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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2001
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Commission File Number 000-32955
LSB CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-3557612
- ----------------------------------------------------------------------- ----------------------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
30 Massachusetts Avenue, North Andover, MA 01845
- ----------------------------------------------------------------------- ----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(978) 725-7500
(Registrant's telephone number, including area code)
-------------------------
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
--------------------------------------
(Title of Class)
Preferred Stock Purchased Rights
--------------------------------
(Title of Class)
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-K 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 III of this Form 10-K or any amendment to this
Form 10-K [ ]
State the aggregate market value of the voting stock held by non-affiliates*
of the registrant based on the closing sale price of
$12.75 per share as of March 21, 2002
Approximately $54,565,461
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of March 21, 2002
- ----- --------------------------------
Common Stock, par value $.10 per share 4,382,243 shares
Documents Incorporated by Reference. Portions of the LSB Corporation (the
"Company") Annual Report to Stockholders for the fiscal year ended December 31,
2001 (the "Annual Report"), attached hereto as Exhibit (13) and the Company's
Proxy Statement for the 2002 Annual Meeting (the "Proxy Statement"), attached
hereto as Exhibit (20), are incorporated by reference into Parts I, II, and III
of this Form 10-K. An index to the exhibits attached to this Form 10-K can be
found on page 9 of this Form 10-K.
* For purposes of this calculation only, the common stock of LSB
Corporation held by directors and executive officers of LSB Corporation
has been treated as owned by affiliates.
PART I
Item 1. Business
The response is incorporated herein by reference from the discussion
respectively under the captions entitled "FINANCIAL HIGHLIGHTS" on page 4,
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" on pages 5 through 15 and Financial Statements and Notes to
Consolidated Financial Statements on pages 18 through 36 of the Annual Report.
The following table is to supplement for information not contained in the Annual
Report.
Short term borrowings include securities sold under agreements to repurchase,
Federal Home Loan Bank (FHLB) advances and Federal Reserve Bank (FRB) borrowings
for which the original maturity is less than 3 months. At December 31, 2001
repurchase agreements were to corporate customers only. Short-term borrowings
are summarized as follows:
2001 2000 1999
------------------------ ----------------------- -----------------------
Repurchase FHLB/FRB Repurchase FHLB/FRB Repurchase FHLB
Agreements Advances Agreements Advances Agreements Advances
- ----------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
Outstanding at December 31 $ 4,220 $ - $ - $ - $ - $32,500
Weighted average rate at
December 31 0.31% - - - - 5.00%
Average balance outstanding
during the year 2,468 21 24,539 24,364 19,899 22,152
Weighted average rate
during the year 2.35% 4.42% 6.29% 6.14% 5.13% 5.27%
Maximum outstanding at
any month end $ 5,836 $ - $ 42,544 $ 71,000 $ 37,639 54,000
=================================================================================================================
Item 2 - Properties
Rent expense for 2001 totaled $144,000. The following table sets forth
the locations of the offices of the Lawrence Savings Bank (the "Bank"), the
wholly owned bank subsidiary of the Company, as well as certain information
relating to these offices as of December 31, 2001
Lease
--------------------
Year Current
Acquired Square Owned/ Term Renewal
Or Leased Feet Leased Expires Options
- ----------------------------------------------------------------------------------------------------------------
CORPORATE OFFICES
North Andover 1992 45,315 Owned -- --
30 Massachusetts Ave.
No. Andover, MA 01845
BRANCH OFFICES
Essex Street 1998 3,432 Leased 2003 One (5) yr.
300 Essex Street Renewal Option
Lawrence, MA 01840
Jackson Street 1998 2,369 Leased 2003 One (5) yr.
20 Jackson Street Renewal Option
Methuen, MA 01844
West Methuen 1979 5,234 Owned -- --
148 Lowell Street
Methuen, MA 01844
Andover 1995 2,449 Leased 2010 Two (5) yr.
342 North Main Street Options
Andover, MA 01810
2
Item 3. Legal Proceedings
The Bank is involved in various legal proceedings incidental to its
business. After review with legal counsel, management does not believe
resolution of such litigation will have a material adverse effect on the
financial condition and operating results of the Bank.
In one litigation matter, the Bank was awarded a $4.2 million
judgment in 1997. The Bank expects to collect this judgment, at least in
substantial part, which would have a material favorable impact on the Bank's
financial statements. Post judgment interest accrues from the date of this
judgment and approximates $1.9 million at December 31, 2001. However,
collectibility of post judgment interest in addition to the $4.2 million award
has not yet been determined.
In another litigation matter, the Bank was awarded $1.1 million by
a jury verdict, during the fourth quarter 1999, in a legal case where the Bank
sought to recover damages from loans previously charged off.
In 2000, the court entered final judgment for approximately $1.8
million, which includes post judgment accrued interest. This award has been
appealed by defendants and collectibility of this award is subject to this
appeal and other contingencies.
It is management's opinion that the timing and final amounts to be
collected cannot be determined at this time. Accordingly, no recognition of
these judgments has been recorded in the financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Stock Equity and Related Stockholder
Matters
The response is incorporated herein by reference from the
discussion under the caption "STOCKHOLDER INFORMATION" on page 37, the
discussion under the subcaption "Capital Adequacy" of the caption "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" on
page 15 of the Annual Report, and from the table titled "Financial Highlights"
on page 4 of the Annual Report.
Item 6. Selected Financial Data
The response is incorporated herein by reference from the table
titled "FINANCIAL HIGHLIGHTS" on page 4 of the Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The response is incorporated herein by reference from the
discussion under the caption "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" on pages 5 through 15 of the Annual Report.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The response is incorporated herein by reference from the
discussion under the subcaption "Interest Rate Sensitivity" of the caption
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" on pages 13 and 15 of the Annual Report.
3
Item 8. Financial Statements and Supplementary Data
The response is incorporated herein by reference from the LSB
Corporation and Subsidiary Consolidated Financial Statements and Notes thereto
on pages 18 through 36 of the Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The response is incorporated herein by reference from the
discussion under the caption "INFORMATION REGARDING DIRECTORS" on pages 5
through 6, the discussion under the caption "EXECUTIVE OFFICERS" on page 9 and
the discussion under the caption "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE" on page 19 of the Proxy Statement.
Item 11. Executive Compensation
The response is incorporated herein by reference from the section
entitled "EXECUTIVE COMPENSATION" on pages 10 through 15 of the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The response is incorporated herein by reference from the
discussion under the caption entitled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT" on pages 17 through 19 of the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The response is incorporated herein by reference from the
discussion under the caption entitled "INDEBTEDNESS OF DIRECTORS AND MANAGEMENT
AND CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS" on page 16 and 17 of the
Proxy Statement.
4
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form F-3 or Form
8-K
(a) (1) Financial Statements: The following LSB Corporation and Subsidiary
Consolidated Financial Statements are incorporated herein by reference
from the Annual Report, listed below and attached as Exhibit (13).
Page number(s) in Annual
Report
------------------------
Report of Management Responsibility 16
Independent Auditors' Report 17
Consolidated Balance Sheets as of 18
December 31, 2001 and 2000
Consolidated Statements of Operations 19
for the years ended December 31,
2001, 2000 and 1999
Consolidated Statements of Changes 20
in Stockholders' Equity for the
years ended December 31, 2001,
2000 and 1999
Consolidated Statements of Cash Flows 21
for the years ended December 31, 2001,
2000 and 1999
Notes to Consolidated Financial Statements 22-36
(a) (2) Financial Statement Schedules:
None.
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the last quarter of the
period covered by this Form 10-K.
5
(c) List of Exhibits:
Exhibits to the Form 10-K have been included (unless otherwise noted)
only with the copies of the Form 10-K filed with the SEC. Upon request
to Investors Relations, LSB Corporation, 30 Massachusetts Avenue, North
Andover, MA 01845, copies of the individual exhibits will be furnished
upon payment of a reasonable reproduction fee.
Exhibits:
(2) Plan of Reorganization *
(3) (i) Articles of incorporation *
(3) (ii) Corporate By-Laws, as amended *
(3) (iii) Certificate of vote of directors establishing a
series of a class of stock *
(4.1) Specimen Certificate of shares of Common Stock of
the Company *
(4.2) Rights Agreement dated as of December 12, 1996 *
(10.1) Employment Agreement by and between the Bank and
Paul A. Miller dated April 21, 1989 *
(10.2) Amendment dated December 23 1992 to Employment
Agreement dated April 21, 1989 *
(10.3) Amendment dated May 25, 2000 to Employment
Agreement dated April 21, 1989 *
(10.4) Employment Agreement by and between the Bank and
Robert P. Perrault dated May 9, 1986 *
(10.5) Amendment dated December 23, 1992 to Employment
Agreement dated May 9, 1986 *
(10.6) Special Termination Agreement by and between the
Bank and Robert P. Perrault dated May 9, 1986 *
(10.7) Amendment dated May 25, 2000 to Special
Termination Agreement dated May 9, 1986 *
(10.8) Supplemental Retirement Agreement by and between
the Bank and Paul A. Miller dated April 21, 1989 *
(10.9) Supplemental Retirement Agreement by and between
the Bank and Paul A. Miller dated April 21, 1996 *
(10.10) Employment Agreement by and between the Bank and
Jeffrey W. Leeds dated February 24, 2000 *
(10.11) Employment Agreement by and between the Bank and
Timothy L. Felter dated February 24, 2000 *
(10.12) Employment Agreement by and between the Bank and
John E. Sharland dated February 24, 2000 *
(10.13) Employment Agreement by and between the Bank and
Richard J. D'Ambrosio dated February 24, 2000 *
(10.14) Lawrence Savings Bank 1986 Stock Option Plan *
(10.15) Lawrence Savings Bank 1997 Stock Option Plan *
(13) 2001 Annual Report to Shareholders of LSB
Corporation
(20) 2002 Proxy Statement
(21) Subsidiary of LSB Corporation and subsidiaries of
Lawrence Savings Bank
(23.1) Consent of KPMG LLP
- ------------------
* Incorporated herein by reference from LSB Corporation Form 8-K
filed July 2, 2001.
(d) Financial Statements Schedules:
None.
6
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the LSB Corporation has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
LSB Corporation
By: /s/ Paul A. Miller
---------------------------------
Paul A. Miller, President
and Chief Executive Officer
DATE: March 28, 2002
7
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the LSB Corporation
and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Paul A. Miller President, Chief Executive Officer and March 28, 2002
- -------------------------------- Director
Paul A. Miller (Principal Executive Officer)
/s/ John E. Sharland Senior Vice President, Chief Financial Officer March 28, 2002
- -------------------------------- (Principal Financial and Principal Accounting
John E. Sharland Officer)
/s/ Thomas J. Burke Chairman of the Board March 28, 2002
- -------------------------------- Director
Thomas J. Burke
/s/ Eugene A. Beliveau Director March 28, 2002
- --------------------------------
Eugene A. Beliveau
/s/ Kathleen I. Boshar Director March 28, 2002
- --------------------------------
Kathleen I. Boshar
/s/ Malcolm W. Brawn Director March 28, 2002
- --------------------------------
Malcolm W. Brawn
/s/ Byron R. Cleveland, Jr. Director March 28, 2002
- --------------------------------
Byron R. Cleveland, Jr.
/s/ Neil H. Cullen Director March 28, 2002
- --------------------------------
Neil H. Cullen
/s/ Robert F. Hatem Director March 28, 2002
- --------------------------------
Robert F. Hatem
/s/ Richard Hart Harrington Director March 28, 2002
- --------------------------------
Richard Hart Harrington
/s/ Marsha A. McDonough Director March 28, 2002
- --------------------------------
Marsha A. McDonough
8
Index to Exhibits attached to Form 10-K
Item Description
- ----------------
(13) 2001 Annual Report to Shareholders of LSB Corporation
(20) 2002 Proxy Statement
(21) Subsidiary of the LSB Corporation and Lawrence Savings Bank
(23.1) Consent of KPMG LLP