-----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, Fh3G5K1fo1fa0KqkFGRqWoMRU5wcJI8Uw9S6UmltKzr3h2PjhUTellAUohSMGOjl PbV+XhuIla13R/DDLrjswQ== 0000950144-01-506478.txt : 20010830 0000950144-01-506478.hdr.sgml : 20010830 ACCESSION NUMBER: 0000950144-01-506478 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST CAROLINA INVESTORS INC CENTRAL INDEX KEY: 0000811040 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 561005066 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08942 FILM NUMBER: 1726241 BUSINESS ADDRESS: STREET 1: 1130 EAST THIRD SRREET SUITE 410 CITY: CHARLOTTE STATE: NC ZIP: 28204 BUSINESS PHONE: 7043730501 MAIL ADDRESS: STREET 1: P O BOX 33607 CITY: CHARLOTTE STATE: NC ZIP: 28233-3607 N-30D 1 g71297n-30d.txt FIRST CAROLINA INVESTORS INC 1 FIRST CAROLINA INVESTORS, INC. REPORT TO SHAREHOLDERS JUNE 30, 2001 2 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 2001 AND 2000 (UNAUDITED)
2001 2000 ------------ ------------ ASSETS Investments in securities, at value (cost of $43,506,795 in 2001 and $29,673,225 in 2000.............................. $ 83,782,587 $ 89,106,418 Cash, including short term investments of $32,196,384 in 2001 and $7,533,439 in 2000............................... 32,190,269 7,513,706 Mortgage loans, secured by real estate...................... 50,734 52,513 Real estate................................................. 2,000,000 2,000,000 Investment in joint venture................................. -- 75,000 Amounts due from sale of security........................... -- 43,286 Accrued dividend and interest receivable.................... 408,256 55,560 Other assets................................................ 2,893,230 2,823,510 ------------ ------------ Total assets...................................... $121,325,076 $101,669,993 ------------ ------------ LIABILITIES Accounts payable and accrued liabilities.................... $ 3,570,464 $ 4,515,961 Federal and state income taxes payable...................... 7,944,021 784,878 Deferred income taxes payable............................... 14,122,563 22,457,157 ------------ ------------ Total liabilities................................. 25,637,048 27,757,996 ------------ ------------ Net Assets.................................................. $ 95,688,028 $ 73,911,997 ============ ============ Net assets per share (3,500,000 no par value common shares authorized, 953,490 shares issued, 951,590 and 955,956 shares outstanding in 2001 and 2000 respectively)......... $ 100.56 $ 77.32 ============ ============
The Consolidated Financial Statements should be read in conjunction with the 2000 Annual Report. 1 3 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED)
2001 2000 ------------ ---------- INCOME Dividends................................................... $ 593,481 $ 802,933 Interest.................................................... 1,354,061 258,796 Gain on sale of real estate................................. 115,068 10,000 Equity in earnings of joint venture......................... -- 177,974 Other....................................................... 3,086 3,834 ------------ ---------- Total income...................................... 2,065,696 1,253,537 ------------ ---------- EXPENSES General and administrative.................................. 42,674 44,539 Professional fees........................................... 59,723 47,379 Other....................................................... 114,900 107,581 ------------ ---------- Total expenses.................................... 217,297 199,499 ------------ ---------- Earnings before income taxes and realized and unrealized appreciation on investments............................... 1,848,399 1,054,038 Provision for income taxes.................................. (577,000) (303,000) ------------ ---------- Net income before realized and unrealized appreciation on investments............................................... 1,271,399 751,038 Gain realized on investments in other companies (net of income tax provision of $14,373,000 in 2001 and $767,000 in 2000).................................................. 21,332,279 1,199,753 Change in unrealized appreciation (depreciation) of investments for the period, net of deferred taxes......... (16,878,076) 559,932 ------------ ---------- Net increase in net assets resulting from operations..................................... $ 5,725,602 $2,510,723 ============ ==========
The Consolidated Financial Statements should be read in conjunction with the 2000 Annual Report. 2 4 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED)
2001 2000 ------------ ----------- Increase in net assets from operations Investment income, net.................................... $ 1,271,399 $ 751,038 Realized gain on investments, net......................... 21,332,279 1,199,753 Change in unrealized appreciation, net.................... (16,878,076) 559,932 ------------ ----------- Net increase in net assets resulting from operations... 5,725,602 2,510,723 Distributions to shareholders of $1.00 per share in 2001 and $.75 in 2000 from investment income, net...... (915,662) (467,356) Treasury shares purchased................................... (278,323) (1,124,731) ------------ ----------- Total increase......................................... 4,531,617 918,636 Net assets Beginning of period....................................... 91,156,411 72,993,361 ------------ ----------- End of period............................................. $ 95,688,028 $73,911,997 ============ ===========
The Consolidated Financial Statements should be read in conjunction with the 2000 Annual Report. 3 5 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES INVESTMENTS IN SECURITIES JUNE 30, 2001 AND 2000 (UNAUDITED)
2001 2000 ------------------------ ------------------------ PRINCIPAL PRINCIPAL AMOUNT OR AMOUNT OR NO. SHARES FAIR VALUE NO. SHARES FAIR VALUE ---------- ----------- ---------- ----------- Common Stocks -- 87.9% in 2001 and 96.6% in 2000 Financial Services -- 54.6% in 2001 and 66.5% in 2000 Coast Bank of Florida PFD..................... 100,000 $ 1,100,000 -- $ -- M & T Bank Corporation........................ 500,000 37,750,000 1,250,000 56,250,000 Merchants Group, Inc.......................... 135,000 2,855,250 135,000 2,244,375 Three Rivers Bancorp, Inc..................... 357,700 4,024,125 124,300 815,718 Manufacturing -- 18.8% in 2001 and 18.7% in 2000 Acme Electric Corporation..................... -- -- 1,010,000 8,711,250 Allied Healthcare, Inc........................ 850,000 2,720,000 -- -- Amcast, Inc................................... 675,200 5,772,960 -- -- CPAC, Inc..................................... 111,571 686,162 -- -- Exolon -- ESK Company......................... 64,700 711,700 64,700 711,700 Marine Transport Corporation.................. -- -- 700,000 1,706,250 Sunrype Products, Inc......................... 65,900 224,179 -- -- Todd Shipyards Corporation.................... 700,000 5,600,000 700,000 5,512,500 Services -- 5.3% in 2001 and 4.3% in 2000 Barrister Global Services Network, Inc........ 159,810 111,867 159,810 169,798 Ecology & Environment, Inc.................... 425,000 3,633,750 425,000 2,576,563 High Falls Brewery Company, LLC............... 185,000 740,000 -- -- Imperial Parking Corporation.................. -- -- 62,500 1,046,875 Diversified -- 9.2% in 2001 and 7.1% in 2000 Bell Industries, Inc.......................... -- -- 108,900 285,863 Denison Mines Ltd. ........................... 3,529,000 359,958 -- -- First Union Real Estate....................... 2,034,100 4,678,430 1,296,400 3,808,175 First Union R/E PFD Conv Ser A................ 134,000 2,680,000 30,700 614,000 Price Enterprises, Inc........................ -- -- 17,000 114,223 Tandycrafts, Inc.............................. -- -- 533,511 1,500,500 ----------- ----------- Total Common Stocks -- (cost of $34,106,245 in 2001 and $26,552,275 in 2000)................. $73,648,381 $86,067,789 ----------- ----------- Debentures -- 12.1% in 2001 and 3.4% in 2000 Excel Legacy Corporation 10% due 2004......... $ 668,000 615,395 $ 668,000 489,310 First Union Real Estate Equity Investments 8.87% due 2003............................. 100,000 94,500 100,000 91,250 High Falls Brewery Company 12% due 2008....... 1,110,000 1,110,000 -- -- Malan Realty Investments 9.5% due 2004........ 2,000,000 1,900,000 -- -- Moran Energy, Inc 8.75% due 2008.............. 95,000 92,981 -- -- Rose Hills Company 9.5% due 2004.............. 3,885,000 2,913,750 -- -- Sizeler Property Investors, Inc. 8% due 2003....................................... 3,442,000 3,407,580 2,758,000 2,458,067 ----------- ---------- ----------- Total Debentures (cost of $9,400,550 in 2001 and 3,120,950 in 2000)............................ $10,134,206 $ 3,038,628 ----------- ----------- Total -- 100% (cost of $43,506,795 in 2001 and $29,673,225 in 2000).......................... $83,782,587 $89,106,418 =========== ===========
The Consolidated Financial Statements should be read in conjunction with the 2000 Annual Report. 4 6 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2001 AND 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, FINANCIAL STATEMENT PRESENTATION AND ORGANIZATION. (A) Organization First Carolina Investors, Inc. was organized December 2, 1971 and subsequently incorporated in the state of Delaware on July 1, 1987. On January 3, 1995 First Carolina Investors, Inc. registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940. (B) Principles of consolidation and financial statement presentation The accompanying consolidated financial statements include First Carolina Investors, Inc. and its subsidiaries (the Company), all of which are wholly-owned. In consolidation, all significant intercompany accounts and transactions have been eliminated. (C) Security valuation Investments in securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation or, if the exchange or market is not open for trading on that day, on the next preceding trading date; other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are stated at the last quoted bid price. Securities of privately-held issuers or for which market quotations are unavailable are valued at fair value as determined in good faith by the Company's Board of Directors. In determining fair value, the Board of Directors may consider, if available, financial statements such as balance sheets and statements of operations; business and strategic plans; evaluations of major assets; quality of management; legal, contractual or market restrictions or limitations on sale of the securities; and other factors which the directors deem relevant. Unrealized appreciation and/or depreciation is included in the statement of operations, net of the effective tax rate, to arrive at the change in net assets. (D) Real estate The Board of Directors and management of the Company value its real property investments at estimated fair value. Procedures utilized to determine the estimated fair value include estimated net cash flows and utilization of fair market comparables in existing subdivisions developed by the Company and other market comparables. The Company accounts for sales of real estate in accordance with Statement of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate." (E) Investment in joint venture The Company had an interest in a joint venture which is engaged in the development and sale of real estate. The Board of Directors and management have used fair market comparables in the existing subdivision developed by the venture in valuing its investment at its estimated fair value. At June 30, 2001, the venture had sold all lots. At June 30, 2000 the venture owned 3 lots at a cost of $113,268. (F) Income taxes The Company is subject to Federal and state corporate income taxes. The Company files a consolidated Federal income tax return. The Company accounts for income taxes in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." 5 7 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred income taxes payable have been increased to reflect the estimated Federal and state income tax liabilities on unrealized gains in real estate, investments in securities and investment in joint venture in the accompanying Consolidated Statements of Assets and Liabilities. (G) Distributions to Shareholders Dividends payable to shareholders are recorded on the declaration date. (H) Management's use of estimates The preparation of financial statements in conformity with generally accepted accounting principals requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses; and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates. (I) Amortization Policies The discount on debentures is amortized to cost over the life of the debentures at the effective rate of interest. (J) Other The Company follows the industry practice of recording security transactions on the trade date. Dividend income is recognized on the ex-dividend date. Interest income is recognized on the accrual basis. (K) Reclassification Certain amounts on the June 30, 2000 consolidated statement of operations have been reclassified to conform to the June 30, 2001 presentation. 2. INVESTMENT TRANSACTIONS Purchases and sales of investment securities were $19,776,869 and $42,160,637 respectively for the six month period ended June 30, 2001 and $2,866,841 and $4,884,000 respectively for the six months ended June 30, 2000. The net gain on sale of investments in other companies for the respective six month period was $21,332,279 in 2001 and $1,199,753 in 2000. The gross unrealized gain on investments in other companies totaled $44,249,320 and $62,274,883 for the six months ended June 30, 2001 and 2000, respectively. Gross unrealized losses were $3,973,528 and $2,841,690 at June 30, 2001 and 2000. 3. MORTGAGE LOANS The Company's investments in mortgage loans as of June 30, 2001 and 2000 are as follows:
2001 2000 --------------------------------- --------------------------------- INTEREST MATURITY OUTSTANDING INTEREST MATURITY OUTSTANDING RATE DATE BALANCE RATE DATE BALANCE -------- -------- ----------- -------- -------- ----------- Permanent first mortgage loans on condominiums...... 16% 12/2002 $50,734 16% 12/2002 $52,513 ------- ------- $50,734 $52,513 ======= =======
6 8 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 4. REAL ESTATE The estimated fair value of real estate owned at June 30, 2001 and 2000, respectively is $2,000,000. It consists of one tract of commercially zoned property totaling 30 acres. Land held for investment is considered non-income producing. 5. OTHER ASSETS The components of other assets at June 30, 2001 and 2000 are as follows:
2001 2000 ---------- ---------- Deferred compensation, funded............................... $2,889,677 $2,802,327 Miscellaneous............................................... 3,553 21,183 ---------- ---------- $2,893,230 $2,823,510 ========== ==========
The deferred compensation includes $2,890,000 and $2,802,000 at June 2001 and 2000 respectively, that is owed to affiliated persons pursuant to a deferred compensation plan. The deferred compensation has accrued over seventeen years. Contributions are no longer being made to the plan. 6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES The components of accounts payable and accrued liabilities at June 30, 2001 and 2000 are as follows:
2001 2000 ---------- ---------- Trade accounts payable...................................... $ 234,898 $ 394,607 Accounts payable for securities............................. 271,847 711,136 Deferred compensation (note 5).............................. 2,889,677 2,802,327 Dividends payable........................................... -- 465,431 Miscellaneous accruals and payable.......................... 174,042 142,460 ---------- ---------- $3,570,464 $4,515,961 ========== ==========
7. NET ASSETS PER SHARE Net assets per share are based on the number of shares of common stock and common stock equivalents outstanding, after deducting treasury stock 951,590 and 955,956 at June 30, 2001 and 2000, respectively. The computation assumes that outstanding stock options were exercised and the proceeds used to purchase common stock resulting in the issuance of an additional 37,828 shares of common stock at June 30, 2001 and 35,594 shares at June 30, 2000. 8. SHARE REPURCHASE PROGRAM At June 30, 2001 the Company has repurchased 592,780 shares as treasury shares at a cost of $18,417,374. At June 30, 2001, 590,880 treasury shares were cancelled and retired. During 2001 through June 30, the Company has repurchased 3,700 shares at an average cost of $75.34 per share on the Boston Stock Exchange, the exchange on which the Company's shares are traded. At the July 25, 2001 Board of Directors meeting, the directors authorized the continuation of the share repurchase program. 9. ACCUMULATED UNDISTRIBUTED INCOME At June 30, 2001, accumulated undistributed net investment income was $6,243,363, accumulated and undistributed net realized gains on investment transactions was $56,825,680 and the net unrealized appreciation in value of investments was $20,832,018. 7 9 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 10. DISTRIBUTION TO SHAREHOLDERS Two dividends totaling $1.00 per share were declared during the six months ended June 30, 2001. Two dividends of $0.75 each per share were declared during the six months ended June 30, 2000. The dividends are taxable to stockholders as ordinary income. At a meeting held on June 19, 2000, the Company's directors adopted a dividend policy to reflect the Company's intention to distribute to shareholders as dividends all undistributed personal holding company income of the Company as defined in the Internal Revenue Code. In the Company's case, the sources of such income are primarily dividends and interest received on its portfolio investments. The Company intends to continue payment of quarterly dividends and, in addition, to include in the fourth quarter dividend an adjusting dividend if necessary to effect a distribution of all undistributed personal holding company income and avoid special taxes imposed by the Internal Revenue Code on the undistributed personal holding company income of personal holding companies. 11. REMUNERATION Each Director receives fees of $2,500 per directors' meeting attended and $1,000 per audit committee meeting attended. The Chairman also receives a $1,500 monthly salary. For the six months ended June 30, 2001 and 2000 directors' fees totaled $18,000 and $33,000, respectively. There was no aggregate remuneration paid during the six months ended June 30, 2001 and 2000. The Company paid brokerage fees of $91,952 and $73,670 for the six months ended June 30, 2001 and 2000, respectively. Trubee, Collins & Co., Inc. received $10,834 and $52,445 during the six months ended June 30, 2001 and 2000, respectively. The Company has executed securities transactions through the brokerage firm of Trubee, Collins and Co., Inc., of which Brent D. Baird, Chairman of the Board and an affiliated person of the Company, is a registered person. 12. INCENTIVE STOCK GRANT AND OPTION PLAN During 1987 options for 45,000 shares of common stock were awarded to certain employees. These options are exercisable at the rate of 20% per year beginning July 1, 1988 at a price of $12.75 per share which was equal to the market price at the date of the adoption of the amended plan. All options are fully vested and exercisable but no options have been exercised at June 30, 2001. At the Annual Meeting of Shareholders held on July 25, 2001, the shareholders approved the incentive stock grant and option plan. 13. COMMITMENTS AND CONTINGENCIES At June 30, 2001 the Company has approximately $250,000 of undisbursed contractual commitments in connection with real estate. In order to protect its investments, the Company may be required to furnish amounts in excess of its current investments or commitments. The Company is not involved in any legal actions. 8 10 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) COMPUTATION OF NET ASSET VALUE PER SHARE PRIMARY AND FULLY DILUTED FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED)
2001 2000 ----------- ----------- Primary Net Assets.................................................. $95,688,028 $73,911,997 =========== =========== Shares Outstanding.......................................... 913,762 920,362 =========== =========== Net Asset Value per Share................................... $ 104.72 $ 80.31 =========== =========== Fully Diluted Options..................................................... 45,000 45,000 Exercise Price of $12.75 Market Price of $80.00 in 2001 and $61.00 in 2000........... $ (7,172) $ (9,406) ----------- ----------- Additional Shares Attributable to Stock Options............. 37,828 35,594 Shares Outstanding.......................................... 913,762 920,362 ----------- ----------- 951,590 955,956 Net Asset Value per Share................................... $ 100.56 $ 77.32 =========== ===========
Annual Meeting Summary On July 25, 2001 the annual shareholders meeting was held in Buffalo, New York. At the meeting, six directors, constituting the entire Board of Directors, were elected to serve a one year term. The votes were as follows:
DIRECTORS NAME FOR WITHHELD - -------------- ------- -------- Brent D. Baird.............................................. 825,943 2,925 Bruce C. Baird.............................................. 825,943 2,925 Theodore E. Dann, Jr........................................ 828,143 725 Patrick W. E. Hodgson....................................... 828,143 725 James E. Traynor............................................ 828,095 773 H. Thomas Webb III.......................................... 825,897 2,971
To ratify the exercise by Messrs. H. Thomas Webb III and James Traynor of options to purchase the Company's common stock awarded to them in 1987 at the exercise price of $12.75, the votes were as follows:
FOR AGAINST ABSTAIN - ------- ------- ------- 688,068 18,052 122,748
To ratify the appointment of KPMG LLP, the votes were as follows:
FOR AGAINST ABSTAIN - ------- ------- ------- 824,393 920 3,555
9 11 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SELECTED PER SHARE DATA AND RATIOS FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED) Per Share Data and Ratios*
2001 2000 ------- ------ Investment income........................................... $ 2.17 $ 1.30 Expenses (including income taxes)......................... (.83) (.52) ------- ------ Investment income, net.................................... 1.34 .78 Distributions from investment income, net................. (.96) (.48) Net realized and unrealized gain on securities............ 4.68 1.82 Share transactions.......................................... .02 .28 ------- ------ Net increase in net asset value............................. 5.08 2.40 Net asset value: Beginning of period....................................... 95.48 74.92 ------- ------ End of period............................................. $100.56 $77.32 ======= ====== Ratios Ratio of expenses to average net assets................... 0.23% 0.60% Ratio of investment income, net, to average net assets.... 2.16% 1.48 Portfolio turnover........................................ 22.38% 3.22
* Per Share data is based upon the average number of shares outstanding for the 6 month periods. The computation assumes that outstanding stock options were exercised and the proceeds used to purchase common stock. 10 12 DIRECTORS Brent D. Baird* Private Investor Bruce C. Baird President Belmont Contracting Co., Inc. Patrick W.E. Hodgson*+ President of Cinnamon Investments Ltd. and Chairman of Todd Shipyards Corporation Theodore E. Dann, Jr.+ President Buffalo Technologies Corporation James E. Traynor+ President Clear Springs Development Co., LLC H. Thomas Webb III* Senior Vice-President Crescent Resources, Inc. OFFICERS Brent D. Baird Chairman H. Thomas Webb III President Bruce C. Baird Vice President, Secretary & Treasurer Cynthia Raby Assistant Secretary REGISTRAR, TRANSFER AND DISBURSING AGENT Continental Stock Transfer and Trust Company 2 Broadway New York, NY 10004 * Member of Executive Committee + Member of the Audit Committee 11 -----END PRIVACY-ENHANCED MESSAGE-----