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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File No. 0-8488

For the fiscal year ended December 31, 2004

 


 

TWENTY SERVICES, INC.

(Exact name of registrant as specified in its charter)

 


 

ALABAMA   63-0372577

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

20 Cropwell Road    
Pell City, Alabama   35128

 

Registrant’s telephone number, including area code (205) 884-7932

 


 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock

7% Cumulative Preferred Stock*

(Title of Class)

 


 

Indicate by checkmark whether the Registrant (1 has filed all reports required to be filed by Section 13 or l5(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past ninety (90) days.    YES  x    NO  ¨

 

As of December 31, 2004, the Registrant had issued and outstanding 1,283,068 shares of common stock, par value of $0.10 per share, and as of December 31, 2004, the aggregate market value of the voting stock of the Registrant held by non affiliates of the Registrant, based upon the book value of such shares as of such date, was approximately $3,660,000.

 

Documents incorporated by reference: None

 

* Includes 7% Cumulative Series A-1980 Preferred Stock, 7% Cumulative Series A-1981 Preferred Stock, 7% Cumulative Series A-1982 Preferred Stock, and 7% Cumulative Series A-1985 Preferred Stock.

 



Table of Contents

1. BUSINESS.

 

(a) General Development of Business. Since its inception in 1955, Twenty Services, Inc. (hereinafter sometimes referred to as the “Registrant” or “Company”), has been engaged principally in the general finance business, including the purchase and sale of real estate. In October 1980, the stockholders of the Registrant authorized the Board of Directors to redeploy the Registrant’s assets and reinvest the proceeds derived from such redeployment in a business other than the general finance business. During 1982 and 1983, the Company and an affiliate of Twenty Services Holding, Inc. (“Holding”), the owner of approximately 56% of the Registrant’s outstanding common stock, acquired an interest in the common stock of The Statesman Group, Inc., an insurance holding company based in Des Moines, Iowa (“Statesman”). The investment in Statesman was sold in 1994. The Registrant invested the proceeds in equities and fixed income securities that offer attractive returns commensurate with the risk assumed. In 1995, the Company acquired an interest in the common stock of American Equity Investment Life Holding Company, an insurance holding company based in Des Moines, Iowa (“American Equity”). As of the date of this Annual Report on Form 10-K the Registrant owns 237,000 shares of common stock of American Equity Investment Life Holding Company

 

Depending upon the financial condition of the Registrant, the opportunities available to the Registrant and other matters, the Registrant may acquire majority interests in, and thereafter direct the operations of, other corporations or business entities engaged in one or more active businesses. The Registrant will continue to engage in certain aspects of the general finance business, including extending credit to certain persons and collecting its loan receivables. As of the date of this annual report on Form 10-K, the Registrant does not believe that the composition of its investments and the nature of its business activities render it subject to the Investment Act of 1940, and the Board of Directors of the Registrant intend that any future acquisitions by and/or business activities of the Registrant will be structured in a manner so that the Registrant will not become subject to the Investment Company Act of 1940.

 

(b) Financial Information Regarding Industry Segments.

 

The Registrant is not required to supply information respecting industry segments. However, for certain information respecting the general finance and other business activities of the Registrant, see the Financial Statements of Twenty Services, Inc., including the notes thereto, which are included elsewhere herein.

 

(c) Narrative Description of Business.

 

General Finance Business. As stated above, the Registrant historically has engaged in the general finance business which has consisted of (i) extending credit to finance various real estate projects, including the purchase of single-family dwellings and commercial real estate, and to finance home improvements (the “Real Estate Loans”), and (ii) extending credit for business and miscellaneous purposes (the “Business and Miscellaneous Loans”).

 

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Table of Contents

Loan Portfolio. The following tabulation sets forth the outstanding balances of the Registrant’s loan portfolio as of December 31 of each year indicated below (including, if appropriate, unearned interest), classified according to the types of loans comprising the Registrant’s loan portfolio:

 

Type of Loans


   2004

   2003

   2002

   2001

   2000

Real Estate

     —      $ 28,490    $ 30,845    $ 35,343    $ 107,178

Business and Miscellaneous

   $ 60,595    $ 69,670      58,226      59,449      67,046
    

  

  

  

  

Total:

   $ 60,595    $ 98,160    $ 88,569    $ 94,792    $ 174,224
    

  

  

  

  

 

Of the Registrant’s aggregate loan portfolio as of December 31, 2004, 100% was secured .

 

Interest Income. The following tabulation sets forth certain information respecting the Registrant’s net interest income for each of the years indicated:

 

     2004

   2003

   2002

Interest Income

   $ 68,183    $ 87,288    $ 71,048

Net Interest Income

   $ 68,183    $ 87,288    $ 71,048

 

The Registrant utilizes the interest (actuarial) method in recognizing income attributable to interest charges. Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 90 days or more and resumed when the loan becomes contractually current.

 

Other Business Activities. As described above, the Registrant’s stockholders have authorized the Registrant to redeploy the Registrant’s assets by conversion of such assets into cash and the reinvestment of the proceeds thereof in other business entities. The Registrant intends to invest in equities and fixed income securities that offer attractive returns commensurate with the risk assumed. In December 1996, the Company acquired a 19.75% interest in a newly formed insurance holding company, American Equity Investment Life Holding Company. The Chairman of the Des Moines, Iowa based company is also the Chairman of the Board of the Registrant. American Equity acquired a block of individual and group insurance policies in 1995 and 1996. In 1996, 1997, 1998 and 1999 American Equity obtained additional equity financing from other investors which reduced the Company’s interest therein to 1.64%.

 

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Competition. With respect to the general finance business, the Registrant is in direct competition with banks and other finance companies located within and without the State of Alabama. Many of these firms are substantially larger than the Registrant, have more capital available for lending activities, pursue more actively new loan activity and enjoy a distinct competitive advantage over the Registrant.

 

In 2003 American Equity made an initial public offering which decreased the Company’s interest therein to less than one percent. However, the offering had the effect of increasing the value of the Company’s investment by approximately $750,000.

 

Employees. During 2004 and 2003, the Registrant employed two (2) persons to fill two (2) positions; one (l) of such positions was an executive position, and one (l) of such positions was a clerical/administrative position.

 

At February 2005, the Registrant employed two (2) persons to fill two (2) positions; one (l) of such positions was an executive position and one (l) of such positions was a clerical/administrative position.

 

The Registrant considers its relationship with its employees to be good.

 

Certain Government Regulations. The Registrant is subject to federal and state regulations relating to consumer credit financing and is subject to periodic examinations by officials of the State of Alabama charged with the responsibility of enforcing such regulations. The last examination of the Registrant by officials of the State of Alabama occurred on October 1, 2004. As a result of such examination, the Registrant was found to be in compliance with the regulations described above, and the Board of Directors of the Registrant believes that the Registrant presently is in compliance with such regulations. No material monetary claim has been made by any borrower against the Registrant respecting failure to comply with such regulations.

 

The Registrant is not subject in any material way to regulations relating to the discharge of materials into the environment.

 

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Table of Contents

Other Matters. The Registrant’s business is not seasonal.

 

No material portion of the contracts or subcontracts of the Registrant is subject to renegotiation by the United States Government.

 

The business of the Registrant is not dependent upon any raw materials, and as of the date of this annual report on Form 10-K, the Registrant does not own any material patent, trademark, license, franchise or concession. During the last two (2) years, the Registrant has not spent any money on research and development activities.

 

Due to the nature of its business, the Registrant does not have backlogs of orders believed to be firm. In addition, except as described in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Registrant does not follow any specified practice with respect to working capital.

 

The Registrant is not dependent upon a single customer or related customers or a very few customers, the loss of any one (l) or more of which would have a materially adverse effect upon its business.

 

Financial Information Regarding Foreign and Domestic Operations and Export Sales.

 

All of the Registrant’s business activities have been conducted within the southeastern portion of the United States.

 

2. PROPERTIES.

 

The Registrant maintains its principal executive office in an office facility located in Pell City, Alabama for which it pays aggregate annual rentals of $7,200. The Registrant believes its office facilities are adequate for its present needs.

 

The Registrant maintains its accounting records on a personal computer which is in compliance with the Y2K.

 

3. LEGAL PROCEEDINGS.

 

As of the date of this annual report on Form 10-K, the Registrant is not a party of any legal proceedings.

 

4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

During the period ended December 31, 2004, no matter was submitted to a vote of the security holders of the Registrant.

 

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Table of Contents

PART II

 

5. MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS.

 

(a) Market Information. No broker or dealer makes an active market in the shares of Common Stock or the Series A-Preferred Stock of the Registrant. Thus, there is no established trading market for the Common Stock or the Series A-Preferred Stock of the Registrant.

 

(b) Holder of Records. As of December 31, 2004 there were 1,675 holders of record of the outstanding Common Stock of the Registrant, and 1,000 holders of record of the outstanding Series A-Preferred Stock of the Registrant.

 

(c) Dividends. During the past two (2) years, no dividends have been paid respecting the shares of Common Stock of the Registrant. Under Alabama law, cash dividends may be paid only out of earned surplus (or retained earnings) of the Registrant.

 

As of December 31, 2004, the Registrant has issued and outstanding 505,110 shares of Series A-Preferred Stock, consisting of four (4) series of such Preferred Stock issued in 1980, 1981, 1982 and 1985. The holders of the Series A-Preferred Stock are entitled to cumulative dividends at the rate of $.07 per share per annum before any dividend may be declared or paid respecting the shares of Common Stock of the Registrant. During 2004 and 2003, the Registrant paid a dividend of $.07 per share respecting the outstanding Series A-Preferred Stock.

 

The Registrant intends, to the extent that future earnings and its capital surplus permit, to pay dividends respecting the shares of Series A-Preferred Stock. The Registrant believes it is unlikely that dividends will be paid in the future respecting the shares of Common Stock of the Company, although such payment will depend upon the future earnings and business prospects of the Registrant.

 

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Table of Contents

SELECTED FINANCIAL DATA

 

The following tabulation sets forth certain financial information respecting the Registrant.

 

     2004

    2003

    2002

    2001

    2000

 

Revenues

   $ 142,812     $ 156,883     $ 180,862     $ 167,740     $ 189,706  
    


 


 


 


 


Net Income (Loss)

   $ 5,921     $ (72,643 )   $ 287,342     $ (89,070 )   $ 77,915  
    


 


 


 


 


Earnings (Loss) per Common Share:

                                        

Net Income (Loss)

   $ (.02 )   $ (.15 )   $ ,20     $ (.10 )   $ .03  
    


 


 


 


 


Total Assets

   $ 4,684,581     $ 4,581,539     $ 3,363,346     $ 2,842,737     $ 2,983,774  
    


 


 


 


 


Dividends Declared:

                                        

Common Stock

   $ 0     $ 0     $ 0     $ 0     $ 0  
    


 


 


 


 


Preferred Stock

   $ 35,357 1   $ 35,357 2   $ 35,357 3   $ 35,357 4   $ 35,357 5
    


 


 


 


 


Total

   $ 35,357     $ 35,357     $ 35,357     $ 35,357     $ 35,357  
    


 


 


 


 


Book Value Per Common Share Outstanding

   $ 2.89     $ 2.90     $ 2.51     $ 1.77     $ 2.25  
    


 


 


 


 



1 Reflects dividend respecting Preferred Stock declared on February 28, 2005.
2 Reflects dividend respecting Preferred Stock declared on February 27, 2004.
3 Reflects dividend respecting Preferred Stock declared on February 28, 2003.
4 Reflects dividend respecting Preferred Stock declared on February 28, 2002.
5 Reflects dividend respecting Preferred Stock declared on February 28, 2001.

 

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Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Liquidity and Capital Resources. During 2004 the Registrant’s liquidity remained virtually unchanged. The Company has no notes payable nor long term debt and does not anticipate the need for borrowing in the near future. The Registrant has sufficient cash and temporary cash investments to meet its short term liquidity needs. Should long term liquidity needs exceed cash and temporary cash investments, then the Registrant would dispose of marketable securities as it deems appropriate. Current trends and known demands and commitments do not create a need for liquidity in excess of the Company’s current abilities to generate liquidity.

 

The Company anticipates that its operating activities and investing activities will continue to generate positive net cash flows and that its financing activities will continue to use cash flows.

 

Results of Operations. The Registrant reported a net income of $5,921 in 2004 as compared to a net loss of $72,643 in 2003. The change was due primarily to the change in method of accounting for the investment in American Equity in 2003 as required by generally accepted accounting principles. General and administrative expenses increased from $133,357 in 2003 to $153,480 in 2004. The increase was due primarily to the increase related to servicing shareholders.

 

Impact of Inflation. Inflation has an impact upon the Registrant’s financial position. Inflationary pressures generally increase the cost of borrowed funds to the Registrant, rendering it less economic for the Registrant to borrow money for re-lending purposes.

 

8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

The financial statements of the Registrant are set forth at page F-3 through F-20 hereof and are incorporated herein by reference.

 

9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

There has been no disagreement between the Registrant and its independent certified public accountants respecting any matter of disclosure, during the past twenty-four (24) months.

 

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Table of Contents

Part III

 

10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

 

(a)-(e) - Identification of Directors and Executive Officers and Other Matters. The following tabulation sets forth certain information respecting the persons who are serving as the directors and executive officers of the Registrant as of March 31, 2005.

 

Names and Positions

with the Registrant


  Age

    

Material Occupations

And Positions During

The last five (5) years


David J. Noble

Chairman of the Board

  73      Chairman of the Board of Directors, Twenty Services, Inc. Pell City, Alabama (finance business), since 1980 and 1979. Chairman of the Board of Directors, Treasurer and Director, Twenty Services Holding, Inc. Pell City, Alabama (holding company) since 1979; Chairman of the Board of Directors and President of American Equity Investment Life Holding Company Des Moines, Iowa since 1995.

Dr. A. J. Strickland, III

Vice-Chairman of the Board

  63      Director and Vice-Chairman of the Board of Directors of Twenty Services, Inc., Pell City, Alabama (general finance business), since 1977; Director, Twenty Services Holding, Inc., Pell City, Alabama (holding company), since 1979; Professor of Strategic Management - School of Commerce, University of Alabama, Tuscaloosa, Alabama since 1980;
           - continued -

 

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Table of Contents

PART III (CONTINUED)

 

Names and Positions

with the Registrant


  Age

    

Material Occupations

And Positions During

the last five (5) years


Dr. A.J. Strickland, III   63      Director, American Equity Investment Life Holding Company, Des Moines, Iowa, since 1995.
Jack C. Bridges   77      Executive Vice-President, Twenty Services, Inc. Pell City, Alabama since April 1997.

 

There is no family relationship between any of the persons named above. Directors of the Registrant are elected at each annual meeting of the stockholders of the Registrant and serve until their successors have been elected and qualified. Executive officers of the Registrant are elected at a meeting of the Board of Directors immediately following each annual meeting of the stockholders of the Registrant. Mr. Noble was elected director of the Registrant in November 1979 pursuant to a resolution adopted by the Board of Directors of the Registrant stating that if Twenty Services Holding, Inc. acquired approximately 20% of the outstanding Common Stock of the Registrant, the Registrant would make available to nominees of Twenty Services, Inc. Holding, Inc. two (2) places on the Registrant’s Board of Directors.

 

(F) Involvement in Certain Legal Proceedings.

 

During the past ten (10) years, no officer or director of the Registrant has been involved in any event of the type described in Item 3(f) of the Regulations S-K of the Securities Exchange Act of 1934.

 

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Table of Contents

11. EXECUTIVE COMPENSATION

 

Current Remuneration. During 2004 no officer or director of the Registrant received aggregate direct remuneration from the Registrant in excess of $60,000. The following tabulation sets forth certain information concerning all remuneration paid by the Registrant to all officers and directors of the Registrant during the year ended December 31, 2004.

 

Name of Individuals or

Number of Persons

In Group


   Capacities
which served


   Salaries and
Directors’ Fees


All directors and officers as a group (three (3) persons)

   Directors and
Officers
   $ 37,200

 

REMUNERATION IN THE FUTURE. As of December 31, 2004, no officer or director of the Registrant has any contact or other arrangement with the Registrant relating to any future remuneration, except that as long as such officers and directors continue to serve in such capacity, they will receive from the Registrant the customary fees and salaries at a rate to be agreed upon by the Registrant and such persons.

 

Directors’ Remuneration. All directors of the Registrant receive $300 per month.

 

Options, Warrants, or Rights. The Registrant does not maintain any plan pursuant to which persons are entitled to acquire any equity securities of the Registrant.

 

Termination of Employment. Except as otherwise described in Item 11 of this annual report on Form 10-K, there are no plans or arrangements relating to payments to be made to any officer, or director of the Registrant, which resulted or will result from any person’s resignation, retirement, or termination or employment with the Registrant.

 

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Table of Contents

12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

(a) Security Ownership of Certain Beneficial Owners.

 

As of the date of this annual report on Form 10-K, the only person who owns of record and directly more than 5% of the Registrant’s outstanding voting securities is Twenty Services Holding, Inc., a Delaware corporation, whose principal business address is 20 Cropwell Drive, Suite 100, Pell City, Alabama. As of such date, Twenty Services Holding, Inc. and an affiliate of Holding own 725,267 shares of Common Stock of the Registrant and approximately 57% of the combined outstanding shares of Common Stock and Series A Preferred Stock of the Registrant. Except as otherwise required by Alabama law and except for certain rights accorded by the Registrant’s Certificate of Incorporation in the event that dividends respecting the Series A-Preferred stock are not paid, the holders of the Series A-Preferred Stock are not entitled to vote respecting matters coming before any meeting of the stockholders of the Registrant.

 

By virtue of his ownership of Common Stock of Twenty Services Holding, Inc., Mr. David J. Noble, the Chairman of the Board or Directors of the Registrant, indirectly and beneficially, owns approximately 52% of the outstanding Common Stock of the Registrant.

 

(b) Security Ownership of Management. The following tabulation sets forth certain information regarding the shares of equity securities of the Registrant.

 

Title of

Class


  

Name of

Beneficial Owner


  Approximate Amount
and Nature of
Beneficial Owner


    Percent of
Class


 

Common Stock

   David J. Noble   668,183 Indirect (1)   52.29 %

Common Stock

   A.J. Strickland, III   49,638 Indirect (1)   3.88 %

Common Stock

   All directors and
executive officers as

a group (3) persons
  717,821 Indirect (1)   56.18 %

(l) Reflects each person’s interest in the shares of common stock of the Registrant owned by Twenty Services Holding, Inc. based upon such person’s ownership of the outstanding shares of common stock of Twenty Services Holding, Inc. as of February 27, 2004, excluding 6,000 shares of common stock of Twenty Services Holding, Inc. held by the Registrant. Twenty Services Holding, Inc. owns 725,267 shares or approximately 57% of the outstanding shares of common stock.

 

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Table of Contents

As of February 27, 2005, all officers and directors of the Registrant as a group beneficially owned, based upon their ownership of the outstanding common stock of Twenty Services Holding, Inc. (“Holding”), and excluding adjustment for the shares of common stock of Holding, held by the Registrant, 717,821 shares of common stock of the Registrant, or approximately 56% of the outstanding common stock of the Registrant as of such date.

 

(c) Changes in Control. There are no arrangements known to the Registrant which subsequently could result in a change of control of the Registrant.

 

13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

 

There were no transactions during 2004 nor are there any currently proposed transactions between any pension, retirement, savings or similar plan of the Registrant and its affiliates, on the other hand, and the Registrant and its affiliates, any officer, director or principal stockholder of the Registrant, or any person who has been nominated as a director of the Registrant, on the other hand.

 

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Table of Contents

PART IV

 

14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

 

(a) (l) - (a) (2) - Financial Statements and Financial Statement Schedules. The financial statements and the financial statement schedules required to be filed as part of this report are listed in the accompanying Index to Financial Statements and Financial Statement Schedules, and are set forth at the pages shown in such Index.

 

(a) (d) - Exhibits. The Certificate of Incorporation of the Registrant, as amended, the By Laws of the Registrant, as amended, and Resolutions of the Board of Directors of the Registrant creating the 7% Cumulative Series A-1980 Preference Stock, the 7% Cumulative Series A-1981 Preference Stock, the 7% Cumulative Series A-1985 Preference Stock, which were filed as exhibits to the Registrant’s Annual Report on Form 10-K for the years ended December 31, 1980, December 31, 1981, December 31, 1982 and 1985, and the Registrant’s report on Form 8-K dated as of April 10 1984, are incorporated by reference.

 

(b) Reports on Form 8-K. No report on Form 8-K was filed during the year.

 

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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, thereunto duly authorized.

 

TWENTY SERVICES, INC.
By:  

/s/ Jack C. Bridges


    Jack C. Bridges
    Executive Vice-President

 

Dated: March 31, 2005

 

SIGNATURE


  

CAPACITY


  DATE

/s/ David J. Noble


David J. Noble

   Chairman and Director and Principal Executive Officer of The Registrant  

March 31, 2005


 

/s/ Dr. A. J .Strickland, III


Dr. A. J .Strickland, III

   Vice-Chairman and Director of Twenty Services, Inc. (The Registrant)  

March 31, 2005


 

 

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Table of Contents

TWENTY SERVICES, INC.

Financial Statements

and

Financial Statement Schedule

For the Years Ended

December 31, 2004, 2003 and 2002


Table of Contents

TWENTY SERVICES, INC.

Index to Financial Statements and Financial Statement Schedule

December 31, 2004, 2003 and 2002

 

Index to Financial Statements and Financial Statement Schedule

   F-1

Independent Auditors’ Report

   F-2

Balance Sheets

   F-3

Statements of Operations

   F-4

Statements of Changes in Stockholders’ Equity

   F-5

Statements of Cash Flows

   F-6

Notes to Financial Statements

   F-7 - F-12

Financial Statement Schedule:

    

Schedule I - Marketable Securities

   F-13

 

F-1


Table of Contents

Independent Auditors’ Report

 

The Shareholders and the Board of Directors

Twenty Services, Inc.

 

We have audited the accompanying balance sheets of Twenty Services, Inc. (the Company) as of December 31, 2004 and 2003, and the related statements of operations, comprehensive income, cash flows and changes in stockholders’ equity for each of the three years in the period ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Twenty Services, Inc. at December 31, 2004 and 2003 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

 

As discussed in Note 3 to the financial statements, in 2003 the Company changed its method of accounting for its investment in American Equity Investment Life Holding Company from the equity method to fair value.

 

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule of marketable securities for the year ended December 31, 2004, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

/s/ BKR Borland Benefield

Birmingham, Alabama

March 31, 2005

 

F-2


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TWENTY SERVICES, INC.

Balance Sheets

 

     December 31,

 
     2004

    2003

 

Assets

                

Cash and cash equivalents

   $ 452,603     $ 71,968  

Marketable securities

     4,177,227       4,417,405  

Accounts receivable

     1,506       4,506  

Notes receivable, net of allowance

     53,245       87,660  
    


 


Total Assets

   $ 4,684,581     $ 4,581,539  
    


 


Liabilities and Stockholders’ Equity

                

Liabilities

                

Accounts payable and accrued expenses

   $ 65,689     $ 34,477  

Deferred tax liability

     355,158       329,748  
    


 


Total liabilities

     420,847       364,225  
    


 


Stockholders’ Equity

                

Preferred stock

     50,511       50,511  

Common stock

     128,307       128,307  

Additional paid-in capital

     1,716,074       1,716,074  

Retained earnings

     1,398,119       1,430,061  

Accumulated other comprehensive income

     1,271,353       1,151,221  

Less: Investment in Twenty Services Holding, Inc.

     (60,000 )     (60,000 )

Preferred treasury stock

     (9,368 )     (7,586 )

Common treasury stock

     (231,262 )     (191,274 )
    


 


Net stockholders’ equity

     4,263,734       4,217,314  
    


 


Total Liabilities and Stockholders’ Equity

   $ 4,684,581     $ 4,581,539  
    


 


 

See accompanying notes to financial statements.

 

F-3


Table of Contents

TWENTY SERVICES, INC.

Statements of Operations

 

     For the Years Ended December 31,

 
     2004

    2003

    2002

 

Revenues

                        

Interest

   $ 68,183     $ 87,288     $ 71,048  

Dividends

     74,466       69,591       87,396  

Other

     163       4       22,418  
    


 


 


Total revenues

     142,812       156,883       180,862  
    


 


 


Operating Expenses

                        

General and administrative

     153,480       132,790       123,201  
    


 


 


Other Income (Loss)

                        

Loss on sale of marketable securities

     (9,486 )     (8,304 )     (9,927 )

Provision for equity in gain of American Equity

     —         —         233,201  
    


 


 


Total other income (loss)

     (9,486 )     (8,304 )     223,274  
    


 


 


Income (Loss) Before Income Taxes and Cumulative Effect of Change in Accounting Principle

     (20,154 )     15,789       280,935  

Income Tax Benefits

     26,075       170,916       6,407  
    


 


 


Net Income Before Cumulative Effect of Change in Accounting for Investment

     5,921       186,705       287,342  

Cumulative Effect of Accounting Change

     —         (259,348 )     —    
    


 


 


Net Income (Loss)

   $ 5,921     $ (72,643 )   $ 287,342  
    


 


 


Earnings (Loss) Per Common Share Before Cumulative Effect of Change in Accounting Principle

   $ (0.02 )   $ 0.12     $ 0.20  

Cumulative Effect of Change in Accounting for Investments

     —         (0.20 )     —    
    


 


 


Earnings (Loss) Per Common Share

   $ (0.02 )   $ (0.08 )   $ 0.20  
    


 


 


 

See accompanying notes to financial statements.

 

F-4


Table of Contents

TWENTY SERVICES, INC.

Statements of Changes in Stockholders’ Equity

For the Years Ended December 31, 2004, 2003, and 2002

 

    Preferred
Stock $.10


  Common
Stock $.10


  Additional
Paid-In
Capital


    Retained
Earnings


    Accumulated
Other
Comprehensive
Income


    Investment
in Twenty
Services
Holding,
Inc.


    Preferred
Treasury
Stock


    Common
Treasury
Stock


    Total

 

Balance - December 31, 2001

  $ 50,511   $ 128,307   $ 1,618,630     $ 1,283,610     $ (52,301 )   $ (60,000 )   $ (5,104 )   $ (171,424 )   $ 2,792,229  

Comprehensive Income

                                                                   

Net Income

    —       —       —         287,342       —         —         —         —         287,342  

Change in Unrealized Cumulative Gains/Losses on Available-for-Sale Securities, Net of Deferred Income Tax of ($109,945)

    —       —       —         —         (9,306 )     —         —         —         (9,306 )
                                                               


Total comprehensive income

                                                                278,036  

Purchase of Treasury Stock

    —       —       —         —         —         —         (1,804 )     (17,144 )     (18,948 )

Dividends on Preferred Stock, ($.07 Per Share)

    —       —       —         (33,707 )     —         —         —         —         (33,707 )

Share of Decrease in American Equity Capital, Net of Deferred Income Tax of ($144,207)

    —       —       199,417       —         —         —         —         —         199,417  
   

 

 


 


 


 


 


 


 


Balance - December 31, 2002

    50,511     128,307     1,818,047       1,537,245       (61,607 )     (60,000 )     (6,908 )     (188,568 )     3,217,027  
   

 

 


 


 


 


 


 


 


Comprehensive Income

                                                                   

Net Income

  $ —     $ —     $ —       $ (72,643 )   $ —       $ —       $ —       $ —       $ (72,643 )

Change in Unrealized Cumulative Gains/Losses on Available-for-Sale Securities, Net of Deferred Income Tax of ($109,945)

    —       —       —         —         266,092       —         —         —         266,092  
                                                               


Total comprehensive income

                                                                193,449  

Cumulative Effect of Change in Accounting Principle, Net of Deferred Income Tax of ($285,303)

    —       —       (101,973 )     —         946,736       —         —         —         844,763  

Purchase of Treasury Stock

    —       —       —         —         —         —         (678 )     (2,706 )     (3,384 )

Dividends on Preferred Stock, ($.07 Per Share)

    —       —       —         (34,541 )     —         —         —         —         (34,541 )
   

 

 


 


 


 


 


 


 


Balance - December 31, 2003

    50,511     128,307     1,716,074       1,430,061       1,151,221       (60,000 )     (7,586 )     (191,274 )     4,217,314  
   

 

 


 


 


 


 


 


 


Comprehensive Income

                                                                   

Net Income

    —       —       —         5,921       —         —         —         —         5,921  

Change in Unrealized Gains on Available-for-Sale Securities, Net of Deferred Income Tax of ($51,485)

    —       —       —         —         120,132       —         —         —         120,132  
                                                               


Total Comprehensive Income

    —       —       —         —         —         —         —         —         126,053  

Purchase of Treasury Stock

    —       —       —         —         —         —         (1,782 )     (39,988 )     (41,770 )

Dividends on Preferred Stock ($.07 Per Share)

    —       —       —         (37,863 )     —         —         —         —         (37,863 )
   

 

 


 


 


 


 


 


 


Balance - December 31, 2004

  $ 50,511   $ 128,307   $ 1,716,074     $ 1,398,119     $ 1,271,353     $ (60,000 )   $ (9,368 )   $ (231,262 )   $ 4,263,734  
   

 

 


 


 


 


 


 


 


 

 

F-5


Table of Contents

TWENTY SERVICES, INC.

Statements of Cash Flows

 

     For the Years Ended December 31,

 
     2004

    2003

    2002

 

Cash Flows From Operating Activities

                        

Interest and dividends received

   $ 142,649     $ 154,510     $ 158,686  

Other income

     163       4       10,009  

Cash paid to suppliers and employees

     (129,870 )     (144,942 )     (134,584 )
    


 


 


Net Cash Flows From Operating Activities

     12,942       9,572       34,111  
    


 


 


Cash Flows From Investing Activities

                        

Principal collected on loans

     37,415       5,263       6,371  

Loans made to customers

     —         (14,854 )     —    

Principal collected on held-to-maturity securities

     252       207       109  

Proceeds from sale of available-for-sale securities

     799,075       904,194       716,646  

Purchases of available-for-sale securities

     (397,018 )     (1,080,096 )     (632,687 )
    


 


 


Net Cash Flows From Investing Activities

     439,724       (185,286 )     90,439  
    


 


 


Cash Flows From Financing Activities

                        

Preferred stock dividends paid

     (30,261 )     (28,814 )     (31,930 )

Purchase of treasury stock

     (41,770 )     (3,384 )     (18,948 )
    


 


 


Net Cash Flows From Financing Activities

     (72,031 )     (32,198 )     (50,878 )
    


 


 


Net Increase (Decrease) in Cash and Cash Equivalents

     380,635       (207,912 )     73,672  

Cash and Cash Equivalents - Beginning of Year

     71,968       279,880       206,208  
    


 


 


Cash and Cash Equivalents - End of Year

   $ 452,603     $ 71,968     $ 279,880  
    


 


 


Reconciliation of Net Income to Net Cash From Operating Activities

                        

Net income (loss)

   $ 5,921     $ (72,643 )   $ 287,342  

Adjustments to reconcile net income to net operating activities

                        

Cumulative effect of change in accounting for investment

     —         259,348       —    

Other noncash income

     —         —         (12,409 )

Provision for equity in gain of American Equity

     —         —         (233,201 )

Loss on sale of marketable securities

     9,486       8,304       9,927  

Net change in deferred income taxes

     (26,075 )     (170,916 )     (6,407 )

(Increase) decrease in accounts receivable

     —         (2,369 )     242  

Increase (decrease) in accounts payable and accrued Liabilities

     23,610       (12,152 )     (11,383 )
    


 


 


Net Cash Flows From Operating Activities

   $ 12,942     $ 9,572     $ 34,111  
    


 


 


 

See accompanying notes to financial statements.

 

 

F-6


Table of Contents

TWENTY SERVICES, INC.

Notes to Financial Statements

For the Years Ended December 31, 2004, 2003, and 2002

 

Note 1 – Accounting Policies

 

Income Recognition - Interest income from finance receivables is recognized using the interest (actuarial) method. Accrual of interest income on finance receivables is suspended when a loan is contractually delinquent for 90 days or more and resumed when the loan becomes contractually current.

 

Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Credit Losses - Provisions for credit losses are charged to income in amounts sufficient to maintain the allowance at a level considered adequate to cover the losses of principal and interest in the existing portfolio. The Company’s charge-off policy is based on a loan-by-loan review for all receivables that are charged off when they are deemed uncollectible.

 

Cash Equivalents - Holdings of highly liquid investments with original maturities of three months or less and investments in money market funds are considered to be cash equivalents.

 

Marketable Securities - On January 1, 1995, the Company adopted the provisions of Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities.”

 

Management determines the appropriate classification of its investment in debt and equity securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company’s securities are classified in two categories and accounted for as follows:

 

    Securities Held-to-Maturity. Bonds, notes, certain preferred stocks and other debt securities for which the Company has the positive intent and ability to hold to maturity are reported at cost, adjusted for amortization of premiums and accretion of discounts which are recognized in interest income using methods which approximate level yields over the period to maturity.

 

    Securities Available-for-Sale. Bonds, notes and certain preferred stocks not classified as held-to-maturity and common stocks are reported at fair value.

 

Declines in the fair value of individual held-to-maturity and available-for-sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The write-downs are included in earnings as realized losses.

 

Unrealized holding gains and losses, net of deferred income taxes, on securities available-for-sale are reported as a net amount in a separate component of stockholders’ equity until realized.

 

Realized gains and losses on the sale of securities available-for-sale are determined using the specific-identification method.

 

Investment - American Equity Investment Life Holding Company – Prior to 2003, this investment was accounted for on the “Equity Basis.” (See Notes 3 and 7).

 

Income Taxes - Deferred income taxes are recognized for the effects of temporary differences between financial statement and tax reporting.

 

Earnings Per Common Share - Earnings per common share are determined by dividing net income (loss), after giving effect to preferred stock dividends, by the weighted average number of common shares outstanding during the year. The weighted average number of common shares outstanding for each of the years ended December 31, 2004, 2003, and 2002 was 1,283,068.

 

 

F-7


Table of Contents

TWENTY SERVICES, INC.

Notes to Financial Statements (Continued)

For the Years Ended December 31, 2004, 2003, and 2002

 

Note 2 – Nature of Operations, Risks, and Uncertainties

 

The Company is primarily engaged in the general finance business. The Company grants commercial and personal real estate loans and general business and personal loans to customers located primarily in Alabama. The majority of the loan portfolio is secured by various types of collateral including mortgages and security interests in equipment and other property with a significant concentration in loans collateralized by residential real estate.

 

Note 3 – Accounting Change

 

In December 2003, the Company changed the method of accounting for its investment in American Equity Investment Life Holding Company (American) from the equity method to fair value. The change was made to more accurately reflect the Company’s investment in American’s common stock. This change in accounting principle was made as a result of American’s initial public offering in December 2003. The initial public offering by American reduced the Company’s ownership percentage to below 1% and significantly reduced the Company’s influence over American’s operating and financial activities. The cumulative effect of this change on periods prior to the year ended December 31, 2003 cannot be determined. This change increased the Company’s investment in American by $870,717, increased accumulated other comprehensive income by $946,736, net of deferred income tax of $285,303, decreased additional paid-in capital by $101,973 and reduced earnings before net income by $259,348 or $0.20 per share. We have not calculated the proforma effect on prior periods because the stock price information for these periods is not determinable.

 

Note 4 – Fair Values of Financial Instruments

 

Statement of Financial Accounting Standards (SFAS) No. 107, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. The following sets forth a comparison of fair values and carrying values of the Company’s financial instruments subject to the provisions of SFAS No. 107.

 

     2004

   2003

     Carrying
Value


  

Fair

Value


   Carrying
Value


  

Fair

Value


Cash and Temporary Investments

   $ 452,603    $ 452,603    $ 71,968    $ 71,968

Marketable Securities

     4,177,227      4,177,227      4,417,405      4,417,405

Finance Receivables, Net

     53,245      53,245      87,660      87,660

 

The following methods and assumptions were used by the Company in estimating the fair values of financial instruments:

 

    Short-term financial instruments are carried at their carrying amounts reported in the balance sheet that are reasonable estimates of fair values due to the relatively short period to maturity of the instruments. This approach applies to cash and temporary investments, finance receivables, notes receivable from related parties and other receivables.

 

    Marketable securities are valued at quoted market values.

 

F-8


Table of Contents

TWENTY SERVICES, INC.

Notes to Financial Statements (Continued)

For the Years Ended December 31, 2004, 2003, and 2002

 

Note 5 – Marketable Securities

 

The amortized cost and aggregate fair values of investments in securities are as follows:

 

     Amortized
Cost


   Gross
Unrealized
Gains


   Gross
Unrealized
Losses


  

Fair

Value


December 31, 2004

                           

Available-for-sale securities

                           

Equity securities

   $ 1,765,123    $ 1,872,987    $ 26,104    $ 3,612,006

Debt securities

     566,384      32,291      36,367      562,308
    

  

  

  

Total available-for-sale securities

   $ 2,331,507    $ 1,905,278    $ 62,471    $ 4,174,314
    

  

  

  

Held-to-maturity securities

                           

Obligations of U.S. Government Corporations and Agencies

   $ 2,913    $ —      $ —      $ 2,913
    

  

  

  

December 31, 2003

                           

Available-for-sale securities

                           

Equity securities

   $ 2,021,659    $ 1,687,611    $ 6,009    $ 3,703,261

Debt securities

     721,391      33,478      43,889      710,980
    

  

  

  

Total available-for-sale securities

   $ 2,743,050    $ 1,721,089    $ 49,898    $ 4,414,241
    

  

  

  

Held-to-maturity securities

                           

Obligations of U.S. Government Corporations and Agencies

   $ 3,164    $ —      $ —      $ 3,164
    

  

  

  

 

The amortized cost and aggregate fair value of debt securities at December 31, 2004 and 2003, by contractual maturity, are as follows. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call prepayment penalties.

 

     Available-for-Sale

   Held-to-Maturity

     Amortized
Cost


   Market
Value


   Amortized
Cost


   Market
Value


December 31, 2004

                           

Corporate Due In:

                           

After 10 Years

   $ 376,878    $ 372,693    $ —      $ —  

U.S. Government Corporations and Agencies Due In:

                           

6-10 Years

     —        —        2,913      2,913

After 10 Years

     189,506      189,615      —        —  
    

  

  

  

Total

   $ 566,384    $ 562,308    $ 2,913    $ 2,913
    

  

  

  

December 31, 2003

                           

Corporate Due In:

                           

1-5 Years

   $ 155,007    $ 161,775    $ —      $ —  

After 10 Years

     376,878      360,824      —        —  
    

  

  

  

       531,885      522,599      —        —  

U.S. Government Corporations and Agencies Due In:

                           

6-10 Years

     —        —        3,164      3,164

After 10 Years

     189,506      188,381      —        —  
    

  

  

  

Total

   $ 721,391    $ 710,980    $ 3,164    $ 3,164
    

  

  

  

 

F-9


Table of Contents

TWENTY SERVICES, INC.

Notes to Financial Statements (Continued)

For the Years Ended December 31, 2004, 2003, and 2002

 

Note 5 – Marketable Securities (continued)

 

Proceeds from the sale of available-for-sale securities were $799,075 for the year ended December 31, 2004. A net loss of $9,486 was realized. There were no sales of held-to-maturity securities for the year ended December 31, 2004.

 

Proceeds from the sale of available-for-sale securities were $904,194 for the year ended December 31, 2003. A net loss of $8,304 was realized. There were no sales of held-to-maturity securities for the year ended December 31, 2003.

 

Note 6 – Finance Receivables and Allowance for Credit Losses

 

Finance receivables consisted of the following at December 31:

 

     2004

    2003

 

Business and Other

   $ 60,595     $ 69,485  

Real Estate

     —         28,525  
    


 


Total Finance Receivables

     60,595       98,010  

Less Allowance for Credit Losses

     (7,350 )     (10,350 )
    


 


Finance Receivables, Net

   $ 53,245     $ 87,660  
    


 


 

At December 31, 2003, contractual maturities of finance receivables were as follows:

 

     2005

   2006

   2007

   Total

Business and Other

   $ 54,044    $ 3,865    $ 2,686    $ 60,595
    

  

  

  

 

Note 7 – Investment - American Equity Investment Life Holding Company (American)

 

For the periods ended prior to December 31, 2003, the Company’s investment of 1.64% of the common stock of American was accounted for under the equity method because the Company exercised significant influence over its operating and financial activities. Accordingly, the investment in American was carried at cost, adjusted for the Company’s proportionate share of earnings or losses.

 

On December 27, 1995, the Company invested $790,000 in American. This was a new company formed by the Chairman of the Board of Twenty Services, Inc. He is Chairman and Chief Executive Officer of American.

 

During 1997, American sold 3,240,864 of common stock for net proceeds of $47,246,469. The transaction caused the Company’s percentage of ownership to decrease from 6.7% to 1.79%.

 

During 1998, American sold 625,000 shares of preferred stock for net proceeds of $625,000. American also sold 161,098 shares of common stock for net proceeds of $10,625,550. These transactions caused the Company’s percentage of ownership to decrease from 1.79% to 1.72%.

 

During 1999, American sold 130,348 shares of common stock for net proceeds of $1,405,094. The transaction caused the Company’s percentage of ownership to decrease from 1.72% to 1.68%.

 

During 2000, American effected a three-for-one-split that resulted in the issuance of 9,424,620 of common stock and a corresponding decrease of $9,425,000 in additional paid-in capital. In addition, the Company issued 477,687 shares of common stock for net proceeds of $1,956,000. American also acquired 84,375 shares of common stock for $619,000. These transactions caused the Company’s percentage of ownership to decrease from 1.68% to 1.63%.

 

F-10


Table of Contents

TWENTY SERVICES, INC.

Notes to Financial Statements (Continued)

For the Years Ended December 31, 2004, 2003, and 2002

 

Note 7 – Investment - American Equity Investment Life Holding Company (American) (continued)

 

There was no change in the Company’s ownership percentage in 2001.

 

During 2002, American issued 34,228 shares of common stock for net proceeds of $137,000. American also acquired 112,750 shares of common stock for $857,000. These transactions caused the Company’s percentage of ownership to increase from 1.63% to 1.64%.

 

The following is a summary of the audited balance sheet and statement of operations of American for 2002:

 

Total Assets

   $ 6,042,266,000
    

Total Liabilities

   $ 5,864,302,000

Minority Interest

     100,486,000

Stockholders' Equity

     77,478,000
    

Total Liabilities and Stockholders' Equity

   $ 6,042,266,000
    

Revenues

   $ 279,713,000

Minority Interest

     7,445,000

Benefits and Expenses

     258,061,000
    

Net Gain

   $ 29,097,000
    

 

For 2002, as required by the equity method of accounting, the Company’s investment of $694,937 increased by $233,201, which is 1.64% of American’s income. The investment was increased by $343,625, net of deferred tax charge of $144,207 for the Company’s share of American’s increase in capital. The net effect of the Company’s investment was an increase of $576,826.

 

For 2001, as required by the equity method of accounting, the Company’s investment of $956,662 increased by $14,236, which is 1.63% of American’s income. The investment was decreased by $275,961, net of deferred tax benefit of $65,432 for the Company’s share of American’s decrease in capital. The net effect on the Company’s investment in American was a decrease of $261,725.

 

For 2000, as required by the equity method of accounting, the Company’s investment of $576,648 was increased by $78,031, which is 1.63% of American’s income. The investment was also increased by $301,983, net of deferred tax of $1,592 for the Company’s share of American’s increase in capital. The net effect on the Company’s investment in American was an increase of $380,014.

 

Note 8 – Income Taxes

 

Temporary differences giving rise to the deferred tax liability (benefit) consist primarily of gains and losses on investments recognized for financial reporting purposes that are not recognized for tax purposes and of unused operating and capital loss carryforwards that may be applied against future taxable income.

 

The provision for income taxes was as follows for the years ended December 31:

 

     2004

   2003

   2002

Current

                    

Deferred Tax Benefits

   $ 26,075    $ 170,916    $ 6,407
    

  

  

 

F-11


Table of Contents

TWENTY SERVICES, INC.

Notes to Financial Statements (Continued)

For the Years Ended December 31, 2004, 2003, and 2002

 

Note 8 – Income Taxes (continued)

 

Deferred tax assets and liabilities at December 31 consisted of the following:

 

     2004

    2003

 

Deferred Tax Assets

                

Net operating and capital loss carryforwards

   $ 197,384     $ 171,309  

Other

     300       300  
    


 


Total deferred tax assets

     197,684       171,609  

Deferred Tax Liability

                

Net unrealized gain on available for sale securities

     (552,842 )     (501,357 )
    


 


Net Deferred Tax Liability

   $ (355,158 )   $ (329,748 )
    


 


 

The Company has available at December 31, 2004, approximately $657,948 of unused operating and capital loss carryforwards that may be applied against future taxable income and that expire in various years from 2006 to 2024.

 

Note 9 – Stockholders’ Equity

 

The preferred stock has a cumulative dividend of $.07 per share and is redeemable at the Company’s option of $1.05 per share. In the event of liquidation, the preferred stockholders receive $1.05 per share before any distributions are made to common stockholders. The 2001 dividend (approximately $33,700) was declared February 2002 and paid in March 2002. The 2002 dividend (approximately $34,000) was declared February 2003 and paid in March 2003. The 2003 dividend (approximately $38,000) was declared February 2004 and paid in March 2004.

 

Note 10 – Investment in Twenty Services Holding, Inc.

 

The Company owns 6,000 shares of common stock of Twenty Services Holding, Inc. (the Holding Company), a holding company that owns approximately 54% of the Company’s outstanding common stock. The amount paid for the Holding Company’s common stock of $60,000 has been deducted from stockholders’ equity in the accompanying balance sheet.

 

Note 11 – Concentration of Credit Risk

 

The Company maintains an investment account with a brokerage firm. Balances are insured up to $500,000 (with a limit of $100,000 for cash) by the Securities Investor Protection Corporation. The Company had $1,121,825 of uninsured investments at December 31, 2004.

 

Note 12 – Treasury Stock

 

The Company purchased 16,256 shares of common stock for an aggregate purchase price of $39,988, or $2.50 per share, and 7,128 shares of its preferred stock for an aggregate purchase price of $1,782 or $0.25 per share, during the year ended December 31, 2004. The shares are held as common treasury stock and preferred treasury stock.

 

The Company purchased 2,119 shares of its common stock for an aggregate purchase price of $2,706, or $1.25 per share, and 2,712 shares of its preferred stock for an aggregate purchase price of $678, or $0.25 per share, during the year ended December 31, 2003. The shares are held as common treasury stock and preferred treasury stock.

 

The Company purchased 13,716 shares of its common stock for an aggregate purchase price of $17,144, or $1.25 per share, and 7,215 shares of its preferred stock for an aggregate purchase price of $1,804, or $.25 per share, during the year ended December 31, 2002. The shares are held as common treasury stock and preferred treasury stock.

 

F-12


Table of Contents

TWENTY SERVICES, INC.

Schedule I - Marketable Securities

For the Year Ended December 31, 2004

 

Name of issuer and title of each issue


  

Number of

shares or

units - principal

amount

of bonds

and notes


  

Cost of

each issue


  

Market

value

of each

issue

at balance
sheet date


  

Amount at which
each portfolio

of equity

security issues

and each other

security issue is

carried in the

balance

sheet


Equity Securities Available-for-Sale:

                         

American Equity Investment Life Holding Company (AEL)

   237,000    $ 790,000    $ 2,552,490    $ 2,552,490

Ace Ltd 7.8% Cum Perp Dep Shs Callable 5/30/08

   1,000      25,403      26,680      26,680

AMF Bowling Worldwide, Ser A Warrants - exp 3/9/09

   524      3,668      —        —  

AMF Bowling Worldwide, Ser B Warrants - exp 3/9/09

   512      2,560      —        —  

Bank of America 6% 11/3/34

   2,000      50,006      50,140      50,140

Easy Gardener Prod 9.4% PFD

   425      10,625      3,137      3,137

Equity Office Prop 7.75% Cum Perp Pfd Callable 7/29/07

   2,000      50,000      54,000      54,000

Innkeepers USA 8% Cum PFD Perp REIT Callable

   8,000      200,000      206,000      206,000

J. P. Morgan & Chase Co.

   3000      107,903      117,030      117,030

Maytag Corp

   3,000      75,688      63,300      63,300

Public Storage $2.45 Dep Shs Repstg 1/1000 A Sh of Eq.

   3,000      60,000      86,130      86,130

Realty Income Corp. 8.25% Sr Unsecd Nts Due 2008 mon.

   6000      150,004      168,600      168,600

SL Green Realty 7.625% Cum Perp Reit PFD Ser C Callable 12/12/08

   2000      50,000      51,200      51,200

Taubman Centers Inc Pfd 8.30%

   1300      32,500      33,163      33,163

Wachovia Pfd Fnd 7.25% Non Cum Perp Exch Pfd Call 12/31/22

   5000      125,000      141,900      141,900

West Bancorporation Inc

   3307      31,766      58,236      58,236
         

  

  

Total Equity Securities Available-for-Sale

          1,765,123      3,612,006      3,612,006
         

  

  

Debt Securities Available-for-Sale:

                         

Aetna, Inc. Notes Cpn 7.625% Due 8/15/26

   150,000      156,152      179,490      179,490

Federal Home Loan Bank Bonds Callable Cpn 5.540% Due 4/23/18

   90,000      90,000      89,565      89,565

Federal Natl Mtg Assn Notes Callable Cpn 6.30% Due 8/25/23

   100,000      99,506      100,050      100,050

JPM Capital Trust I Company GTD Cpn 7.540% Due 1/15/27

   120,000      121,795      130,203      130,203

Land O Lakes Cap Trst I 144 B/E Cpn 7.45% Due 3/15/28

   100,000      98,931      63,000      63,000
         

  

  

Total Debt Securities Available-for-Sale

          566,384      562,308      562,308
         

  

  

Debt Securities Held-to-Maturity –

                         

GNMA Mortgage Backed Certificates, Due 2012

          2,913      —        2,913
         

  

  

Total

        $ 2,334,420    $ 4,174,314    $ 4,177,227
         

  

  

 

F-13