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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: April 27, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission File Number: 0-1653
GENESEE CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 16-0445920
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 Powers Bldg., 16 W. Main Street, Rochester, New York 14614
(Address of principal executive offices) (zip code)
Registrant's Telephone Number, including area code: (585) 454-1250
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act: Class B Common
Stock, par value
$.50 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 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. x
----
The aggregate market value of voting common stock (Class A) held by
non-affiliates, based on the price for Class B Common Stock at the close of
trading on July 12, 2002 was $1,351,977.
The number of shares outstanding of each of the registrant's classes of common
stock as of July 12, 2002 was:
Number of Shares
Class Outstanding
----- ----------------
Class A Common Stock (voting) 209,885
par value $.50 per share
Class B Common Stock (non-voting)
par value $.50 per share 1,464,201
Page 2 of 69
PART I
Item 1. Description of Business
General. Genesee Corporation (the "Corporation") was incorporated in
1932 under the laws of the State of New York. Until 1986, the Corporation was
known as The Genesee Brewing Company, Inc. and was engaged solely in the
production and sale of malt beverages. In 1986, the Corporation implemented a
strategy to diversify its business operations beyond its traditional brewing
business. The Corporation subsequently restructured to become a holding company,
changed its name and expanded its business to include subsidiaries conducting
dry food processing and packaging, equipment leasing and real estate investment.
On October 19, 2000, the Corporation's shareholders approved a plan to
liquidate and dissolve the Corporation. Pursuant to this plan, the Corporation
has now liquidated all of its operating businesses and one of its real estate
investments.
On December 15, 2000, the Corporation sold substantially all of the
assets and certain liabilities of its brewing business to High Falls Brewing
Company, LLC ("High Falls") for $27.2 million, of which $16.2 million was paid
in cash and $11.0 million by the notes receivable from High Falls identified in
Exhibits 10-3, 10-4 and 10-6 to this report. High Falls has made all scheduled
payments of principal and interest on these notes through July 15, 2002. On
April 22, 2002 the Corporation obtained a release from its performance guaranty
of the production agreement between Boston Beer Corporation and High Falls which
is identified in Exhibit 10-9 to this report. A copy of the release is filed
with this report as Exhibit 10-25.
On December 28, 2000, the Corporation's equipment leasing subsidiary,
Cheyenne Leasing Company ("Cheyenne") sold a significant portion of its lease
portfolio for $15.3 million, generating net cash proceeds to the Corporation of
$12.8 million. Cheyenne retained a small portion of its lease portfolio which it
will continue to manage for the duration of the respective lease terms. As of
July 12, 2002, there were 25 leases remaining in Cheyenne's portfolio.
On October 10, 2001, the Corporation sold all of the outstanding stock
of its Ontario Foods, Inc. subsidiary, which constituted its Foods Division, to
Associated Brands, Inc. ("ABI") for $27 million. Net of purchase price
adjustments, the Corporation received $22.1 million in cash. The Corporation
also took back a $2.25 million note and mortgage which are identified,
respectively, in Exhibits 10-23 and 10-24 to this report. The note and mortgage,
together with $178,000 in cash paid by ABI, were placed in escrow for a period
of eighteen months to cover any contingent liabilities or post-closing
obligations of the Corporation. On April 5, 2002 ABI paid in full the $2.25
million note and mortgage so the $2.43 million escrow is now funded entirely by
cash, which is invested in commercial bank money market funds.
On May 31, 2002, the Corporation sold its ten-percent interest in an
office building in Rochester, New York and a related note receivable from the
building owner for $2.4 million in cash. In connection with this transaction,
the purchasers have agreed to indemnify the Corporation for any liability
arising from the Corporation's guaranty of half of a $5.5 million senior
subordinated loan on the building. The Transfer Agreement pursuant to which the
Corporation sold its interests in Clinton Square and the Indemnification
Agreement relating to the senior subordinated loan are filed with this report as
Exhibits 10-26 and 10-27, respectively.
Page 3 of 69
Under the plan of liquidation and dissolution, the Corporation has paid
to Class A and Class B shareholders liquidating distributions totaling $42.7
million, or $25.50 per share, in three partial liquidating distributions: $7.50
per share was paid on March 1, 2001; $13.00 per share was paid on November 1,
2001; and $5.00 per share was paid on May 17, 2002.
The Corporation owns two real estate holdings through wholly-owned
subsidiaries of its Genesee Ventures, Inc. subsidiary. One is a fifty-percent
interest in a 408-unit residential property located in a suburb of Syracuse, New
York. The other is a fifty-percent interest in a 150-unit residential property
located in a suburb of Rochester, New York. The Corporation is exploring
opportunities to divest these holdings pursuant to the plan of liquidation and
dissolution.
With the sale of the Foods Division, the Corporation adopted the
liquidation basis of accounting effective September 29, 2001. Under the
liquidation basis of accounting, assets are stated at their estimated net
realizable values and liabilities are stated at their estimated settlement
amounts, which estimates will be periodically reviewed and adjusted.
Employees. As of April 27, 2002, the Corporation employed 4 people.
Item 2. Properties
The Corporation's Genesee Ventures subsidiary has investments in real
estate which are described in Item 1 of this report. Each real estate investment
is owned by a separate subsidiary of Genesee Ventures, Inc. in partnership with
an unrelated real estate investment and management company.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during
the fiscal quarter ended April 27, 2002.
Page 4 of 69
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Corporation's Class B Common Stock trades on the NASDAQ National
Market tier of the NASDAQ Stock Market under the symbol GENBB. As of July 12,
2002, the number of holders of record of Class A (voting) Common Stock and Class
B (non-voting) Common Stock were 91 and 828, respectively. There is no
established public trading market for the Corporation's Class A stock, which has
generally traded within the same range as Class B stock. The price for the Class
B stock as reported by NASDAQ and the dividends and liquidating distributions
paid per share on Class A and B stock for each quarter for the past two years
are shown below:
UNAUDITED FISCAL YEAR ENDED APRIL 27, 2002 FISCAL YEAR ENDED APRIL 28, 2001
Market Price Dividend/ Market Price Dividend/
High Low Distribution High Low Distribution
---- --- ------------ ---- --- ------------
First Quarter $ 26.80 23.00 .00 $ 21.00 17.75 .35
Second Quarter 29.75 19.85 .00 40.88 19.94 .00
Third Quarter 29.75 15.98 13.00 37.25 32.13 .00
Fourth Quarter 20.20 18.65 .00 35.75 22.65 7.50
After paying a regular quarterly dividend of $.35 per share on June 1, 2000, the
Board of Directors suspended the payment of quarterly dividends, choosing
instead to make liquidating distributions as and when feasible under the plan of
liquidation and dissolution approved by shareholders. Partial liquidating
distributions of $7.50, $13.00, and $5.00 per share were paid to Class A and
Class B shareholders on March 1, 2001, November 1, 2001, and May 17, 2002,
respectively.
Page 5 of 69
Item 6. Selected Financial Data
The selected historical financial data included in the table below as
of April 27, 2002, for the twenty two weeks ended September 29, 2001 and for the
four fiscal years ended April 28, 2001 is derived from the consolidated
financial statements of the Corporation and should be read in conjunction
herewith. As described in Note 1 to the accompanying consolidated financial
statements, the Corporation adopted the liquidation basis of accounting
effective September 29, 2001. Therefore, information in the April 27, 2002 and
September 29, 2001 columns below follow this basis of accounting. The
information for the prior four years presented below follows the going-concern
basis of accounting.
YEARS ENDED
April 27, Sept. 29, ----------------------------------------------
2002 2001 4/28/01 4/29/00 5/1/99 5/2/98
---- ---- ------- ------- ------ ------
Net Revenues From Continuing Operations N/A $0 $0 $0 $0 $0
Net (Loss)/Earnings From Continuing Operations
N/A 142 (1,120) (897) 265 1,318
Net (Loss)/Earnings From Discontinued
Operations N/A (22,473) (1,294) (2,503) 2,198 17
Total Assets $41,860 N/A 81,665 95,771 143,953 135,589
Total Long Term Debt N/A N/A 5,973 6,273 4,761 N/A
Net Assets in Liquidation 29,622 59,086 N/A N/A N/A N/A
Basic (Loss)/Earnings Per Share From
Continuing Operations N/A .08 (.69) (.55) .16 .82
Basic (Loss)/Earnings Per Share From
Discontinued Operations N/A (13.20) (.79) (1.55) 1.36 .01
Basic Loss Per Share From
Extraordinary Item N/A (.23) N/A N/A N/A N/A
Diluted (Loss)/Earnings Per Share From
Continuing Operations N/A .08 (.69) (.55) .16 .81
Diluted (Loss)/Earnings Per Share From
Discontinued Operations N/A (13.20) (.79) (1.55) 1.36 .01
Diluted Loss Per Share From
Extraordinary Item N/A (.23) N/A N/A N/A N/A
Cash Dividends Per Share 13.00 0.00 7.85 1.40 1.80 1.80
(Dollars in thousands, except per share data)
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This financial review should be read in conjunction with the
accompanying consolidated financial statements. Effective September 29, 2001 the
Corporation adopted the liquidation basis of accounting which is described in
detail in Note 1 to the accompanying consolidated financial statements.
Page 6 of 69
LIQUIDITY AND CAPITAL RESOURCES - APRIL 27, 2002
On May 17, 2002 the Corporation paid a partial liquidating distribution
of $8,370,000, or $5 per share. This distribution represented the third
distribution paid to shareholders under the Corporation's plan of liquidation
and dissolution. On November 1, 2001 the Corporation paid a partial liquidating
distribution of $21,763,000, or $13.00 per share. On March 1, 2001, the
Corporation paid a partial liquidating distribution of $12,557,000 or $7.50 per
share. The Corporation expects to pay additional liquidating distributions as
the Corporation: (a) receives payment on the promissory notes described in Item
1 of this report and in Note 7 to the consolidated financial statements which
accompany this report; (b) receives proceeds from the sale of the remaining
assets of the Corporation and; (c) discharges contingent liabilities and
post-closing obligations arising from the sale of its assets and other
contingent liabilities. The length of time which will be required to wind-up the
Corporation's affairs is uncertain and will impact the value of the
Corporation's net assets in liquidation due to the ongoing expense of operating
the Corporation.
The Corporation's cash and cash equivalents are invested in commercial
bank money market funds. These funds are currently yielding approximately 1.8%
per annum. Investment in money market funds is intended to earn a reasonable
return on those funds and give the Corporation the security and flexibility
required as it completes the liquidation and dissolution process.
The Corporation's marketable securities consist of a bond portfolio
managed by an investment management firm. This portfolio had a fair market value
of $6,667,000 at April 27, 2002. The investments in this portfolio include
approximately $1.2 million in U.S. treasury notes and government agency bonds
with the balance invested in corporate bonds with a Moody's dollar weighted
average rating of Aa3. The entire portfolio currently has a weighted average
duration of approximately 1.9 years. The current yield to maturity is
approximately 3.9%.
During fiscal 2002, the Corporation received $919,000 in principal
payments from High Falls under the promissory notes described in Item 1 of this
report and in Note 7 to the accompanying consolidated financial statements.
During fiscal 2002, the Corporation received $337,000 in distributions
and principal payments related to its investment in and a note receivable from
unconsolidated real estate entities. The Corporation also increased the value of
this line item by $250,000 and $290,000 during the third quarter and fourth
quarter of fiscal 2002, respectively. The fourth quarter adjustment is the
result of the sale, subsequent to year end, of the Corporation's ten percent
interest in and note receivable from Clinton Square, which is described in Item
1 of this report.
During fiscal 2002, the Corporation recorded a $655,000 write-down of
its minority interest in the food service equipment and supplies business
described in Note 11 to the accompanying financial statements. This write-down
reduced other assets accordingly. Other assets were further reduced during
fiscal 2002 as a result of the Corporation having collected $244,000 from
certain officers on outstanding loans. The remaining balance of these officer
loans receivable is $167,000 at April 27, 2002.
During the quarter ended January 26, 2002, the Corporation recorded a
$900,000 increase in management's estimate of the Corporation's operating costs
through final dissolution. No fourth quarter adjustment was required for this
estimate.
Page 7 of 69
During the fourth quarter of fiscal 2002, the Corporation paid Boston
Beer Corporation $300,000 for a release from the Corporation's performance
guaranty of the production agreement between Boston Beer Corporation and High
Falls Brewing Company, LLC. The release also relieved the Corporation from its
obligation under the guaranty to maintain liquid net worth of at least $7
million to secure its obligations under the guaranty.
SUMMARY OF CONTINUING AND DISCONTINUED OPERATIONS
As discussed in Note 1 to the accompanying financial statements, the
Corporation adopted the liquidation basis of accounting on September 29, 2001.
As a result, the Corporation no longer reports the results of continuing and
discontinued operations. Under the liquidation basis of accounting, the
Corporation presents a Statement of Changes in Net Assets in Liquidation instead
of the Statement of Earnings and Comprehensive Loss that was presented under the
going concern basis of accounting used by the Corporation prior to September 29,
2001.
As a result of the sale of the Corporation's Foods Division in October
2001 (which is described in Item 1 and in Note 11 to the consolidated financial
statements which accompany this report), the operations of the Foods Division
have been classified as discontinued operations for all periods presented
leaving only corporate expenses and investment related income in continuing
operations.
Comparison of 22 weeks ended September 29, 2001 to 52 weeks ended April 28, 2001
On a consolidated basis, the Corporation reported net earnings from
continuing operations of $142,000, or $.08 basic and diluted earnings per share,
for the twenty-two weeks ended September 29, 2001, compared to a net loss from
continuing operations of $1.1 million, or $.69 basic and diluted loss per share,
for fiscal 2001. The increase in net earnings from continuing operations for the
twenty-two weeks ended September 29, 2001 is primarily attributable to $1.4
million in compensation expense related to the exercise of stock options during
fiscal 2001. Also, corporate expenses for the current period were less since it
covers only twenty-two weeks whereas the comparative period covers a full year.
The Corporation reported a net loss from discontinued operations of
$22.1 million, or $13.20 basic and diluted loss per share, for the twenty-two
weeks ended September 29, 2001, compared to a net loss from discontinued
operations of $1.3 million, or $.79 basic and diluted loss per share, for fiscal
2001. This unfavorable variance is primarily related to the $21.8 million Foods
Division impairment charge that was reported in the first quarter of fiscal 2002
and the loss on the sale of the Foods Division reported in the second quarter of
fiscal 2002. In connection with the sale of the Foods Division, the Corporation
also recorded an extraordinary loss of $385,000, net of taxes. This charge is a
pre-payment penalty associated with the early extinguishment of a Foods Division
mortgage note payable.
Comparison of fiscal 2001 and fiscal 2000
On a consolidated basis, the Corporation reported a net loss from
continuing operations of $1.1 million, or $.69 basic and diluted loss per share,
for fiscal 2001, compared to a net loss from continuing operations of $897,000,
or $.55 basic and diluted loss per share, for fiscal 2000. The increase in net
loss from continuing operations for fiscal 2001 was primarily attributable to
$1.4 million in compensation expense related to the exercise of stock options
during fiscal 2001 offset by an increase in investment and interest income and a
decrease in selling, general and administrative expenses. The increase in
investment and interest income was primarily attributable to interest received
on notes receivable described in Item 1 and in Note 7 to the consolidated
financial statements which accompany
Page 8 of 69
this report. The decrease in selling, general and administrative expenses is a
result of the Corporation reducing costs as it follows its plan of liquidation
and dissolution.
The Corporation reported a net loss from discontinued operations of
$1.3 million, or $.79 basic and diluted loss per share, for fiscal 2001,
compared to a net loss from discontinued operations of $2.5 million, or $1.55
basic and diluted loss per share, for fiscal 2000. This favorable variance is
primarily related to the recording of a $1.8 million loss on disposal of Genesee
Ventures, Inc. in the fourth quarter of fiscal 2000.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of
the federal securities laws. These forward-looking statements include estimates
of the net assets of the Corporation in liquidation, statements about the amount
and timing of the payment of additional liquidating distributions and statements
about the Corporation's operating costs through final dissolution which will
vary with the length of time it operates. The cautionary statements regarding
estimates of net assets in liquidation set forth in Note 1 to the consolidated
financial statements which accompany this report are incorporated herein by
reference. The forward-looking statements in this report are subject to a number
of other significant risks and uncertainties, and there can be no assurance that
the expectations reflected in those statements will be realized or achieved.
Such risks and uncertainties include, without limitation, the risk of default by
the purchaser of the Corporation's brewing business on its payment and other
obligations under the promissory notes described in Note 7 to the consolidated
financial statements which accompany this report; the possible extension of
payment terms under the promissory notes described in Note 7 to the consolidated
financial statements related to the sale of the Corporation's brewing business;
the possibility of delay in finding buyers and completing the divestiture of the
remaining assets of the Corporation; the amounts that the Corporation is able to
realize from the divestiture of the remaining assets of the Corporation;
possible contingent liabilities and post-closing indemnification and other
obligations arising from the sale of the Corporation's operating businesses and
other assets; and risks associated with the liquidation and dissolution of the
Corporation, including without limitation, settlement of the Corporation's
liabilities and obligations, costs incurred in connection with carrying out the
plan of liquidation and dissolution, the amount of income earned during the
liquidation period on the Corporation's bond portfolio and investment in money
market funds, risks that the market value of the Corporation's bond portfolio
could decline, risks associated with investments in bonds and money market funds
in the current low interest rate environment, discharge of contingent
liabilities, and the actual timing of the winding up and dissolution of the
Corporation.
Page 9 of 69
Item 8. Financial Statements and Supplementary Data
(a) Selected Quarterly Financial Data (Unaudited)
9 WEEKS 22 WEEKS
FIRST ENDED ENDED
22 WEEKS ENDED 9/29/01 QUARTER 9/29/01 9/29/01
- -----------------------------------------------------------------------------------------
Net Revenues From Continuing Operations $ 0 $ 0 $ 0
Gross Profit From Continuing Operations 0 0 0
Net Earnings From Continuing Operations 104 38 142
Net Loss From Discontinued Operations (21,187) (1,286) (22,473)
Basic Earnings Per Share From Continuing
Operations .06 .02 .08
Basic Loss Per Share From Discontinued
Operations (12.66) (.54) (13.20)
Basic Loss Per Share From
Extraordinary Item 0 (.23) (.23)
Diluted Earnings Per Share From Continuing
Operations .06 .02 .08
Diluted Loss Per Share From Discontinued
Operations (12.66) (.54) (13.20)
Diluted Loss Per Share From
Extraordinary Item 0 (.23) (.23)
FIRST SECOND THIRD FOURTH TOTAL
FISCAL YEAR ENDED 4/28/01 QUARTER QUARTER QUARTER QUARTER YEAR
- ---------------------------------------------------------------------------------------------------------------------
Net Revenues From Continuing
Operations $ 0 $ 0 $ 0 $ 0 $ 0
Gross Profit From Continuing
Operations 0 0 0 0 0
Net Earnings/(Loss) From Continuing
Operations 32 (3) (272) (877) (1,120)
Net (Loss)/Earnings From Discontinued
Operations (15) (1,006) 302 (575) (1,294)
Basic Earnings/(Loss) Per Share From
Continuing Operations .02 .00 (.17) (.54) (.69)
Basic (Loss)/Earnings Per Share From
Discontinued Operations (.01) (.62) .18 (.34) (.79)
Diluted Earnings/(Loss) Per Share From
Continuing Operations .02 .00 (.17) (.54) (.69)
Diluted (Loss)/Earnings Per Share
From Discontinued Operations (.01) (.62) .18 (.34) (.79)
(Dollars in thousands, except per share data)
Page 10 of 69
(b) Index to Financial Statements
Page
----
Report of Independent Accountants - PricewaterhouseCoopers LLP 11
Statement of Net Assets in Liquidation (Liquidation Basis) at April 27, 2002 12
Statement of Changes in Net Assets in Liquidation (Liquidation Basis)
For the thirty weeks ended April 27, 2002 13
Consolidated Balance Sheet at April 28, 2001 (Going-Concern Basis) 14
Consolidated Statements of Loss and Comprehensive Loss
For the twenty two weeks ended September 29, 2001 and the two years ended
April 28, 2001 and April 29, 2000 15
Consolidated Statements of Shareholders' Equity
For the twenty two weeks ended September 29, 2001 and the two years ended
April 28, 2001 and April 29, 2000 16
Consolidated Statements of Cash Flows 17
For the twenty two weeks ended September 29, 2001 and the two years
ended April 28, 2001 and April 29, 2000
Notes to Consolidated Financial Statements 18
Page 11 of 69
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
Genesee Corporation
We have audited the statement of net assets in liquidation of Genesee
Corporation as of April 27, 2002, and the related statement of changes in net
assets in liquidation for the period from September 30, 2001 to April 27, 2002.
In addition, we have audited the consolidated balance sheet as of April 28,
2001, the related consolidated statements of loss and comprehensive loss,
shareholders' equity, and cash flows for the two years then ended, and the
consolidated statements of loss and comprehensive loss, shareholders' equity,
and cash flows for the period from April 29, 2001 to September 29, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with 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.
As more fully described in Note 1, the Company is currently being liquidated. As
a result, the Company has changed its basis of accounting for periods subsequent
to September 29, 2001 from the going-concern basis to a liquidation basis.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the net assets in liquidation of Genesee
Corporation as of April 27, 2002, the changes in its net assets in liquidation
for the period from September 30, 2001 to April 27, 2002 its financial position
as of April 28, 2001, the results of its operations and its cash flows for the
two years then ended and for the period from April 29, 2001 to September 29,
2001, in conformity with accounting principles generally accepted in the United
States of America applied on the bases described in the preceding paragraph.
As described in Note 1, these financial statements as of April 27, 2002 and for
the period then ended have been prepared on the liquidation basis of accounting,
which requires management to make significant assumptions and estimates
regarding the fair value of assets and the estimate of liquidating costs to be
incurred. Because of the inherent uncertainty related to these estimates and
assumptions, there will likely be differences between these estimates and the
actual results and those differences may be material.
/s/ PricewaterhouseCoopers LLP
July 1, 2002
Rochester, New York
Page 12 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Statement Of Net Assets In Liquidation (Liquidation Basis)
April 27, 2002
(Dollars in thousands, except per share data)
ASSETS
Cash and cash equivalents $ 16,747
Marketable securities available for sale 6,667
Notes receivable 10,081
Investment in and notes receivable from unconsolidated real estate partnerships 6,351
Investment in direct financing and leveraged leases 209
Estimated income tax receivable 994
Other assets 811
----------
Total assets $ 41,860
==========
LIABILITIES AND NET ASSETS
Accrued compensation $ 1,245
Accrued expenses and other liabilities 1,021
Liquidating distribution payable 8,370
Accrued self-insured workers compensation 1,602
----------
Total liabilities 12,238
----------
Net assets in liquidation $ 29,622
==========
Number of common shares outstanding (Class A - 209,885; Class B - 1,464,201) 1,674,086
Net assets in liquidation per outstanding share $ 17.69
==========
See accompanying notes to consolidated financial statements.
Page 13 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Statement Of Changes In Net Assets In Liquidation (Liquidation Basis)
For the Thirty Weeks Ended April 27, 2002
(Dollars in thousands)
Shareholders' Equity at September 29, 2001 (Going-Concern Basis) $ 47,159
To adjust assets to net realizable values 2,001
To adjust liabilities to anticipated settlement amounts 9,926
--------
Net assets in liquidation at September 29, 2001 59,086
Liquidating distribution paid to shareholders (21,763)
Liquidating distribution payable to shareholders (8,370)
Changes in estimated liquidation values of assets and liabilities 669
--------
Net assets in liquidation at April 27, 2002 $ 29,622
========
See accompanying notes to consolidated financial statements.
Page 14 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheet (Going-Concern Basis)
April 28, 2001
(Dollars in thousands, except per share data)
APRIL 28, 2001
--------------
ASSETS
Current assets:
Cash and cash equivalents $ 12,237
Marketable securities available for sale 9,037
Notes receivable, current portion 771
Deferred income tax assets, current portion 338
Other current assets 123
Net assets held for disposal - current 47,147
--------
Total current assets 69,653
Net property, plant and equipment 11
Notes receivable, noncurrent portion 10,229
Deferred income tax assets, noncurrent portion 1,772
--------
Total assets $ 81,665
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 176
Accrued compensation 230
--------
Total current liabilities 406
Deferred gain on sale of brewing business 11,926
--------
Total liabilities 12,332
--------
Shareholders' equity:
Common stock:
Class A common stock, voting, $.50 par value. Authorized 450,000 shares; 105
209,885 shares issued and outstanding
Class B common stock, non-voting, $.50 par value. Authorized 3,850,000 shares; 753
1,506,876 shares issued
Additional paid-in capital 5,803
Retained earnings 64,485
Officer loans (411)
Accumulated other comprehensive income 91
Less: Class B treasury stock, at cost; 42,675 shares (1,493)
--------
Total shareholders' equity 69,333
--------
Total liabilities and shareholders' equity $ 81,665
========
See accompanying notes to consolidated financial statements.
Page 15 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Loss and Comprehensive Loss (Going-Concern Basis)
For the Twenty Two Weeks Ended September 29, 2001 and the Years Ended
April 28, 2001 and April 29, 2000
(Dollars in thousands, except per share data)
SEPTEMBER 29, FISCAL FISCAL
2001 2001 2000
----------- ----------- -----------
Revenues $ -- $ -- $ --
Cost of goods sold -- -- --
----------- ----------- -----------
Gross profit -- -- --
Compensation expense - stock options -- 1,378 --
Selling, general and administrative expenses 503 1,479 1,864
----------- ----------- -----------
Operating loss (503) (2,857) (1,864)
Investment and interest income 735 1,048 549
Other income 5 3 --
Interest expense -- -- (132)
----------- ----------- -----------
Earnings (loss) from continuing operations before income taxes 237 (1,806) (1,447)
Income tax expense (benefit) 95 (686) (550)
----------- ----------- -----------
Earnings (loss) from continuing operations 142 (1,120) (897)
Discontinued operations:
Loss from operations of the discontinued segments
(less applicable income tax expense (benefit) of $714,
$(335), and $ 258 respectively) (21,154) (2,063) (643)
Loss on sale of the Foods Division (less applicable
income tax benefit of $0) (1,166) -- --
Adjustment to the loss and the loss on disposal of Genesee
Ventures, Inc., respectively (less applicable income tax
expense (benefit) of $145, $966 and $( 1,240), respectively) 232 769 (1,860)
----------- ----------- -----------
Net loss before extraordinary item (21,946) (2,414) (3,400)
Extraordinary item - Loss from the extinguishment of debt,
net of income tax benefit of $257 (385) -- --
----------- ----------- -----------
Net loss (22,331) (2,414) (3,400)
Other comprehensive income (loss), net of income taxes:
Unrealized holding gains (losses) arising during the period 157 211 (197)
----------- ----------- -----------
Comprehensive loss $ (22,174) $ (2,203) $ (3,597)
=========== =========== ===========
Basic and diluted earnings (loss) per share from continuing operations $ 0.08 $ (0.69) $ (0.55)
Basic and diluted loss per share from discontinued operations $ (12.64) $ (1.26) $ (0.40)
Basic and diluted loss per share from sale of the Foods Division $ (0.70) $ -- $ --
Basic and diluted gain (loss) per share from disposal of Genesee Ventures, Inc. $ 0.14 $ 0.47 $ (1.15)
Basic and diluted loss per share from the extraordinary item $ (0.23) $ -- $ --
----------- ----------- -----------
Basic and diluted loss per share $ (13.35) $ (1.48) $ (2.10)
=========== =========== ===========
Weighted average common shares outstanding 1,674,086 1,633,164 1,620,013
Weighted average and common equivalent shares 1,674,086 1,633,164 1,620,013
See accompanying notes to consolidated financial statements.
Page 16 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity (Going-Concern Basis)
(Dollars in thousands, except per share data)
Common Stock Additional Retained Officer
Class A Class B Paid-In Capital Earnings Loans
------------------------------------------------------------------------
BALANCE AT MAY 1, 1999 $ 105 $ 753 $ 5,856 $85,692 $ -
========================================================================
Comprehensive income:
Net loss (3,400)
Other comprehensive loss
Total comprehensive loss
Dividends paid - $1.40 per share (2,269)
Common stock bonus issued (9)
------------------------------------------------------------------------
BALANCE AT APRIL 29, 2000 105 753 5,847 80,023 -
========================================================================
Comprehensive income:
Net loss (2,414)
Other comprehensive income
Total comprehensive loss
Regular dividend paid - $.35 per share (567)
Common stock bonus issued
exercise of stock options and issuance (44) (411)
Liquidating distribution paid - $7.50 per share (12,557)
------------------------------------------------------------------------
BALANCE AT APRIL 28, 2001 105 753 5,803 64,485 (411)
========================================================================
Comprehensive income:
Net loss (22,331)
Other comprehensive income
Total comprehensive loss
------------------------------------------------------------------------
BALANCE AT SEPTEMBER 29, 2001 $ 105 $ 753 $ 5,803 $42,154 $(411)
========================================================================
Accumulated
Other
Comprehensive Treasury Stock
Income (Loss) Class B Total
----------------------------------------------
$ 77 $ (3,446) $ 89,037
==============================================
BALANCE AT MAY 1, 1999
Comprehensive income: (3,400)
Net loss (197) (197)
Other comprehensive loss -------
(3,597)
Total comprehensive loss (2,269)
Dividends paid - $1.40 per share 45 36
Common stock bonus issued ----------------------------------------------
(120) (3,401) 83,207
BALANCE AT APRIL 29, 2000 ==============================================
Comprehensive income:
Net loss (2,414)
Other comprehensive income 211 211
-------
Total comprehensive loss (2,203)
Regular dividend paid - $.35 per share (567)
Common stock bonus issued
exercise of stock options and issuance 1,908 1,453
Liquidating distribution paid - $7.50 per share (12,557)
----------------------------------------------
Balance at April 28, 2001 91 (1,493) 69,333
==============================================
Comprehensive income:
Net loss (22,331)
Other comprehensive income 157 157
-------
Total comprehensive loss (22,174)
----------------------------------------------
BALANCE AT SEPTEMBER 29, 2001 $ 248 $ (1,493) $ 47,159
==============================================
See accompanying notes to consolidated financial statements.
Page 17 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Going-Concern Basis)
FOR THE TWENTY TWO WEEKS ENDED SEPTEMBER 29, 2001 AND THE
YEARS ENDED APRIL 28, 2001, APRIL 29, 2000
(Dollars in thousands)
SEPTEMBER 29, FISCAL FISCAL
2001 2001 2000
------------- ------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) from continuing operations $ 142 $ (1,120) $ (897)
Adjustments to reconcile net earnings (loss) to net
cash (used in) provided by operating activities:
Net loss gain on sale of marketable securities (8) (157) (7)
Compensation expense - stock options -- 1,378 --
Deferred tax provision (2) (66) 185
Extraordinary loss from early extinguishment of debt (385) -- --
Other (550) 800 493
Changes in non-cash assets and liabilities, net of amounts sold:
Trade accounts receivable 3 135 129
Other assets -- (204) (304)
Accounts payable 174 168 227
Accrued expenses and other 80 212 464
Income taxes payable 545 (79) (1,151)
Other liabilities -- (625) (547)
----- ----------- -------- -------- --------
Net cash (used in) provided by continuing operating activities (1) 442 (1,408)
Net cash provided by (used in) discontinued operations 1,821 (15,885) 5,239
-------- -------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,820 (15,443) 3,831
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable securities 2,018 3,382 3,455
Purchases of marketable securities and other investments (2,160) (4,212) (3,499)
-------- -------- --------
Net cash used in continuing investing activities (142) (830) (44)
-------- -------- --------
Proceeds from sale of brewing business assets -- 16,218 --
Proceeds from sale of equipment leases -- 12,605 --
Proceeds from sale of Foods Division 22,079 -- --
Other cash provided by discontinued operations 535 5,462 1,783
-------- -------- --------
Net cash provided by discontinued operations 22,614 34,285 1,783
-------- -------- --------
NET CASH PROVIDED BY INVESTING ACTIVITIES 22,472 33,455 1,739
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt -- -- (3,000)
Payment of liquidating distribution -- (12,557) 0
Payment of dividends -- (567) (2,269)
-------- -------- --------
Net cash used in continuing financing activities -- (13,124) (5,269)
Net cash (used in) provided by discontinued operations (5,973) (300) 1,512
-------- -------- --------
NET CASH USED IN FINANCING ACTIVITIES (5,973) (13,424) (3,757)
-------- -------- --------
Net increase in cash and cash equivalents 18,319 4,588 1,813
Cash and cash equivalents at beginning of the period 12,237 7,649 5,836
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 30,556 $ 12,237 $ 7,649
======== ======== ========
See accompanying notes to consolidated financial statements.
Page 18 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 29, 2001, April 28, 2001, and April 29, 2000
(1) Summary of Significant Accounting Policies - Liquidation Basis
LIQUIDATION BASIS FINANCIAL STATEMENTS
With the sale of its Foods Division, which is described in Note 11,
Genesee Corporation and Subsidiaries (the Corporation) adopted the
liquidation basis of accounting effective September 29, 2001. See
Adjustments from Going-Concern to Liquidation Basis of Accounting table
below. Under the liquidation basis of accounting, assets are stated at
their estimated net realizable values and liabilities are stated at
their estimated settlement amounts, which estimates will be
periodically reviewed and adjusted. A Statement of Net Assets and a
Statement of Changes in Net Assets are the two financial statements
presented under the Liquidation Basis of Accounting.
The valuation of assets at their net realizable value and liabilities
at their anticipated settlement amounts necessarily requires many
estimates and assumptions. In addition, there are substantial risks and
uncertainties associated with carrying out the liquidation and
dissolution of the Corporation. The valuations presented in the
accompanying Statement of Net Assets in Liquidation represent
estimates, based on present facts and circumstances, of the net
realizable values of assets and the costs associated with carrying out
the plan of liquidation and dissolution based on the assumptions set
forth below. The actual values and costs are expected to differ from
the amounts shown herein and could be greater or lesser than the
amounts recorded. In particular, the estimates of the Corporation's
costs will vary with the length of time it operates. Accordingly, it is
not possible to predict the aggregate amount that will ultimately be
distributable to shareholders and no assurance can be given that the
amount to be received in liquidation will equal or exceed the net
assets in liquidation per share in the accompanying Statement of Net
Assets in Liquidation or the price or prices at which the Corporation's
common stock has generally traded or is expected to trade in the
future.
Adjustments from Going-Concern to Liquidation Basis of Accounting
(Dollars in Thousands):
Shareholders' Equity at September 29, 2001 ( Going-Concern Basis) $ 47,159
To adjust assets to net realizable values 2,001
To adjust liabilities to anticipated settlement amounts 9,926
Net Assets in Liquidation at September 29, 2001 (Liquidation Basis) $ 59,086
Page 19 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies - Liquidation Basis
(continued)
Assumptions used when converting to the Liquidation Basis of Accounting
at September 29, 2001
Management estimated that the aggregate fair value of the Corporation's
investment in and notes receivable from unconsolidated real estate
partnerships exceeded cost by approximately $500,000 and that the
estimated fair value of property, plant and equipment exceeded cost by
approximately $30,000. Management also estimated that the fair value of
income taxes receivable was approximately $1.1 million greater than the
net amount of tax accounts previously included on the Corporation's
September 29, 2001 balance sheet under going-concern accounting. This
increase is predominantly attributable to the realization of tax
credits resulting from the decision to liquidate the Corporation. These
amounts are included in the $2 million adjustment to net realizable
values shown above, the difference being $411,000 of officer loans
reclassified from shareholders' equity to assets for purposes of
liquidation basis accounting and reporting.
Management estimated that the Corporation would spend approximately $2
million in operating costs through final dissolution. This amount was
accrued at September 29, 2001 in accordance with liquidation accounting
and is reflected in the $9.9 million adjustment to anticipated
settlement amounts shown above, which is net of the $11.9 million
deferred gain on the sale of the brewing business that no longer exists
under liquidation accounting.
General assumptions used and asset and liability values under the
Liquidation Basis of Accounting
Following are assumptions utilized by management in assessing the fair
value of assets and the expected settlement values of liabilities
included in the Statement of Net Assets in Liquidation as of April 27,
2002.
Cash and cash equivalents - Presented at face value. The Corporation
considers all highly liquid investments with original maturities of
three months or less to be cash equivalents. The Corporation maintains
balances in various operating and money market accounts in excess of
federally insured limits. At April 27, 2002, substantially all cash
balances were in excess of federally insured limits.
Marketable securities available for sale - Presented at quoted market
prices. The Corporation maintains a portfolio that consists
predominantly of high quality corporate bonds which is managed by an
independent third party. Valuation of the Corporation's marketable
securities is based upon closing prices of their marketable securities,
as provided by the investment manager, at April 27, 2002. The fair
value of the Corporation's portfolio can be summarized as follows
(dollars in thousands):
Fixed Income Securities
Debt securities issued by the U.S. Government $1,164
Corporate debt Securities 5,208
-------
6,372
Other 295
--------
Marketable Securities $6,667
--------
Page 20 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies - Liquidation Basis
(continued)
The fair value of fixed income securities, by contractual maturity, are
as follows (dollars in thousands):
Contractual maturity
Less than one year $ 505
After one year, but within five years 5,505
After five years, but within ten years 263
After ten years 99
-------
Total fixed income securities $6,372
-------
Notes receivable - Stated at face value which approximates fair value.
As partial consideration for the Corporation's sale of Genesee Brewing
Company, the Corporation received notes receivable from the buyer. The
terms of the notes receivable can be found at Note 7. The Corporation
considers the notes receivable to be fully collectible, and the
interest rate on the notes receivable are considered to be at market;
therefore the face value of the notes are considered to be fair value.
At April 27, 2002, these notes receivable totaled $10.1 million.
Investment in and notes receivable from unconsolidated real estate
partnerships - Valued based on independent appraisals and management
estimates.
Clinton Square - The Corporation had a 10% ownership interest
in Clinton Square, an office building located in Rochester,
New York, and a related note receivable. On May 31, 2002, the
Corporation sold both its ownership interest and related note
receivable from Clinton Square for $2.4 million.
Limited Partnerships - The Corporation has a 50% ownership
interest in two limited partnerships which own apartment
complexes located in Syracuse and Rochester, New York. The
fair market value at April 27, 2002 of the Corporation's
investment in these limited partnerships is based on
independent, third party valuations.
The value of the Corporation's investment in these limited partnerships
is $4.0 million at April 27, 2002.
Investment in direct financing and leveraged leases - Presented at the
present value of future lease payments of leases under renewal and the
fair value of all equipment under renewed and month-to-month leases.
Estimated income tax receivable - Based on management's estimate.
Amount reflects the impact on cash flow under an orderly liquidation
scenario. It is comprised of current taxes on current year income,
adjusting for estimates of future income, and the utilization of tax
credits and carryforwards. Certain amounts included in the estimated
income tax receivable are subject to audit by various taxing
authorities. Management does not believe that the results of any audit
will significantly alter this amount.
Page 21 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies - Liquidation Basis
(continued)
Other assets - Valued based on management estimates.
Accrued compensation, accrued expenses, and other liabilities - Based
on management's estimate. These are the estimated costs to complete the
Corporation's plan of liquidation and dissolution, and represents the
estimated cash costs of operating the Corporation through its expected
termination date. These costs, which include personnel, facilities,
professional fees, and other related costs, are estimated based on
various assumptions regarding the number of employees, the use of
outside professionals (including attorneys and accountants) and other
costs. Given that there is inherent uncertainty in the estimation
process, actual results could be materially different.
Liquidating distribution payable - On April 23, 2002, the Corporation
declared a liquidating distribution to be paid to shareholders of
record on May 10, 2002. The distribution was paid on May 17, 2002 (See
Note 3).
Accrued self-insured workers compensation - Based on an independent
actuarial valuation. The Corporation is self-insured for workers
compensation claims and has retained this liability for the
subsidiaries that were sold. The Corporation is required to have a
statutory standby letter of credit in the amount of $3.2 million for
workers compensation claims. This letter of credit, which is renewed
annually, has been collateralized by Corporation cash and is in effect
through August 2003.
Contingent liabilities - In addition to liabilities recorded on the
accompanying consolidated financial statements, the Corporation also
has certain contingent liability claims. Management does not believe
that there will be any future material cash outflows as a result of
these claims, or as a result of any other unknown claims or
liabilities, thus no amount is included in these accompanying
consolidated financial statements.
During the fourth quarter of fiscal 2002, the Corporation paid Boston
Beer Corporation $300,000 for a release from the Corporation's
performance guaranty of the production agreement between Boston Beer
Corporation and High Falls Brewing Company, LLC. This guaranty required
the Corporation to maintain liquid net worth of at least $7 million to
secure its obligations under the guaranty.
Net assets in liquidation per outstanding share, which is reported in
the Statement of Net Assets in Liquidation, is calculated by dividing
net assets in liquidation by the combined total of Class A and Class B
shares outstanding at April 27, 2002.
Page 22 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies - Liquidation Basis (continued)
Changes to asset and liability values under the Liquidation Basis of
Accounting from September 29, 2001 to April 27, 2002.
The value of the Corporation's investment in and notes receivable from
unconsolidated real estate partnerships was increased by $250,000 in the
third quarter of fiscal 2002 based on an updated independent appraisal and
management's estimate. This line item was further increased by $290,000 in
the fourth quarter based on the sales price realized in May 2002 on the
sale of the Corporation's 10% investment in entities that own an office
building in downtown Rochester, New York and a related note receivable.
The value of the Corporation's investment in a food service equipment and
supplies business was reduced by $355,000 to $0 in the last half of fiscal
2002. This investment had previously been included in other assets in the
statement of net assets in liquidation.
The Corporation's estimate of remaining operating costs through final
dissolution was increased by $900,000 in the third quarter of fiscal 2002.
As of April 27, 2002, the Corporation has approximately $2.0 million
recorded for these run-out costs. $1.2 million is allocated to
compensation-type costs while the remaining $800,000 covers all other
general and administrative costs such as professional fees, office related
costs, insurance expense, and other miscellaneous costs expected to be
incurred during the run-out period.
The Corporation's cash operating expenses, which reduced the run-out
accrual discussed above from September 29, 2001 through April 27, 2002,
were as follows:
Compensation and related costs $ 780,000
Rent and other office expenses 38,000
Insurance expense 115,000
Professional Fees 243,000
Other 33,000
----------
$1,209,000
==========
Page 23 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Summary of Significant Accounting Policies - Going-Concern Basis
GOING-CONCERN BASIS FINANCIAL STATEMENTS
Prior to September 29, 2001, the date at which the liquidation basis of
accounting was adopted, the Corporation followed the going-concern basis
of accounting. Following are notes to the consolidated financial
statements prepared under the going-concern basis of accounting. The
going-concern basis financial statements consist of the April 28, 2001
Consolidated Balance Sheet, the Consolidated Statement of Loss and
Comprehensive Loss for the twenty-two weeks ended September 29, 2001 and
the years ended April 28, 2001 and April 29, 2000, the Consolidated
Statements of Cash Flows for the twenty-two weeks ended September 29, 2001
and the years ended April 28, 2001 and April 29, 2000, and the
Consolidated Statements of Shareholders' Equity for the twenty-two weeks
ended September 29, 2001 and the years ended April 28, 2001 and April 29,
2000.
Principles of Consolidation and Nature of Operations
The consolidated financial statements of the Corporation include for
continuing operations, the Corporation's corporate segment. The corporate
segment retains the Corporation's cash, investments in marketable
securities, and significant notes receivable, which in turn generates
investment income which is then used in support of corporate costs. (See
Note 11 for information related to the Corporation's discontinued
segments.)
All significant inter-company balances and transactions have been
eliminated in consolidation.
Recently Issued Accounting Standards
Statements of Financial Accounting Standards (SFAS) No. 141,
"Business Combinations," No. 142, "Goodwill and Other Intangible
Assets," and No. 143, "Accounting for Asset Retirement Obligations"
were issued by the Financial Accounting Standards Board ( FASB) in
June 2001. SFAS No. 141 eliminates the pooling-of-interests method
for business combinations and requires the use of the purchase
method.
SFAS No. 142 changes the accounting for goodwill and indefinite life
intangibles from an amortization approach to a non-amortization approach
requiring periodic testing for impairment of the asset. Under SFAS No.
142, an impairment test will be required upon adoption and at least
annually to determine potential write-downs of goodwill and indefinite
life intangible assets. The provisions of SFAS No. 142 are required to be
applied starting with fiscal years beginning after December 15, 2001. SFAS
No. 143 establishes accounting standards for the recognition and
measurement of legal obligations associated with the retirement of
tangible long-lived assets and requires recognition of a liability for an
asset retirement obligation in the period in which it occurred. SFAS No.
143 is effective for fiscal years beginning after June 15, 2002. The
adoption of SFAS No. 142 and SFAS No. 143 will not have a material impact
on the Corporation's financial position or results of operations.
Page 24 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Summary of Significant Accounting Policies - Going-Concern Basis
(continued)
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which amends Accounting
Principles Board Opinion No. 30 ("APB 30"), "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions." SFAS No. 144 retains the fundamental provisions of SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," for recognizing and measuring
impairment losses on long-lived assets held for use and long-lived assets
to be disposed of by sale, while resolving significant implementation
issues. SFAS No. 144 retains the basic provisions of APB 30 on the
presentation of discontinued operations in the income statement, but
expands the scope to include all distinguishable components of an entity
that will be eliminated from ongoing operations in a disposal transaction.
The adoption of SFAS No. 144 will not have a material impact on the
Corporation's financial position or results of operations.
In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections" which, among other technical amendments, no longer requires
financial statement presentations to include gains and losses from the
early extinguishment as an extraordinary item. SFAS No. 145 is effective
for all fiscal years beginning after May 15, 2002. SFAS No. 145 will not
have a material impact on the Corporation's financial position or results
of operations.
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents include all cash balances and highly liquid
investments with an original maturity of three months or less. Marketable
securities include mutual funds, corporate, government and government
agency obligations.
Comprehensive Loss
The Corporation reports comprehensive income or loss in accordance with
the provisions of SFAS No. 130, "Reporting Comprehensive Income." SFAS No.
130 establishes standards for reporting and display of comprehensive
income or loss and its components (revenues, expenses, gains, losses, and
other comprehensive income) in a set of financial statements in order to
report a measure of all changes in equity of an enterprise. Other
comprehensive income or loss refers to revenues, expenses, gains and,
losses that are included in comprehensive income or loss but excluded from
net earnings or loss.
The amount of income tax expense or (benefit) allocated to other
comprehensive income for the twenty-two weeks ended September 29, 2001,
fiscal 2001, and fiscal 2000 was approximately $105,000, $118,000, and
$(110,000), respectively.
Page 25 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Summary of Significant Accounting Policies - Going-Concern Basis
(continued)
Income Taxes
The provision for income taxes is based upon pre-tax earnings, with
deferred income taxes arising from the permanent and temporary differences
between the financial reporting basis and the tax basis of the
Corporation's assets and liabilities. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which the
temporary differences are expected to reverse and give immediate effect to
changes in income tax rates.
Stock-Based Compensation
The Corporation measures compensation cost for its stock-based
compensation plans under the provisions of Accounting Principles Board
(APB) Opinion No. 25, "Accounting for Stock Issued to Employees." In
accordance with SFAS No. 123, "Accounting for Stock-Based Compensation,"
disclosure of compensation costs on the basis of fair value is presented
in Note 10 - Stock Option and Bonus Plans.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results may differ from those estimates.
Earnings Per Share
The Corporation presents basic earnings per share, which is computed by
dividing the income available to common shareholders by the weighted
average number of common shares outstanding for the period, and diluted
earnings per share, which reflects the potential dilution that could occur
if securities or other contracts to issue common stock were exercised or
converted into common stock.
At September 29, 2001 and in fiscal 2001 and fiscal 2000, respectively,
9,500, 27,500, and 216,051 shares of potential common stock are considered
anti-dilutive and are excluded from the calculation of diluted earnings
per share.
Reclassifications
It is the Corporation's policy to reclassify certain amounts in the prior
year consolidated financial statements to conform with the current year
presentation.
Fiscal Year
The Corporation's fiscal year ends on the Saturday closest to April 30.
Fiscal years for the financial statements included herein are for the 52
week periods ending April 28, 2001 and April 29, 2000.
Page 26 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(3) Partial Liquidating Distributions
Under its plan of liquidation and dissolution, the Corporation has paid
the following partial liquidating distributions to its Class A and Class B
shareholders.
Date Paid Total $ Distributed $ Per Share
--------- ------------------- -----------
March 1, 2001 $12,557,000 $ 7.50
November 1, 2001 21,763,000 13.00
May 17, 2002 8,370,000 5.00
----------- ------
$42,690,000 $25.50
----------- ------
(4) Financial Instruments
The following estimated fair value amounts have been determined using
available market information and appropriate valuation methodologies.
However, considerable judgment is necessarily required in interpreting
market data to develop the estimates of value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts that the
Corporation could realize in a current market exchange. The use of
different market assumptions or estimation methodologies may have a
material effect on the estimated fair value amounts.
The carrying amount of cash and cash equivalents approximate a reasonable
estimation of their fair value. Fair value of marketable securities is
determined based on quoted market prices for investments. Fair value of
the notes receivable approximates the carrying value at April 28, 2001.
Fair value of the mortgage payable, based on discounted cash flows,
approximates the carrying value at April 28, 2001.
Page 27 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(4) Financial Instruments (continued)
Marketable securities are classified as available for sale. The amortized
cost, gross unrealized gains/losses and fair values of marketable
securities at April 28, 2001 are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------------------------------------------
Fixed income securities:
Debt securities issued by
U.S. Government $ 5,304 $ 64 $ 4 $ 5,364
Corporate debt securities 3,345 94 12 3,427
------- ------ ------ -------
8,649 158 16 8,791
------- ------ ------ -------
Mutual funds:
Fixed income funds 44 - 2 42
------- ------ ------ -------
Other 204 - - 204
------- ------ ------ -------
Marketable securities available
for sale $ 8,897 $ 158 $ 18 $ 9,037
======= ====== ====== =======
(Dollars in thousands)
Page 28 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(4) Financial Instruments (continued)
The amortized cost and fair value of fixed income securities at April 28,
2001, by contractual maturity, are as follows:
Amortized Fair
Cost Value
Contractual maturity:
Less than one year $ 0 $ 0
After one year, but within five years 7,961 8,083
After five years, but within ten years 551 566
After ten years 137 142
------- ------
Total fixed income securities $ 8,649 $8,791
======= ======
(Dollars in thousands)
The following represents the total proceeds from sales of marketable
securities for the twenty-two weeks ended September 29, 2001 and for the
fiscal years ended April 28, 2001 and April 29, 2000, and the components
of net gains and losses realized on those sales, which are determined on a
weighted average basis:
9/29/01 2001 2002
------- ------ ------
Proceeds from sale $ 2,018 $3,282 $3,455
------- ------ ------
Gains from sales 8 167 104
Losses from sales 0 (10) (97)
------- ------ ------
Net gains from sales $ 8 $ 157 $ 7
------- ------ ------
(Dollars in thousands)
Page 29 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) Income Taxes
Components of income tax (benefit) expense from continuing operations for
the twenty-two weeks ended September 29, 2001 and for the fiscal years
ended April 28, 2001, and April 29, 2000 are as follows:
9/29/01 2001 2000
Current:
Federal $ 74 $ (577) $ (463)
State 21 (109) (87)
---- ------ ------
Total current income tax expense (benefit) 95 (686) (550)
---- ------ ------
Deferred:
Federal 0 0 0
State 0 0 0
---- ------ ------
Total deferred income tax expense 0 0 0
---- ------ ------
Total income tax expense (benefit) $ 95 $ (686) $ (550)
==== ====== ======
(Dollars in thousands)
The actual tax expense reflected in the consolidated statements of
earnings differs from the expected tax expense, computed by applying the
U.S. federal corporate tax rate to earnings before income taxes as follows
for the twenty two weeks ended September 29, 2001 and for the fiscal years
ended April 28, 2001, and April 29, 2000:
9/29/01 2001 2000
------- ------ ------
Computed expected tax expense (benefit) @ 34% $ 80 $ (614) $ (492)
State income taxes (net of federal income tax
benefit) 15 (72) (58)
----- ------ ------
Total income tax expense (benefit) $ 95 $ (686) $ (550)
===== ====== ======
Effective tax rate 40% 38% 38%
===== ====== ======
(Dollars in thousands)
Page 30 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) Income Taxes (continued)
The tax effects of temporary differences that give rise to significant
portions of the deferred income tax assets and liabilities at April 28,
2001 is presented below:
2001
Deferred income tax assets:
Deferred gain on sale of brewing business $ 2,656
Allowance for doubtful accounts 79
Operating accruals 248
Package design 91
Non-compete agreement 102
Deferred compensation and other
employee related accruals 313
Other 126
-------
Total deferred income tax assets 3,615
-------
Deferred income tax liabilities:
Accelerated depreciation on plant and equipment 727
Unrealized gains on marketable securities 51
Other 727
-------
Total deferred income tax liabilities 1,505
-------
Net deferred income tax assets $ 2,110
=======
(Dollars in thousands)
The change in the deferred tax asset or liability for unrealized gains or
losses on investments classified as available for sale is reflected in
equity in accordance with SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." A valuation allowance has been
established to reflect the uncertainty of the realization of certain state
investment tax credits. These credits and the related valuation allowance
are included in discontinued operations.
Page 31 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Property, Plant and Equipment
Property, plant and equipment at April 28, 2001 is summarized as follows:
2001
Land and land improvements $ 6
Buildings 45
Machinery, equipment, furniture and fixtures 4
-------
Total property, plant and equipment 55
Less accumulated depreciation 44
-------
Net property, plant and equipment $ 11
-------
(Dollars in thousands)
Page 32 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) Notes Receivable
Notes receivable consists of three separate notes from High Falls which
are dated December 15, 2000 and were executed in connection with the sale
of the Corporation's brewing business to High Falls as of that date. The
general terms of the notes follow.
Subordinated Promissory Note - $4,500,000 note receivable with an original
maturity date of December 15, 2003 bearing interest at 12% per annum
payable quarterly with principal payments of $500,000, $1,000,000 and
$3,000,000 due on the first, second and third anniversary dates of the
note, respectively. Under certain circumstances, the final $3,000,000 of
principal may be paid $1,000,000, $1,000,000 and $1,000,000 on the third,
fourth, and fifth anniversary dates, respectively. The entire principal
balance was outstanding at April 28, 2001.
First Senior Bridge Note - $3,500,000 note receivable with a maturity date
of June 1, 2004 bearing interest at Manufacturers & Traders Trust
Company's prime rate plus 1% per annum payable quarterly with principal
payments of $125,000 commencing September 15, 2001 and quarterly
thereafter through the maturity date at which time the entire outstanding
principal and accrued interest is due. The note provides for a mandatory
prepayment to the extent High Falls receives proceeds from HUD financing
or JDA financing. The entire principal balance was outstanding at April
28, 2001.
Second Senior Bridge Note - $3,000,000 note receivable with a maturity
date of June 1, 2004 bearing interest at Manufacturers & Traders Trust
Company's prime rate plus 1% per annum payable monthly through August 15,
2001 with principal and interest payments based on an amortization period
of 240 months commencing September 15, 2001 and monthly thereafter through
the maturity date at which time the entire outstanding principal and
accrued interest is due. The note provides for a mandatory prepayment to
the extent High Falls receives proceeds from HUD financing or JDA
financing. The entire principal balance was outstanding at April 28, 2001.
(8) Segment Reporting
As stated in Note 2, the Corporation's corporate segment is the only
reporting segment for continuing operations. The corporate segment retains
the Corporation's investments in marketable securities, significant notes
receivable, generating investment income as well as supporting corporate
costs. (See Note 11 for information related to the Corporation's
discontinued segments.)
Page 33 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(9) Supplemental Cash Flow Information
Cash (refunded) paid for taxes was approximately $(11,000), $ 8,894,000,
and $1,765,000 for the twenty-two weeks ended September 29, 2001, fiscal
2001, and fiscal 2000, respectively; cash paid for interest was
approximately $134,000, $422,000, and $351,000 for the twenty-two weeks
ended September 29, 2001, fiscal 2001, and fiscal 2000, respectively.
Interest capitalized amounted to $194,000 in fiscal 2000. No interest was
capitalized during the twenty-two weeks ended September 29, 2001 or in
fiscal 2001.
(10) Stock Option and Bonus Plans
Under the Corporation's 1992 Stock Plan, as amended (the "Stock Plan"),
officers and other key employees may, at the discretion of the Management
Continuity Committee of the Board of Directors, be granted options that
allow for the purchase of shares of the Corporation's Class A and Class B
common stock. These options may be exercised any time from the award date
to a specified date not more than ten years from the award date or five
years in the case of 10% or more shareholders. Under the Stock Plan,
outside directors are granted options to purchase shares of Class B common
stock. Outside director options may be exercised at any time from the
option award date until five years after the award date.
The Corporation has adopted a Stock Bonus Incentive Program under the
Stock Plan (the "Bonus Program"). The Bonus Program authorizes the Board
of Directors to award shares of Class B common stock to officers and other
key employees. These shares are issued from treasury shares in five equal
annual installments commencing in the year in which the award takes place.
Changes in stock options are as follows:
Options Weighted Average Options Weighted Average
Outstanding Price Per Share Exercisable Price Per Share
----------- ---------------- ----------- ----------------
Balance at May 1, 1999 138,500 $40.72 138,500 40.72
Granted 131,301 25.24
Expired (21,000) 39.40
Forfeited (32,750) 40.12
-------- ------
Balance at April 29, 2000 216,051 $31.53 119,075 $ 36.60
Granted 2,000 38.31
Expired (3,000) 44.27
Forfeited (39,750) 43.29
Exercised (147,801) 25.90
-------- ------
Balance at April 28, 2001 27,500 $43.92 27,500 $ 43.92
Expired (7,000) 43.38
Forfeited (11,000) 44.76
-------- ------
Balance at Sept. 29, 2001 9,500 $43.35 9,500 $ 43.35
Page 34 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(10) Stock Option and Bonus Plans (continued)
Common stock reserved for options and employee awards totaled 9,500 and
27,500 shares as of September 29, 2001 and April 28, 2001, respectively.
The Corporation adopted the disclosure-only provisions of SFAS No. 123,
and continues to apply the provisions of APB Opinion No. 25 for plan
accounting. If compensation cost for the Corporation's stock-based plans
had been determined based on the fair value at the grant dates in
accordance with SFAS No. 123, the Corporation's net earnings and basic and
diluted earnings per share for the fiscal years ended April 28, 2001, and
April 29, 2000 would have been reduced to the pro forma amounts indicated
below.
During the twenty-two weeks ended September 29, 2001 no options were
granted; therefore there is no related disclosure for this twenty-two week
period.
Reported Pro Forma
Earnings Earnings
2001
Net loss $(2,414) $(2,447)
Basic loss per share (1.48) (1.50)
Diluted loss per share (1.48) (1.50)
2000
Net loss $(3,400) $(3,590)
Basic loss per share (2.10) (2.22)
Diluted loss per share (2.10) (2.22)
(Dollars in thousands, except per share data)
For purposes of this disclosure, the fair value of each option was
estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions: expected option
term of 5 years, expected volatility of 39.3%, and 23.6%, in fiscal 2001
and fiscal 2000 respectively, expected dividend yield of 0%, and 5.6%, and
risk-free interest rates of 5.69%, and 5.92%, in fiscal 2001, and fiscal
2000, respectively. The weighted average fair value of stock options
granted was $16.64, and $4.26, in fiscal 2001 fiscal 2000, respectively.
Page 35 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(10) Stock Option and Bonus Plans (continued)
The following table summarizes information about stock options outstanding
and exercisable at September 29, 2001:
Options Outstanding Options Exercisable
- --------------------------------------------------------------------------------
Wgtd. Avg. Wgtd. Avg.
Range of Exercise Contractual Life Wgtd. Avg. Exercise
Prices Per Share Number in Years Exercise Price Number Price
- --------------------------------------------------------------------------------
$38.00 - 40.99 2,000 3.5 $ 38.31 2,000 $38.31
41.00 - 46.00 7,500 0.5 44.70 7,500 44.70
- --------------------------------------------------------------------------------
$38.00 - 46.00 9,500 0.9 $43.35 9,500 $43.35
================================================================================
Page 36 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations
In October 2000, the Corporation's shareholders approved a plan to
liquidate and dissolve the Corporation. The Corporation is liquidating by
selling or otherwise disposing of its assets and winding up its affairs.
The proceeds from the liquidation, net of amounts paid or reserved to
discharge all of the Corporation's obligations and liabilities, is being
distributed to the Corporation's shareholders in a series of liquidating
distributions, after which the Corporation will be dissolved.
The Corporation sold its brewing business in December 2000 to High Falls
Brewing Company, LLC ("High Falls") for $27.2 million. The Corporation
received $11 million of the sale price in the form of notes receivable
more fully described in Note 7.
The Corporation sold a significant portion of its equipment lease
portfolio in December 2000 and received $12.8 million in proceeds. The
Corporation retained a small portion of its lease portfolio which it
continues to manage.
On October 10, 2001, the Corporation sold all of the outstanding stock of
its Foods Division to Associated Brands, Inc. ("ABI") for $27 million. The
sale was completed in accordance with the terms of a Purchase Agreement
(the "Agreement") which is described in Exhibit 10-24 to this report. Net
of closing date adjustments, the Corporation received $22.1 million in
cash at closing. In addition, a $2.25 million note and mortgage and
$178,000 in cash were received by the Corporation and placed in escrow for
eighteen months. The mortgage note has since been paid and the $2.4
million escrow is now all cash.
The Corporation is evaluating strategies to sell or otherwise divest the
Corporation's remaining assets, all of which have been adjusted to their
estimated net realizable values under the liquidation basis of accounting
as stated in Note 1. The following major asset categories remain: Cash and
cash equivalents is comprised of operating cash accounts, money market
accounts, and an escrow account related to the sale of the Corporation's
Foods Division (see above). Marketable securities available for sale
represents the Corporation's professionally managed bond portfolio. Notes
receivable is comprised of the notes related to the sale of the brewery
(see Note 7.) Investment in and notes receivable from unconsolidated real
estate partnerships includes the Corporation's 50% investment in two
entities that each own an apartment complex in New York State and a 10%
investment in entities that own an office building in downtown Rochester,
New York as well as a note receivable from one of those entities (see
subsequent sale transaction information following in this Note).
Investment in direct financing and leveraged leases represents the
Corporation's investment in equipment leases retained after the sale of a
majority of the equipment lease portfolio. Other assets include certain
loans to corporate officers, a minority interest in a privately-held
company that distributes non-durable equipment and supplies to the food
service industry and interest receivable on the notes described above.
Page 37 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations (continued)
The results of operations for the discontinued brewing, foods, equipment
leasing and real estate investment businesses were as follows:
22 Weeks
Ended
(Dollars in thousands) 9/29/01 Fiscal 2001 Fiscal 2000
-------- ----------- -----------
Revenue $ 19,903 $ 117,899 $ 166,531
Less beer taxes (0) (13,302) (24,552)
-------- --------- ---------
Net revenue 19,903 104,597 141,979
Cost of goods sold (15,936) (83,382) (110,206)
Selling, general, and admin. (2,080) (22,445) (31,598)
Impairment charge (21,833) 0 0
Other income (1,925) 567 (560)
Loss from operations of
the discontinued
segments, net of tax
benefit or expense (21,154) (2,063) (643)
======== ========= =========
Loss on sale of Foods Division (1,166) 0 0
======== ========= =========
Adjustment to the loss on
disposal of Genesee
Ventures, Inc., net of
tax expense $ 232 $ 769 $ (1,860)
======== ========= =========
Extraordinary item - loss
from the extinguishment
of debt, net of income
tax benefit $ (385) $ 0 $ 0
======== ========= =========
Page 38 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations - (continued)
The net assets of the brewing, foods, equipment leasing and real estate
investment businesses have been excluded from their respective captions
and reported as net assets held for disposal in the accompanying
consolidated balance sheet at April 28, 2001. The net assets of the
brewing, foods, equipment leasing and real estate investment businesses at
April 28, 2001 were as follows:
(Dollars in thousands)
Accounts receivable, net $ 3,048
Inventories 8,758
Other current assets 318
Net property, plant and equipment 12,226
Net goodwill and other intangibles 25,426
Investment in direct financing and
leveraged leases 1,389
Investment in and notes receivable from
unconsolidated real estate partnerships 5,193
Other assets 1,879
Net deferred income tax asset 993
Notes payable, current portion (1,474)
Accounts payable (1,105)
Accrued compensation
(263)
Accrued expenses and other (3,976)
Accrued postretirement benefits (745)
Notes payable, noncurrent portion (4,499)
Other liabilities (21)
---------
Net assets held for disposal - current $ 47,147
=========
Page 39 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations - (continued)
The Corporation's investment in a real estate limited partnership in which
it has less than a majority interest is accounted for by the equity
method. The Corporation's proportionate share of the results of operations
of this unconsolidated limited partnership is recorded net of tax in
discontinued operations.
Revenue Recognition
Revenue from the Corporation's lease portfolio is recognized on a level
yield method.
Concentration of Credit Risk
The Corporation's lease receivable balances are from a diversity of
lessees in various industries and businesses. This diversity, in addition
to security interests in the leased equipment, allows the Corporation to
minimize its credit risk on lease receivables. Substantially all of the
accounts receivable balances are from food retailers.
Property, Plant and Equipment
The Corporation regularly assesses all of its long-lived assets for
impairment and recognizes a loss when the carrying value of an asset
exceeds its expected future cash flows. The Corporation determined that no
impairment loss needed to be recognized for applicable assets in fiscal
2001 and 2000. In the first quarter of fiscal 2002, the Corporation
recorded a $21.8 million impairment charge related to the Foods Division.
This charge is included as a part of the first quarter's operating loss
with an equivalent reduction in goodwill.
Goodwill and Other Intangibles
Goodwill and other intangibles are amortized on a straight-line basis
ranging from 3 to 25 years. The carrying value of goodwill and other
intangibles are assessed periodically based on the expected future cash
flows of the assets associated with the goodwill and other intangibles. As
noted above, goodwill was reduced by $21.8 million in the first quarter of
fiscal 2002 related to an impairment charge.
Real Estate Investment
During the second quarter of fiscal 1998, the Corporation and its partners
refinanced the Rochester, New York office building in which the
Corporation owned a ten percent interest. The financing package included a
$31.5 million first mortgage loan obtained on a non-recourse basis, a $5.5
million term loan that is secured, in part, by a 50% limited guarantee
from the Corporation, and a $2.9 million note receivable by the
Corporation. The Corporation's exposure under the guarantee is capped at
$2.75 million. As mentioned previously, the Corporation sold its
investment in the building along with its note receivable in May 2002.
Further, the Corporation has been indemnified against any claims related
to the loan guarantee mentioned above.
Page 40 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations (continued)
Leasing Activities
The Corporation's leasing activity is conducted by Cheyenne Leasing
Company, a wholly owned subsidiary of Genesee Ventures, Inc. On October
31, 2000, Genesee Ventures, Inc. bought out the 15% minority interest in
Cheyenne Leasing Company from its joint venture partner to obtain this
wholly owned status. Information pertaining to the Corporation's net
investment in direct financing leases and leveraged leases at April 28,
2001 is presented below:
2001
-------------------------
Direct
Financing Leveraged
Minimum rentals receivable $ 156 $ 0
Estimated unguaranteed residual
value of leased assets 76 1,201
Unearned and deferred income 0 (44)
----- ------
Investment in leases 232 1,157
----- ------
Investment in direct financing and leveraged leases 1,389
Deferred taxes arising from leases (511)
------
Net after-tax investment in leases $ 878
======
(Dollars in thousands)
The following is a schedule of minimum rentals receivable by year for
direct financing and leveraged leases at April 28, 2001:
Fiscal Year:
2002 $ 96
2003 60
-----
Total minimum rentals receivable $ 156
=====
(Dollars in thousands)
Inventories
Inventories at April 28, 2001 is summarized as follows:
2001
-------
Finished goods $ 3,881
--
Raw materials, containers and packaging supplies 4,877
-------
Total inventories $ 8,758
=======
(Dollars in thousands)
Page 41 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations (continued)
Property, Plant and Equipment
Property, plant and equipment at April 28, 2001
is summarized as follows:
2001
--------
Land and land improvements $ 288
Buildings 6,848
Machinery, equipment, furniture and fixtures 10,614
Construction in process 112
--------
Total property, plant and equipment 17,862
Less accumulated depreciation 5,636
--------
Net property, plant and equipment $ 12,226
========
(Dollars in thousands)
Notes Payable
Mortgage Note Payable
During fiscal 1999, the Corporation borrowed $4,800,000 through a building
loan agreement with a bank to purchase a building for the Corporation's
food business of which $4,592,000 was outstanding at April 28, 2001. This
mortgage note was repaid in full in conjunction with the sale of the Foods
Division in October 2001.
Term Note Payable
During fiscal 2000, the Corporation borrowed $1,700,000 under a multiple
disbursement term note payable of which $1,381,000 was outstanding at
April 28, 2001. These funds were used for renovation to, and construction
at, the building mentioned above. This note was paid in full on May 31,
2001.
Postretirement Benefits
The Corporation previously provided certain health care and life insurance
benefits to eligible retired employees and spouses under a welfare benefit
plan (the Plan) covering substantially all retirees and employees of
Genesee Brewing Company. Effective with the sale of its brewing business
on December 15, 2000, the Corporation was relieved of its liability and
responsibility for these postretirement benefits. However, the Corporation
implemented a phase-out plan whereby retiree postretirement benefits will
continue at decreasing levels through the end of calendar 2001 at which
time benefits will be discontinued. This $745,000 liability is included in
the Corporation's consolidated balance sheet at April 28, 2001.
Page 42 of 69
GENESEE CORPORATION
AND SUBSIDIARIES
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Directors: The table below lists the directors of the Corporation
and sets forth their ages, their other positions with the Corporation and its
subsidiaries, the principal occupations of those directors who do not hold other
positions with the Corporation or its subsidiaries, and the expiration of their
terms in office. The term in office of each director expires at the annual
meeting of shareholders of the Class A Common Stock held in the year specified.
Expiration
Director Position and Principal Occupation of Term
Name and Age Since for the Last Five Years in Office
- ------------------------------------------------------------------------------------------
Stephen B. Ashley (62) 1987 President of the Corporation (1) 2002
William A. Buckingham (59) 1992 Retired; formerly Executive Vice 2004
President of First Empire State
Corporation and Manufacturers and
Traders Trust Company (2)
Thomas E. Clement (69) 2001 Retired; formerly a partner of Nixon 2003
Peabody, LLP (3)
Carl E. Sassano (52) 2001 President and Chief Executive Officer of 2004
Transmation, Inc. (4)
Charles S. Wehle (54) 1976 Chairman of the Board of Directors of 2003
the Corporation (5)
(1) See Note (1) to Item 10(b).
(2) Mr. Buckingham retired in 1996 as Executive Vice President of First Empire
State Corporation, a publicly held bank holding company, and Manufacturers
and Traders Trust Company, a New York State chartered bank.
(3) Mr. Clement retired as a partner of the law firm of Nixon Peabody LLP in
2000, a position he had held for more than five years. Mr. Clement
previously served as a director of the Corporation from 1970 to 1999.
(4) Mr. Sassano was elected President and Chief Executive Officer of
Transmation, Inc. in April 2002. Mr. Sassano is also a director of
Transmation, Inc. From 2000 to 2002 he served as a private business
consultant. From 1999 to 2000 Mr. Sassano served as President and Chief
Operating Officer of Bausch & Lomb, Inc., a global vision and health care
products manufacturer. From 1996 to 1999 Mr. Sassano served as President -
Global Vision Care of Bausch & Lomb, Inc.
(5) See Note (2) to Item 10(b).
Page 43 of 69
(b) Executive Officers: The table below lists the executive officers of
the Corporation and its subsidiaries and sets forth their ages, the dates they
became officers and the offices held. Officers of the Corporation and its
subsidiaries serve for a term of one year beginning with the first meeting of
the Board of Directors occurring after the annual meeting of the holders of
Class A Common Stock of the Corporation.
Officer of the
Name Age Company Since Office
- --------------------------------------------------------------------------------
Stephen B. Ashley 62 2000 President (1)
Charles S. Wehle 54 1988 Chairman of the Board of Directors (2)
Mark W. Leunig 47 1988 Senior Vice President, Chief
Administrative Officer, Secretary
and General Counsel (3)
Steven M. Morse 38 2000
Vice President, Chief Financial
Officer and Treasurer (4)
(1) Mr. Ashley was elected President of the Corporation in December 2000.
Since July 1996 Mr. Ashley has been Chairman and Chief Executive Officer
of The Ashley Group, an affiliated group of privately owned real estate
management and investment companies. Mr. Ashley is also a Director of
Federal National Mortgage Association, Exeter Fund, Inc. and Exeter
Insurance Fund, Inc.
(2) Mr. Wehle was elected Chairman of the Board of Directors in March 2000. He
retired as Senior Vice President of the Corporation and President of
Genesee Brewing Company in May 2000. He had served as Senior Vice
President of the Corporation for more than five years and as President of
Genesee Brewing Company since October 1996.
(3) Mr. Leunig was elected Senior Vice President, Chief Administrative Officer
and Secretary of the Corporation in December 2000. Prior to that, he was
Vice President, Secretary and General Counsel of the Corporation,
positions he held for more than five years.
(4) Mr. Morse was elected Vice President, Chief Financial Officer and
Treasurer of the Corporation on December 13, 2001. He was elected Vice
President and Treasurer in December 2000. From 1999 to 2000, Mr. Morse
served as the Corporation's Corporate Consolidations Manager. From 1996 to
1999, he served as an Audit Manager at the public accounting firm of
Delloitte & Touche, LLP. Mr. Morse is a certified public accountant.
(c) Compliance with Section 16(a) of Securities Exchange Act of 1934:
To the Corporation's knowledge, based solely on review of copies of reports of
initial ownership and changes of ownership furnished to the Corporation by its
directors, executive officers and persons who own more than ten percent of the
Corporation's Class B Common Stock, and written representations to the
Corporation by such persons that no other reports were required, there were no
failures by such persons to comply with the reporting requirements under Section
16(a) of the Securities Exchange Act of 1934 during the Corporation's fiscal
year ended April 27, 2002.
Page 44 of 69
Item 11. Executive Compensation
(a) Summary of Executive Compensation. The table below sets forth a
summary of compensation paid during the past three fiscal years for all services
rendered to the Corporation and its subsidiaries by the former Chief Executive
Officer, the President of the Corporation (who is acting in the capacity of the
chief executive officer) and the other executive officers of the Corporation
whose total annual salary and bonus for the fiscal year ended April 27, 2002
exceeded $100,000.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
----------------------------------- ------------------------------------
Other
Annual Restricted Stock All Other
Name and Fiscal Compen- Stock Options/ Compensa-
Principal Position Year Salary ($) Bonus ($)($) sation Awards ($) SARs (#) tion ($)
- ------------------ ------ ---------- ------------ --------- ---------- -------- ---------
Stephen B. Ashley, 2002 60,000 0 - 0 0 0
President 2001 22,500 0 - 0 1,000 31,875
2000 - - - - 1,000 -
Mark W. Leunig, 2002 172,174 95,202 109,070(1) 0 0 72,122(2)
Senior Vice 2001 137,660 94,320 57,647(3) 0 9,576 39,162
President, 2000 115,833 91,875 938 0 12,800 21,375
General Counsel
and Secretary
Steven M. Morse, 2002 90,481 25,000 0 0 0 103,228(4)
Vice President 2001 79,125 61,250 30,094(3) 0 5,289 13,612
and Treasurer 2000 - - - - 0 -
(1) Amount paid upon exercise of stock appreciation rights.
(2) Amount reflects $63,749 retirement payment under employment agreement with
the Corporation, $4,876 paid upon termination of Rabbi Trust under the
Corporation's Benefit Restoration Plan (which amount was reported under
Item 11(a) in Form 10-K's previously filed by the Corporation), $2,975
payment in lieu of flexible spending account benefit under employment
agreement with the Corporation, and $522 in premiums paid by the
Corporation on life insurance policies.
(3) Amount reflects the dollar value of stock appreciation rights granted in
fiscal 2001.
(4) Amount reflects $81,080 of above-market value stock appreciation rights
held at April 27, 2002, $19,143 retirement payment under employment
agreement with the Corporation, $2,975 payment in lieu of flexible
spending account benefit under employment agreement with the Corporation,
and $130 in premiums paid by the Corporation on life insurance policies.
(b) Grant of Options or Stock Appreciation Rights. The Corporation did
not grant any options or stock appreciation rights to the executive officers
identified in Item 11(a) during the Corporation's fiscal year ended April 27,
2002.
Page 45 of 69
(c) Exercise of Options by Executive Officers. The table below sets
forth information about the aggregate number of shares received and the value
realized by the named executive officer upon exercise of options exercised
during the Corporation's fiscal year ended April 27, 2002; and the aggregate
number and value of options held by the named executive officer at the end of
the fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at FY-End(#) Options at FY-End($)
Acquired Value -------------------- --------------------
on Realized Exercis- Unexercis- Exercis- Unexercis-
Name Exercise ($) able able able able
- --------------------------------------------------------------------------------
Stephen B. Ashley 0 0 2,000 0 0 0
Mark W. Leunig 0 0 1,500 0 0 0
Steven M. Morse 0 0 0 0 0 0
(d) Director Compensation. Directors who are employees of the
Corporation do not receive directors' fees or other compensation for their
services as directors. Directors who are not employees receive an annual fee of
$7,000 plus $500 for each Board and Committee meeting they attend. Charles S.
Wehle receives an additional annual fee of $10,000 as Chairman of the Board of
Directors.
(e) Agreements With Named Executive Officers.
(1) The Corporation has an employment agreement with Mr. Leunig
which provides that if Mr. Leunig's employment is terminated without "Cause" (as
that term is defined in the agreement) the Corporation must pay to Mr. Leunig a
lump sum payment equal to 150% of his annual salary. Under the agreement, Mr.
Leunig is eligible to receive an annual bonus of up to 40% of his annual salary
at the discretion of the Management Continuity Committee of the Board of
Directors. Also under the agreement, the Corporation: (a) granted to Mr. Leunig
the stock appreciation rights identified in Item 11(b) of the Corporation's
report on Form 10-K for the fiscal year ended April 28, 2001 which is
incorporated herein by reference; (b) is required to pay to Mr. Leunig a
retirement payment equal to 16.67% of Mr. Leunig's annual gross income; and (c)
is required to continue, for stated periods subsequent to termination of
employment, coverage for Mr. Leunig under certain medical insurance and other
employee benefit plans.
(2) The Corporation has an employment agreement with Mr. Morse
which provides that if Mr. Morse's employment is terminated without "Cause" (as
that term is defined in the agreement) the Corporation must pay to Mr. Morse a
lump sum payment equal to his annual salary. Under the agreement, Mr. Morse is
eligible to receive an annual bonus of up to 25% of his annual salary at the
discretion of the Management Continuity Committee of the Board of Directors.
Also, under the agreement, the Corporation: (a) granted to Mr. Morse the stock
appreciation rights identified in Item 11(b) of the Corporation's report on Form
10-K for the fiscal year ended April 28, 2001 which is incorporated herein by
reference; (b) is required to pay to Mr. Morse a retirement payment equal to
16.67% of Mr. Morse's annual gross income; and (c) is required to continue, for
stated periods subsequent to termination of employment, coverage for Mr. Morse
under certain medical insurance and other employee benefit plans.
Page 46 of 69
(3) Under an agreement with the Corporation, Stephen B. Ashley is
expected to devote approximately 400 hours per year to his duties as President
of the Corporation and is paid a salary of $5,000 per month.
(f) Compensation Committee Interlocks and Insider Participation.
Stephen B. Ashley served during the fiscal year ended April 27, 2002 as a member
of the Management Continuity Committee of the Corporation's Board of Directors.
Page 47 of 69
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners. The Corporation's
only class of voting securities is its Class A Common Stock. As of July 12,
2002, persons who owned of record or were known by the Corporation to own
beneficially more than 5% of the outstanding Class A Common Stock were:
Percent of
Name and Address Amount Owned Class A Stock
- ---------------------------------- ------------ -------------
Charles S. Wehle as Trustee 73,845 (1) 35.2%
under the Will of Louis A. Wehle
600 Powers Building
16 West Main Street
Rochester, New York 14614
Charles S. Wehle and Henry S. Wehle 41,957 (2) 20.0%
600 Powers Building
16 West Main Street
Rochester, New York 14614
Charles S. Wehle as Trustee under 12,145 (3) 5.8%
Elizabeth R. Wehle Trust
600 Powers Building
16 West Main Street
Rochester, New York 14614
(1) The power to vote and otherwise act with respect to these shares is
vested in Charles S. Wehle while a trustee. In the event of his
death, resignation or incapacity, such power would pass to Henry S.
Wehle.
(2) Excludes shares owned by trusts described elsewhere in this table and
notes. Includes 31,443 shares held by Trust under Will of John L.
Wehle, 8,595 shares owned individually by the Estate of John L.
Wehle, Jr., 1,890 shares owned individually by Charles S. Wehle and
29 shares owned individually by Henry S. Wehle. Pursuant to a
Shareholder Agreement and Irrevocable Proxy dated June 22, 1988 (the
"Shareholder Agreement") among John L. Wehle, John L. Wehle, Jr.,
Charles S. Wehle and Henry S. Wehle (the "Shareholders"), Charles S.
Wehle is appointed proxy to vote all voting securities of the
Corporation then owned or thereafter acquired by the Shareholders.
Under the Shareholder Agreement, Henry S. Wehle would succeed Charles
S. Wehle as proxy in the event of the death, incapacity or
resignation of Charles S. Wehle. The Shareholder Agreement will
continue in effect until terminated in writing signed by all of the
surviving Shareholders. As of July 12, 2002, 41,957 Class A shares,
constituting 20% of the Class A shares outstanding, are subject to
the Shareholder Agreement.
(3) The power to vote and otherwise act with respect to these shares is
vested in Charles S. Wehle while a trustee. In the event of his
death, resignation or incapacity, such power would pass to Henry S.
Wehle.
Except as otherwise described above, to the Corporation's knowledge the persons
listed above have sole voting and sole investment power with respect to all
Class A shares listed.
Page 48 of 69
(b) Security Ownership of Management. The number of and percentage of
outstanding shares of Class A and Class B Common Stock of the Corporation
beneficially owned (as determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934) as of July 12, 2002 by each director and by all
directors and executive officers as a group are set forth in the following
table:
Shares of Percentage Of Shares of Percentage of
Name of Director Class A Class A Class B Class B
Or Executive Officer Common Stock Common Stock Common Stock Common Stock
- -------------------- ------------ ------------- ------------ -------------
Charles S. Wehle 127,947(1) 61.0% 80,173(2) 5.5%
Mark W. Leunig NONE - 16,499(3) 1.1%
Steven M. Morse NONE - 250 (7)
Stephen B. Ashley NONE - 2,896(4) (7)
William A. Buckingham 240 (7) 2,723(5)(6) (7)
Thomas E. Clement NONE - NONE(5) -
Carl E. Sassano NONE - NONE -
All Directors and
Executive Officers
as a group (7 persons) 128,187 61.1% 119,743 8.1%
(1) See Table under Item 12(a) and Notes (1), (2) and (3) thereto.
(2) Includes 40,633 shares held as trustee under the will of Louis A. Wehle
(see Note (1) to table set forth in Item 12(a) above); 37,090 shares held
as trustee under Elizabeth R. Wehle irrevocable trust dated January 12,
1950, the power to act with respect which is vested in Mr. Wehle as a
trustees; and 2,450 shares owned individually
(3) Includes 13,499 shares owned individually and 3,000 shares which may be
acquired pursuant to presently exercisable stock options.
(4) Includes 896 shares owned individually and 2,000 shares which may be
acquired pursuant to presently exercisable stock options.
(5) Mr. Buckingham and Mr. Clement serve as trustees of Genesee Country
Museum, which holds 37,638 Class B shares, none of which are
included in the table above.
(6) Includes 723 shares owned individually and 2,000 shares which may be
acquired pursuant to presently exercisable stock options.
(7) Amount of shares owned does not exceed one-percent of shares
outstanding.
(c) Change of Control Arrangements. A Shareholder Agreement and
Irrevocable Proxy among John L. Wehle, John L. Wehle, Jr., Charles S. Wehle and
Henry S. Wehle dated June 22, 1988
Page 49 of 69
may at a subsequent date result in a change in control of the Corporation, which
agreement is more fully described in Note (2) to Item 12(a).
Item 13. Certain Relationships and Related Transactions.
(a) Related Transactions. The Corporation subleases approximately 1,200
square feet of office space from S.B. Ashley Management Corporation. Steven B.
Ashley, a director and President of the Corporation, is an officer, director and
majority owner of S.B. Ashley Management Corporation. During the fiscal year
ending April 27, 2002, the Corporation expects to pay approximately $30,000 to
S.B. Ashley Management Corporation for rent, utilities, taxes and ancillary
services under the sublease with S.B. Ashley Management Corporation.
(b) Indebtedness of Management. Mark W. Leunig, Senior Vice President,
Chief Administrative Officer and Secretary of the Corporation is indebted to the
Corporation in connection with loans made by the Corporation to allow such
executive officer to exercise options to purchase shares of the Corporation's
Class B common stock (the "Purchased Shares"). As of July 12, 2002, Mr. Leunig
owed the Corporation $42,535 in connection which such loan. The largest
aggregate amount of indebtedness outstanding under such loan during the fiscal
year ended April 27, 2002 was $272,935. The indebtedness is secured by a pledge
of the Purchased Shares and Mr. Leunig has assigned to the Corporation all
liquidating distributions paid on the Purchased Shares to repay the
indebtedness. The indebtedness is without interest until the earlier of: (i) six
(6) months after the Corporation's Board of Directors determines that the
Corporation will not make any further liquidating distributions; or (ii) six (6)
months after termination of employment for "Cause" (as that term is defined in
the promissory note evidencing such indebtedness) or resignation from the
Corporation.
Page 50 of 69
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statement Schedules:
All schedules have been omitted because they are either not
applicable or not required, or the required information is
given in the consolidated financial statements or the notes
thereto.
2. Exhibits:
See Exhibit Index at Page 52 of this report.
(b) Reports on Form 8-K. The Corporation filed reports on Form 8-K on
April 24, 2002 and July 2, 2002 to report information under Item 5 (Other
Events).
Page 51 of 69
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized.
GENESEE CORPORATION
July 23, 2002 By: /s/Stephen B. Ashley
- ------------------------------ ----------------------------------
(Date) Stephen B. Ashley, President
July 23, 2002 By: /s/Steven M. Morse
- ------------------------------ ----------------------------------
(Date) Steven M. Morse, Vice
President and
Chief Financial Officer
- --------------------------------------------------------------------------------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
/s/Stephen B. Ashley July 23, 2002 Director
- ------------------------------ ------------------
Stephen B. Ashley (Date)
/s/William A. Buckingham July 23, 2002 Director
- ------------------------------ ------------------
William A. Buckingham (Date)
/s/Charles S. Wehle July 23, 2002 Director
- ------------------------------ ------------------
Charles S. Wehle (Date)
/s/Thomas E. Clement July 23, 2002 Director
- ------------------------------ ------------------
Thomas E. Clement (Date)
/s/Carl E. Sassano July 23, 2002 Director
- ------------------------------ ------------------
Carl E. Sassano (Date)
Page 52 of 69
EXHIBIT INDEX
NUMBER DOCUMENT PAGE
3-1 Certificate of Incorporation (incorporated by reference to --
Exhibit 3-1 to the Corporation's report on Form 10-K for
the fiscal year ended April 29, 2000).
3-2 Certificate of Amendment of the Certificate of Incorporation --
(incorporated by reference to the Corporation's report on
Form 10-Q for the fiscal quarter ended January 27, 2001).
3-3 By-Laws (incorporated by reference to Exhibit 3-2 to the --
Corporation's report on Form 10-K for the fiscal year ended
April 29, 2000).
10-1 Asset Purchase Agreement, dated as of August 29, 2000 --
between The Genesee Brewing Company, Inc. and High Falls
Brewing Company, LLC (incorporated by reference to Exhibit
10-1 to the Corporation's report on Form 8-K filed on
January 2, 2001).
10-2 Amendment No. 1 to Asset Purchase Agreement dated as of --
December 15, 2000, between The Genesee Brewing Company, Inc.
and High Falls Brewing Company, LLC (incorporated by
reference to Exhibit 10-2 to the Corporation's report on
Form 8-K filed on January 2, 2001.
10-3 $3,500,000 First Senior Bridge Note dated December 15, 2000 --
executed by High Falls Brewing Company, LLC in favor of The
Genesee Brewing Company, Inc. (incorporated by reference to
Exhibit 10-3 to the Corporation's report on Form 8-K filed
on January 2, 2001).
10-4 $3,000,000 First Senior Bridge Note dated December 15, 2000 --
executed by High Falls Brewing Company, LLC in favor of The
Genesee Brewing Company, Inc. (incorporated by reference to
Exhibit 10-4 to the Corporation's report on Form 8-K filed
on January 2, 2001).
10-5 Mortgage dated as of December 15, 2000 executed by High --
Falls Brewing Company, LLC in favor of The Genesee Brewing
Company, Inc. (incorporated by reference to Exhibit 10-5 to
the Corporation's report on Form 8-K filed on January 2,
2001).
10-6 $4,500,000 Subordinated Promissory Note dated December 15, --
2000 executed by High Falls Brewing Company, LLC in favor
of The Genesee Brewing Company, Inc. (incorporated by
reference to Exhibit 10-6 to the Corporation's report on
Form 8-K filed January 2, 2001).
10-7 Security Agreement dated as of December 15, 2000 executed by --
High Falls Brewing Company, LLC in favor of The Genesee
Brewing Company, Inc. (incorporated by reference to Exhibit
10-7 to the Corporation's report on Form 8-K filed on
January 2, 2001).
10-8 Intercreditor Agreement dated as of December 15, 2000 among --
High Falls Brewing Company, LLC, The Genesee Brewing
Company, Inc., Manufacturers and Traders Trust Company and
Cephas Capital Partners, LP (incorporated by reference to
Exhibit 10-8 to the Corporation's report on Form 8-K filed
on January 2, 2001).
Page 53 of 69
NUMBER DOCUMENT PAGE
10-9 Guaranty dated as of December 15, 2000 executed by The --
Genesee Brewing Company, Inc. in favor of Boston Brewing
Company, Inc. d/b/a The Boston Beer Company for itself and
as the sole general partner of Boston Beer Company Limited
Partnership (incorporated by reference to Exhibit 10-9 to
the Corporation's report on Form 8-K filed on January 2,
2001).
10-10 Indemnification Agreement dated as of December 15, 2000 --
between The Genesee Brewing Company, Inc. and High Falls
Brewing Company, LLC (incorporated by reference to Exhibit
10-10 to the Corporation's report on Form 8-K filed January
2, 2001).
10-11 Portfolio Purchase Agreement dated as of September 1, 2000 --
among Cheyenne Leasing Company, Genesee Ventures, Inc.,
Taylor-Bolane Associates, Inc. Genesee Corporation and ICON
Cheyenne, LLC (incorporated by reference to Exhibit 10-14 to
the Corporation's report on Form 8-K filed on January 2,
2001).
10-12 Employment and Stock Appreciation Agreement with M.W. Leunig --
dated as of December 15, 2000 (incorporated by reference to
Exhibit 10-15 to the Corporation's report on Form 10-K for
the fiscal year ended April 28, 2001).
10-13 Employment and Stock Appreciation Agreement with S.M. Morse --
dated as of December 15, 2000 (incorporated by reference to
Exhibit 10-16 to the Corporation's report on Form 10-K for
the fiscal year ended April 28, 2001).
10-14 Letter agreement with S.B. Ashley dated January 8, 2001 --
(incorporated by reference to Exhibit 10-17 to the
Corporation's report on Form 10-K for the fiscal year ended
April 28, 2001).
10-15 Indemnification Agreement with Steven M. Morse dated June --
27, 2001 (incorporated by reference to Exhibit 10-18 to the
Corporation's report on Form 10-K for the fiscal year ended
April 28, 2001). Substantially identical agreements were
executed with all other directors and officers of the
Corporation
10-16 $368,968 Secured Promissory Note dated February 12, 2001 --
executed by Mark W. Leunig in favor of the corporation
(incorporated by reference to Exhibit 10-20 to the
Corporation's report on Form 10-K for the fiscal year ended
April 28, 2001.
10-17 1992 Stock Plan (incorporated by reference to Exhibit 10-1 --
to the Corporation's report on Form 10-Q for the fiscal
quarter ended October 30, 1999).
10-18 Stock Bonus Incentive Program under 1992 Stock Plan --
(incorporated by reference to Exhibit 10-3 to the
Corporation's report on Form 10-K for the fiscal year ended
May 2, 1998).
10-19 Agreement of Sublease by and between S.B. Ashley Management --
Corporation and the Corporation dated May 18, 2001
(incorporated by reference to Exhibit 10-27 to the
Corporation's report on Form 10-Q for the fiscal quarter
ended January 29, 2000).
Page 54 of 69
NUMBER DOCUMENT PAGE
10-20 Plan of Liquidation and Dissolution adopted by the --
Corporation's shareholders on October 29, 2000 (incorporated
by reference to Exhibit 10-28 to the Corporation's report on
Form 10-K for the fiscal year ending April 28, 2001)
10-21 Purchase Agreement dated September 21, 2001 by and among --
Associated Brands, Inc., Associated Brands Inc. and Genesee
Corporation (incorporated by reference to Exhibit 10-1 to
the Corporation's report on Form 8-K filed on October 24,
2001). Exhibits and schedules pursuant to the Purchase
Agreement have not been filed by the registrant, which
hereby undertakes to file such exhibits and schedules upon
request by the Commission.
10-22 Escrow Agreement dated October 5, 2001 by and among Genesee --
Corporation, Associated Brands, Inc. and HSBC Bank USA
(incorporated by reference to Exhibit 10-2 to the
Corporation's report on Form 8-K filed on October 24, 2001).
10-23 $2.25 Million Restated Mortgage Note dated October 5, 2001 --
executed by Ontario Foods, Incorporated in favor of Genesee
Corporation (incorporated by reference to Exhibit 10-3 to
the Corporation's report on Form 8-K filed on October 24,
2001).
10-24 Mortgage Modification and Extension Agreement dated as of --
October 1, 2001 by and among Ontario Foods, Incorporated,
Genesee Corporation and County of Orleans Industrial
Development Agency (incorporated by reference to Exhibit
10-4 to the Corporation's report on Form 8-K filed on
October 24, 2001). Exhibits and schedules pursuant to the
Mortgage Modification and Extension Agreement have not been
filed by the registrant, who undertakes to file such
exhibits and schedules upon request by the Commission.
10-25 Guaranty Release Agreement dated April 22, 2002 by and 55
between GBC Liquidating Corp. and Boston Beer Corporation.
10-26 Transfer Agreement dated May 31, 2002 by and among Genesee 57
Ventures Inc., Home Leasing Corporation, Norman Leenhouts
and Nelson B. Leenhouts. Exhibits pursuant to the Transfer
Agreement have not been filed by the registrant, who hereby
undertakes to file such exhibits upon request by the
Commission.
10-27 Indemnification Agreement dated May 31, 2002 by and between 65
Genesee Corporation, Norman Leenhouts, Nelson B. Leenhouts
and Home Leasing Corporation.
21 Subsidiaries of the Registrant 69