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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: May 3, 2003
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]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act.) Yes [ ] No [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 October 25, 2002, the last business day of the fiscal 2003 second
quarter, was $778,411.
Page 2 of 95
The number of shares outstanding of each of the registrant's classes of common
stock as of July 11, 2003 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 3 of 95
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 its real estate
investments, as follows:
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 notes receivable
from High Falls. At May 3, 2003, the amount remaining due the
Corporation from High Falls is $4 million under a subordinated note
receivable with an original face amount of $4.5 million. This note is
currently in default as High Falls failed to make a $1 million
principal payment to the Corporation on December 15, 2002. The
Corporation is currently in discussions with High Falls regarding the
restructuring of this remaining note in connection with the possible
recapitalization of High Falls Brewing Company. For further information
on the Corporation's estimate of this note's fair value see item 7.
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 11, 2003, there were
approximately 10 leases remaining in Cheyenne's portfolio.
On October 10, 2001, the Corporation sold all of the
outstanding stock of its Ontario Foods, Incorporated, 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. 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 with the proceeds being placed in the
escrow account. On April 9, 2003 all but $25,000 of the escrow account,
which was retained for claims presented by ABI against the escrow, was
released to the Corporation. In May 2003, the escrow account was closed
with $10,277 paid to ABI and the balance paid to the Corporation.
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.
Page 4 of 95
On September 16, 2002, the Corporation sold its 50% interests
in a 408-unit apartment complex located in Syracuse, New York and a
150-unit apartment complex located in Rochester, New York for a
combined sales price of $4.5 million.
Under the plan of liquidation and dissolution, the Corporation has paid
to Class A and Class B shareholders seven liquidating distributions totaling
$62.8 million, or $37.50 per share.
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 May 3, 2003, the Corporation employed 3 people.
Item 2. Properties
None
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 May 3, 2003.
Page 5 of 95
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 11, 2003, the number of holders of record of Class A (voting) Common Stock
and Class B (non-voting) Common Stock were 87 and 810, 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 liquidating distributions paid per share
on Class A and B stock for each quarter for the past two years are shown below:
FISCAL YEAR ENDED MAY 3, 2003 FISCAL YEAR ENDED APRIL 27, 2002
Market Price Liquidating Market Price Liquidating
UNAUDITED High Low Distribution High Low Distribution
- --------------------------------------------------------------------------------------------------------------
First Quarter $ 21.90 15.51 5.00 $ 26.80 23.00 .00
Second Quarter 17.51 6.91 8.00 29.75 19.85 .00
Third Quarter 9.84 7.52 .00 29.75 15.98 13.00
Fourth Quarter 9.96 4.85 4.00 20.20 18.65 .00
- --------------------------------------------------------------------------------------------------------------
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.
Page 6 of 95
Item 6. Selected Financial Data
The selected historical financial data included in the table below
as of May 3, 2003, April 27, 2002, the twenty two weeks ended September 29, 2001
and for the three 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 May 3,
2003, April 27, 2002 and September 29, 2001 columns below follow this basis of
accounting. The information for the three years ended April 28, 2001 follows the
going-concern basis of accounting.
YEARS ENDED
May 3, April 27, Sept. 29, ----------------------------------
2003 2002 2001 4/28/01 4/29/00 5/1/99
-------------------------------------------------------------------------------
Net Revenues From Continuing Operations N/A N/A $ 0 $ 0 $ 0 $ 0
Net (Loss)/Earnings From Continuing Operations N/A N/A 142 (1,120) (897) 265
Net (Loss)/Earnings From Discontinued
Operations N/A N/A (22,473) (1,294) (2,503) 2,198
Total Assets $ 15,935 $ 41,860 N/A 81,665 95,771 143,953
Total Long Term Debt N/A N/A N/A 5,973 6,273 4,761
Net Assets in Liquidation 8,377 29,622 59,086 N/A N/A N/A
Basic (Loss)/Earnings Per Share From
Continuing Operations N/A N/A .08 (.69) (.55) .16
Basic (Loss)/Earnings Per Share From
Discontinued Operations N/A N/A (13.43) (.79) (1.55) 1.36
Diluted (Loss)/Earnings Per Share From
Continuing Operations N/A N/A .08 (.69) (.55) .16
Diluted (Loss)/Earnings Per Share From
Discontinued Operations N/A N/A (13.43) (.79) (1.55) 1.36
Cash Dividends Per Share 17.00 13.00 0.00 7.85 1.40 1.80
(Dollars in thousands, except per share data)
Page 7 of 95
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.
LIQUIDITY AND CAPITAL RESOURCES - MAY 3, 2003
Liquidating distributions have been paid to Class A and Class B
shareholders under the Corporation's plan of liquidation and dissolution as
follows:
AMOUNT AMOUNT
DATE PAID 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
August 26, 2002 8,370,000 5.00
October 11, 2002 5,023,000 3.00
March 17, 2003 4,185,000 2.50
April 28, 2003 2,511,000 1.50
----------- ------
TOTAL $62,779,000 $37.50
=========== ======
Subject to amounts that the Corporation may hold to discharge
obligations and potential contingent liabilities (see Contingent Liability
Reserve Policy described below), the Corporation expects to pay additional
liquidating distributions as the Corporation: (a) receives payment on the
remaining promissory note described in Note 1 to the accompanying consolidated
financial statements which accompany this report; (b) is allowed to reduce the
financial assurance for its self-insured workers compensation liability
described below; (c) reduces the amount of the Contingent Liability Reserve
described below. The length of time that 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. While Management has targeted that the Corporation's plan of
liquidation and dissolution will be completed by April 2004, there will be a
further phase required to wind up its business, necessitated by certain assets
and liabilities having a longer maturity or term. While the duration of this
additional phase is unknown, there will be costs associated with it. The
Corporation has estimated the present value of those costs at $300,000 and has
recorded this amount in the accompanying Statement of Net Assets in Liquidation
at May 3, 2003.
As a result of certain assets and liabilities having a maturity or term
beyond April 2004, the Corporation currently expects that the net realizable
value of certain assets will not be distributed to shareholders and certain of
the Corporation's liabilities, including the workers compensation liability
described below, will not be discharged by that date. All such assets and
liabilities will be retained by the dissolved Corporation or transferred to a
post-dissolution entity to be held for the benefit of the Corporation's
shareholders and will be distributed to shareholders as the net realizable
values of such retained assets become distributable after discharging any
retained liabilities.
Since it is unknown how long it will be before a final liquidating
distribution is paid to shareholders, the present value of the net assets in
liquidation per outstanding share could be less than is reported in the
accompanying Statement of Net Assets in Liquidation and the ultimate
distributions to shareholders may differ materially from the Corporation's
current estimate.
Page 8 of 95
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
The Corporation's unrestricted and restricted cash and cash equivalents
are invested in commercial bank money market funds to earn a market rate of
return on those funds and give the Corporation the security and flexibility
required as it completes the liquidation and dissolution process. These funds
are currently yielding approximately 1.1% per annum. The Corporation's Board of
Directors (the "Board") has adopted a Contingent Liability Reserve Policy
whereby the Corporation will maintain a cash contingency reserve equal to $2.5
million, or $1.50 per outstanding share, for unexpected expenses of the
Corporation. The amount of the reserve may be modified in the future by the
Board as deemed necessary. The balance of this reserve is $2.5 million at May 3,
2003; however, it is not classified as restricted or as a liability in the
accompanying Statement of Net Assets in Liquidation.
Restricted cash represents cash which the Corporation is temporarily
unable to access. During April 2003 the Corporation received $2.4 million upon
the expiration of an escrow account established in connection with the sale of
its Foods Division in October 2001. A balance of $25,000 remained in escrow at
May 3, 2003 for claims presented by the buyer of the Foods Division against the
escrow. These claims were resolved in May 2003 and the escrow account was closed
with the proceeds distributed accordingly. As a result, the restricted cash
reflected on the accompanying Statement of Net Assets in Liquidation was reduced
accordingly.
Restricted cash in the amount of $3.2 million is being held in a
money-market account with a commercial bank as collateral for a standby letter
of credit issued by the bank to provide statutorily required financial assurance
for the Corporation's self-insured workers compensation liability. The
Corporation is required by the New York Workers Compensation Board (the
"Compensation Board") to maintain the $3.2 million standby letter of credit,
which is in effect through August 2003. The Corporation expects to renew this
letter of credit or obtain a replacement standby letter of credit in a like
amount from another commercial bank if the current letter of credit is not
renewed. The issuing bank required the Corporation to collateralize the letter
of credit by maintaining a cash balance of $3.2 million in a money-market
account with the bank. Despite a $1.5 million actuarial valuation of the
Corporation's workers compensation liability as of May 3, 2003 and the
Corporation's expectation that the actuarial valuation of its workers
compensation liability will decline over time as claims are paid, the
Compensation Board will not review the $3.2 million financial security
requirement until at least December 2003 and it is not currently known whether
the Compensation Board will adjust the financial security requirement to an
amount more consistent with the actuarial valuation of workers compensation
liability. It is management's current expectation that the Compensation Board
will require the Corporation to maintain some amount of financial assurance for
the actuarially determined duration of the self-insured workers compensation
liability, which is currently estimated to be twenty to twenty-five years, and
any such amount will not be available for distribution to shareholders until the
Corporation is relieved of its financial assurance obligation.
The Corporation's marketable securities consist of a bond portfolio
managed by an investment management firm. This portfolio had a fair market value
of $3,010,000 at May 3, 2003. The investments in this portfolio include $311,000
in U.S. government agency bonds with the balance of $2,699,000 invested in
corporate bonds. The portfolio at May 3, 2003 has a Moody's dollar weighted
average rating of A1. The portfolio currently has a weighted average duration of
approximately 1.22 years. The current weighted average yield to maturity is
approximately 1.91%.
Page 9 of 95
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
During fiscal 2003, the Corporation received $6.1 million in principal
payments from High Falls in full satisfaction of two High Falls bridge notes
described in Note 1 to the accompanying consolidated financial statements. The
remaining $4 million note receivable from High Falls bears interest at the rate
of 12% per annum; however, interest is currently accruing at the default rate of
14% per annum as a result of the default by High Falls on the December 15, 2002
$1 million principal payment. Interest is payable quarterly. The $4 million
balance is payable as follows: $1 million was due on December 15, 2002 and $3
million is due on December 15, 2003. As mentioned above, High Falls did not make
the $1 million principal payment due on December 15, 2002. As a result of this
default, the Corporation is currently in discussions with High Falls regarding
the restructuring of this remaining note in connection with the possible
recapitalization of High Falls Brewing Company. The December 15, 2003 principal
payment can be extended by High Falls to December 15, 2005 if High Falls does
not achieve 2.5 million barrels of contract brewing volume as measured from
December 15, 2000 through December 15, 2003. High Falls, which is required to
certify its contract brewing volume annually, has certified to the Corporation
that as of December 31, 2002, it has achieved 2,153,946 barrels of contract
brewing volume since December 15, 2000.
The $4 million note is subordinate to High Falls' senior bank debt and
mezzanine financing. Under the terms of the senior debt agreements, in the event
of a default by High Falls, the senior lenders could declare a standstill, which
would prevent the Corporation from receiving principal and interest payments and
enforcing its rights against collateral pledged by High Falls to secure the $4
million note. If the senior lenders were to declare a standstill, payments to
the Corporation and the Corporation's rights against collateral pledged to
secure the note could be suspended indefinitely. The terms of the High Falls
seller financing are detailed in exhibits to the Corporation's report on Form
8-K filed on January 2, 2001.
During the second quarter of fiscal 2003, the Corporation adjusted the
value of the High Falls note on its Statement of Net Assets in Liquidation to
$2.8 million to reflect management's current estimate of the value of the note,
which is based on the fair market value of publicly traded debt instruments of
similar quality. At May 3, 2003, the fair value of this note receivable remains
at $2.8 million. This adjustment had no effect on the estimated income tax
payable amount presented in the Statement of Net Assets in Liquidation.
Investment in and notes receivable from unconsolidated real estate
partnerships decreased by $6,351,000 to $0 at fiscal year end. In the first
quarter of fiscal 2003, the Corporation received $2.4 million in proceeds from
the sale of its ten percent interest in, and note receivable from, Clinton
Square, which is described in Note 7 of the accompanying consolidated financial
statements. This receipt of funds reduced the investment in and notes receivable
from unconsolidated real estate partnerships line item in the Statement of Net
Assets accordingly.
In the second quarter of fiscal 2003, the Corporation sold its two real
estate investments that are described in Note 7 to the accompanying consolidated
financial statements for $4.5 million. As a result of obtaining this $4.5
million sales price, the value of these real estate investments was increased in
the first quarter of fiscal 2003 by approximately $500,000, pre-tax. This
receipt of funds reduced the investment in and notes receivable from
unconsolidated real estate partnerships line item in the Statement of Net Assets
accordingly. Also, as a result of these sales the estimated income tax
receivable line item in the Statement of Net Assets was decreased by $200,000.
Other assets decreased during fiscal 2003 primarily as a result of
prepaid insurance amortization, the receipt of $168,000 in insurance refunds,
and the collection of $167,000 from certain officers on outstanding loans, which
have now been completely repaid.
Page 10 of 95
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Combined accrued compensation and accrued expenses and other
liabilities as presented in the Statement of Net Assets in Liquidation decreased
from its April 27, 2002 balance by $867,000. This decrease is a result of the
payment of compensation related costs and operating costs of approximately $2.0
million and an increase in the run-out and additional winding-up phase accruals
in the second, third and fourth quarters by $450,000, $200,000 and $539,000
respectively.
During fiscal 2003, the estimated net income tax receivable of $994,000
at April 27, 2002 became an estimated net income tax payable of $4.7 million at
fiscal year end. This change from asset to liability resulted from approximately
$5.5 million of tax refunds being received by the Corporation during the year
and from the $200,000 reduction related to the real estate investment sales
noted above. The $4.7 million net income tax payable is an estimation of the
accumulation of the payments and refunds expected in the future and reflect the
estimated impact on cash flow under an orderly liquidation scenario.
The accrued self-insured workers compensation liability decreased by
$107,000 during fiscal 2003 as a result of regular and expected payments on
claims of $357,000 and a $250,000 increase in the liability as a result of an
independent actuarial valuation prepared at fiscal year end.
SUMMARY OF CONTINUING AND DISCONTINUED OPERATIONS - GOING CONCERN BASIS
As a result of the sale of the Corporation's Foods Division in October
2001 (which is described in Item 1 and in Note 7 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
$22.5 million, or $13.43 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.
Page 11 of 95
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
RECENTLY ISSUED ACCOUNTING STANDARDS
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. As a result of implementing SFAS No.
145, the loss on early extinguishment of debt that was previously classified as
extraordinary has been reclassified and included as a component of discontinued
operations.
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, including the
additional wind-up phase beyond April 2004, that 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 accompanying consolidated financial
statements that 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 amount and timing of
payments to the Corporation by High Falls Brewing Company LLC ("High Falls")
under the remaining promissory note described in Note 1 to the accompanying
consolidated financial statements which accompany this report; the possible
extension of payment or renegotiation of terms as a result of the default by
High Falls under that note; possible contingent liabilities and post-closing
indemnification and other obligations arising from the sale of the Corporation's
operating businesses and other assets; the risk that federal, state or local
taxing authorities will audit the tax returns filed by the Corporation to report
the sale of its brewing, foods and equipment leasing businesses and other assets
resulting in additional taxes being assessed against the Corporation; the risk
that income, sales, use and other tax returns filed by the Corporation prior to
the divestiture of its brewing, foods and equipment leasing businesses might be
audited by federal, state or local taxing authorities resulting in additional
taxes being assessed against the Corporation; the risk that the Corporation may
not be able to realize its current estimate of the net value of its assets; the
risk that the Corporation may have underestimated the settlement expense of its
obligations and liabilities, including without limitation, its estimates of
self-insured workers compensation liability, accrued compensation, and tax
liabilities; 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 and additional run-out expenses, 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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Page 12 of 95
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) (.77) (13.43)
Diluted Earnings Per Share From Continuing
Operations .06 .02 .08
Diluted Loss Per Share From Discontinued
Operations (12.66) (.77) (13.43)
(Dollars in thousands, except per share data)
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)
Page 13 of 95
Item 8. Financial Statements and Supplementary Data
(b) Index to Financial Statements
Page
----
Report of Independent Auditors- PricewaterhouseCoopers LLP 14
Statement of Net Assets in Liquidation (Liquidation Basis) at May 3, 2003
And April 27, 2002 15
Statement of Changes in Net Assets in Liquidation (Liquidation Basis)
For the year ended May 3, 2003 and for the thirty weeks ended April 27, 2002 16
Consolidated Statements of Loss and Comprehensive Loss (Going Concern Basis)
For the twenty two weeks ended September 29, 2001 and the year ended
April 28, 2001 17
Consolidated Statements of Shareholders' Equity (Going Concern Basis) For
the twenty two weeks ended September 29, 2001 and the year ended
April 28, 2001 18
Consolidated Statements of Cash Flows (Going Concern Basis) For the twenty
two weeks ended September 29, 2001 and the year ended April 28, 2001 19
Notes to Consolidated Financial Statements 20
Page 14 of 95
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
Genesee Corporation
We have audited the statements of net assets in liquidation of Genesee
Corporation as of May 3, 2003 and April 27, 2002, and the related statements of
changes in net assets in liquidation for the year ended May 3, 2003 and the
period from September 30, 2001 to April 27, 2002. In addition, we have audited
the consolidated statements of loss and comprehensive loss, shareholders'
equity, and cash flows for the period from April 29, 2001 to September 29, 2001
and the year ended April 28, 2001. These financial statements are the
responsibility of the Corporation 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 Corporation is currently being
liquidated. As a result, the Corporation 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 May 3, 2003 and April 27, 2002, the changes in its net assets
in liquidation for the year ended May 3, 2003 and the period from September 30,
2001 to April 27, 2002, the results of its operations and its cash flows for the
period from April 29, 2001 to September 29, 2001 and the year ended April 28,
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, the financial statements for periods subsequent to
September 29, 2001 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
Rochester, New York
June 11, 2003
Page 15 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Statement Of Net Assets In Liquidation (Liquidation Basis)
May 3, 2003 and April 27, 2002
(Dollars in thousands, except per share data)
2003 2002
ASSETS
Cash and cash equivalents $ 6,572 $ 11,147
Restricted cash 3,200 5,600
Marketable securities available for sale 3,010 6,667
Notes receivable 2,800 10,081
Investment in and notes receivable from unconsolidated
real estate partnerships 0 6,351
Investment in direct financing and leveraged leases 7 209
Estimated net income tax receivable 0 994
Other assets 346 811
---------- ----------
Total assets $ 15,935 $ 41,860
========== ==========
LIABILITIES AND NET ASSETS
Accrued compensation $ 525 $ 1,245
Accrued expenses and other liabilities 874 1,021
Liquidating distribution payable 0 8,370
Estimated net income tax payable 4,664 0
Accrued self-insured workers compensation 1,495 1,602
---------- ----------
Total liabilities 7,558 12,238
---------- ----------
Net assets in liquidation $ 8,377 $ 29,622
========== ==========
Number of common shares outstanding (Class A - 209,885; Class B - 1,464,201) 1,674,086 1,674,086
Net assets in liquidation per outstanding share $ 5.00 $ 17.69
========== ==========
See accompanying notes to consolidated financial statements.
Page 16 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Statement Of Changes In Net Assets In Liquidation (Liquidation Basis)
For the Year ended May 3, 2003 and the Thirty Weeks Ended April 27, 2002
(Dollars in thousands)
2003 2002
-------- --------
Net assets in liquidation at April 28, 2002 and September 29, 2001, respectively $ 29,622 $ 59,086
Liquidating distributions paid to shareholders (20,089) (21,763)
Liquidating distribution payable to shareholders 0 (8,370)
High Falls subordinated note receivable:
Interest income 510 518
Change in fair value (1,200) 0
Interest income 734 446
Changes in estimated liquidation values of assets and liabilities (1,200) (295)
-------- --------
Net assets in liquidation at May 3, 2003 and April 27, 2002, respectively $ 8,377 $ 29,622
======== ========
See accompanying notes to consolidated financial statements.
Page 17 of 95
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 Year Ended
April 28, 2001
(Dollars in thousands, except per share data)
SEPTEMBER 29, FISCAL
2001 2001
------------- -----------
Revenues $ - $ -
Cost of goods sold - -
---------- ----------
Gross profit - -
Compensation expense - stock options - 1,378
Selling, general and administrative expenses 503 1,479
---------- ----------
Operating loss (503) (2,857)
Investment and interest income 735 1,048
Other income 5 3
Interest expense - -
---------- ----------
Earnings (loss) from continuing operations before income taxes 237 (1,806)
Income tax expense (benefit) 95 (686)
---------- ----------
Earnings (loss) from continuing operations 142 (1,120)
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)
Loss on sale of the Foods Division (less applicable income tax benefit of $0) (1,551) -
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
---------- ----------
Net loss (22,331) (2,414)
Other comprehensive income (loss), net of income taxes:
Unrealized holding gains (losses) arising during the period 157 211
---------- ----------
Comprehensive loss $ (22,174) $ (2,203)
========== ==========
Basic and diluted earnings (loss) per share from continuing operations $ 0.08 $ (0.69)
Basic and diluted loss per share from discontinued operations $ (12.64) $ (1.26)
Basic and diluted loss per share from sale of the Foods Division $ (0.93) $ -
Basic and diluted gain per share from disposal of Genesee Ventures, Inc. $ 0.14 $ 0.47
---------- ----------
Basic and diluted loss per share $ (13.35) $ (1.48)
========== ==========
Weighted average common shares outstanding 1,674,086 1,633,164
Weighted average and common equivalent shares 1,674,086 1,633,164
See accompanying notes to consolidated financial statements.
Page 18 of 95
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 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
-------------------------------------------------
BALANCE AT APRIL 29, 2000 $ (120) $ (3,401) $ 83,207
====== ======== ========
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 19 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Going-Concern Basis)
For the Twenty Two Weeks Ended September 29, 2001 and the
Year ended April 28, 2001
(Dollars in thousands)
SEPTEMBER 29, FISCAL
2001 2001
------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) from continuing operations $ 142 $ (1,120)
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)
Compensation expense - stock options - 1,378
Deferred tax provision (2) (66)
Other (550) 800
Changes in non-cash assets and liabilities, net of amounts sold:
Trade accounts receivable 3 135
Other assets - (204)
Accounts payable 174 168
Accrued expenses and other 80 212
Income taxes payable 545 (79)
Other liabilities - (625)
-------- ---------
Net cash (used in) provided by continuing operating activities 384 442
Net cash provided by (used in) discontinued operations 1,436 (15,885)
-------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,820 (15,443)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable securities 2,018 3,382
Purchases of marketable securities and other investments (2,160) (4,212)
-------- ---------
Net cash used in continuing investing activities (142) (830)
-------- ---------
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
-------- ---------
Net cash provided by discontinued operations 22,614 34,285
-------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 22,472 33,455
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt - -
Payment of liquidating distribution - (12,557)
Payment of dividends - (567)
-------- ---------
Net cash used in continuing financing activities - (13,124)
Net cash (used in) provided by discontinued operations (5,973) (300)
-------- ---------
NET CASH USED IN FINANCING ACTIVITIES (5,973) (13,424)
-------- ---------
Net increase in cash and cash equivalents 18,319 4,588
Cash and cash equivalents at beginning of the period 12,237 7,649
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 30,556 $ 12,237
======== =========
See accompanying notes to consolidated financial statements.
Page 20 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 3, 2003, April 27, 2002, September 29, 2001 and April 28, 2001
(1) Liquidation Basis Note
LIQUIDATION BASIS FINANCIAL STATEMENTS
With the sale of its Foods Division, which is described Note 7,
Genesee Corporation and Subsidiaries (the Corporation) adopted the liquidation
basis of accounting effective September 29, 2001. Upon adopting the liquidation
basis of accounting, adjustments were made to the Corporation's recorded assets
and liabilities, details of which are included 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. In addition, the estimate of net assets in
liquidation per share presented in accordance with accounting principles
generally accepted in the United States of America (GAAP) in the accompanying
Statement of Net Assets in Liquidation generally does not incorporate a present
value discount to reflect the amount of time that will transpire before the
value of those assets is distributed to shareholders. 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 estimate of net assets in liquidation per
share presented in the accompanying Statement of Net Assets in Liquidation or
the price or prices at which the Corporation's common stock has 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 21 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Liquidation Basis Note (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 May 3,
2003.
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 May 3, 2003, substantially all cash
balances were in excess of federally insured limits. The Corporation's
Board of Directors (the "Board") has adopted a Contingent Liability
Reserve Policy whereby the Corporation will maintain a cash contingency
reserve equal to $2.5 million, or $1.50 per outstanding share, for
unexpected expenses of the Corporation. The amount of the reserve may
be modified in the future by the Board as deemed necessary. The balance
of this reserve is $2.5 million at May 3, 2003; however, it is not
classified as restricted or as a liability in the accompanying
Statement of Net Assets in Liquidation.
Page 22 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Liquidation Basis Note (continued)
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 investment manager. Valuation of the
Corporation's marketable securities is based upon closing prices of
their marketable securities, as provided by the investment manager, at
May 3, 2003. 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 $ 311
Corporate debt Securities 2,460
-------
2,771
Other 239
-------
Marketable Securities $ 3,010
-------
The fair value of fixed income securities, by contractual maturity, are as
follows (dollars in thousands):
Contractual maturity
Less than one year $ 673
After one year, but within five years 2,049
After five years 49
-------
Total fixed income securities $ 2,771
-------
Notes receivable - Stated at fair value, which has been discounted from
face value as described below. As partial consideration for the sale of
its brewing business, the Corporation received $11 million in notes
receivable from High Falls. On July 30, 2002 the Corporation received
$5.9 million in satisfaction of the remaining principal balance due on
two bridge notes with original face amounts of $3.5 million and $3
million. This prepayment was in accordance with the terms of the notes,
which required prepayment at such time as the buyer received proceeds
from government backed loans. At May 3, 2003, the amount remaining due
to the Corporation from High Falls is $4 million under a subordinated
note receivable with an original face amount of $4.5 million. The $4
million balance is payable as follows: $1 million was due on December
15, 2002 and $3 million is due on December 15, 2003. High Falls did not
make the $1 million principal payment due on December 15, 2002 and is
currently in default under the terms of the remaining High Falls note.
The Corporation is currently in discussions with High Falls regarding
the restructuring of this remaining note in connection with the
possible recapitalization of High Falls Brewing Company. The
Corporation has adjusted the value of the remaining balance of the High
Falls note on the Statement of Net Assets in Liquidation to $2.8
million to reflect management's current estimate of the value of the
note, which is based on the fair market value of publicly traded debt
instruments of similar quality.
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.
Page 23 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Liquidation Basis Note (continued)
Other assets - Valued based on management estimates. At May 3, 2003 the
$346,000 balance is primarily comprised of prepaid insurance and a note
receivable from a former customer of the Genesee Brewing Company, Inc.,
that the Corporation retained after the sale of the brewery to High
Falls in December 2000.
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 which is April 2004 and for an additional wind-up
phase after April 2004. 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. The table below
details these costs by category as of May 3, 2003 and April 27, 2002.
2003 2002
---- ----
Compensation and related costs $ 525,000 $ 1,245,000
Office expenses, including rent 54,000 92,000
Insurance Expense 200,000 272,000
New York Sate Sales Tax - 178,000
Professional Fees 205,000 375,000
Post April 2004 Costs 300,000 -
Other 115,000 104,000
----------- ============
$ 1,399,000 $ 2,266,000
=========== ============
Liquidating Distribution Payable - Exists when the Corporation has
declared a partial liquidating distribution prior to the date of the
statement of net assets in liquidation with such distribution to be
paid subsequent to the statement date. This amount is calculated by
multiplying the number of outstanding Class A and Class B shares by the
declared dollar per share amount.
Estimated income tax payable - 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 for future expenditures, the utilization of tax credits,
carryforwards and carrybacks. Certain amounts included in the estimated
income tax payable are subject to audit by both state and federal
taxing authorities. The Corporation has requested accelerated audits
from both state and federal taxing authorities for the tax years ending
April 27, 2002, April 28, 2001, and April 29, 2000. The net payable is
an estimation of the accumulation of the payments expected in the
future. Because tax returns are filed utilizing estimates and
management's reasonable interpretation of applicable rules, the actual
results after a tax audit can be different from amounts initially
filed. Based upon all known facts,
Page 24 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Liquidation Basis Note (continued)
management has made an estimation of the range of probable outcomes
after the audits referred to above have been completed. The tax payable
on the Statement of Net Assets is management's estimate of the most
probable point within the range. Such estimations are often updated as
additional information becomes available.
Due to the numerous significant business dispositions that occurred
during the years which are to be audited, management believes it is
probable that the results of the aforementioned audits may increase or
decrease the amount of estimated income tax payable recorded in the
Statement of Net Assets by up to approximately $400,000. The
Corporation may also incur additional professional fees as a result of
these audits.
During the first quarter of fiscal 2003, the then estimated income tax
receivable was reduced by $200,000 related to the Corporation's sale of
its investment in the two apartment complexes mentioned in Note 7.
The following table depicts the receivable and payable components of
the estimated net income tax payable and receivable as of May 3, 2003
and April 27, 2002, respectively, reported on the accompanying
Statement of Net Assets in Liquidation.
2003 2002
---- ----
Income tax receivable $ - $ 5,504
Income tax payable (4,664) (4,510)
------- -------
Estimated net income tax
(payable) receivable $(4,664) $ 994
======= =======
Dollars in thousands
Accrued self-insured workers compensation - Based on an independent
actuarial valuation. The Corporation's brewing and foods businesses
were self-insured for workers compensation claims and the Corporation
retained this liability after those businesses were sold.
Contingent liabilities - As with any operating business, the
Corporation may have potential contingent liabilities in addition to
the liabilities recorded in the accompanying consolidated financial
statements. Because no claims for contingent liabilities have been made
or threatened, no amount has been recorded for such liabilities in the
accompanying consolidated financial statements.
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 May 3, 2003.
Changes to asset and liability values under the Liquidation Basis of
Accounting from April 27, 2002 to May 3, 2003.
Page 25 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Liquidation Basis Note (continued)
During the second quarter of fiscal 2003, the value of the High Falls
note receivable was reduced by $1.2 million to $2.8 million. See
explanation above in this note.
The value of the Corporation's investment in and notes receivable from
unconsolidated real estate partnerships was increased by approximately
$500,000 in the first quarter of fiscal 2003 based on a negotiated
sales price of the Corporation's investment in two apartment complexes
that were subsequently sold in the second quarter of fiscal 2003 for
$4.5 million.
The Corporation's estimate of remaining operating costs through final
dissolution, compensation and other accrued expenses, was increased by
$450,000, $200,000, and $539,000 in the second, third and fourth
quarters of fiscal 2003, respectively. As of May 3, 2003, the
Corporation has $1,399,000 recorded for these run-out costs. $525,000
is allocated to compensation-type costs while the remaining $874,000
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, which is
targeted to be April 2004, plus an additional phase of unknown term to
wind up the Corporation's business.
The Corporation's cash operating expenses, which reduced the run-out
accrual discussed above from April 27, 2002 through May 3, 2003, were
as follows:
Compensation and related costs $ 804,000
Office expenses including rent 71,000
Insurance and workers compensation
State assessment expense 382,000
New York Sales tax and related expense 413,000
Professional Fees 350,000
Other 36,000
-----------
$ 2,056,000
===========
The accrued self-insured workers compensation liability was increased
during the fourth quarter by $250,000 based on an independent actuarial
valuation of open claims.
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
Page 26 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Liquidation Basis Note (continued)
$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
Office expenses including rent 38,000
Insurance expense 115,000
Professional Fees 243,000
Other 33,000
-----------
$ 1,209,000
===========
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.
AMOUNT AMOUNT
DATE PAID 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
August 26, 2002 8,370,000 5.00
October 11, 2002 5,023,000 3.00
March 17, 2003 4,185,000 2.50
April 28, 2003 2,511,000 1.50
----------- ------
TOTAL $62,779,000 $37.50
=========== ======
Page 27 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Liquidation Basis Note (continued)
Fiscal Year
The Corporation's fiscal year ends on the Saturday closest to April 30.
The fiscal year for the financial statements included herein is for the
53 week and 52 week periods ending May 3, 2003 and April 27, 2002,
respectively.
(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 Consolidated
Statement of Loss and Comprehensive Loss for the twenty-two weeks ended
September 29, 2001 and the year ended April 28, 2001, the Consolidated
Statements of Cash Flows for the twenty-two weeks ended September 29,
2001 and the year ended April 28, 2001, and the Consolidated Statements
of Shareholders' Equity for the twenty-two weeks ended September 29,
2001 and the year ended April 28, 2001.
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 7 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
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. As
a result of implementing SFAS No. 145, the loss on early extinguishment
of debt that was previously classified as extraordinary has been
reclassified and included as a component of discontinued operations.
Page 28 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Summary of Significant Accounting Policies - Going Concern Basis
(continued)
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 allocated to other comprehensive
income for the twenty-two weeks ended September 29, 2001 and fiscal
2001 was approximately $105,000 and $118,000, respectively.
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.
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 at April 28, 2001, 9,500 and 27,500 shares of
potential common stock, respectively, are considered anti-dilutive and
are excluded from the calculation of diluted earnings per share.
Page 29 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(2) Summary of Significant Accounting Policies - Going Concern Basis
(continued)
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.
The fiscal year for the financial statements included herein are for
the 52 week period ending April 28, 2001.
(3) Income Taxes - Going Concern Basis
Components of income tax (benefit) expense from continuing operations
for the twenty-two weeks ended September 29, 2001 and for the fiscal
year ended April 28, 2001 are as follows:
9/29/01 2001
------- -------
Current:
Federal $ 74 $ (577)
State 21 (109)
---- ------
Total current income tax expense (benefit) 95 (686)
---- ------
Deferred:
Federal 0 0
State 0 0
---- ------
Total deferred income tax expense 0 0
---- ------
Total income tax expense (benefit) $ 95 $ (686)
==== ======
(Dollars in thousands)
Page 30 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(3) Income Taxes - Going Concern Basis (continued)
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 year ended April 28, 2001:
9/29/01 2001
------- ----
Computed expected tax expense (benefit) @ 34% $ 80 $ (614)
State income taxes (net of federal income tax benefit) 15 (72)
---- -------
Total income tax expense (benefit) $ 95 $ (686)
==== =======
Effective tax rate 40% 38%
==== =======
(Dollars in thousands)
(4) Segment Reporting - Going Concern Basis
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 7 for information related to the
Corporation's discontinued segments.)
(5) Supplemental Cash Flow Information - Going Concern Basis
Cash (refunded) paid for taxes was approximately $(11,000) and $
8,894,000 for the twenty-two weeks ended September 29, 2001 and fiscal
2001, respectively; cash paid for interest was approximately $134,000
and $422,000 for the twenty-two weeks ended September 29, 2001 and
fiscal 2001, respectively. No interest was capitalized during the
twenty-two weeks ended September 29, 2001 or in fiscal 2001.
(6) Stock Option and Bonus Plans - Going Concern Basis
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.
Page 31 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Stock Option and Bonus Plans - Going Concern Basis (continued)
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 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
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 year ended April 28, 2001
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)
(Dollars in thousands, except per share data)
Page 32 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Stock Option and Bonus Plans - Going Concern Basis (continued)
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% in fiscal 2001, expected
dividend yield of 0%, and risk-free interest rate of 5.69% in fiscal
2001. The weighted average fair value of stock options granted was
$16.64 in fiscal 2001.
The following table summarizes information about stock options
outstanding and exercisable at September 29, 2001:
Options Outstanding Options Exercisable
- -----------------------------------------------------------------------------------------------------------------------
Wgtd. Avg.
Range of Exercise Prices Contractual Life in Wgtd. Avg. Wgtd. Avg.
Per Share Number Years Exercise Price Number Exercise 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
============== ===== === ======= ===== ========
(7) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations/Going Concern Basis
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 1.
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. 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 cash escrow has been released except for
$25,000 which remains in the escrow account for claims presented by
ABI. These minor final claims have been settled with the remaining
account balance distributed accordingly.
Page 33 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations/Going Concern Basis (continued)
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.
On September 16, 2002, the Corporation sold its 50% interests in a
408-unit apartment complex located in Syracuse, New York and a 150-unit
apartment complex located in Rochester, New York for a combined sales
price of $4.5 million.
With the sale of its interest in the apartment complexes mentioned
above, the Corporation completed the liquidation phase of its plan of
liquidation and dissolution.
Page 34 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations/Going Concern Basis (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
-------- -----------
Revenue $ 19,903 $ 117,899
Less beer taxes (0) (13,302)
--------- ----------
Net revenue 19,903 104,597
Cost of goods sold (15,936) (83,382)
Selling, general, and admin. (2,080) (22,445)
Impairment charge (21,833) 0
Other income (1,925) 567
Loss from operations of the
discontinued segments, net of tax
benefit or expense (21,154) (2,063)
========== ==========
Loss on sale of Foods Division (1,551) 0
========== ==========
Adjustment to the loss on disposal of
Genesee Ventures, Inc., net of tax
expense
$ 232 $ 769
========= ==========
Page 35 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations/Going Concern Basis (continued)
The Corporation's previous investment in a real estate limited
partnership in which it has less than a majority interest was accounted
for by the equity method. The Corporation's proportionate share of the
results of operations of this unconsolidated limited partnership was
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. 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.
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.
Page 36 of 95
GENESEE CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) Divestiture of the Corporation's Operating Businesses - Discontinued
Operations/Going Concern Basis (continued)
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 continued at decreasing levels through the end
of calendar 2001 at which time benefits were discontinued. Even though
the Corporation's health insurance premium subsidy concluded at
December 31, 2001, the Corporation continues to administer the retiree
group's health insurance arrangement. This administrative support is
scheduled to cease on December 31, 2003.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Page 37 of 95
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 (63) 1987 President of the Corporation (1) 2005
William A. Buckingham (60) 1992 Retired; formerly Executive Vice President of First 2004
Empire State Corporation and Manufacturers and
Traders Trust Company (2)
Thomas E. Clement (70) 2001 Retired; formerly a partner of Nixon Peabody, LLP (3) 2003
Mark W. Leunig (48) 2003 Former Senior Vice President and Chief 2006
Administrative Officer of Genesee Corporation (4)
Carl E. Sassano (53) 2001 President and Chief Executive Officer of Transcat, 2004
Inc. (5)
Charles S. Wehle (55) 1976 Chairman of the Board of Directors of the Corporation 2003
(6)
(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. Leunig was elected to the Corporation's Board of Directors and
appointed Secretary of the Corporation on April 28, 2003. Mr. Leunig
was elected Senior Vice President, Chief Administrative Officer and
Secretary of the Corporation in December 2000, and held that position
until March 31, 2003. Prior to that, he was Vice President, Secretary
and General Counsel of the Corporation, positions he held for more than
five years.
Page 38 of 95
(5) Mr. Sassano was elected President and Chief Executive Officer of
Transcat, Inc. in April 2002. Mr. Sassano is also a director of
Transcat, 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.
(6) See Note (2) to Item 10(b).
(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 63 2000 President (1)
Mark W. Leunig 48 1988 Secretary (3)
Charles S. Wehle 55 1988 Chairman of the Board of Directors (2)
Steven M. Morse 39 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 to the Corporation's Board of Directors and
appointed Secretary of the Corporation on April 28, 2003. Mr. Leunig
was elected Senior Vice President, Chief Administrative Officer and
Secretary of the Corporation in December 2000, and held that position
until March 31, 2003. Prior to that, he was Vice President, Secretary
and General Counsel of the Corporation, positions he held for more than
five years.
Page 39 of 95
(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
Deloitte & 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 May 3, 2003.
(d) Financial Code of Ethics: See Exhibit 14 for the
Corporation's Financial Code of Ethics, which is incorporated herein by
reference thereto.
(e) Audit Committee Financial Expert: On behalf of the
Corporation's Board of Directors, the Audit Committee is responsible for
providing an independent, objective review of the Corporation's auditing,
accounting and financial reporting process, public reports and disclosures and
system of internal controls regarding financial accounting. The Audit Committee
is comprised solely of independent Directors as defined in the Marketplace Rules
of the Nasdaq Stock Market, and is governed by a written charter adopted by the
Board of Directors. The composition of the Audit Committee, the attributes of
its members and the responsibilities of the Committee, as reflected in the Audit
Committee Charter ( Charter ), are intended to be in accordance with applicable
requirements for corporate audit committees. The Committee Chair, William A.
Buckingham, meets the independence requirements set forth under Nasdaq
4200(a)14, and financial expert qualifications as set forth in Section 407 of
the Sarbanes-Oxley Act of 2002.
Page 40 of 95
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 President of
the Corporation (who is acting in the capacity of the chief executive officer),
the former Senior Vice President and Chief Administrative Officer, and the Vice
President and Chief Financial Officer of the Corporation, all of whose total
annual salary and bonus for the fiscal year ended May 3, 2003 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, 2003 60,000 0 0 0 0 0
President 2002 60,000 0 0 0 0 0
2001 22,500 0 0 0 1,000 31,875
Mark W. Leunig, 2003 172,602 65,353 0 0 0 308,156(5)
Former Senior Vice 2002 172,174 95,202 109,070(1) 0 0 72,122(2)
President, General 2001 137,660 94,320 57,647(3) 0 9,576 39,162
Counsel and
Secretary
Steven M. Morse, 2003 101,923 25,482 92,716(1) 0 0 39,317(6)
Vice President and 2002 90,481 25,000 0 0 0 103,228(4)
Treasurer 2001 79,125 61,250 30,094(3) 0 5,289 13,612
(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.
Page 41 of 95
(5) Amount reflects a $41,040 retirement payment under employment agreement
with the Corporation, $1,613 payment in lieu of flexible spending
account benefit under employment agreement with the Corporation, $1,578
in premiums paid by the Corporation on life insurance policies, and a
$263,925 severance payment under employment agreement with the
Corporation.
(6) Amount reflects a $37,000 retirement payment under employment agreement
with Corporation, $1,613 payment in lieu of flexible spending account
benefit under employment agreement with the Corporation, and $704 in
premiums paid by the Corporation on life insurance policies.
(b) Grant of Options or Stock Appreciation Rights. The Corporation
did not grant any options or stock appreciation rights to the executive officers
identified in Item 11(a) during the Corporation's fiscal year ended May 3, 2003.
(c) Exercise of Options by Executive Officers. The table below
sets forth information about the aggregate number of shares received and the
value realized by the named executive officer upon exercise of options exercised
during the Corporation's fiscal year ended May 3, 2003; and the aggregate number
and value of options held by the named executive officer at the end of the
fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of Unexercised In-the-Money
Shares Options at FY-End (#) Options at FY-End ($)
Acquired --------------------- ---------------------
on Value Exercis- Unexercis- Exercis- Unexercis-
Name Exercise Realized ($) able able able able
- --------------------------------------------------------------------------------------------------------------
Stephen B. Ashley 0 0 1,000 0 0 0
Mark W. Leunig 0 0 0 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, other than the Chair of the Audit Committee
and the Secretary, who are not employees receive an annual fee of $7,000 plus
$500 for each Board and Committee meeting they attend. William A. Buckingham as
Chair of the Audit Committee receives an annual fee of $10,000 plus $500 for
each Board and Committee meeting he attends. Mark W. Leunig as Secretary of the
Corporation receives $700 annually in addition to his regular Director fee.
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.
Morse which provides that if Mr. Morse's employment is terminated without
"Cause" (as that term is defined in the agreement), as a result of death, or
disability, 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 35% 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
Page 42 of 95
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.
(2) 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 May 3, 2003 as a member of
the Management Continuity Committee of the Corporation's Board of Directors
which functions as the Board's Compensation Committee.
Page 43 of 95
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
(a) Security Ownership of Certain Beneficial Owners. The
Corporation's only class of voting securities is its Class A Common Stock. As of
July 11, 2003, 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 11,
2003, 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.
(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
Page 44 of 95
accordance with Rule 13d-3 under the Securities Exchange Act of 1934) as of July
11, 2003 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 - 13,499 (6)
Steven M. Morse NONE - 250 (6)
Stephen B. Ashley NONE - 1,896(3) (6)
William A. Buckingham 240 (6) 1,723(4)(5) (6)
Thomas E. Clement NONE - NONE(4) -
Carl E. Sassano NONE - NONE -
All Directors and
Executive Officers as a 128,187 61.1% 97,541 6.7%
group (7 persons)
(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 896 shares owned individually and 1,000 shares which may be
acquired pursuant to presently exercisable stock options.
(4) Mr. Buckingham and Mr. Clement serve as trustees of Genesee Country
Museum, which holds 20,338 Class B shares, none of which are included
in the table above.
(5) Includes 723 shares owned individually and 1,000 shares which may be
acquired pursuant to presently exercisable stock options.
(6) 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 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).
Page 45 of 95
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. Stephen 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 May 3, 2003, the Corporation paid $24,000 to S.B.
Ashley Management Corporation for rent, utilities, taxes and ancillary services
under the sublease with S.B. Ashley Management Corporation.
Page 46 of 95
PART IV
Item 14. Controls and Procedures
In accordance with Securities Exchange Act of 1934 rules, the
Corporation's management, under the supervision of the President and Chief
Financial Officer, conducted an evaluation of the effectiveness of the design
and operation of the Corporation's disclosure controls and procedures within 90
days of the filing date of this annual report. Based on that evaluation, the
Corporation concluded that the design and operation of its disclosure controls
and procedures were effective. There have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of such evaluation.
Item 15. Principal Accountant Fees and Services
Fiscal 2003 Fiscal 2002
Audit Fees $ 28,000 $ 36,200
Audit-Related Fees 0 71,870
Tax Fees 50,485 134,670
All Other Fees 8,150 11,350
--------- ---------
Total $ 86,635 $ 254,090
The Corporation's Audit Committee has reviewed the fees noted above for
non-audit services and believes they are compatible with the independent
accountants' independence.
Item 16. 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 49 of this report.
(b) Reports on Form 8-K. The Corporation filed reports on Form
8-K on February 21, 2003, March 10, 2003, April 9, 2003, and April 29, 2003 to
report information under Item 5 (Other Events).
Page 47 of 95
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 29, 2003 By: /s/ Stephen B. Ashley
- ------------------- -----------------------------------------
(Date) Stephen B. Ashley, President
July 29, 2003 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 29, 2003 Director
- ---------------------------------- ------------------
Stephen B. Ashley (Date)
/s/ William A. Buckingham July 29, 2003 Director
- ---------------------------------- ------------------
William A. Buckingham (Date)
/s/ Charles S. Wehle July 29, 2003 Director
- ---------------------------------- ------------------
Charles S. Wehle (Date)
/s/ Thomas E. Clement July 29, 2003 Director
- ---------------------------------- ------------------
Thomas E. Clement (Date)
/s/ Carl E. Sassano July 29, 2003 Director
- ---------------------------------- ------------------
Carl E. Sassano (Date)
/s/ Mark W. Leunig July 29, 2003 Director
- ---------------------------------- ------------------
Mark W. Leunig (Date)
Page 48 of 95
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 49 of 95
NUMBER DOCUMENT PAGE
- ------ -------- ----
10-9 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).
10-10 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).
10-11 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).
10-12 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.
10-13 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).
10-14 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).
10-15 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-K for the fiscal year ended April 28, 2001).
10-16 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).
10-17 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.
10-18 Transfer Agreement dated May 31, 2002 by and among Genesee Ventures Inc., Home Leasing --
Corporation, Norman Leenhouts and Nelson B. Leenhouts (incorporated by reference to Exhibit
10-26 to the Corporation's report on Form 10-K for the fiscal year ended April 27, 2002.)
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.
10-19 Indemnification Agreement dated May 31, 2002 by and between Genesee Corporation, Norman --
Leenhouts, Nelson B. Leenhouts and Home Leasing Corporation (incorporated by reference to
Exhibit 10-26 to the Corporation's report on Form 10-K for the fiscal year ended April
27, 2002.)
Page 50 of 95
NUMBER DOCUMENT PAGE
- ------ -------- ----
10-20 Membership Interest Purchase Agreement dated as of September 16, 2002 by and among 51
Genesee Ventures, Inc., Crossroads Spencerport LLC, Natapow Realty Corporation, and
Theodore F. Spall, Jr. Exhibits pursuant to the Membership Interest Purchase Agreement
have not been filed by the registrant, who hereby undertakes to file such exhibits upon
request by the Commission.
10-21 Assignment of membership units dated as of September 16, 2002 given by Genesee Ventures, 64
Inc. to Crossroads Spencerport LLC.
10-22 Release and Termination Agreement dated as of September 16, 2002 by and among Genesee 66
Ventures, Inc., Crossroads Spencerport LLC, Natapow Realty Corporation, and Theodore F.
Spall, Jr.
10-23 Partnership Interest Purchase Agreement dated as of September 16, 2002 by and among 69
Genesee Syracuse Properties, Inc., Westbrook 1993 Limited Partnership, Spall Natapow
Ventures, Ltd., Natapow Realty Corporation, and Theodore F. Spall, Jr. Exhibits
pursuant to the Partnership Interest Purchase Agreement have not been filed by the
registrant, who hereby undertakes to file such exhibits upon request by the Commission.
10-24 Assignment of Limited Partnership units dated as of September 16, 2002 given by Genesee 83
Syracuse Properties, Inc. to Westbrook 1993 Limited Partnership.
10-25 Release Agreement dated as of September 16, 2002 by and among Genesee Syracuse 85
Properties, Inc., Westbrook 1993 Limited Partnership, Spall Natapow Ventures, Ltd.,
Natapow Realty Corporation, and Theodore F. Spall, Jr.
10-26 Amendment to Employment Agreement with S.M. Morse (see Exhibit 10-10 above) dated as of 88
May 4, 2003.
14 Genesee Corporation Financial Code of Ethics 91
21 Subsidiaries of the Registrant 92
31 Officer Certifications as required by Section 302 of the Sarbanes-Oxley Act of 2002 93
32 Officer Certifications as required by Section 906 of the Sarbanes-Oxley Act of 2002 95