stock in connection with exercise of stock options 207,500 - 2,075 - 333,800 - - - Redemption of stock (302,653) - 3,027) - (1,257,371) - - - Cancellation of treasury of stock - - (398) - - - - 58,108 Repayment of notes receivable - - - - - 527,041 - - ---------- ------- ------- ----- ----------- --------- ----------- --------- Balance, December 31, 2003 1,493,367 20,000 $14,933 $ 200 $5,884,414 $ - $2,380,494 $ - ========== ======= ======== ====== =========== ========== =========== =========
---------------------------- Accumulated Other Total Comprehensive Shareholders' Income Equity ------------- -------------- Balance, December 31, 2001 $ 9,562 $ 7,748,846 Net income - 137,326 Other comprehensive income Unrealized losses on investments (9,739) (9,739) ------------- -------------- Comprehensive income 127,587 -------------- Repayment of notes receivable - 70,695 Purchase of treasury stock - (58,108) ------------- -------------- Balance, December 31, 2002 (177) 7,889,020 Net income - 730,616 Other comprehensive income Unrealized gains on marketable securities 177 177 ------------- -------------- Comprehensive income 730,793 -------------- Issuance of stock in connection with exercise of stock options - 335,875 Redemption of stock - (1,260,398) Cancellation of treasury of stock - 57,710 Repayment of notes receivable - 527,041 ------------- -------------- Balance, December 31, 2003 - $ 8,280,041 ============= ============== -12- WINMILL & CO. INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31,
2003 2002 ---- ---- Cash Flows from Operating Activities: Net income $ 730,616 $ 137,326 ------------- ------------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 67,962 57,159 Increase in deferred income taxes 481,200 69,000 Increase in cash value of life insurance (32,193) (32,160) Net unrealized appreciation of publicly held affiliates and on proprietary securities trading (1,211,157) (163,105) (Increase) decrease in: Management, distribution and other fees receivable (7,597) (8,499) Dividends, interest and other receivables (39,525) (32,229) Prepaid expenses and other current assets (36,712) (27,699) Refundable income taxes 165,924 86,126 Other assets 8,058 (26,538) Increase (decrease) in: Accounts payable (12,585) (15,286) Accrued expenses (1,949) (54,322) Accrued income taxes 51,847 9,300 Other current liabilities (54,735) (10,215) -------------- ------------- Total adjustments (621,462) (148,468) ------------- ------------- Net cash provided by (used for) operating activities $ 109,154 $ (11,142) ============= ============= Cash Flows from Investing Activities: Capital expenditures $ (20,476) $ (18,874) Proprietary securities trading sales 68,908 27,173 Proprietary securities trading purchases (57,191) (722,438) Acquisition of intangible asset - (476,471) ------------- ------------- Net cash used in investing activities (8,759) (1,190,610) ------------- ------------- Cash Flows from Financing Activities: Repayments of notes receivable 620,316 70,695 Issuance of stock 335,875 - Purchase of treasury stock (1,202,688) (58,108) ------------- ------------- Net cash provided by (used in) financing activities (246,497) 12,587 ------------- ------------- Net decrease in cash and cash equivalents (146,102) (1,189,165) Cash and cash equivalents: Beginning of year 1,254,528 2,443,693 ------------- ------------- End of year $ 1,108,426 $ 1,254,528 ============= =============
-13- WINMILL & CO. INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 and 2002 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS Winmill & Co. Incorporated ("Company") is a holding company. Its subsidiaries' business consists of providing investment management and distribution services for the Midas Funds (three open-end funds), two closed-end funds, and proprietary securities trading. Its publicly held affiliates are Bexil Corporation (Amex Symbol: BXL); Tuxis Corporation (Amex Symbol: TUX); Foxby Corp. (Amex Symbol: FXX); and Global Income Fund (Amex Symbol: GIF). The businesses of Bexil and Tuxis are, respectively, insurance services and real estate. Global Income Fund and Foxby are closed end funds. BASIS OF PRESENTATION The consolidated financial statements include the accounts of the Company and all of its subsidiaries. Substantially all intercompany accounts and transactions have been eliminated. ACCOUNTING ESTIMATES In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses and other liabilities approximate fair value because of the short maturity of these items. Marketable securities are recorded at market value which represents the fair value of the securities. CASH AND CASH EQUIVALENTS Investments in money market funds are considered to be cash equivalents. At December 31, 2003, the Company and subsidiaries had invested approximately $870,400 in an affiliated money market fund. MARKETABLE SECURITIES The Company and its non-broker/dealer subsidiaries' marketable securities are considered to be "available-for-sale" and recorded at market value, with the unrealized gain or loss included in stockholders' equity as "accumulated other comprehensive income." Marketable securities of the broker/dealer subsidiary are valued at market with unrealized gains and losses included in earnings. At December 31, 2003, all marketable securities were held by the broker/dealer subsidiary. -14- WINMILL & CO. INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2003 and 2002 INCOME TAXES The Company's method of accounting for income taxes conforms to Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes." This method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. The Company and its wholly-owned subsidiaries file consolidated income tax returns. EQUIPMENT Equipment, furniture and fixtures are recorded at cost and are depreciated on the straight-line basis over their estimated useful lives, 3 to 10 years. At December 31, 2003, accumulated depreciation on equipment, furniture and fixtures amounted to approximately $837,700. INTANGIBLE ASSETS As of December 31, 2003, the Company's carrying value of intangible assets was approximately $810,700 with accumulated amortization of approximately $228,900. These intangible assets are being amortized over their useful lives, which is fifteen years and the estimated annual amortization is approximately $54,000 per year over the next five years. In addition, intangible assets are reviewed for impairment and the remaining useful life evaluated at least annually to determine whether events and circumstances warrant a revision to the remaining period of amortization. COMPREHENSIVE INCOME The Company discloses comprehensive income in the financial statements. Comprehensive income includes net income and unrealized gains and losses on marketable securities held by the Company and its non-broker/dealer subsidiaries, which is reported as other comprehensive income in stockholders' equity. SEGMENT INFORMATION The Company's operating segments are organized into three groups - fund services, publicly held affiliates and proprietary trading. EARNINGS PER SHARE Basic earnings per share is computed using the weighted average number of shares outstanding. Diluted earnings per share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock. -15- WINMILL & CO. INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2003 and 2002 The following table sets forth the computation of basic and diluted earnings per share:
2003 2002 ---- ---- Numerator for basic and diluted earnings per share: Net income $ 730,616 $ 137,326 ============ ============ Denominator: Denominator for basic earnings per share: Weighted-average shares 1,596,946 1,638,403 Effect of dilutive securities: Employee Stock Options 34,398 10,726 ------------ ------------ Denominator for diluted earnings per share: adjusted weighted - average shares and assumed conversions 1,631,344 1,649,129 ============ ============
2. MARKETABLE SECURITIES
At December 31, 2003 marketable securities, at market, consisted of: Broker/dealer subsidiary Publicly held affiliates $ 5,381,226 Proprietary trading 1,105,471 ------------ Total marketable securities (cost - $5,271,323) $ 6,486,697 ============
Included in the broker/dealer's holdings of publicly held affiliates are $3,540,045 of shares (representing approximately 25% of the outstanding shares) of Bexil Corporation and $1,528,841 of shares (representing approximately 20% of the outstanding shares) of Tuxis Corporation, both of which have received shareholder approval to change from registered investment companies to operating companies. Effective January 6, 2004, the Securities and Exchange Commission issued an order declaring that Bexil Corporation had ceased to be a registered investment company under Section 8(f) of the Investment Company Act of 1940. -16- WINMILL & CO. INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2003 and 2002 3. LEASE COMMITMENTS The Company leases office space under a lease which expires September 30, 2008. The future minimum lease payments for years ended December 31, including electricity are as follows: 2004 $ 97,100 2005 97,100 2006 97,700 2007 100,200 2008 76,600 ---------- $ 468,700 4. SHAREHOLDERS' EQUITY The Class A and Class B Common Stock are identical in all respects except for voting rights, which are vested solely in the Class B Common Stock. The Company also has 1,000,000 shares of Preferred Stock, $.01 par value, authorized. As of December 31, 2003 and 2002, none of the Preferred Stock was issued. 5. NET CAPITAL REQUIREMENTS The Company's broker/dealer subsidiary is a member firm of the National Association of Securities Dealers, Inc. ("NASD") and is registered with the Securities and Exchange Commission as a broker/dealer. Under its membership agreement with the NASD, the broker/dealer must maintain minimum net capital, as defined, of not less than $100,000, or 6-2/3% of aggregate indebtedness, whichever is greater; and a ratio of aggregate indebtedness to net capital, as defined, of not more than 15 to 1. At December 31, 2003, the subsidiary had net capital of approximately $5,592,500; net capital requirements of $100,000; excess net capital of approximately $5,492,500; and the ratio of aggregate indebtedness to net capital was approximately .04 to 1. 6. STOCK OPTIONS On December 6, 1995, the Company adopted a Long-Term Incentive Plan which, as amended, provides for the granting of a maximum of 600,000 options to purchase Class A Common Stock to directors, officers and key employees of the Company or its subsidiaries. As of December 31, 2003, there were 33,500 remaining options available for future issuance under the Plan. With respect to non-employee directors, only grants of non-qualified stock options and awards of restricted shares are available. The three non-employee directors were granted 2,500 options each on December 10, 2002. The option price per share may not be less than the fair value of such shares on the date the option is granted, and the maximum term of an option may not exceed ten years except as to non-employee directors for which the maximum term is five years. -17- WINMILL & CO. INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2003 and 2002 The Company applies APB Opinion 25 and related interpretations in accounting for its stock option plans. Accordingly, no compensation cost has been recognized for its stock option plans. Pro forma compensation cost for the Company's plans is required by Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation (SFAS 123)" and has been determined based on the fair value at the grant dates for awards under these plans consistent with the method of SFAS 123. For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information follows:
Years Ended December 31, ------------------------ 2003 2002 ---- ---- Net income As reported $730,616 $137,326 Pro forma $730,616 $102,381 Earnings per share Basic As reported $.46 $.08 Pro forma $.46 $.06 Diluted As reported $.45 $.08 Pro forma $.45 $.06
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2002: 41.18%, risk-free interest rate of 1.17% and expected life of three years for each year. A summary of the status of the Company's stock option plans as of December 31, 2003 and 2002, and changes during the years ending on those dates is presented below:
Weighted Number Average Of Exercise Stock Options Shares Price ------------- -------- ----------- Outstanding at December 31, 2001 21,000 $1.60 Granted 77,500 $1.61 Canceled (17,000) $1.76 ---------- Outstanding at December 31, 2002 281,500 $1.59 Exercised (207,500) $1.62 ---------- Outstanding at December 31, 2003 74,000 $1.50 ==========
There were 74,000 and 266,500 options exercisable at December 31, 2003 and 2002 with a weighted-average exercise price of $1.50 and $1.59, respectively. The weighted-average fair value of options granted using the Black Scholes option-pricing model was $.40 for the year ended December 31, 2002. -18- WINMILL & CO. INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2003 and 2002 The following table summarizes information about stock options outstanding at December 31, 2003:
Weighted-Average Range of Number Remaining Weighted-Average Exercise Prices Outstanding Contractual Life Exercise Price --------------- ----------- ---------------- ----------------- $1.50 - $1.60 74,000 3.6 years $1.50
In connection with the exercise of stock options in 2003, the Company redeemed 85,214 shares of Class A Common Stock. In connection with the exercise of the options in prior years, the Company had received from certain officers notes with interest rates ranging from 2.45% to 2.48% per annum payable December 31, 2004. The balance of the notes at December 31, 2002 was $527,041, which was classified as "notes receivable for common stock issued." These notes were paid in full during 2003 by the redemption of 151,197 shares of Class A Common Stock. In addition, there were 66,242 shares of Class A Common Stock redeemed by the Company in 2003 from certain officers and directors. 7. PENSION PLAN The Company has a 401(k) retirement plan for substantially all of its qualified employees. Contributions are based upon a percentage of earnings of eligible employees and are accrued and funded on a current basis. Total pension expense for the years ended December 31, 2003 and 2002 was approximately $47,200 and $49,500, respectively. 8. INCOME TAXES The provision for income tax expense (benefit) was as follows: 2003 2002 ---- ---- Current Federal $ 16,000 $ (4,500) State and local 8,382 13,800 ---------- --------- 24,382 9,300 Deferred 481,200 69,000 ---------- --------- $ 505,582 $ 78,300 ========== ========= -19- WINMILL & CO. INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2003 and 2002 Deferred tax assets (liabilities) are comprised of the following at December 31, 2003:
2003 ----- Unrealized (appreciation) depreciation on investments $ (486,200) Accrued expenses 2,000 Net capital loss carryforwards 25,000 ----------- Net deferred tax liabilities $ (459,200) ===========
A reconciliation of the federal statutory income tax rate to the Company's effective tax rate is as follows:
2003 2002 ---- ---- Statutory rate 34.0% 34.0% Increase in effective tax rate resulting from: State income taxes, net of federal benefit - 4.2 Non-deductible income and expenses - net 6.9 (1.9) ----- ----- 40.9% 36.3% ===== =====
9. RELATED PARTIES All investment management and distribution fees are a result of services provided to the Funds. All such services are provided pursuant to agreements that set forth the fees to be charged for these services. These agreements are subject to annual review and approval by each Fund's Board of Directors and a majority of the Fund's non-interested directors. In addition, during the years ended December 31, 2003 and 2002, the Funds paid approximately $42,000 and $44,000, respectively, for recordkeeping services to ISC, which paid such amounts to certain brokers for performing such services. These reimbursements for recordkeeping services were recorded in management, distribution and other fees. The Company's investment manager and distributor subsidiaries waived management and distribution fees from the Funds in the amount of approximately $153,000 and $179,700 for the years ended December 31, 2003 and 2002, respectively. Certain officers of the Company also serve as officers and/or directors of the Funds. Commencing August 1992, the Company has a key man life insurance policy on the life of the Company's Chairman which provides for the payment of $1,000,000 to the Company upon his death. As of December 31, 2003, the policy had a cash surrender value of approximately $306,400 and is included in other assets in the balance sheet. -20- WINMILL & CO. INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) December 31, 2003 and 2002 10. FINANCIAL INFORMATION BY BUSINESS SEGMENT The following details selected financial information by business segment.
Fund Publicly Held Proprietary December 31, 2003 Services Affiliates Trading Total ----------------- -------- ------------------ ------------- ----- Revenues $ 1,473,850 $ 753,631 $ 473,072 $ 2,700,553 Income from operations $ 601,239 $ 262,730 $ 372,229 $ 1,236,198 Depreciation and amortization $ 57,830 $ 8,405 $ 1,727 $ 67,962 Capital expenditures $ 20,476 $ - $ - $ 20,476 Gross identifiable assets $ 2,452,538 $ 5,381,226 $ 1,105,471 $ 8,939,235 Fund Publicly Held Proprietary December 31, 2002 Services Affiliates Trading Total ----------------- -------- ------------------ ------------- ----- Revenues $ 1,526,116 $ 464,278 $ (179,626) $ 1,810,768 Income from operations $ 507,464 $ (14,348) $ (277,490) $ 215,626 Depreciation and amortization $ 44,739 $ 10,312 $ 2,108 $ 57,159 Capital expenditures $ 18,874 $ - $ - $ 18,874 Gross identifiable assets $ 2,819,356 $ 4,389,555 $ 897,525 $ 8,106,436
11. CONTINGENCIES From time to time, the Company and/or its subsidiaries are threatened or named as defendants in litigation arising in the normal course of business. As of December 31, 2003, neither the Company nor any of its subsidiaries was involved in any other litigation that, in the opinion of management, would have a material adverse impact on the consolidated financial statements. In April 2002, the Company entered into a Death Benefit Agreement ("Agreement") with the Company's Chairman. Following his death, the Agreement provides for annual payments, equal to 80% of his average annual salary received from the Company, its affiliates, subsidiaries and other related entities for the three year period prior to his death subject to certain adjustments to his wife until her death. The Company's obligations under the Agreement are not secured and will terminate if he leaves the Company's employ under certain conditions. -21- Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure There were no changes in or disagreements with the Company's accountants on accounting and financial disclosure matters during the two years ended December 31, 2003. Item 8A. Controls and Procedures (a) Evaluation of disclosure controls and procedures. The Company's chief executive officer and chief financial officer, after evaluating the effectiveness of the Company's "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c)) as of a date (the "Evaluation Date") within 90 days before the filing date of this annual report, have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures were effective. (b) Changes in internal controls. There were no significant changes in the Company's internal controls or to the Company's knowledge, in other factors that could significantly affect the Company's disclosure controls and procedures subsequent to the Evaluation Date. -22- PART III -------- Item 9. Directors and Executive Officers The following list contains the names, ages, positions and lengths of service of all directors and executive officers of the Company.
Name Position Years of Service Age ---- -------- ---------------- --- Director Officer -------- ------- Bassett S. Winmill Chairman of the Board 27 27 73 Robert D. Anderson Vice Chairman of the Board 27 27 74 Thomas B. Winmill, Esq. President, 15 16 44 General Counsel, Director Edward G. Webb, Jr. Director 18* 15** 64 Charles A. Carroll Director 12 - 73 Mark C. Winmill Director 14*** 16**** 46 Marion E. Morris Senior Vice President - 3 58 William G. Vohrer Treasurer, - 3 53 Chief Accounting Officer Monica Pelaez, Esq. Vice President, Secretary, Associate General Counsel - 4 32
* 1985 to 1990 and 1992 to present. ** 1979 to 1990 *** 1989 to 1999 and 2000 to present. **** 1987 to 1999 -23- Set forth below is a description of the business experience of the directors and executive officers of the Company during the past five years. BASSETT S. WINMILL - Chairman of the Board of Directors. He is also Chairman of certain investment companies managed by Company subsidiaries and Tuxis Corporation and Bexil Corporation. He is a member of the New York Society of Security Analysts, the Association for Investment Management and Research, and the International Society of Financial Analysts. He is the father of Thomas B. Winmill and Mark C. Winmill. ROBERT D. ANDERSON - Vice Chairman of the Board of Directors. He is also Vice Chairman of certain investment companies managed by Company subsidiaries and certain subsidiaries of the Company. THOMAS B. WINMILL, ESQ. - President, General Counsel, Chief Executive Officer and Director. He is also President of the investment companies managed by Company subsidiaries and of certain subsidiaries of the Company. He is also a director and President of Bexil Corporation and a director and general counsel of Tuxis Corporation. He is a director of Golden Cycle Gold Corporation. He is a member of the New York State Bar. He is a member of the New York Section of the Society for Mining, Metallurgy and Exploration, Inc. He is a son of Bassett S. Winmill and brother of Mark C. Winmill. EDWARD G. WEBB, JR. - Director. He is Equity Portfolio Manager of Advanced Asset Management Advisers, Inc. He was President of Webb Associates, Ltd. since 1996. Prior to that, he served as a Senior Vice President and Director of the Company. CHARLES A. CARROLL - Director. From 1989 to the present, he has been affiliated with Kalin Associates, Inc., a member firm of the New York Stock Exchange. MARK C. WINMILL - Director. He is currently President of Tuxis Corporation. He was Co-President and Director of the Company from June 1990 to March 1999 and an Officer and Director of its various Funds and subsidiaries from June 1987 to March 1999. He was President and Director of Bull & Bear Securities, Inc. ("BBSI"), a nationwide discount broker, from June 1987 until March 1999 when the Company sold BBSI to The Royal Bank of Canada. He was also Chief Operating Officer of BBSI from April 1999 to February 2000. He is a son of Bassett S. Winmill and a brother of Thomas B. Winmill. WILLIAM G. VOHRER - Chief Financial Officer, Treasurer and Chief Accounting Officer. He joined the Company in February 2001. He is also Chief Financial Officer and Treasurer of certain investment companies managed by Company subsidiaries and certain subsidiaries of the Company, Bexil Corporation and Tuxis Corporation. From 1999 to 2001, he consulted on accounting matters. From 1994 to 1999 he was Chief Financial Officer and Financial Operations Principal for Nafinsa Securities, Inc., a Mexican Securities broker/dealer. From 1978 to 1994, he held Chief Financial Officer/Controller positions with various international banks. MARION E. MORRIS - Senior Vice President. Since 2000, she has served as Senior Vice President of the Company, certain investment companies managed by Company subsidiaries and certain subsidiaries of the Company. She is Director of Fixed Income and a member of the Investment Policy Committee. From 1997 to 2000, she acted as general manager of Michael Trapp. Previously, she had served as Vice President of Salomon Brothers, The First Boston Corporation and Cantor Fitzgerald. MONICA PELAEZ, ESQ. - Vice President, Secretary and Chief Compliance Officer. She is also Vice President, Secretary and Chief Compliance Officer of certain investment companies managed by Company subsidiaries and certain subsidiaries of the Company, Bexil Corporation and Tuxis Corporation. Previously, she was Special Assistant Corporation Counsel to New York City Administration for Children's Services from 1998 to 2000. She earned her Juris Doctor from St. John's University School of Law in 1997. She is a member of the New York State Bar. -24- Each director is elected by the vote or written consent of the holder of a majority of the Class B Common Stock and holds office until the next meeting of the Class B common stockholder and until his successor is elected and qualified, or until his earlier death, resignation or removal. The Company has adopted a Code of Ethic as defined in Item 406 of Regulation S-KB, which code applies to all of its employees, including its principal executive officer, principal financial officer, accounting officer, and persons performing similar functions. The Code of Ethics is available by calling the Company at 1-212-785-0900. The Audit Committee assists the Company's Board of Directors in its oversight of the quality and integrity of the accounting, audit and reporting practices of the Company. The Audit Committee's role includes discussing with management the Company's processes to manage business and financial risk and for compliance with significant applicable legal, ethical and regulatory requirements. The Audit Committee is responsible for the appointment, replacement, compensation and oversight of the independent auditor engaged to prepare or issue audit reports on the financial statements of the Company. The Audit Committee relies on the expertise and knowledge of management, the internal auditor, and the independent auditors in carrying out its oversight responsibilities. The Audit Committee of the Board of Directors consists of Charles A. Carroll, Edward G. Webb, Jr. and Mark C. Winmill. Each member of the audit committee is independent as defined under the Nasdaq Marketplace rules except for Mark C. Winmill. The Board of Directors had determined that Charles A. Carroll, Edward G. Webb, Jr. and Mark C. Winmill have sufficient knowledge in financial and accounting matters to serve on the Committee and each is an "audit committee financial expert" as defined by SEC rules. Based solely on the information from Forms 3, 4, and 5 furnished to it, the Company believes that the directors, officers, and owners of more than 10 percent of the Class A Common Stock of the Company have filed on a timely basis reports required by Section 16(a) of the Securities Exchange Act of 1934 during the most recent fiscal year. Forms 4/A were filed on behalf of Charles A. Carroll on April 1, 2004 to amend Forms 4 submitted on January 3, 2001 and February 9, 2001. Additionally, Form 4/A was filed on behalf of Robert D. Anderson on April 1, 2004 to amend Form 4 submitted on September 15, 2003. Item 10. Executive Compensation The following information and tables set forth the information required under the Securities and Exchange Commission's executive compensation rules. -25- Summary Compensation Table The following table sets forth, for the three years ended December 31, 2003, the compensation paid to the chief executive and the other officers whose total annual salary and bonus exceeded $100,000 in 2003. SUMMARY COMPENSATION TABLE
Long-Term Annual Compensation Compensation ------------ ------------------ Securities All Other Name And Salary Bonus Other Annual Underlying Compensation Principal Position Year ($) ($) Compensation* Options ---------------- - ------------------ ---- ---------------------- ------------- ----------- (a) (b) Bassett S. Winmill 2003 $ 100,000(c) $ - - - $1,174 $6,000 Chairman 2002 $ 131,733(c) $ - - 80,000 $1,174 $6,888 2001 $ 315,000 $ 13,125 - 55,000 $3,584 $6,300 Thomas B. Winmill 2003 $ 100,000(d) $ - - - $ 120 $5,500 President and 2002 $ 110,970(d) $ - - 80,000 $ 120 $6,600 Chief Executive Officer 2001 $ 187,500(d) $ 10,416 - 55,000 $ 300 $6,300 Monica Pelaez 2003 $ 100,000 $ 5,769 - 5,000 $ 96 $6,346 Vice President, Secretary 2002 $ 80,000 $ 10,000 - 5,000 $ 68 $5,400 2001 $ 70,000 $ 2,969 - 5,000 $ 53 $2,975
* Information omitted as perquisites do not exceed the lesser of $50,000 or 10% of the total annual salary and bonus for the year for the named executive officers. (a) Represents term life insurance (b) Represents Company's matching contributions to 401(k) Plan. (c) Bassett Winmill also received $243,750 and $200,000 in 2003 and 2002, respectively, in compensation and bonus from Bexil Corporation and $200,000 and $175,000 in 2003 and 2002, respectively, in compensation from Tuxis Corporation for his services as Executive Chairman. (d) Thomas Winmill also received $471,667, $350,000 and $62,500 in 2003, 2002 and 2001, respectively, in compensation and bonus from Bexil Corporation for his services as President. -26- Option Grants Table - ------------------- The following table sets forth, for the year ended December 31, 2003, information regarding the options granted for each of the executive officers named in the Summary Compensation Table.
Potential Realizable Value At Assumed Annual Rates Of Stock Price Appreciation For Individual Grants Option Term ----------------------------------------------------------------- ------------------------ Number Of % Of Total Securities Options Underlying Granted To Options Employees In Exercise Expiration Name Granted Fiscal Year Price Date 5% 10% ---- ------------ --------------- ---------- -------------- -- --- Bassett S. Winmill - - - - $ - $ - Thomas B. Winmill - - - - $ - $ - Monica Pelaez - - - - $ - $ -
Aggregated Option Exercises and Fiscal Year-End Option Value Table - ------------------------------------------------------------------ The following table sets forth, for the year ended December 31, 2003, information regarding the outstanding options for each of the executive officers named in the Summary Compensation Table.
Number of Shares of Class A Stock Value of Number of Underlying Unexercised Shares of Unexercised In-The-Money Class A Options at Options at Stock Dollar 12-31-03 (#) 12-31-03 ($) Acquired on Value Exercisable/ Exercisable/ Name Exercise Realized Unexercisable Unexercisable - ---- ----------- -------- ------------- -------------- Bassett S. Winmill 80,000 $132,275 0 / 0 $0 / $0 Thomas B. Winmill 80,000 $132,275 0 / 0 $0 / $0 Monica Pelaez 0 $0 5,000 / 0 $11,450 / $0
Long-Term Incentive Plan Awards Table - ------------------------------------- There were no long-term incentive plan awards made during the year ended December 31, 2003 to the executive officers named in the Summary Compensation Table. Compensation of Directors - ------------------------- Edward G. Webb, Jr., Charles A. Carroll and Mark C. Winmill were the only individuals who received compensation for their service as directors of the Company in 2003. They were each paid $500 per quarter as a retainer and $2,000 per quarterly meeting attended plus expenses. For the year ended December 31, 2003, Mr. Webb, Mr. Carroll and Mr. Mark C. Winmill were each paid $10,000 for attending four regular meetings and annual retainer. -27- Employment Contracts - -------------------- The Company has no employment or termination contracts with any of its employees except to the extent of the agreement described in Notes 9 and 11 to the financial statements. 1995 Long-Term Incentive Plan - ----------------------------- On December 6, 1995, the Board of Directors of the Company ("Board") and the Class B voting common stockholder adopted the Winmill & Co. Incorporated 1995 Long-Term Incentive Plan ("Plan") under which, as amended, a maximum of 600,000 options and stock-based awards (collectively, "Awards") may be made to directors, officers and employees of the Company or its subsidiaries. The amended Plan is described below. The purpose of the Plan is to assist the Company and its subsidiaries in attracting and retaining officers, directors and others for the benefit of the Company. The Plan also acts as an incentive in motivating selected officers and key employees to achieve long-term objectives of the Company, which is intended to inure to the benefit of all stockholders of the Company. Any proceeds raised by the Company under the Plan will be used for working capital purposes. General Provisions - ------------------ Duration of the Plan; Share Authorization. The Plan will terminate on December 6, 2005, unless terminated earlier by the Board. Six hundred thousand (600,000) shares of the Company's Class A Common Stock ("Shares") have been available for Awards under the Plan. The Shares to be offered under the Plan are authorized and unissued Shares, or issued Shares that have been reacquired by the Company and held in its treasury. Shares covered by any unexercised portions of terminated options, Shares forfeited by Participants, and Shares subject to any Awards that are otherwise surrendered by a Participant without receiving any payment or other benefit with respect thereto may again be subject to new Awards under the Plan. In the event the purchase price of an option or tax withholding relating to an Award is paid in whole or in part through the delivery of Shares, the number of Shares issuable in connection with the exercise of the option may not again be available for the grant of Awards under the Plan. Plan Administration. The Plan is administered by the Board or Compensation Committee ("Committee") of the Board. The Committee is composed of at least two directors of the Company, each of whom is a "Non-Employee Director" as defined in Rule 16b-3 promulgated by the SEC ("Rule 16b-3") under Section 16 of the Securities Exchange Act of 1934, as amended ("Exchange Act"). When the Committee is administering the Plan, the Committee will determine the officers and other key employees who will be eligible for and granted Awards, determine the amount and type of Awards, establish and modify administrative rules relating to the Plan, impose such conditions and restrictions on Awards as it determines appropriate and take such other action as may be necessary or advisable for the proper administration of the Plan. The Board or Committee may, with respect to Participants who are not subject to Section 16 of the Exchange Act, delegate such of its powers and authority under the Plan as it deems appropriate to certain officers or employees of the Company. Plan Participants. Any employee of the Company or its subsidiaries, whether or not a director of the Company, may be selected by the Board or Committee to receive an Award under the Plan. Non-Employee Directors shall receive such Awards (other than Incentive Stock Options) as the Board in its discretion may designate. -28- Awards Available Under the Plan - ------------------------------- Awards to employees under the Plan may take the form of stock options or Restricted Share Awards. Awards under the Plan may be granted alone or in combination with other Awards. The consideration for issuance of Awards under the Plan is the continued services of the employees and non-employee directors to the Company and its subsidiaries. Stock Options Granted to Employees. Stock options ("Incentive Stock Options") meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto ("Code"), and stock options that do not meet such requirements ("Non-Qualified Stock Options") are both available for grant to employees under the Plan. The term of each option will be determined by the Board or Committee, but no option will be exercisable more than ten years after the date of grant. If, however, an Incentive Stock Option is granted to a Participant who, at the time of grant of the option, owns (or is deemed to own under Section 424(d) of the Code) more than 10% (a "Ten Percent Shareholder") of the Company's Class B common stock, par value $0.01 per share ("Company Voting Securities"), the option is not exercisable more than five years after the date of grant. Options may also be subject to restrictions on exercise, such as exercise in periodic installments, performance targets and waiting periods, as determined by the Board or Committee. The exercise price of each option is determined by the Board or Committee; however, the per share exercise price of an option must be at least equal to 100% of the Fair Market Value (as defined below) of a Share on the date of grant of such option. If, however, an Incentive Stock Option is granted to a Ten Percent Shareholder, the per share exercise price of the option must be at least equal to 110% of the Fair Market Value of a Share on the date of grant of such option. Fair Market Value of a Share means, as of any given date, the most recently reported sale price of a Share on such date as of the time when Fair Market Value is being determined on the principal national securities exchange on which the Shares are then traded or, if the Shares are not then traded on a national securities exchange, the most recently reported sale price of the Shares on such date as of the time when Fair Market Value is being determined on Nasdaq; provided, however, that, if there were no sales reported as of such date, Fair Market Value is the last sale price previously reported. In the event the Shares are not admitted to trade on a securities exchange or quoted on Nasdaq, the Fair Market Value of a Share as of any given date is as determined in good faith by the Board or Committee. Notwithstanding the foregoing, the Fair Market Value of a Share will never be less than par value per share. Subject to whatever installment exercise and waiting period provisions the Board or Committee may impose, options may be exercised in whole or in part at any time prior to expiration of the option by giving written notice of exercise to the Company specifying the number of Shares to be purchased. Such notice must be accompanied by payment in full of the purchase price in such form as the Board or Committee may accept. If and to the extent determined by the Board or Committee in its discretion at or after grant, payment in full or in part may also be made in the form of Shares duly owned by the Participant (and for which the Participant has good title, free and clear of any liens and encumbrances) based on the Fair Market Value of the Shares on the date the option is exercised. In the case of an Incentive Stock Option, however, the right to make payment of the purchase price in the form of Shares may be authorized only at the time of grant. Stock options granted under the Plan are not transferable except by will or the laws of descent and distribution and may be exercised, during the Participant's lifetime, only by the Participant. Unless the Board or Committee provides for a shorter period of time, upon a Participant's termination of employment other than by reason of death or disability, the Participant may, within three months from the date of such termination of employment, exercise all or any part of his or her options as were exercisable at the date of termination of employment but only if (x) the Participant resigns or retires and the Board or Committee consents to such resignation or retirement and (y) such termination of employment is not for cause. In no event, however, may any option be exercised after the time when it would otherwise expire. If such termination of employment is for cause or the Board or Committee does not so consent, the right of such Participant to exercise such options will terminate at the date of termination of employment. -29- Further, unless the Board or Committee provides for a shorter period of time, upon a Participant's becoming disabled (such date being the "Disability Date"), the Participant may, within one year after the Disability Date, exercise all or a part of his or her options that were exercisable upon such Disability Date. In no event, however, may any option be exercised after the time when it would otherwise expire. Further, unless the Board or Committee provides for a shorter period of time, in the event of the death of a Participant while employed by the Company or prior to the expiration of the option as provided for in the event of disability, to the extent all or any part of the option was exercisable as of the date of death of the Participant, the right of the Participant's beneficiary to exercise the option will expire upon the expiration of one year from the date of the Participant's death (but in no event more than one year from the Participant's Disability Date) or on the stated termination date of the option, whichever is earlier. In the event of the Participant's death, the Board or Committee may, in its sole discretion, accelerate the right to exercise all or any part of an Option that would not otherwise be exercisable. To the extent all or any part of an option was not exercisable as of the date of a Participant's termination of employment, such right will expire at the date of such termination of employment. Notwithstanding the foregoing, the Board or Committee, in its sole discretion and under such terms as it deems appropriate, may permit a Participant who will continue to render significant services to the Company after his or her termination of employment to continue to accrue service with respect to the right to exercise his or her options during the period in which the individual continues to render such services. Restricted Shares. The Board or Committee may award restricted Shares ("Restricted Shares") to a Participant. Such a grant gives a Participant the right to receive Shares subject to a risk of forfeiture based upon certain conditions. The forfeiture restrictions on the Restricted Shares may be based upon performance standards, length of service or other criteria as the Board or Committee may determine. Until all restrictions are satisfied, lapsed or waived, the Company will maintain control over the Restricted Shares but the Participant will be entitled to receive dividends on the Restricted Shares; provided, however, that any Shares distributed as a dividend or otherwise with respect to any Restricted Shares as to which the restrictions have not yet lapsed will be subject to the same restrictions as such Restricted Shares. When all restrictions have been satisfied and/or waived or have lapsed, the Company will deliver to the Participant or, in the case of the Participant's death, his or her beneficiary, stock certificates for the appropriate number of Shares, free of all restrictions (except those imposed by law). None of the Restricted Shares may be assigned or transferred (other than by will or the laws of descent and distribution), pledged or sold prior to lapse or release of the applicable restrictions. All of a Participant's Restricted Shares and rights thereto are forfeited to the Company unless the Participant continues in the service of the Company or any parent or subsidiary of the Company as an employee until the expiration of the forfeiture period, and all other applicable restrictions of the Restricted Shares. Notwithstanding the foregoing, the Board or Committee may, in its sole discretion, waive the forfeiture period and any other applicable restrictions on a Participant's Restricted Share Award, provided that the Participant must at that time have completed at least one year of employment after the date of grant. Awards Granted to Non-Employee Directors. Non-Employee Directors are eligible only to receive Non-Qualified Stock Options and Awards of Restricted Shares. All such grants may be made only by the Board. The terms and conditions applicable to grants of such Awards to Non-Employee Directors (except where specifically stated herein to the contrary) are the same as those applicable to grants of Non-Qualified Options and Restricted Shares to employees, except that references to (a) the Committee shall be deemed to refer to the Board (b) employees shall be deemed to refer to Non-Employee Directors and (c) termination of employment shall be deemed to refer to termination of service. -30- Termination and Amendment - ------------------------- The Board may amend or terminate the Plan at any time it is deemed necessary or appropriate; provided, however, that no amendment may be made, without the affirmative approval of the holder of Company Voting Securities, that would require stockholder approval under Rule 16b-3, the Code or other applicable law unless the Board determines that compliance with Rule 16b-3 and/or the Code is no longer desired. Except as provided by the Board or Committee, in its sole discretion, at the time of an Award or pursuant to certain antidilution provisions (as discussed below), no Award granted under the Plan to a Participant may be modified (unless such modification does not materially decrease the value of the Award) after the date of grant except by express written agreement between the Company and the Participant, provided that any such change (a) may not be inconsistent with the terms of the Plan, and (b) must be approved by the Board or Committee. The Board has the right and the power to terminate the Plan at any time. No Award may be granted under the Plan after the termination of the Plan, but the termination of the Plan will not have any other effect and any Award outstanding at the time of the termination of the Plan may be exercised after termination of the Plan at any time prior to the expiration date of such Award to the same extent such Award would have been exercisable had the Plan not terminated. Antidilution Provisions - ----------------------- Recapitalization. The number and kind of shares subject to outstanding Awards, the purchase price or exercise price of such Awards, and the number and kind of shares available for Awards subsequently granted under the Plan will be appropriately adjusted to reflect any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other change in capitalization with a similar substantive effect upon the Plan or the Awards granted under the Plan. The Board or Committee has the power and sole discretion to determine the nature and amount of the adjustment to be made in each case. However, in no event will any adjustment be made in accordance with the Plan's antidilution provisions to any previous grant of Restricted Shares if an adjustment has been or will be made to the Shares awarded to a Participant in such person's capacity as a stockholder. Sale or Reorganization. After any reorganization, merger or consolidation in which the Company is the surviving entity, each Participant will, at no additional cost, be entitled upon the exercise of an Award outstanding prior to such event, and in connection with the payout after such event of any Award outstanding at the time of such event, to receive (subject to any required action by stockholders), in lieu of the number of Shares receivable or exercisable pursuant to such option, the number and class of shares of stock or other securities to which such Participant would have been entitled pursuant to the terms of the reorganization, merger or consolidation if, at the time of such reorganization, merger or consolidation, such Participant had been the holder of record of a number of Shares equal to the number of Shares receivable or exercisable pursuant to such Award. Comparable rights will accrue to each Participant in the event of successive reorganizations, mergers or consolidations of the character described above. Options to Purchase Stock of Acquired Companies. After any reorganization, merger or consolidation in which the Company is a surviving entity, the Board or Committee may grant substituted options under the provisions of the Plan, pursuant to Section 424 of the Code, replacing old options granted under a plan of another party to the reorganization, merger or consolidation whose stock subject to the old options may no longer be issued following such merger or consolidation. The foregoing adjustments and manner of application of the foregoing provisions will be determined by the Board or Committee in its sole discretion. Any such adjustments may provide for the elimination of any fractional Shares that might otherwise become subject to any options. -31- Item 11. Security Ownership of Certain Beneficial Owners and Management. (a) Bassett S. Winmill, Chairman of the Board of Directors, owns all of the issued and outstanding shares of the Company's Class B Common Stock, which represents 100% of the Company's voting securities. (b) The following table sets forth, as of December 31, 2003, information relating to beneficial ownership by individual directors of the Company, executive officers named in the Summary Compensation Table and by directors and executive officers of the Company as a group, of the currently issued and outstanding Class A Common Stock of the Company.
Amount and Nature of Percent Name of Beneficial Owner Beneficial Ownership (4) of Class ------------------------ ------------------------ -------- Bassett S. Winmill 185,669 12.4% Thomas B. Winmill 134,481 (1) 9.0% Robert D. Anderson 86,969 5.8% Edward G. Webb, Jr. 21,164 (2) 1.4% Charles A. Carroll 27,500 (2) 1.8% Mark C. Winmill 47,564 3.2% Monica Pelaez 5,000 (3) 0.3% All directors and executive officers as a group (7 persons) 508,447 33.2%
(1) Includes 10,000 shares held by Thomas B. Winmill's sons, of which he disclaims beneficial ownership. (2) Includes options exercisable to purchase 17,500 shares. (3) Includes options exercisable to purchase 5,000 shares. (4) The nature of the beneficial ownership for all the Class A Common Stock is investment power. Item 12. Certain Relationships and Related Transactions The following sets forth the reportable items regarding indebtedness of management in excess of $60,000. Largest Amount Amount Of Outstanding At Name and Relationship Indebtedness December 31, 2003 ------------ ----------------- Bassett S. Winmill, Chairman * $265,816 $0 Thomas B. Winmill, President * $197,398 $0 Mark C. Winmill, Director * $225,158 $0 * In connection with the exercise of stock options and related tax expense, the Company received notes with interest rates ranging from 2.45% to 2.48% per annum payable on December 31, 2004. These notes were fully repaid during 2003. -32- Item 13. Exhibits, Consolidated Financial Statements and Schedules, and Reports on Form 8-K (a) (1) Financial Statements See Item 7 for a list of the financial statements filed as part of this report. (2) Financial Statement Schedules by Regulation S-X are not required under the related instructions or are inapplicable, and therefore have been omitted. (3) Exhibits (2) Not applicable (3) Certificate of Incorporation as amended October 24, 1989 as filed as an exhibit to Form 10-K for the year ended December 31, 1992 and incorporated herein by reference; Certificate of Incorporation as amended April 1, 1999 as filed as an exhibit to Form 10-K/A for the year ended December 31, 1998 and incorporated herein by reference; By-Laws amended as of October 1, 1993 as filed as an exhibit to Form 10-K for the year ended December 31, 1993 and incorporated herein by reference, and By-Laws amended as of April 1, 1999 as filed as an exhibit to Form 10-K/A for the year ended December 31, 1998 and incorporated herein by reference. (4) Instruments defining the rights of security holders, including indentures (see Article Four of Certificate of Incorporation). (9) Not applicable. (10) Material Contracts (a) Investment Management Agreements, Distribution Agreements and Plans of Distribution ("12b-1 Plans") between subsidiaries of the Company and the Funds and Non-Exclusive License Agreements between the Company and the Funds:
Non-Exclusive Management Distribution 12b-1 License Fund Agreement Agreement Plan Agreement ---- ---------- ------------ ----- ------------- (i) Foxby Corp. (5) - - (5) (ii) Global Income Fund, Inc. (4) - - - (iii) Midas Dollar Reserves, Inc. (1) (1) (1) (3) (iv) Midas Fund, Inc. (2) (2) (2) (3) (v) Midas Special Equities Fund, Inc. (1) (1) (1) (3)
(1) Filed as exhibits to Form 10-K for the year ended December 31, 1993 and incorporated herein by reference. (2) Filed as exhibits to Form 10-K for the year ended December 31, 1995 and incorporated herein by reference. -33- (3) Filed as exhibits to Form 10-K for the year ended December 31, 1997 and incorporated herein by reference. (4) Filed as exhibits to Form 10-K for the year ended December 31, 1999 and incorporated herein by reference. (5) Filed as exhibits to Form 10-KSB for the year ended December 31, 2002 and incorporated herein by reference. (b) Winmill & Co. Incorporated 1995 Long-Term Incentive Plan, as adopted December 6, 1995 and amended February 6, 1996, filed as exhibit to Form 10-K for the year ended December 31, 1995 and incorporated herein by reference. (c) Section 422A Incentive Stock Option Plan, as adopted December 5, 1990, filed as exhibit to Form 10-K for the year ended December 31, 1990 and incorporated herein by reference. (d) Investment Management Transfer Agreements between the investment management subsidiaries of the Company and filed as exhibit to Form 10-K for the year ended December 31, 1992 and incorporated herein by reference. (e) Winmill & Co. Incorporated Investment Plan, filed as an exhibit to Form 10-K for the year ended December 31, 1993 and incorporated herein by reference. (f) Death Benefit Agreement dated July 22, 1994 and filed as exhibit to Form 10-K for the year ended December 31, 1994 and incorporated herein by reference. (g) Winmill & Co. Incorporated Incentive Stock Option Agreement for Employees - Bassett S. Winmill filed as an exhibit to Form 10-K for the year ended December 31, 1995 and incorporated herein by reference. (h) Winmill & Co. Incorporated Incentive Stock Option Agreement for Employees - Robert D. Anderson filed as an exhibit to Form 10-K for the year ended December 31, 1995 and incorporated herein by reference. (i) Winmill & Co. Incorporated Incentive Stock Option Agreement for Employees - Mark C. Winmill filed as an exhibit to Form 10-K for the year ended December 31, 1995 and incorporated herein by reference. (j) Winmill & Co. Incorporated Incentive Stock Option Agreement for Employees - Thomas B. Winmill filed as an exhibit to Form 10-K for the year ended December 31, 1995 and incorporated herein by reference. (k) Winmill & Co. Incorporated Stock Option Agreement - Edward G. Webb, Jr. filed as an exhibit to Form 10-K for the year ended December 31, 1995 and incorporated herein by reference. (l) Winmill & Co. Incorporated Stock Option Agreement - Charles A. Carroll filed as an exhibit to Form 10-K for the year ended December 31, 1995 and incorporated herein by reference. -34- (m) Winmill & Co. Incorporated 1995 Long-Term Incentive Plan, (as Amended and Restated as of October 29, 1997), filed as exhibit to Form 10-K for the year ended December 31, 1997 and incorporated herein by reference. (n) Option Certificate for Bassett S. Winmill filed as an exhibit to Form 10-K for the year ended December 31, 1997 and incorporated herein by reference. (o) Option Certificate for Edward G. Webb, Jr. filed as an exhibit to Form 10-K for the year ended December 31, 1997 and incorporated herein by reference. (p) Option Certificate for Charles A. Carroll filed as an exhibit to Form 10-K for the year ended December 31, 1997 and incorporated herein by reference. (q) Option Certificate for Thomas B. Winmill filed as an exhibit to Form 10-K for the year ended December 31, 1997 and incorporated herein by reference. (r) Option Certificate for Robert D. Anderson filed as an exhibit to Form 10-K for the year ended December 31, 1997 and incorporated herein by reference. (s) Purchase Agreement, dated as of December 17, 1998, by and among Winmill & Co. Incorporated (formerly Bull & Bear Group, Inc.), Bull & Bear Securities, Inc. and RBC Holdings (USA) Inc., with all exhibits thereto filed as an exhibit to Form 8-K on December 18, 1998 and incorporated herein by reference. (t) Death Benefit Agreement as amended April 2002 filed as exhibit to Form 10-KSB for the year ended December 31, 2002 and incorporated herein by reference. (11) Statement Regarding Computation of Per Share Earnings (12) Not applicable. (13) Not applicable. (16) Not applicable. (18) Not applicable. (21) Wholly-Owned Subsidiaries of the Company (23) Not applicable. (24) Not applicable. (27) Not applicable. (28) Not applicable. (99) Code of Ethics for Principal Executives and Senior Financial Officers. (b) Reports on Form 8-K. November 14, 2003 - Regulation FD Disclosure - Financial Results for the third quarter and nine months ended September 30, 2003. 8-K/A - December 2, 2003 - Regulation FD Disclosure - Financial Results for the third quarter and nine months ended September 30, 2003. -35- Item 14. Principal Accountant Fees and Services During the years ended December 31, 2003 and 2002, the Company was billed the aggregate fees set forth below by Tait, Weller & Baker, the Company's principal accountant during 2003 and 2002: 2003 2002 ---- ---- Audit Fees $ 47,500 $ 47,500 Audit Related Fees 4,000 4,150 Tax Fees 22,065 15,000 All Other fees - - --------- --------- Total Fees $ 73,565 $ 66,650 ========= ========= Audit fees include fees related to the annual independent audit of the Company's financial statements. Audit related fees include fees related to the quarterly review of the Company's Form 10-QSB filings. Tax fees include fees related to the preparation of the annual federal, state and city tax returns and other tax services. The Audit Committee also has adopted a formal policy concerning approval of audit and non-audit services to be provided by the independent auditor of the Company. The policy requires that all services Tait, Weller & Baker, the Company's independent auditor, may provide to the Company, including audit services and permitted audit-related and non-audit services, be pre-approved by the Audit Committee. The Audit Committee approved all audit and tax services provided by Tait, Weller & Baker. -36- SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WINMILL & CO. INCORPORATED March 31, 2004 By: /s/ William G. Vohrer ----------------------------------- William G. Vohrer Chief Financial Officer, Treasurer, Chief Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Company and in the capacities and on the dates indicated. March 31, 2004 By: /s/ Thomas B. Winmill ----------------------------------- Bassett S. Winmill, Chairman of the Board, Director Thomas B. Winmill on behalf of Bassett S. Winmill by Power of Attorney signed 12/11/01 March 31, 2004 By: /s/ Thomas B. Winmill ----------------------------------- Robert D. Anderson, Vice Chairman, Director Thomas B. Winmill on behalf of Robert D. Anderson by Power of Attorney signed 12/11/01 March 31, 2004 By: /s/ Thomas B. Winmill ----------------------------------- Thomas B. Winmill, Esq., President Chief Executive Officer, General Counsel, Director March 31, 2004 By: /s/ Thomas B. Winmill ----------------------------------- Edward G. Webb, Jr., Director Thomas B. Winmill on behalf of Edward G. Webb, Jr. by Power of Attorney signed 12/11/01 March 31, 2004 By: /s/ Thomas B. Winmill ----------------------------------- Charles A. Carroll, Director Thomas B. Winmill on behalf of Charles A. Carroll by Power of Attorney signed 12/11/01 March 31, 2004 By: /s/ Thomas B. Winmill ----------------------------------- Mark C. Winmill, Director Thomas B. Winmill on behalf of Mark C. Winmill by Power of Attorney signed 12/11/01 -37- Certification Under Section 906 Of The Sarbanes-Oxley Act of 2002 Certification of Periodic Financial Report Pursuant to 18 U.S. C. Section 1350 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Winmill & Co. Incorporated (the "Company") certifies that the Annual Report on Form 10-KSB of the Company of the fiscal year ended December 31, 2003 fully complies with the requirements of Section 13(a) or 15 (d), as applicable, of the Securities Exchange Act of 1934 and information contained in that Form 10-KSB fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: March 31, 2004 /s/ Thomas B. Winmill ----------------------------------- Thomas B. Winmill Chief Executive Officer and President Dated: March 31, 2004 /s/ William G. Vohrer ----------------------------------- Chief Financial Officer, Treasurer, Chief Accounting Officer -38- Certification- Exchange act rules 13a-14 and 15d-14 I, Thomas B. Winmill, certify that: 1. I have reviewed this annual report on Form 10-KSB of Winmill & Co. Incorporated; 2. Based on my knowledge, this Annual 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 annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 annual 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 annual report (the "Evaluation Date"); and c) presented in this annual 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 annual report whether or not 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. Date: March 31, 2004 /s/ Thomas B. Winmill - ---------------------- Chief Executive Officer -39- Certification- Exchange act rules 13a-14 and 15d-14 I, William G. Vohrer, certify that: 1. I have reviewed this annual report on Form 10-KSB of Winmill & Co. Incorporated; 2. Based on my knowledge, this annual 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 annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual 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 annual 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 annual report (the "Evaluation Date"); and c) presented in this annual 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 annual report whether or not 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. Date: March 31, 2004 /s/ William G. Vohrer ----------------------- Chief Financial Officer, Treasurer, Chief Accounting Officer -40- INDEX TO EXHIBITS (3) Exhibits (11) Statement Regarding Computation of Per Share Earnings. (21) Wholly-Owned Subsidiaries of the Company. (99) Code of Ethics for Principal Executives and Senior Financial Officers. -41- EX-11 3 exhibit11.txt COMPUTATION OF PER SHARE EARNINGS Exhibit 11 - Statement Regarding Computation of Per Share Earnings
2003 2002 ---- ---- Basic Diluted Basic Diluted ----- ------- ----- ------- Weighted average common shares outstanding 1,596,946 1,596,946 1,638,403 1,638,403 Weighted average common shares issuable upon exercise of stock options under the treasury stock method - 34,398 - 10,726 Weighted average common shares issuable upon exercise of warrants under the treasury stock method - - - - Weighted average common shares and common share equivalents utilized for earnings per share computation 1,596,946 1,631,344 1,638,403 1,649,129
EX-21 4 exhibit21.txt SUBSIDIARIES OF WCI Exhibit 21 - Wholly-Owned Subsidiaries of the Company CEF Advisers, Inc., a Delaware corporation Investor Service Center, Inc., a Delaware corporation Midas Management Corporation, a Delaware corporation EX-99 5 codeofethics.txt CODE OF ETHICS FOR OFFICERS Exhibit 99 - Code of Ethics for Principal Executives and Senior Financial Officers. CODE OF ETHICS FOR PRINCIPAL EXECUTIVES AND SENIOR FINANCIAL OFFICERS Winmill & Co. Incorporated (the "Company") has adopted this Code of Ethics for Principal Executive and Senior Financial Officers (the "Code") pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 and the final rules and regulations promulgated by the Securities and Exchange Commission thereunder. This Code provides principles to which the principal executive officer, senior financial officer, controller and other persons performing similar functions (collectively, "Officers") are expected to adhere and advocate. This Code embodies rules regarding individual and peer responsibilities, as well as responsibilities to employers, the public and other stakeholders. Company Officers shall seek to: o Act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships. o Provide constituents with information that is accurate, complete, objective, relevant, timely and understandable. o Comply with rules and regulations of federal, state, and local governments, and other appropriate private and public regulatory agencies. o Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing their independent judgment to be subordinated. o Respect the confidentiality of information acquired in the course of their work except when authorized or otherwise legally obligated to disclose. Confidential information acquired in the course of their work is not used for personal advantage. o Share knowledge and maintain skills important and relevant to their constituents* needs. o Pro-actively promote ethical behavior as a responsible partner among peers in their work environment. o Achieve responsible use of and control over all assets and resources employed or entrusted to them. o Report, on a timely basis, conduct that the Officer believes to be a violation of the Code to Company's Audit Committee or Board of Directors. -----END PRIVACY-ENHANCED MESSAGE-----