-----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, CSAzGDYbD7yUpS/1/9SXkXnRt04SHQHheXOLjz7BfRdHWJZ/VmAuPA9jtn1pHzC3 i7Wom86bAEAECRpuH2dZiw== 0000950144-99-010724.txt : 19990830 0000950144-99-010724.hdr.sgml : 19990830 ACCESSION NUMBER: 0000950144-99-010724 CONFORMED SUBMISSION TYPE: NSAR-A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990827 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: NSAR-A SEC ACT: SEC FILE NUMBER: 811-08942 FILM NUMBER: 99700715 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 NSAR-A 1 N-SAR (6.1) PAGE 1 000 A000000 06/30/1999 000 C000000 0000811040 000 D000000 N 000 E000000 NF 000 F000000 Y 000 G000000 N 000 H000000 N 000 I000000 6.1 000 J000000 A 001 A000000 FIRST CAROLINA INVESTORS, INC. 001 B000000 811-8942 001 C000000 7043730501 002 A000000 1130 E. 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6 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998 CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN THE 1998 ANNUAL REPORT AND FORM NSAR OF FIRST CAROLINA INVESTORS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 1998 ANNUAL REPORT OF STOCKHOLDERS AND FORM NSAR. 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 29,022,745 106,821,883 92,391 2,500,000 13,132,795 122,547,069 0 0 37,064,071 37,064,071 0 0 999,581 1,015,166 436,572 0 4,242,979 0 43,254,303 85,482,998 414,970 57,198 1,212,386 761,251 923,303 6,320,380 (976,666) 6,267,017 0 486,731 0 0 0 15,700 115 4,687,679 3,806,407 16,565,750 0 0 0 0 761,251 94,344,949 79.59 .92 5.29 (.48) 0 .20 85.52 0.81 THE $0.20 PER SHARE RETURN OF CAPITAL INDICATED ABOVE REPRESENTS SHARE TRANSACTIONS AND NOT A RETURN OF CAPITAL OR OTHER DISTRIBUTION. THE 115 SHARES REINVESTED REPRESENTS THE NET CHANGE IN ADDITIONAL SHARES ATTRIBUTABLE TO STOCK OPTIONS.
EX-99 3 FIRST CAROLINA INVESTORS, INC. REPORT TO SHAREHOLDERS JUNE 30, 1999 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES JUNE 30, 1999 AND 1998 (UNAUDITED)
1999 1998 ------------ ------------ ASSETS Investments in securities, at value (cost of $29,022,745 in 1999 and $15,861,656 in 1998)............................. $106,821,883 $125,931,488 Cash, including short term investments of $8,428,363 in 1999 and $1,714,039 in 1998.................................... 10,921,603 1,883,983 Mortgage loans, secured by real estate...................... 54,250 99,081 Real estate................................................. 2,250,000 4,439,000 Investment in joint venture................................. 250,000 250,000 Amounts due from sale of security........................... -- 5,304,506 Accrued dividend and interest receivable.................... 38,141 168,172 Other assets................................................ 2,211,192 2,673,003 ------------ ------------ Total assets...................................... $122,547,069 $140,749,233 ------------ ------------ LIABILITIES Accounts payable and accrued liabilities.................... $ 3,315,867 $ 3,391,817 Federal and state income taxes payable...................... 2,767,264 1,931,773 Deferred income taxes payable............................... 30,980,940 42,975,680 ------------ ------------ Total liabilities................................. 37,064,071 48,299,270 ------------ ------------ Deferred Income............................................. -- 119,500 ------------ ------------ Net Assets.................................................. $ 85,482,998 $ 92,330,463 ============ ============ Net assets per share (3,500,000 no par value common shares authorized, 1,004,981 shares issued, 999,581 and 1,073,366 shares outstanding in 1999 and 1998 respectively)......... $ 85.52 $ 86.02 ============ ============
The Consolidated Financial Statements should be read in conjunction with the 1998 Annual Report. 1 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
1999 1998 ---------- ----------- INCOME Dividends................................................... $ 414,970 $ 483,100 Interest on mortgage loans.................................. 57,198 202,857 Gain on sale of real estate................................. 941,593 153,316 Equity in earnings of joint venture......................... (3,312) 156,990 Other....................................................... 274,105 137,790 ---------- ----------- Total income...................................... 1,684,554 1,134,053 ---------- ----------- EXPENSES General and administrative.................................. 194,491 161,128 Professional fees........................................... 37,405 27,793 Sales and marketing......................................... -- 4,370 Other....................................................... 74,355 68,415 ---------- ----------- Total expenses.................................... 306,251 261,706 ---------- ----------- Earnings before income taxes and realized and unrealized appreciation on investments............................... 1,378,303 872,347 Provision for income taxes.................................. (455,000) (256,000) ---------- ----------- Net income before realized and unrealized appreciation on investments............................................... 923,303 616,347 Gain realized on investments in other companies (net of income tax provision of $4,535,000 in 1999 and $2,069,000 in 1998).................................................. 6,320,380 3,235,506 Change in unrealized appreciation (depreciation) of investments for the period, net of deferred taxes......... (976,666) 8,490,680 ---------- ----------- Net increase in net assets resulting from operations...................................... $6,267,017 $12,342,533 ========== ===========
The Consolidated Financial Statements should be read in conjunction with the 1998 Annual Report. 2 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)
1999 1998 ----------- ----------- Increase in net assets from operations Investment income, net.................................... $ 923,303 $ 616,347 Realized gain on investments, net......................... 6,320,380 3,235,506 Change in unrealized appreciation, net.................... (976,666) 8,490,680 ----------- ----------- Net increase in net assets resulting from operations... 6,267,017 12,342,533 Distributions to shareholders of $.50 per share In 1999 and in 1998 from investment income, net........... (486,731) (518,731) Treasury shares purchased................................... (1,092,607) (243,428) ----------- ----------- Total increase............................................ 4,687,679 11,580,374 Net assets Beginning of period....................................... 80,795,319 80,750,089 ----------- ----------- End of period............................................. $85,482,998 $92,330,463 =========== ===========
The Consolidated Financial Statements should be read in conjunction with the 1998 Annual Report. 3 FIRST CAROLINA INVESTORS, INC. & SUBSIDIARIES INVESTMENTS IN SECURITIES JUNE 30, 1999 AND 1998 (UNAUDITED)
1999 1998 ------------------------- ------------------------- COMMON STOCKS -- 100% NO. SHARES VALUE NO. SHARES VALUE - --------------------- ---------- ------------ ---------- ------------ Financial Services -- 69.8% in 1999 and 86.1% in 1998 M & T Bank Corporation.................. 130,000 $ 71,500,000 190,000 $105,260,000 Merchants Group, Inc.................... 135,000 3,020,625 135,000 3,189,375 Manufacturing -- 12.7% in 1999 and 5% in 1998 Acme Electric Corporation............... 941,000 5,116,688 -- -- Exolon -- ESK Co........................ 64,700 1,164,600 64,200 2,407,500 Marine Transport Corporation............ 700,000 2,493,750 -- -- Todd Shipyards Corporation.............. 700,000 4,812,500 700,000 3,893,750 Services -- 7.6% in 1999 and 3.9% in 1998 Barrister Information Systems Corp...... 1,757,910 5,273,730 1,598,100 1,797,862 Ecology & Environment, Inc.............. 425,000 2,868,750 306,300 3,063,000 Diversified -- 9.9% in 1999 and 5% in 1998 Bell Industries, Inc.................... 592,700 2,630,106 -- -- First Union Real Estate Equity & Mortgage Investments................. 1,000,000 4,500,000 -- -- Oglebay Norton Company.................. 98,000 2,180,500 160,000 6,320,000 Tandycrafts, Inc........................ 347,761 1,260,634 -- -- ------------ ------------ Total -- 100% (cost of $29,022,745 in 1999 and $15,861,656 in 1998)................ $106,821,883 $125,931,487 ============ ============
The Consolidated Financial Statements should be read in conjunction with the 1998 Annual Report. 4 FIRST CAROLINA INVESTORS, INC., & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1999 AND 1998 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. The Company became an investment company on January 3, 1995, and accordingly has prepared its consolidated financial statements on a fair value basis. Prior to this time the Company prepared its consolidated financial statements on a historical cost basis. Financial information for periods prior to January 3, 1995 is available by referring to quarterly filings on Form 10-Q, annual filing on Form 10-KSB and reports to stockholders. (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; 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. (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 appraisals by an independent appraiser, estimated net cash flows, 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 has 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 both fair market comparables in the existing subdivision developed by the venture and discounted net cash flows in valuing its investment at its estimated fair value. At June 30, 1999 and 1998 respectively, the venture owned 7 lots at a cost of $293,236. (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 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 other companies and investment in joint venture in the accompanying Consolidated Statements of Assets and Liabilities. (G) 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. (H) 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. 2. INVESTMENT TRANSACTIONS Purchases and sales of investment securities were $8,892,700 and $12,242,158 respectively for the six month period ended June 30, 1999 and $2,686,581 and $5,304,506 respectively in 1998. The net gain on sale of investments in other companies was $6,320,380 in 1999 and $3,235,506 in 1998. The gross unrealized gain on investments in other companies totaled $79,250,263 and $110,362,897 for the six months ended June 30, 1999 and 1998, respectively. Gross unrealized losses were $1,451,127 and $293,066 at June 30, 1999 and 1998. 3. MORTGAGE LOANS The Company's investments in mortgage loans as of June 30, 1999 and 1998 are as follows:
1999 1998 --------------------------------- --------------------------------- INTEREST MATURITY OUTSTANDING INTEREST MATURITY OUTSTANDING RATE DATE BALANCE RATE DATE BALANCE -------- -------- ----------- -------- -------- ----------- Permanent first mortgage loans on condominiums...... 16% 12/2002 $54,250 16% 12/2002 $79,581 Junior mortgage loans secured by residential lots........ -- -- -- 8 12/98 19,500 ------- ------- $54,250 $99,081 ======= =======
4. REAL ESTATE The estimated fair value of real estate owned at June 30, 1999 and 1998, respectively is $2,250,000 and $4,439,000. It consists of 35 acres of land held for investment and 4 developed lots at June 30, 1999 and 140 acres with 5 developed lots at June 30, 1998. The aggregate cost for Federal income tax purposes is approximately $1,400,000 at June 30, 1999 and $2,600,000 1998 respectively. Land held for investment is considered non-income producing. 6 FIRST CAROLINA INVESTORS, INC., & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 5. OTHER ASSETS The components of other assets at June 30, 1999 and 1998 are as follows:
1999 1998 ---------- ---------- Deferred compensation, funded............................... $2,191,947 $1,967,359 Sales center................................................ -- 561,759 Miscellaneous............................................... 19,245 143,885 ---------- ---------- $2,211,192 $2,673,003 ========== ==========
The deferred compensation includes $2,191,000 and $1,724,000 at June 1999 and 1998 respectively, that is owed to affiliated persons pursuant to a deferred compensation plan. The deferred compensation has accrued over fifteen 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, 1999 and 1998 are as follows:
1999 1998 ---------- ---------- Trade accounts payable...................................... $ 717,905 $ 911,850 Deferred compensation (note 5).............................. 2,191,947 1,967,359 Dividends payable........................................... 242,015 259,315 Miscellaneous accruals and payable.......................... 155,915 242,555 Cash held in escrow......................................... 8,085 10,738 ---------- ---------- $3,315,867 $3,391,817 ========== ==========
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 999,581 and 1,073,366 at June 30, 1999 and 1998, 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 39,919 shares of common stock at June 30, 1999 and 36,804 shares at June 30, 1998. At June 30, 1999, accumulated undistributed net investment income is $4,242,979; accumulated and undistributed net realized gains on investment transactions are $22,886,130 and the net unrealized appreciation in value of investments is $43,254,303. 8. SHARE REPURCHASE PROGRAM At June 30, 1999 the Company has repurchased 543,880 shares as treasury shares at a cost of $15,095,611. At June 30, 1999, 538,480 treasury shares were cancelled and retired. During 1999 through June 30, the Company has repurchased 15,700 shares at an average cost of $69.59 per share on the Boston Stock Exchange, the exchange on which the Company's shares are traded. At the May 26, 1999 Board of Directors meeting, the directors authorized the continuation of the share repurchase program. 9. DISTRIBUTION TO STOCKHOLDERS Two dividends of $0.25 each per share were declared during the six months ended June 30, 1999 and 1998, respectively. The dividends are taxable to stockholders as ordinary income. 7 FIRST CAROLINA INVESTORS, INC., & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 10. REMUNERATION Each Director receives fees of $2,500 per directors' meeting attended and $100 per audit committee meeting attended. The Chairman also receives a $1,500 monthly salary. For the six months ended June 30, 1999 and 1998 directors' fees totaled $30,300 and $25,200, respectively. Aggregate remuneration paid during the six month periods was $109,761 for 1999 and $395,169 for 1998. The Company paid brokerage fees of $82,510 and $8,995 for the six months ended June 30, 1999 and 1998, respectively. Trubee, Collins & Co., Inc. received $8,415 and $8,995 during the six months ended June 30, 1999 and 1998, respectively. Mr. Baird, Chairman of the Company, is an employee of Trubee, Collins & Co., Inc. 11. STOCK 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. 12. COMMITMENTS AND CONTINGENCIES At June 30, 1999 the Company has approximately $250,000 of undisbursed contractual commitments in connection with real estate development. In order to protect its investments, the Company may be required to furnish amounts in excess of its current contractual investments or commitments. The future development of the Company's land holdings may require additional expenditures. The Company is not involved in any legal actions. 8 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, 1999 AND 1998 (UNAUDITED)
1999 1998 ----------- ----------- Primary Net Assets.................................................. $85,482,998 $92,330,463 =========== =========== Shares Outstanding.......................................... 962,662 1,036,562 =========== =========== Net Asset Value per Share................................... $ 88.80 $ 89.07 =========== =========== Fully Diluted Options..................................................... 45,000 45,000 Exercise Price of $12.75 Market Price of $73.00 in 1999 and $70.00 in 1998........... $ (8,081) $ (8,196) ----------- ----------- Additional Shares Attributable to Stock Options............. 36,919 36,804 Shares Outstanding.......................................... 962,662 1,036,562 ----------- ----------- 999,581 1,073,366 Net Asset Value per Share................................... $ 85.52 $ 86.02 =========== ===========
Annual Meeting Summary On May 26, 1999 the annual stockholders meeting was held in Buffalo, New York. At the meeting, six directors were elected to serve a one year term. The votes were as follows:
DIRECTORS NAME FOR WITHHELD -------------- ------- -------- Brent D. Baird.............................................. 819,240 25 Bruce C. Baird.............................................. 819,140 125 Theodore E. Dann, Jr........................................ 819,238 27 Patrick W. E. Hodgson....................................... 819,240 25 James E. Traynor............................................ 819,236 29 H. Thomas Webb III.......................................... 819,240 25
9 FIRST CAROLINA INVESTORS, INC., & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SELECTED PER SHARE DATA AND RATIOS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) Per Share Data and Ratios*
1999 1998 ------ ------ Investment income........................................... $ 1.67 $ 1.06 Expenses (including income taxes)......................... (.75) (.48) ------ ------ Investment income, net.................................... .92 .58 Distributions from investment income, net................. (.48) (.48) ------ ------ Net realized and unrealized gain on securities............ 5.29 10.79 Share transactions.......................................... .20 .06 ------ ------ Net increase in net asset value............................. 5.93 10.95 Net asset value: Beginning of year......................................... 79.59 75.07 ------ ------ End of period............................................. $85.52 $86.02 ====== ====== Ratios Ratio of expenses to average net assets................... 0.81% 0.64% Ratio of investment income, net, to average net assets.... 1.79 1.39 Portfolio turnover........................................ 9.11 2.44
* 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 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-----