Attached files
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EX-22.1 - COMDISCO HOLDING CO INC | ex22-1.htm |
EX-32.1 - COMDISCO HOLDING CO INC | ex32-1.htm |
EX-31.1 - COMDISCO HOLDING CO INC | ex31-1.htm |
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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FORM
10-K
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[X]
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
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For
the Fiscal Year Ended September 30, 2009
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OR
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[ ]
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
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For
the transition period from ________________ to
____________________
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Commission
file number 000-499-68
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COMDISCO
HOLDING COMPANY, INC.
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(Exact
name of registrant as specified in its charter)
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Delaware
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54-2066534
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(State
or other jurisdiction of
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(I.R.S.
employer
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incorporation
or organization)
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identification
no.)
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5600
North River Road
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Rosemont,
Illinois
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60018
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(Address
of principal executive offices)
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(Zip
code)
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Registrant’s
telephone number, including area code: (847)
698-3000
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of Each Class
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Name
of Each Exchange on Which Registered
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N/A
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N/A
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Securities
registered pursuant to Section 12(g) of the Act: Title of Each Class |
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Common
Stock, par value $0.01 per share Contingent Distribution Rights |
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes [ ]
No [X]
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes [ ] No
[X]
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X]
No [_]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T
(§232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes
[ ] No [ ]
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of the 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 a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definition of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act:
Large
accelerated filer [ ]
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Accelerated
filer [ ]
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Non-accelerated
filer [ ]
(Do not check if a smaller reporting company)
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Smaller
reporting company [X]
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the
Act). Yes
[_] No [X]
The
aggregate market value of common stock held by non-affiliates of the registrant
was approximately $5,000,000 based on its closing price per share of $7.10 on
March 31, 2009. On March 31, 2009, there were 4,029,055 shares of common stock
outstanding. No officer or director beneficially held shares of the Company’s
Common Stock as of December 1, 2009. Shareholders who owned 5 percent or more of
the outstanding common stock at that time have been excluded in that such
persons may be deemed affiliates. The determination of affiliate status is not
necessarily a conclusive determination for other purposes.
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.
Title
of Each Class
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Number
of Shares Outstanding at December 1, 2009
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Common
Stock, par value
$0.01
per share
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4,029,055
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DOCUMENTS
INCORPORATED BY REFERENCE: NONE
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COMDISCO
HOLDING COMPANY, INC.
2009
ANNUAL REPORT ON FORM 10-K
TABLE
OF CONTENTS
PAGE
PART
I
ITEM
1. BUSINESS
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1
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ITEM
1A. RISK FACTORS
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7
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ITEM
1B. UNRESOLVED STAFF COMMENTS
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10
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ITEM
2. PROPERTIES
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10
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ITEM
3. LEGAL PROCEEDINGS
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11
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ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
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12
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PART II | |
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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12
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ITEM
6. SELECTED FINANCIAL DATA
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14
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ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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14
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ITEM
7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
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23
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ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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24
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ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
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42
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ITEM
9A.CONTROLS AND PROCEDURES
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42
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ITEM
9B. OTHER INFORMATION
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43
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PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
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43
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ITEM
11. EXECUTIVE COMPENSATION
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44
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ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDERS MATTERS
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45
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ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
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46
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ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
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47
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PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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48
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i
2009
ANNUAL REPORT ON FORM 10-K
PART
I
Disclosure
Regarding Forward-Looking Statements
This
Annual Report on Form 10-K contains, and our periodic filings with the
Securities and Exchange Commission (the “SEC”) and written and oral statements
made by the Company’s sole officer and director to press, potential investors,
securities analysts and others, will contain, forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”)
and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), and
the Company intends that such forward-looking statements be subject to the safe
harbors created thereby. These forward-looking statements are not historical
facts, but rather are predictions and generally can be identified by use of
statements that include phrases such as “believe,” “expect,” “anticipate,”
“estimate,” “intend,” “plan,” “foresee,” “looking ahead,” “is confident,”
“should be,” “will,” “predicted,” “likely” or other words or phrases of similar
import. Similarly, statements that describe or contain information related to
matters such as our intent, belief, or expectation with respect to financial
performance, claims resolution under the Plan (as defined below), cash
availability and cost-cutting measures are forward-looking statements. These
forward-looking statements often reflect a number of assumptions and involve
known and unknown risks, uncertainties and other factors that could cause our
actual results to differ materially from those currently anticipated in these
forward-looking statements. In light of these risks and uncertainties, the
forward-looking events might or might not occur, which may affect the accuracy
of forward-looking statements and cause the actual results of the Company to be
materially different from any future results expressed or implied by such
forward-looking statements.
Important
factors that could cause actual results to differ materially from those
suggested by these written or oral forward-looking statements, and could
adversely affect our future financial performance, include the risk factors
discussed in Item 1A. “Risk Factors”. Many of the risk factors that could affect
the results of the Company’s operations are beyond our ability to control or
predict.
Available
Information
The
Company’s website address is www.comdisco.com. The Company makes available
through its website its Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and all amendments to those reports, as soon
as reasonably practicable after such material is electronically filed with the
SEC. The Company also makes available through the website its press releases,
the Code of Conduct Applicable to its Chief Executive Officer and Authorized
Representatives, the Employee Code of Conduct, the Audit Committee Charter, the
Disclosure Controls Committee Charter and the Compensation Committee Charter, as
well as contact information for the Audit Committee. Information contained on
the Company’s website is not intended to be part of this Annual Report on Form
10-K.
ITEM
1. BUSINESS
THE
COMPANY EMERGED FROM CHAPTER 11 BANKRUPTCY PROCEEDINGS ON AUGUST 12, 2002. THE
PURPOSE OF THE COMPANY IS TO SELL, COLLECT OR OTHERWISE REDUCE TO MONEY IN AN
ORDERLY MANNER THE REMAINING ASSETS OF THE CORPORATION. PURSUANT TO THE
COMPANY’S FIRST AMENDED JOINT PLAN OF REORGANIZATION (THE “PLAN”) AND
RESTRICTIONS CONTAINED IN THE COMPANY’S CERTIFICATE OF INCORPORATION (THE
“CERTIFICATE”), THE COMPANY IS SPECIFICALLY PROHIBITED FROM ENGAGING IN ANY
BUSINESS ACTIVITIES INCONSISTENT WITH ITS LIMITED BUSINESS PURPOSE. ACCORDINGLY,
WITHIN THE NEXT FEW YEARS, IT IS ANTICIPATED THAT THE COMPANY WILL HAVE REDUCED
ALL OF ITS ASSETS TO CASH AND MADE DISTRIBUTIONS OF ALL AVAILABLE CASH TO
HOLDERS OF ITS COMMON STOCK AND CONTINGENT DISTRIBUTION RIGHTS IN THE MANNER AND
PRIORITIES SET FORTH IN THE PLAN. AT THAT POINT, THE COMPANY WILL CEASE
OPERATIONS. THE COMPANY FILED ON AUGUST 12, 2004 A CERTIFICATE OF DISSOLUTION
WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE TO FORMALLY EXTINGUISH
COMDISCO HOLDING COMPANY, INC.’S CORPORATE EXISTENCE WITH THE STATE OF DELAWARE
EXCEPT FOR THE PURPOSE OF COMPLETING THE WIND DOWN CONTEMPLATED BY THE
PLAN.
1
In
this report on Form 10-K, references to “the Company,” “Comdisco Holding,” “we,”
“us” and “our” mean Comdisco Holding Company, Inc., its consolidated
subsidiaries, including Comdisco, Inc., Comdisco Ventures Fund A, LLC (formerly
Comdisco Ventures, Inc.) and its predecessors, except in each case where the
context indicates otherwise. References to “Comdisco, Inc.” mean Comdisco, Inc.
and its subsidiaries, other than the Prism (as defined below) entities, prior to
the Company’s emergence from bankruptcy on August 12, 2002, except where the
context indicates otherwise.
General
Development of Business
Comdisco
Holding Company, Inc. was formed on August 8, 2002 for the purpose of selling,
collecting or otherwise reducing to money in an orderly manner the remaining
assets of the Company and all of its direct and indirect subsidiaries, including
Comdisco, Inc. The Company’s business purpose is limited to the orderly sale or
run-off of all its remaining assets. Pursuant to the Plan and restrictions
contained in its Certificate, the Company is specifically prohibited from
engaging in any business activities inconsistent with its limited business
purpose.
Since
emerging from bankruptcy proceedings on August 12, 2002, the Company has,
pursuant to the Plan, focused on the monetization of its remaining assets. The
Company expects total revenue and net cash provided by operating activities to
continue to decrease until the wind down of its operations is completed; however
the Company cannot accurately predict the actual net amount to be realized, or
the timing of such realization, from the continued monetization of its
assets. Therefore, comparisons of quarter-to-quarter or year-to-year
results of operations should not be relied upon as an indication of the
Company’s future performance.
The
Company has reduced, and expects to continue to reduce, the size and complexity
of its organizational and systems infrastructure concurrently with the
monetization of its assets. As of December 1, 2009, the Company had a total of
five employees (two full-time and three part-time), a decrease of approximately
99 percent from approximately 600 employees upon emergence from bankruptcy
proceedings on August 12, 2002. Approximately eight former employees continue to
periodically assist the Company on a consulting basis.
During
2008, the Company received permission to begin the process of abandoning and
destroying certain of its stored paper and electronic records for periods prior
to January 1, 1997. As of the date of this filing, the Company
destroyed substantially all of those records.
On
August 12, 2004, Randolph I. Thornton’s appointment as Initial Disbursing Agent
became effective. As Initial Disbursing Agent, Mr. Thornton performs the roles
and responsibilities of the Board of Directors and officers of the Company,
including all measures that are necessary to complete the administration of the
reorganized debtors’ Plan and Chapter 11 cases. Mr. Thornton serves as Chief
Executive Officer, President and Secretary and is the sole director and
executive officer of the Company.
Reorganized
Corporate History
On
July 16, 2001, Comdisco, Inc. and fifty of its domestic subsidiaries filed
voluntary petitions for relief under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy court for the Northern District of Illinois
Eastern Division (the “Bankruptcy court”) (consolidated case number 01-24795).
Comdisco Holding Company, Inc., as the successor company to Comdisco, Inc.,
emerged from bankruptcy under the Plan that became effective on August 12, 2002.
Prior to the effective date of the Plan, Comdisco, Inc. formed Comdisco Holding
Company, Inc., a Delaware corporation (the “Company” or “Comdisco Holding”).
Comdisco, Inc. emerged as a wholly-owned subsidiary of Comdisco Holding. As a
result, Comdisco Holding became the successor to Comdisco, Inc. A copy of the
Plan for Comdisco, Inc., as well as other information related to distributions
of cash and securities pursuant to the Plan can be found in a Current Report on
Form 8-K filed on August 9, 2002 with the SEC by Comdisco, Inc. A copy of the
Plan was filed as an exhibit thereto.
Prior
to the bankruptcy, Comdisco, Inc. provided technology services worldwide to help
its customers maximize technology functionality, predictability and
availability, while freeing them from the complexity of managing their
technology. Comdisco, Inc. leased information technology equipment to a variety
of industries and more specialized equipment to key vertical industries,
including semiconductor manufacturing and electronic
2
assembly,
healthcare, telecommunications, pharmaceutical, biotechnology and manufacturing.
Through its Ventures group (as defined below), Comdisco, Inc. provided equipment
leasing and other financing and services to venture capital-backed
companies.
Implementation
of the Plan resulted in the reorganization of Comdisco, Inc. and its domestic
and foreign subsidiaries into Comdisco Holding and three new primary
subsidiaries: (i) Comdisco Global Holding Company, Inc. (dissolved on September
27, 2004), which managed the sale and run-off of the Company’s reorganized
European IT Leasing operations and assets; (ii) Comdisco, Inc., which managed
the sale and run-off of the Company’s reorganized US Leasing operations and
assets; and (iii) Comdisco Ventures, Inc. (renamed Comdisco Ventures Fund A
LLC), which managed the sale and run-off of the Company’s venture financing
operations and assets (“Ventures”). The Company’s Corporate Asset Management, or
CAM, group was responsible for the sale and run-off of certain corporate and
leasing assets that remained after certain pre-emergence bankruptcy asset sales.
The CAM group’s operations were managed through Comdisco, Inc.
Implementation
of the Plan also resulted in the reorganization of Prism Communication Services,
Inc. and its subsidiaries (“Prism”); as a consequence, Prism became a direct
wholly-owned subsidiary of Comdisco Domestic Holding Company, Inc., which was
itself a direct wholly-owned subsidiary of Comdisco, Inc. The assets of the
Prism entities have been liquidated and the proceeds realized from such
liquidation were distributed to creditors of Prism in accordance with the Plan.
The Prism estates were closed by order of the Bankruptcy court on February 26,
2004.
General
Terms of the Plan of Reorganization
As
more fully described in the Plan, the Company’s business purpose is limited to
the orderly sale or run-off of all of its remaining assets. Pursuant to the Plan
and restrictions contained in its Certificate, the Company is specifically
prohibited from engaging in any business activities inconsistent with its
limited business purpose.
In
very general terms, the Plan contemplated six different classes of claims
against the Comdisco, Inc. bankruptcy estate:
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“Class
C-1” Claims. This class was comprised of secured claims against Comdisco,
Inc.
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·
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“Class
C-2” Claims. This class was comprised of certain priority claims against
Comdisco, Inc., but did not include Administrative Claims or Priority Tax
Claims (as each were defined in the Plan) although such claims had the
same priority as Class C-2 Claims.
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·
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“Class
C-3” Claims. This class was comprised of general unsecured convenience
claims against Comdisco, Inc. that were $15,000 or less and claims in
excess of $15,000, but whose holder elected to reduce his or her claims to
$15,000 in the aggregate and have the reduced single claim reclassified as
a general unsecured convenience
claim.
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·
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“Class
C-4” Claims. The largest class of claims against the Comdisco, Inc.
bankruptcy estate, this class was comprised of general unsecured claims
other than Class C-3 Claims and includes holders of Comdisco, Inc. notes,
bonds, credit lines and other trade debt (the “C-4
creditors”).
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·
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“Class
C-5A” Claims. This class was comprised of equity claims, consisting of
holders of shares of Comdisco, Inc. common stock and other “Interests” as
defined in the Plan. All shares of common stock of Comdisco, Inc. were
cancelled on August 12, 2002 in accordance with the
Plan.
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·
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“Class
C-5B” Claims. This class was comprised of subordinated claims against
Comdisco, Inc.
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The
Plan provided that holders of allowed Class C-1 Claims, allowed Class C-2
Claims, Administrative Claims and Priority Tax Claims were unimpaired. Class C-1
Claims primarily related to discounted lease rentals where the Company generated
cash proceeds by selling the future rental payments for specific domestic lease
contracts on a non-recourse basis.
3
On
August 12, 2002, pursuant to the Plan, the Company, along with its direct
wholly-owned subsidiary, Comdisco, Inc., co-issued variable rate senior secured
notes due 2004 (the “Senior Notes”) in the principal amount of $400 million and
11 percent subordinated secured notes due 2005 (the “Subordinated Notes”) in the
principal amount of $650 million. Further, on September 30, 2002, the Company
issued 4.2 million shares of common stock, $0.01 par value per share (the
“Common Stock”).
On
September 30, 2002, the Company made an initial distribution to holders of
allowed Class C-4 Claims based upon an aggregate allowed amount of approximately
$3.628 billion. Allowed Claims for creditors in Class C-4 received a pro rata
distribution comprised of cash, Senior Notes, Subordinated Notes, new Common
Stock of the Company and rights to the Trust Assets (as defined
below).
Allowed
Claims for Class C-5A received contingent distribution rights (“CDRs”) that
entitle holders to share at increasing percentages in the proceeds realized from
the monetization of the Company’s assets based upon the present value of
distributions made to the C-4 creditors in the bankruptcy estate of Comdisco,
Inc. Pursuant to a Bankruptcy court order dated March 27, 2003, approximately
4,388,000 CDRs were held by the Company’s transfer agent and any distributions
relating to these rights are held by the estate of Comdisco, pending resolution
of the Class C-5A Claims related to the shares purchased pursuant to Comdisco,
Inc.’s Shared Investment Plan (“SIP”). Approximately 2,176,000 of the
aforementioned CDRs related to Class C-5A have been assigned to the Litigation
Trust (as defined in the Plan) in conjunction with settlements reached between
the litigation trustee and some of the senior managers who participated in the
SIP (the “SIP Participants”) or turned over to the litigation trustee according
to an order entered by a Federal Court authorizing turnover of CDR
assets. Approximately 480,000 CDRs were assigned to individuals or
other trustees. Additionally, 92,000 CDRs related to Class C-5A
Claims have been cancelled during the bankruptcy by the Company. The
balance of approximately 1,640,000 CDRs are currently being held by the
Company’s transfer agent and any distributions relating to these rights are
being held by the estate of Comdisco.
There
were no Class C-5B Claims allowed, therefore CDRs related to such C-5B Claims
were cancelled on August 14, 2008 and the funds held for those CDRs were
reallocated to holders of CDRs related to Class C-5A Claims. The
3,732,000 CDRs related to Class C-5B Claims were cancelled by the
Company. As of September 30, 2008, the Company revised certain
estimates utilized in estimating the CDR liability as a result of significant
events and the resolution of various matters that occurred in the fourth quarter
of fiscal year ended 2008. Those events included: (i) the summary
judgments in favor of the Litigation Trust against certain SIP Participants
received on September 24, 2008, (ii) the distribution of the final Allowed Claim
on July 10, 2008, (iii) the withdrawal or dismissal of all remaining
claims in the fourth quarter of the fiscal year 2008, (iv) the closure of the
Disputed Claims Reserve and the final supplemental distribution from the
Disputed Claims Reserve on August 14, 2008, and (v) the cancellation of the
Class C-5B shares in the Disputed Interests Reserve and the reallocation of the
cash balances relating to those shares to the remaining CDR holders of record on
September 25, 2008. As a result of those significant events that
occurred in the fiscal quarter ended September 30, 2008 and as a result of other
facts and circumstances, the Company believed it was also better able to
estimate certain future cash flows in excess of book value that were previously
not considered estimable. However, due to the volatility in the markets for
equity, the Company has not included its fair value estimates in determining the
CDR liability.
Since
September 30, 2008, the Company has estimated, and will continue to estimate,
the CDR liability based on the net equity of the Company after taking into
consideration future operating costs and expenses, and other expected cash
inflows in excess of book value, including estimated future interest income,
estimated recoveries and any potential net distributions from the Litigation
Trust which are currently estimated to be nominal. See
the risk factors discussed in Item 1A. “Risk Factors”, particularly the risks
entitled “Uncertainties Inherent in the CDR Liability Calculation” and
“Uncertainties Inherent in the Determination of Fair Market Value of the
Remaining Portfolio.”
Information
on the CDRs can be found in a Registration Statement on Form 8-A filed by the
Company on August 12, 2002 with the SEC and in the section entitled “Contingent
Distribution Rights” in Item 7, Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
Approximately
$1.347 billion of outstanding claims as of the initial distribution were
Disputed Claims. Pursuant to the Plan, the Company established a reserve for
Disputed Claims in the amount of $450 million (the
4
“Disputed
Claims Reserve”) which was funded based upon a Bankruptcy court order granting
authority to Comdisco, Inc. to estimate certain claims. The Disputed Claims
Reserve was established to fund a claim once the claim was deemed an Allowed
Claim so long as funds were available in the Disputed Claims
Reserve. As all Disputed Claims were resolved as of August 14, 2008,
the Company closed the Disputed Claims Reserve and distributed the remaining
balance of funds and shares in accordance with the Plan.
Historically,
payments and distributions from the Disputed Claims Reserve were made as
appropriate to the holder of any Disputed Claim that had become an Allowed
Claim, on the next Quarterly Distribution Date (as defined in the Plan) after
the date the Disputed Claim had become an Allowed Claim. Such distributions were
based upon the cumulative distributions that would have been made to the holder
of such a claim under the Plan if the Disputed Claim had been allowed on the
Effective Date (as defined in the Plan) and were not limited by the Disputed
Claim amounts previously reserved with respect to such Disputed Claim to the
extent that additional amounts were available in the Disputed Claims Reserve. On
each Quarterly Distribution Date, the Disputed Claims Reserve was reduced by an
amount equal to the amount reserved with respect to each Disputed Claims that
had been resolved during the period.
SIP
Bankruptcy Claims: In February 1998, pursuant to the SIP, the SIP Participants
took out full recourse, personal loans to purchase approximately six million
shares of Comdisco, Inc.’s common stock. In connection therewith, Comdisco, Inc.
executed a guaranty dated February 2, 1998 (the “Guaranty”) providing a guaranty
of the loans in the event of default by the SIP Participants to the lenders
under the SIP (the “SIP Lenders”). On November 29, 2001, the SIP Lenders filed a
master proof of claim in the Comdisco, Inc. bankruptcy in the amount of $133
million (“SIP Guaranty Claim”). The Company and the SIP Lenders subsequently
reached a settlement that was approved by the Bankruptcy court on December 9,
2004. Proofs of Claim were filed by forty-eight of the SIP Participants in the
bankruptcy estate of Comdisco, Inc. The Company objected to such Proofs of
Claim. All SIP Participants (or their respective bankruptcy trustees)
who filed Proofs of Claims have withdrawn such claims and/or the claims have
been dismissed by the Bankruptcy court.
Litigation
Trust: The Plan provided that, under certain circumstances, subrogation rights
that the Company may have against the SIP Participants who participated in the
SIP be placed in a trust for the benefit of C-4 creditors (the “Trust Assets”).
Under the Plan the Litigation Trust is solely responsible for collection of
amounts due on the promissory notes of the SIP Participants who did not take
advantage of the SIP Relief (as defined in the Plan). The Company has
a limited indemnification obligation to the litigation trustee under the
Litigation Trust agreement.
The
Litigation Trust has commenced both state and federal lawsuits to collect on
such SIP Participants’ promissory notes. Six of the sixty-seven SIP Participants
filed personal bankruptcy.
On
September 24, 2008, a federal district court judge entered summary judgments
against twenty-seven of the SIP Participants on their respective SIP Note
obligations and the Litigation Trust has commenced collection actions against
them. The SIP Participants have filed appeals on those
judgments. The federal district court judge has entered orders in the
federal cases ordering that certain CDRs and related proceeds held by the estate
of Comdisco, Inc. and BNY Mellon (holder of CDRs) on behalf of those SIP
Participants be turned over to the Litigation Trust. Pursuant to
these orders, the Company has turned over CDRs and related proceeds and will
continue to do so if additional orders are entered.
As
of November 11, 2009, twelve of these twenty-seven SIP participants have settled
their respective judgments with the Litigation Trust which is also in ongoing
settlement discussions with some of the state and other federal SIP
participants.
Additionally,
the Litigation Trust has filed summary judgments against twenty-five SIP
participants who are defendants in the pending state court
actions. One state SIP Participant has settled.
Please
refer to the quarterly reports filed by the Litigation Trust in the bankruptcy
court for more details. Any proceeds collected by the Litigation Trust, net of
expenses, will be considered Trust Assets and distributed in accordance with the
Plan and litigation trust agreement.
5
SIP
Joinder Action: As reported at Item 3. Legal Proceedings, On January 27, 2006,
certain of the SIP participants filed a joint action in the Circuit Court of
Cook County, Illinois, County Department, Law Division, Case Number 2006L001006
and captioned Bryant Collins, et al v. Nicholas Pontikes, et al. against certain
directors of the former Comdisco, Inc. During the quarter ended
September 30, 2009, a settlement was reached in the action. All
settlement documents have been executed, and a Stipulation and Agreed Order of
Voluntary Dismissal With Prejudice was entered by the court on October 28,
2009. The nominal settlement amount was paid by the former Comdisco,
Inc.’s directors and officer’s insurance policy coverage. See Recent
Developments “SIP Joinder Action.”
Changes
in Governance
On
April 15, 2004, the Bankruptcy court entered an order (the “Order”) granting the
motion (the “Motion”) that was filed on February 17, 2004 by the Company in
furtherance of the Plan. A copy of the Motion was furnished to the SEC on a Form
8-K pursuant to Item 9 on February 18, 2004. The Company also included a copy of
the Motion in its Report to Stakeholders, dated March 2, 2004, that was
distributed to holders of the Company’s common stock, CDRs, and Disputed Claims
remaining in the bankruptcy and also certain other interested
parties.
Pursuant
to and in furtherance of the Order, on August 12, 2004, the following occurred:
The officers of the Company resigned their respective officer positions; the
Board of Directors appointed Randolph I. Thornton, as Chief Executive Officer,
President and Secretary of Comdisco Holding Company, Inc.; the Company filed a
Certificate of Amendment to its Certificate with the State of
Delaware amending the Certificate to provide for a Board of Directors consisting
of one member; four of the five individuals serving on the Board of Directors
resigned their position as Directors (Randolph I. Thornton did not resign and
continues as the sole director); and Randolph I. Thornton’s appointment as
Initial Disbursing Agent became effective. As Initial Disbursing Agent, Mr.
Thornton assumed the roles and responsibilities performed by the former Board of
Directors and officers of the Company, including all measures which are
necessary to complete the administration of the reorganized debtors’ Plan and
Chapter 11 cases.
On
May 1, 2008, Randolph I. Thornton appointed the following employees, Robert E.
T. Lackey, Deborah L. Dompke, Susan Long, Mary Ann Bolster and Michael J.
Salerno, as Authorized Representatives of the Company. These individuals derive
their authority from Mr. Thornton as sole director and officer of the Company
and report directly to him. Approximately eight former employees continue to
periodically assist the Company on a consulting basis.
Filing
of Certificate of Dissolution
Pursuant
to and in furtherance of the Order, the Company filed on August 12, 2004 a
Certificate of Dissolution with the Secretary of State of the State of Delaware
to formally extinguish Comdisco Holding Company, Inc.’s corporate existence with
the State of Delaware except for the purpose of completing the wind down
contemplated by the Plan.
Narrative
Description of Business
General
Since
the Company emerged from Chapter 11 bankruptcy proceedings on August 12, 2002,
the Company’s business activities have been limited to the orderly sale or
run-off of all its existing asset portfolios. Pursuant to the Plan and
restrictions contained in its Certificate, the Company is specifically
prohibited from engaging in any business activities inconsistent with its
limited business purpose. Since emerging from bankruptcy, the Company has not
engaged in any new leasing or financing activities, except for previously
existing customer commitments and to restructure existing equipment leases and
loans to maximize the value of the Company’s assets.
6
Principal
Business Location
The
Company’s operations are primarily conducted through its principal office in
Rosemont, Illinois which occupies leased short-term furnished executive office
space.
Customers
and Competition
Due
to the Company’s limited business purpose, the Company does not expect to be
dependent upon a single customer or group of customers to generate future
investment or revenue opportunities. In addition, the Company’s reorganization
plan specifically prohibits the Company from engaging in any business activities
inconsistent with its limited business purpose.
Employees
On
September 30, 2009, the Company had five U.S. employees (two full-time and three
part-time). No employees are represented by a labor union. The Company
anticipates further reductions in its workforce as the wind down continues.
Approximately eight former employees continue to periodically assist the Company
on a consulting basis.
Other
The
Company does not own any patents, trademarks, licenses, franchises or
concessions that it considers to be material to the Company’s
business.
The
Company’s business is not seasonal; however, quarter-to-quarter results from
operations can vary significantly.
On
September 9, 2009, the Company closed the estate of Comdisco Investment Group,
Inc. On September 11, 2009, in order to facilitate the wind down of
the Company’s foreign subsidiaries, the Company acquired all of the outstanding
shares of Equiplease Limited (“Equiplease”).
Financial
Information about Geographic Areas
See
Note 10 of Notes to Consolidated Financial Statements, which is incorporated in
this section by reference, for information about foreign and domestic
operations.
ITEM
1A. RISK FACTORS
The
following risk factors and other information included in this Annual Report on
Form 10-K should be carefully considered. The risks and uncertainties described
below are not the only ones the Company confronts. Additional risks and
uncertainties not presently known to it or that it currently deems immaterial
also may impair the Company’s business operations and the implementation of the
Plan. If any of the following risks actually occurs, the Company’s business,
financial condition, operating results and the implementation of the Plan could
be materially adversely affected.
Uncertainties
Relating to the Bankruptcy Plan and the Limited Business Plan
The
Company has incurred and will continue to incur significant costs associated
with the administration of the estate of Comdisco, Inc. and in completing the
wind down of operations. The amount of these costs, which are being expensed as
incurred, are expected to have a significant adverse affect on the results of
operations and on the Company’s cash position.
The
Company’s post-bankruptcy business plan is limited to an orderly run-off or sale
of its remaining assets. Pursuant to the Plan and restrictions contained in its
Certificate, the Company is specifically prohibited from
7
engaging
in any business activities inconsistent with its limited business plan. This
business plan is based on numerous assumptions including the anticipated future
performance of the Company in running off its operations, the time frame for the
run-off, general business and economic conditions, and other matters, many of
which are beyond the control of the Company and some of which may not
materialize. As a result, the Company’s ability to effectively complete this
business plan is inherently uncertain. In addition, unanticipated events and
circumstances occurring subsequent to the date of this Annual Report may affect
the actual financial results of the Company’s operations.
Uncertainties
Relating to the Wind Down of Operations
The
Company has reduced the size and complexity of its organizational and systems
infrastructure concurrently with the monetization of its assets. The success of
the Company’s continuing wind down of operations and implementation of an Order
entered by the Bankruptcy court authorizing the organizational systems
infrastructure wind down is dependent on numerous factors, including the timing
and amount of cash received from the monetization of its assets, the ability of
the Disbursing Agent to fulfill the positions of the previous Board of Directors
and executive officers and the ability of the Company to effectively consolidate
its management structure and maintain its operations with limited
personnel.
Impact
of Recoveries by Litigation Trust on the Company’s Obligation To Make Payments
in Respect of Contingent Distribution Rights
As
the present value of distributions to certain C-4 creditors have reached the
100% threshold level of percentage recovery established pursuant to the Plan,
holders of CDRs are entitled to receive payments from the Company equal to 37%
of each dollar available to be distributed to Comdisco stakeholders in
accordance with the Plan. All payments by the Company in respect of CDRs are
made from the Company’s available cash-on-hand and not from funds distributed by
the Litigation Trust. The Company expects to maintain cash reserves sufficient
to make any required payments pursuant to its CDR liability arising from either
the Company’s equity or net distributions from the Litigation
Trust. Any actual net distributions by the Litigation Trust to the
C-4 creditors will increase the Company’s liability to CDR
holders. As of the date of this filing, a reasonable estimate of
future net distributions is not determinable.
Uncertainties
Inherent in the CDR Liability Calculation
The
CDR liability is management’s estimate of the amount of the net equity of the
Company to be shared by holders of CDRs at the sharing percentage of 37%. The
formula used to calculate the net equity of the Company includes variables (e.g.
future operating costs and expenses, estimated future interest income, estimated
recoveries, actual asset values realized, currency fluctuations, etc.) which are
not under the control of the Company. Such variables are inherently uncertain
due to the impact of influences such as time, inflation or deflation, interest
rate changes, foreign currency exchange rate changes, third party credit risks,
international and domestic events, court or tax rulings contrary to the
Company’s expectations, and timing and amounts of distributions to C-4 creditors
by the Litigation Trust.
Uncertainties
Inherent in the Determination of Fair Market Value of the Remaining
Portfolio
The
determination of the fair value of the remaining portfolio of the Company is
management’s estimate of such fair value at a moment in time based on
information available to management at that time. The estimate of fair value is
inherently uncertain due to external factors that could impact the value of
assets remaining in the portfolio. Some of the external factors include time,
inflation and deflation, changes in interest and foreign currency exchange
rates, third party credit risks, domestic and international events, court or tax
rulings contrary to the Company’s expectations, and liquidation events in the
equity portfolio.
8
The
Company’s Liquidity is Dependent on a Number of Factors
The
Company’s liquidity generally depends on cash on hand and cash provided by
operating activities. The Company’s cash flow from operating activities is
dependent on a number of variables, including, but not limited to, market
conditions for the sale of equity securities, global economic and political
conditions, control of operating costs and expenses and the ability of the
Company to dispose or otherwise convert to cash its remaining
assets.
Market
Conditions Have Made It Difficult and May Continue to Make it Difficult for the
Company To Timely Realize the Value of its Warrant and Equity Securities
(collectively, “Equity Investments”)
Market
conditions have adversely affected, and could continue to adversely affect in
the future, the opportunities for the acquisition/merger of the
Internet-related, communications and other high technology and emerging growth
companies that make up the substantial majority of the Company’s Equity
Investments. Additionally, the public market for high technology and other
emerging growth companies is extremely volatile. Such volatility has adversely
affected, and could continue to adversely affect, the ability of the Company to
realize value from its Equity Investments. Exacerbating these conditions is the
fact that some of the Equity Investments held by the Company may be subject to
lockup agreements restricting its ability to sell until several months after an
initial public offering. Without an available liquidity event, the Company may
be unable to sell its Equity Investments. As a result, the Company, or Windspeed
on behalf of the Company, may not be able to generate gains or receive proceeds
from the sale of Equity Investments and the Company’s business and financial
results may suffer. Additionally, liquidation preferences may continue to be
offered by companies in the Company’s portfolio to parties willing to lend to
such companies. The liquidation preferences have had, and could continue to
have, an adverse impact on the value of the Company’s Equity Investments. For
those Equity Investments without a public trading market, the realizable value
of the Company’s Equity Investments could prove to be lower than the carrying
value currently reflected in the financial statements.
The
estimated fair market value of the Company’s equity securities was determined in
consultation with Windspeed based on a variety of factors, including, but not
limited to, quoted trading levels for publicly-traded securities, last round
valuation for privately held securities, industry and company multiples,
industry acceptance in the market place, liquidity discounts due to lock ups,
estimated revenue, and customer, product and market share growth by the
respective companies in the portfolio. Substantially all of these factors are
outside the control of the Company and are subject to significant volatility.
There can be no assurance that the Company will be able to realize the estimated
fair market value. Furthermore, the current estimated fair market value is
subject to significant concentration risk, as of September 30, 2009, 96 percent
of the estimated fair market value of the entire portfolio is concentrated in
ten individual companies and approximately 80 percent of the estimated amount is
in three individual companies.
Uncertainties
in Collections and Recoveries
The
Company believes that its collections and recoveries on accounts previously
written off could provide future but diminishing cash flows. The amount and
timing of such collections and recoveries are dependent upon many factors
including any offsets or counterclaims that may be asserted against the Company
and the ability of a former lessee or debtor or its respective estate to pay the
claim or any portion thereof. Some of these factors are beyond the control of
the Company.
The
Payment of Dividends and Distributions
All
funds generated from the Company’s remaining asset portfolios are required by
the Plan to be used to satisfy liabilities of the Company and, to the extent
funds are available, to pay dividends on the Company’s Common Stock and to make
distributions with respect to the CDRs in the manner and priorities set forth in
the Plan. Because of the composition and nature of its asset portfolios, the
Company expects to generate funds from the sale or run-off of its asset
portfolios at a decreasing rate over time. The Company has material restrictions
on its ability, and does not expect or intend, to make any significant
investments in new or additional assets. Accordingly, the amount of funds
potentially available to pay dividends on the Company’s Common Stock and to make
distributions
9
with
respect to the CDRs is limited to the funds in excess of the Company’s
liabilities that may be generated from the remaining asset
portfolios.
The
Company Faces a Number of Uncertainties Around the Settlement of Domestic and
International Tax Positions.
The
Company continues to wind down its domestic and international operations. Prior
to a subsidiary being dissolved, the Company may have to obtain tax clearances
at the state level domestically and on an international level in the country in
which the subsidiary was incorporated. The Company has estimated the amounts for
such tax settlements; however, actual settlements could differ from such
estimates and will be reflected as adjustments in future financial statements
when probable and estimable. In conjunction with the wind down of its
operations, the Company has outsourced the domestic and international tax
functions to a third party service provider.
Limited
Public Market for Common Stock
There
is currently a limited public market for the Company’s Common Stock. Holders of
the Company’s Common Stock may, therefore, have difficulty selling their Common
Stock, should they decide to do so. In addition, there can be no assurances that
such markets will continue or that any shares of Common Stock which may be
purchased may be sold without incurring a loss. Any such market price of the
Common Stock may not necessarily bear any relationship to the Company’s book
value, assets, past operating results, financial condition or any other
established criteria of value, and may not be indicative of the market price for
the Common Stock in the future. Further, the market price of the Common Stock
may be volatile depending on a number of factors, including the status of the
Company’s business performance, its limited business purpose, industry dynamics,
news announcements or changes in general economic conditions.
Limited
Public Market for Contingent Distribution Rights
There
is currently a limited public market for the Company’s CDRs. Holders of the
Company’s CDRs may, therefore, have difficulty selling their CDRs, should they
decide to do so. In addition, there can be no assurances that such markets will
continue or that any CDRs which may be purchased may be sold without incurring a
loss. Any such market price of the CDRs may not necessarily bear any
relationship to the Company’s book value, assets, past operating results,
financial condition or any other established criteria of value, and may not be
indicative of the market price for the CDRs in the future. Further, the market
price of the CDRs may be volatile depending on a number of factors, including
the status of the Company’s business performance, industry dynamics, news
announcements or changes in general economic conditions.
Impact
of Interest Rates and Foreign Exchanges Rates
Increases
in interest rates could impact the value of certain of the Company’s assets and
a strengthening of the US dollar could impact the value of the Company’s
remaining net foreign assets consisting primarily of tax receivables and tax
liabilities, a bank guarantee in the Netherlands and recoveries on two former
lease receivables in Europe.
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not
applicable.
ITEM
2. PROPERTIES
Since
October 31, 2004, the Company has leased short-term furnished executive office
space for all of its operations at 5600 N. River Road in Rosemont, Illinois. The
terms of its rental agreement provide the Company with the ability to match its
actual leased space with its declining space requirements. The
Company does not own any property.
10
ITEM
3. LEGAL PROCEEDINGS
Bankruptcy
Proceeding
The
Company continues to appear before the Bankruptcy court from time to time to
clarify and administer Plan matters and the wind down of the operations of the
Company.
SIP
Joinder Action
On January 27, 2006, certain of the SIP
participants filed a joint action in the Circuit Court of Cook County, Illinois,
County Department, Law Division, Case Number 2006L001006 and captioned Bryant
Collins, et al v. Nicholas Pontikes, et al. against certain directors of the
former Comdisco, Inc. During the quarter ended September 30, 2009, a
settlement was reached in the action. All settlement documents have
been executed, and a Stipulation and Agreed Order of Voluntary Dismissal With
Prejudice was entered by the court on October 28, 2009. The nominal
settlement amount was paid by the former Comdisco, Inc.’s directors and
officer’s insurance policy coverage.
Litigation Trust Termination
Motion
On March 16, 2006, a motion was filed
in the Bankruptcy court for the Northern District of Illinois on behalf of
certain SIP Participants who had filed proofs of claim in the Comdisco, Inc.
bankruptcy ("SIP Claimants"). The motion sought an order from the Bankruptcy
court terminating the Litigation Trust. On July 20, 2006, the Bankruptcy court
judge denied the motion of the SIP Claimants. On August 18, 2006, the SIP
Claimants appealed the Bankruptcy court judge's denial of their motion. On
January 30, 2007, the federal district court judge affirmed the denial of the
motion. The SIP Claimants appealed the denial to the US Circuit Court of Appeals
for the 7th Circuit. A mandatory mediation was held on April 20, 2007. The
mediation was adjourned and no settlement was achieved by the parties. The
parties briefed the appeal and oral arguments were held before the Appellate
Court on November 26, 2007. On August
13, 2008, the Appellate Court ruled and dismissed the appeal for want of
jurisdiction. As of the date of this filing, there have been no further
proceedings on this matter.
Litigation
Trust Summary Judgments
On
September 24, 2008, a federal district court judge entered summary judgments
against twenty-seven of the SIP Participants on their respective SIP Note
obligations and the Litigation Trust has commenced collection actions against
them. The SIP Participants have filed appeals on those
judgments. The federal district court judge has entered orders in the
federal cases ordering that certain CDRs and related proceeds held by the estate
of Comdisco, Inc. and BNY Mellon (holder of CDRs) on behalf of those SIP
Participants be turned over to the Litigation Trust. Pursuant to
these orders, the Company has turned over CDRs and related proceeds and will
continue to do so if additional orders are entered.
As
of November 11, 2009, twelve of these twenty-seven SIP participants have settled
their respective judgments with the Litigation Trust which is also in ongoing
settlement discussions with some of the state and other federal SIP
participants.
Additionally,
the Litigation Trust has filed summary judgments against twenty-five SIP
participants who are defendants in the pending state court
actions. One state SIP Participant has settled.
Please
refer to the quarterly reports filed by the Litigation Trust in the bankruptcy
court for more details. Any proceeds collected by the Litigation Trust, net of
expenses, will be considered Trust Assets and distributed in accordance with the
Plan and litigation trust agreement.
11
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There
were no matters submitted to a vote of security holders during the three months
ended September 30, 2009.
PART
II
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
In
connection with the September 30, 2002 initial distribution under the Plan, the
Company issued approximately 3.74 million shares of Common Stock to holders of
Allowed Claims in Class C-4. Also, approximately 460,000 additional shares of
Common Stock were deposited in the Disputed Claims Reserve for future
distribution pending the outcome of Disputed Claims. The last 1,600
shares in the Disputed Claims Reserve were distributed during two allowed claim
distributions on November 14, 2007 and on July 10, 2008 and a final supplemental
distribution on August 14, 2008. The Company’s Common Stock currently
trades on the Over-the-Counter Bulletin Board system under the symbol “CDCO.OB”.
In addition, the Contingent Distribution Rights currently trade on the
Over-the-Counter Bulletin Board system under the symbol “CDCOR.OB”.
Over-the-Counter Bulletin Board quotations reflect inter-dealer prices, without
retail mark-up, markdown or commission and may not necessarily represent
actual transactions.
The
Plan authorizes, but does not require, the issuance of additional shares of the
Company’s Common Stock to make distributions to holders of CDRs. The Company has
chosen to distribute cash to holders of CDRs in lieu of shares of Common Stock
(see discussion following for distributions made to holders of CDRs). More
information on distributions to holders of CDRs can be found in a Registration
Statement on Form 8-A filed by the Company on August 12, 2002 with the SEC and
in the section Contingent Distribution Rights in Item 7, Management’s Discussion
and Analysis of Financial Condition and Results of Operations.
Common
Stock
As
of December 1, 2009, there were 242 shareholders of record of the Company’s
Common Stock. The following table sets forth the dividend adjusted high and low
sales prices for the Common Stock of Comdisco Holding Company, Inc. and cash
dividends paid during fiscal 2009 and 2008.
|
|
2009 |
2008
|
||||||||||||||||||||||||
Quarter
|
High
|
Low
|
Dividends
|
High
|
Low
|
Dividends
|
|||||||||||||||||||
First
|
$ | 9.70 | $ | 6.50 | -- | $ | 12.00 | $ | 9.11 | -- | |||||||||||||||
Second
|
8.00 | 6.70 | -- | 10.00 | 6.61 | -- | |||||||||||||||||||
Third
|
8.25 | 6.51 | -- | 10.88 | 9.30 | -- | |||||||||||||||||||
Fourth
|
8.50 | 7.00 | -- | 10.01 | 9.01 | -- |
The
Company’s transfer agent and registrar is BNY Mellon Shareowner Services, 480
Washington Boulevard Jersey City, New Jersey, 07310. The shareholder relations
telephone number is (800) 851-9677 and the internet address is http://www.melloninvestor.com.
12
The
Company intends to treat the dividend distributions for federal income tax
purposes as part of a series of liquidating distributions in complete
liquidation of the Company. Aggregate total dividend distributions on the
Company’s Common Stock were as follows (in thousands):
Aggregate
Payment
|
||||||
May
2003
|
$ | 307,773 | ||||
June
2003
|
60,019 | |||||
September
2003
|
199,782 | |||||
December
2003
|
50,365 | |||||
May
2004
|
48,267 | |||||
March
2005
|
52,447 | |||||
January
2006
|
20,172 | |||||
December
2006
|
25,748 | |||||
$ | 764,573 |
Contingent
Distribution Rights
For
financial reporting purposes, the Company records CDRs as a liability and as an
operating expense although the CDRs trade over-the-counter.
The
Plan entitles holders of CDRs to share at increasing percentages in the proceeds
realized from the Company’s assets based upon the present value of distributions
to certain C-4 creditors in the bankruptcy estate of Comdisco,
Inc. As of September 30, 2009, the sharing percentage was 37%, which
is the maximum sharing percent. As of December 1, 2009, there were
1,920 holders of record of the Company’s CDRs and 148,448,188 outstanding
CDRs.
The
Company maintains sufficient cash reserves for operations and the potential CDR
liability arising from either the Company’s equity or any potential net
distributions from the Litigation Trust to C-4 creditors. The outcome
and timing of the actual net distributions from the Litigation Trust will impact
both the timing and the amount of future dividends and CDR
payments.
Aggregate
total distributions with respect to the CDRs were as follows (in
thousands):
Aggregate
Payment
|
Per
CDR
|
||||||||
May
2003
|
$ | 2,730 | $ | .01793 | |||||
June
2003
|
2,468 | .01621 | |||||||
September
2003
|
13,370 | .08780 | |||||||
December
2003
|
7,827 | .05140 | |||||||
March
2004
|
2,848 | .01870 | |||||||
May
2004
|
11,892 | .07810 | |||||||
December
2004
|
14,953 | .09820 | |||||||
March
2005
|
22,171 | .14560 | |||||||
January
2006
|
5,558 | .03650 | |||||||
March
2006
|
3,761 | .02470 | |||||||
December
2006
|
6,852 | .04500 | |||||||
September
2007
|
22,841 | .15000 | |||||||
September
2008
|
893 | .00602 | |||||||
Total
CDR payments before reallocation
|
$ | 118,164 | $ | .77616 | |||||
September
2008 reallocation
|
$ | -- | $ | .01984 | |||||
Total
CDR payments
|
$ | 118,164 | $ | .79600 |
13
See
“Critical Accounting Policies” and “Contingent Distribution Rights” in Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” for information on the CDR liability.
Recent
Sales of Unregistered Securities
None.
Repurchases
of Common Stock
There
were no repurchases of Common Stock in the fourth quarter of fiscal 2009 or
during the fiscal year 2009. The Company does not regularly repurchase shares
nor does the Company have a share repurchase plan.
ITEM
6. SELECTED FINANCIAL DATA
Not applicable.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and related notes included elsewhere in this
Annual Report on Form 10-K for the fiscal year ended September 30, 2009. This
discussion and analysis also contains forward-looking statements and should also
be read in conjunction with the disclosures and information contained in the
sections of this Annual Report on Form 10-K entitled “Disclosure Regarding
Forward-Looking Statements” and “Risk Factors Relating to the
Company.”
THE
COMPANY EMERGED FROM CHAPTER 11 BANKRUPTCY PROCEEDINGS ON AUGUST 12, 2002. THE
PURPOSE OF THE COMPANY IS TO SELL, COLLECT OR OTHERWISE REDUCE TO MONEY IN AN
ORDERLY MANNER THE REMAINING ASSETS OF THE CORPORATION. PURSUANT TO THE
COMPANY’S PLAN AND RESTRICTIONS CONTAINED IN THE COMPANY’S CERTIFICATE, THE
COMPANY IS SPECIFICALLY PROHIBITED FROM ENGAGING IN ANY BUSINESS ACTIVITIES
INCONSISTENT WITH ITS LIMITED BUSINESS PURPOSE. ACCORDINGLY, WITHIN THE NEXT FEW
YEARS, IT IS ANTICIPATED THAT THE COMPANY WILL HAVE REDUCED ALL OF ITS ASSETS TO
CASH AND MADE DISTRIBUTIONS OF ALL AVAILABLE CASH TO HOLDERS OF ITS COMMON STOCK
AND CONTINGENT DISTRIBUTION RIGHTS IN THE MANNER AND PRIORITIES SET FORTH IN THE
PLAN. AT THAT POINT, THE COMPANY WILL CEASE OPERATIONS. THE COMPANY FILED ON
AUGUST 12, 2004 A CERTIFICATE OF DISSOLUTION WITH THE SECRETARY OF STATE OF THE
STATE OF DELAWARE TO FORMALLY EXTINGUISH COMDISCO HOLDING COMPANY, INC.’S
CORPORATE EXISTENCE WITH THE STATE OF DELAWARE EXCEPT FOR THE PURPOSE OF
COMPLETING THE WIND DOWN CONTEMPLATED BY THE PLAN.
AS
A RESULT OF THE REORGANIZATION AND THE IMPLEMENTATION OF FRESH-START REPORTING,
AS FURTHER DESCRIBED HEREIN, THE COMPANY’S RESULTS OF OPERATIONS AFTER JULY 31,
2002 ARE NOT COMPARABLE TO RESULTS REPORTED IN PRIOR PERIODS FOR COMDISCO,
INC.
14
General
The
Company’s operations continued to wind down during fiscal year 2009 compared to
prior years. The Company’s assets at September 30, 2009 consist primarily of
cash, tax receivables, and equity securities. The timing on collections on the
tax receivables and the sale of equity securities is uncertain. The equity
securities portfolio requires liquidity events before these assets can be
converted to cash. The Company expects that proceeds from the disposition of
equity securities will provide future cash flows in excess of the current
carrying value of these assets. In addition, the Company, as a former lessor,
has a number of leases in default whereby collection efforts are underway to
support a recovery on the account. Receipts, if any, will be in excess of the
carrying value of these assets because the related lease receivables were
previously written-off.
Equity
Investments: The Company holds common stock, preferred stock and warrants
(collectively "Equity Investments"). The Company carries its common stock and
preferred stock investments in public companies at fair market value and in
private companies at the lower of cost or estimated fair market value in its
financial statements. Any warrants held by the Company in private companies are
carried at zero value. Any write-downs in the carrying value of such Equity
Investments in private companies are considered permanent for financial
reporting purposes. See Note 5 of Notes to Consolidated Financial Statements and
"Critical Accounting Policies". It is management's expectation that the amount
in private company investments ultimately realized on Equity Investments will,
in the aggregate, exceed the amount reflected in the financial statements as of
September 30, 2009, which is approximately $1,029,000. The Company estimates
that the realizable value, net of management fees and sharing, at September 30,
2009 for its Equity Investments in private companies is approximately
$2,215,000. The Company's estimate of the fair value of its private
company investments was made in consultation with Windspeed Acquisition Fund GP,
LLC ("Windspeed"), a professional investment management group which the Company
engaged to manage the Company's Equity Investments on an ongoing basis in
February 2004. As reported on a Current Report on Form 8-K filed by
the Company on March 19, 2009, the Windspeed management agreement was extended
on March 16, 2009 until February 20, 2011. There is no assurance as
to the timing or the amount the Company will ultimately realize on the Equity
Investments. Management's expectations are subject to the risk factors discussed
in Item 1A. “Risk Factors”, entitled "Market Conditions Have Made It Difficult
and May Continue to Make It Difficult for the Company to Timely Realize on the
Value of Its Warrant and Equity Securities."
Collections
and recoveries: The Company has potential collections and recoveries on accounts
previously written off. A substantial number of such recoveries involve prior
lessees or debtors now in bankruptcy and in whose respective case the Company
has filed and is pursuing a claim to maximize its recoveries. The Company’s cost
basis in these accounts is nominal. The amount and timing of such collections
and recoveries, if any, are subject to the risk factors discussed in Item 1A.
“Risk Factors”, particularly the risk entitled “Uncertainties in Collections and
Recoveries.”
Subsidiaries: The
Company has significantly reduced the number of its domestic and international
subsidiaries from ninety-four to six subsidiaries as of December 1, 2009. To the
extent that such subsidiaries were Reorganized Debtors, the Company has closed
the related estates. On September 9, 2009, the Company closed the
estate of Comdisco Investment Group, Inc. On September 11, 2009, in
order to facilitate the wind down of the Company’s foreign subsidiaries, the
Company acquired all of the outstanding shares of Equiplease.
Disputed
Claims relating to the Comdisco, Inc. Bankruptcy estate
Since
emerging from bankruptcy proceedings on August 12, 2002, the Company focused on
the resolution of Disputed Claims. Upon emergence, and pursuant to the Plan, the
Company established a Disputed Claims Reserve for Disputed Claims estimated in
the amount of $450 million. The Company has resolved all Disputed
Claims, closed the Disputed Claims Reserve and distributed all the funds and
shares in accordance with the Plan.
Trust
Assets and Litigation Trust
Pursuant
to the Plan, the Litigation Trust is solely responsible for collecting from, and
has filed lawsuits against, all SIP Participants who had not accepted relief.
Any judgments against the SIP Participants, net of fees and expenses, are
considered Trust Assets as defined in the Plan, and will be distributed by the
Litigation Trust in
15
accordance
with the Plan. The Litigation Trust files periodic reports with the Bankruptcy
court. These reports provide more information on the
litigation.
Holders
of CDRs will earn an amount resulting from any distributions from the net
proceeds of Trust Assets to C-4 creditors in accordance with the Plan. The
Litigation Trust is solely responsible for distributing the net proceeds from
Trust Assets to C-4 creditors, while the Company is solely responsible for
making CDR payments. The Company maintains sufficient cash reserves
for the potential CDR liability related to its equity and any potential net
distributions by the Litigation Trust. The outcome and the timing of the actual
net distributions by the Litigation Trust will impact both the timing and the
amount of future dividends and CDR payments. See this Item 7 below for “Critical
Accounting Policies” and Item 1A. “Risk Factors” for a discussion of the “Impact
of Recoveries by Litigation Trust on the Company’s Obligation To Make Payments
in Respect of Contingent Distribution Rights”, “Uncertainties Inherent in the
CDR Liability Calculation” and “Uncertainties Inherent in the Determination of
Fair Market Value of the Remaining Portfolio”.
Emergence
from Bankruptcy
Since
the Company emerged from Chapter 11 bankruptcy proceedings on August 12, 2002,
the Company’s business activities have been limited to the orderly sale or
run-off of all of its existing asset portfolios. Pursuant to the Plan and
restrictions contained in its Certificate, the Company is specifically
prohibited from engaging in any business activities inconsistent with its
limited business purpose. Since emerging from bankruptcy, the Company has not
engaged in any new leasing or financing activities, except for previously
existing customer commitments and to restructure existing equipment leases and
loans to maximize the value of the Company’s assets.
All
funds generated from the Company’s remaining asset portfolios are required by
the Plan to be used to satisfy liabilities of the Company and, to the extent
funds are available, to pay dividends on the Company’s Common Stock and to make
distributions with respect to the CDRs in the manner and priorities set forth in
the Plan. There were no payments to CDR holders in the fiscal year ended
September 30, 2009 and $893,000 in the fiscal year ended September 30,
2008. In addition, during the fiscal year ended September 30,
2008, the Company reallocated $2,945,000 plus accrued interest of $395,000 to
CDR holders related to cash balances formerly held in reserve for the disputed
interests reserve for Class C-5B Claims. No such reallocation was made during
the fiscal year ended September 30, 2009. See Item 1. “General Terms
of the Plan of Reorganization” and Part II, Item 5 “Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities”. There were no dividends paid during the fiscal year
ended September 30, 2009 and 2008. Because of the composition and
nature of its remaining assets, the Company expects to generate funds from the
sale or collection of its remaining assets at a decreasing rate over
time.
The
Company maintains sufficient cash reserves for the potential CDR liability
related to its equity and any potential recoveries and net distributions by the
Litigation Trust to C-4 creditors. The outcome and timing of the
actual net distributions by the Litigation Trust will impact both the timing and
the amount of future dividends and CDR payments. See Item 7 below for
“Critical Accounting Policies” and Item 1A. “Risk Factors” for a discussion of
the “Impact of Recoveries by Litigation Trust on the Company’s Obligation To
Make Payments in Respect of Contingent Distribution Rights”, “Uncertainties
Inherent in the CDR Liability Calculation” and “Uncertainties Inherent in the
Determination of Fair Market Value of the Remaining Portfolio”.
The
Company has material restrictions on its ability, and does not expect, to make
significant investments in new or additional assets. The Company continually
evaluates opportunities for the orderly sale and collection of its remaining
assets. Accordingly, within the next few years, it is anticipated that the
Company will have reduced all of its assets to cash, resolved all litigation and
made distributions of all available cash to holders of its Common Stock and CDRs
in the manner and priorities set forth in the Plan and completed all regulatory
filings. At that point, the Company will cease operations.
Critical
Accounting Policies
The
Company’s consolidated financial statements are prepared in accordance with U.S.
generally accepted accounting principles. The preparation of these financial
statements requires the Company’s management to use estimates and assumptions
that affect reported amounts of assets and liabilities, revenues and expenses
and
16
disclosure
of contingent assets and liabilities. These estimates are subject to known and
unknown risks, uncertainties and other factors that could materially impact the
amounts reported and disclosed in the consolidated financial
statements.
The
SEC issued Financial Reporting Release No. 60, “Cautionary Advice Regarding
Disclosure About Critical Accounting Policies” which recommends that companies
provide additional disclosure and analysis of those accounting policies
considered most critical.
The
Company believes the following to be among the most critical judgment areas in
the application of its accounting policies:
·
|
CDRs
and CDR Liability: The Plan entitled holders of Comdisco Holding’s CDRs to
share at increasing percentages in the proceeds realized from the
Company’s assets based upon the present value of distributions to certain
C-4 creditors pursuant to the bankruptcy estate of Comdisco,
Inc.
|
|
The
Company estimates the CDR liability based on the net equity of the Company
after taking into consideration future operating costs and expenses, and
other expected cash inflows in excess of book value, including estimated
future interest income, estimated recoveries and any potential net
distributions from the Litigation Trust which are currently estimated to
be nominal. See the risk factors discussed in Item 1A. “Risk
Factors”, particularly the risks entitled “Uncertainties Inherent in the
CDR Liability Calculation” and “Uncertainties Inherent in the
Determination of Fair Market Value of the Remaining
Portfolio.”
|
||
·
|
Equity
Investments In Private Companies: Equity investments in private companies
consist primarily of small investments in approximately 50 private
companies. The Company carries its common stock and preferred stock
investments in private companies at the lower of cost or estimated fair
market value in the financial statements. Warrants in non-public companies
are carried at zero value. The Company, in consultation with Windspeed,
which provides ongoing management of the Company’s portfolio in equity
investments, regularly estimates the value of investments in private
companies and adjusts carrying values when market and customer specific
events and circumstances indicate that such assets might be impaired. All
write-downs are considered permanent impairments for financial reporting
purposes. At September 30, 2009, the carrying value of the Company’s
equity investments in private companies was approximately $1,029,000 and
the estimated fair market value was approximately
$2,215,000.
|
|
·
|
Income
Taxes: The Company establishes liabilities or reduces assets
for uncertain tax positions when the Company believes certain tax
positions are not more likely than not of being sustained if
challenged. Each fiscal quarter, the Company evaluates these
uncertain tax positions and adjusts the related tax assets and liabilities
in light of changing facts and
circumstances.
|
The
above listing is not intended to be a comprehensive list of all the Company’s
accounting policies. Please refer to the Company’s consolidated financial
statements and notes thereto which contain the Company’s significant accounting
policies and other disclosures required by accounting principles generally
accepted in the United States of America.
Basis
of Presentation
In
this annual report on Form 10-K, references to “the Company,” “Comdisco
Holding,” “we,” “us” and “our” mean Comdisco Holding Company, Inc., its
consolidated subsidiaries and Comdisco Ventures, Inc. (renamed to Comdisco
Ventures Fund A LLC), and its predecessors, except in each case where the
context indicates otherwise. References to “Comdisco, Inc.” mean Comdisco, Inc.
and its subsidiaries, other than the Prism entities, prior to the Company’s
emergence from bankruptcy on August 12, 2002, except where the context indicates
otherwise.
17
Recent
Developments
SIP
Joinder Action
On January 27, 2006, certain of the SIP
participants filed a joint action in the Circuit Court of Cook County, Illinois,
County Department, Law Division, Case Number 2006L001006 and captioned Bryant
Collins, et al v. Nicholas Pontikes, et al. against certain directors of the
former Comdisco, Inc. During the quarter ended September 30, 2009, a
settlement was reached in the action. All settlement documents have
been executed, and a Stipulation and Agreed Order of Voluntary Dismissal With
Prejudice was entered by the court on October 28, 2009. The nominal
settlement amount was paid by the former Comdisco, Inc.’s directors and
officer’s insurance policy coverage.
Litigation Trust Termination
Motion
On March 16, 2006, a motion was filed
in the Bankruptcy court for the Northern District of Illinois on behalf of
certain SIP Participants who had filed proofs of claim in the Comdisco, Inc.
bankruptcy ("SIP Claimants"). The motion sought an order from the Bankruptcy
court terminating the Litigation Trust. On July 20, 2006, the Bankruptcy court
judge denied the motion of the SIP Claimants. On August 18, 2006, the SIP
Claimants appealed the Bankruptcy court judge's denial of their motion. On
January 30, 2007, the federal district court judge affirmed the denial of the
motion. The SIP Claimants appealed the denial to the US Circuit Court of Appeals
for the 7th Circuit. A mandatory mediation was held on April 20, 2007. The
mediation was adjourned and no settlement was achieved by the parties. The
parties briefed the appeal and oral arguments were held before the Appellate
Court on November 26, 2007. On August
13, 2008, the Appellate Court ruled and dismissed the appeal for want of
jurisdiction. As of the date of this filing, there have been no further
proceedings on this matter.
Litigation
Trust Summary Judgments
On
September 24, 2008, a federal district court judge entered summary judgments
against twenty-seven of the SIP Participants on their respective SIP Note
obligations and the Litigation Trust has commenced collection actions against
them. The SIP Participants have filed appeals on those
judgments. The federal district court judge has entered orders in the
federal cases ordering that certain CDRs and related proceeds held by the estate
of Comdisco, Inc. and BNY Mellon (holder of CDRs) on behalf of those SIP
Participants be turned over to the Litigation Trust. Pursuant to
these orders, the Company has turned over CDRs and related proceeds and will
continue to do so if additional orders are entered.
As
of November 11, 2009, twelve of these twenty-seven SIP participants have settled
their respective judgments with the Litigation Trust which is also in ongoing
settlement discussions with some of the state and other federal SIP
participants.
Additionally,
the Litigation Trust has filed summary judgments against twenty-five SIP
participants who are defendants in the pending state court
actions. One state SIP Participant has settled.
Please
refer to the quarterly reports filed by the Litigation Trust in the bankruptcy
court for more details. Any proceeds collected by the Litigation Trust, net of
expenses, will be considered Trust Assets and distributed in accordance with the
Plan and litigation trust agreement.
Records
Destruction
On June 26, 2008, the Company obtained
an order from the Bankruptcy court authorizing it to destroy or transfer certain
of its stored paper and electronic records attributed to periods prior to
January 1, 1997. As of the date of this filing, the Company destroyed
substantially all of those records.
18
Subsidiary
Changes
On
September 9, 2009, the Company closed the estate of Comdisco Investment Group,
Inc. On September 11, 2009, in order to facilitate the wind down of
the Company’s foreign subsidiaries, the Company acquired all of the outstanding
shares of Equiplease.
Results of Operations
Certain
reclassifications and immaterial corrections have been made to the prior period
financial statements as discussed in Note 2 of Notes to Consolidated Financial
Statements.
Fiscal
Year Ended September 30, 2009 Compared to the Fiscal Year Ended September 30,
2008
Revenue
(in
thousands)
|
Year ended
September
30,
|
Percent
Increase
(Decrease)
|
Explanation
of Change
|
||||
2009
|
2008
|
||||||
Gain
on sale of equity and warrant securities
|
$ 3,949
|
$ 8,198
|
(52%)
|
Equity
securities, which are managed by Windspeed, represent the primary
remaining revenue generating asset. See “Overview”
for additional information. (A)
|
|||
Interest
income
|
559
|
1,962
|
(72%)
|
Interest
earned on cash balances. (B)
|
|||
Miscellaneous
income
|
25
|
76
|
(67%)
|
Miscellaneous
receipts.
|
|||
Total
Revenue
|
$ 4,533
|
$ 10,236
|
(56%)
|
A)
|
The
decrease in gains on sale of equity holdings for the year ended September
30, 2009 relates to a decrease in the liquidations of positions in public
and private companies from October 1, 2008 through September 30, 2009 as
compared to the period from October 1, 2007 through September 30,
2008.
|
|
B)
|
Interest
income earned in the fiscal year ended September 30, 2009 is lower due to
lower interest rates.
|
Costs
and Expenses
(in
thousands)
|
Year
ended
September
30,
|
Percent
Increase
(Decrease)
|
Explanation
of Change
|
||||||||||
2009
|
2008
|
||||||||||||
Selling,
general and
administrative
|
$ 4,477
|
$ 5,693
|
(21%)
|
SG&A
costs have decreased with the continued wind-down of
operations.
|
|||||||||
Write-down
of privately held securities
|
22
|
1,564
|
(99%)
|
(A)
|
|||||||||
Contingent
distribution rights
|
(1,038)
|
8,896
|
+100%
|
(B)
|
|||||||||
Bad
debt recoveries
|
(2,741)
|
(1,336)
|
+100%
|
Collections
& recoveries. (C)
|
|||||||||
Foreign
exchange loss
|
207
|
95
|
+100%
|
Translation
losses for foreign entities that have been substantially
liquidated.
|
|||||||||
Minority
interest
|
542
|
--
|
N/A
|
||||||||||
$ 1,469
|
$ 14,912
|
(90%)
|
19
(A)
|
The
decrease in write-down of privately held securities during the fiscal year
ended September 30, 2009 from the fiscal year ended September 30, 2008 was
due to one company which ultimately filed an Assignment for Benefit of
Creditors during 2008. See Item 7 “Critical Accounting
Policies” for more information.
|
|
(B)
|
As
a result of significant events and the resolution of various matters that
occurred in the fourth quarter of fiscal year ended September 30, 2008,
the Company’s management revised the estimate of its liability to CDR
holders as of September 30, 2008, resulting in significantly higher
expense than in 2009. The reduction in CDR expense during 2009
is primarily the result of the lower estimated future interest
income, higher estimated future selling, general and
administrative costs and higher tax expense offset in part by higher gain
on sale of equity investments. See Item 7 "Critical Accounting Policies"
for a discussion of the potential liability from any future recoveries and
distributions by the litigation trustee.
|
|
(C)
|
The
increase in proceeds during the fiscal year ended September 30, 2009 is
primarily due to a collection from a settlement agreement in the Just for
Feet bankruptcy estate of approximately $1,750,000 received in January
2009.
|
Selling,
General and Administrative Expenses
The
following table summarizes selling, general and administrative expenses (in
thousands):
Year
ended September 30,
|
||||||||
2009
|
2008
|
|||||||
Compensation
and benefits
|
$ | 1,941 | $ | 2,323 | ||||
Outside
professional services
|
1,594 | 2,583 | ||||||
Other
expenses
|
942 | 787 | ||||||
$ | 4,477 | $ | 5,693 |
Income
Taxes
See
Note 4 – Income Taxes of Notes to Consolidated Financial Statements for details
about the Company’s income tax provision. Income taxes are subject to the risk
factor “The Company Faces a Number of Uncertainties Around the Settlement of
Domestic and International Tax Positions” discussed in Item 1A. “Risk
Factors”.
During
the fiscal years ended September 30, 2009 and 2008, the Company recorded US tax
expense of $34,000 and $89,000, respectively.
During
the fiscal year ended September 30, 2009, the Company recorded a $15,000 tax
benefit for its Canadian operations as a result of increased interest income
accruals and a settlement of an audit in Quebec. During the fiscal
year ended September 30, 2008, the Company recorded a $207,000 tax expense for
its Canadian operations as a result of increased interest accruals.
During
the fiscal year ended September 30, 2009, the Company recorded a $601,000 tax
expense for its Mexican operations as a result of the following
events: 1) During the quarter ended December 31, 2008, the Company
received an income tax refund from the Mexican Ministry of Finance in the amount
of approximately $128,000 and wrote down, for financial reporting purposes, the
remaining income tax refund balance of approximately $770,000, 2) During the
quarter ended March 31, 2009, the Company re-filed with the Mexican Ministry of
Finance providing additional documentation which, during the quarter ended June
30, 2009, resulted in the Company receiving approximately $169,000 of the
remaining balance which was recorded as income tax benefit. During
the fiscal year ended September 30, 2008, the Company recorded a tax benefit of
approximately $88,000 related to its Mexican subsidiary, primarily as a result
of an asset tax refund.
During
the quarter ended September 30, 2009, the Company established liabilities of
approximately $360,000 to cover potential tax obligations for final tax
clearance in various jurisdictions.
20
Net
Earnings (Loss)
Net
earnings were approximately $2,084,000, or $0.52 per share-basic and diluted,
for the fiscal year ended September 30, 2009 compared to net loss of
approximately $(4,884,000), or $(1.21) per share-basic and diluted, for the
fiscal year ended September 30, 2008.
Off-Balance
Sheet Arrangements
The
Company does not maintain any off-balance sheet arrangements, transactions,
obligations or other relationships with unconsolidated entities that would be
expected to have a material current or future effect upon the Company’s
financial condition or results of operations.
Liquidity
and Capital Resources
The
Company’s liquidity generally depends on cash on hand and cash provided by
operating activities. The Company’s cash flow from operating activities is
dependent on a number of variables, including, but not limited to, market
conditions for the sale of Equity Investments, control of operating costs and
expenses and the ability of the Company to dispose or otherwise convert to cash
its remaining assets. All funds generated from the collection of remaining
assets are required by the Plan to be used to satisfy liabilities of the Company
and, to the extent funds are available, to pay dividends on the Company’s Common
Stock and to make distributions with respect to the CDRs in the manner and
priorities set forth in the Plan. Because of the composition and nature of its
remaining assets, the Company expects to generate funds from the sale or
collection of its remaining assets at a decreasing rate over time.
At
September 30, 2009, the Company had unrestricted cash and cash equivalents of
approximately $66,065,000, an increase of approximately $8,511,000 compared to
September 30, 2008. Net cash provided by operating activities for the fiscal
year ended September 30, 2009 was $7,889,000. The effect of exchange rate
changes on cash balances held in foreign currencies was an increase in cash and
cash equivalents of approximately $782,000 for the fiscal year ended September
30, 2009. Net cash used by the Company in the acquisition of all of
the outstanding shares of Equiplease was $160,000.
During
the year, approximately $3,475,000 of proceeds net of fees were generated from
the Windspeed managed warrant and equity portfolio. Additionally,
approximately $5,762,000 of tax receipts were received related to the Company’s
Canadian and Mexican subsidiaries and approximately $3,315,000 of proceeds were
received from interest income, bad debt recoveries and other revenue. The
Company’s cash expenditures were primarily operating expenses of $4,568,000
(principally professional services and compensation).
The
Company’s current and future liquidity depends on cash on hand, proceeds from
the sale of Equity Investments, recoveries and interest income. The Company
expects its cash on hand and cash flow from operations to be sufficient to fund
operations and to meet its obligations (including its obligation to make
payments to CDR holders) under the Plan for the foreseeable future.
Net
cash provided by operating activities was $7,889,000 in fiscal year 2009
compared to net cash provided by operating activities was $9,353,000 in fiscal
year 2008.
Dividends
The
Company intends to treat the dividend distributions for federal income tax
purposes as part of a series of liquidating distributions in complete
liquidation of the Company. Aggregate total dividend distributions on the
Company’s Common Stock were as follows (in thousands):
Aggregate
Payment
|
||||
May
2003
|
$ | 307,773 | ||
June
2003
|
60,019 | |||
September
2003
|
199,782 |
21
December
2003
|
50,365 | |||
May
2004
|
48,267 | |||
March
2005
|
52,447 | |||
January
2006
|
20,172 | |||
December
2006
|
25,748 | |||
$ | 764,573 |
Contingent
Distribution Rights
For
financial reporting purposes, the Company records CDRs as a liability and as an
operating expense although the CDRs trade over-the-counter.
The
Plan entitles holders of CDRs to share at increasing percentages in the proceeds
realized from the Company’s assets based upon the present value of distributions
to certain C-4 creditors in the bankruptcy estate of Comdisco, Inc. As of
December 1, 2009, the sharing percentage was 37% which is the maximum sharing
percent and there were 1,920 holders of record of the Company’s CDRs and there
were 148,448,188 outstanding CDRs.
The
Company maintains sufficient cash reserves for operations and the potential CDR
liability arising from either the Company’s equity and any potential net
distributions from the Litigation Trust to the C-4 creditors. The
outcome and the timing of the actual net distributions from the Litigation Trust
will impact both the timing and the amount of future dividends and CDR
payments.
Aggregate
total distributions with respect to the CDRs were as follows (in
thousands):
Aggregate
Payment
|
Per
CDR
|
|||||||
May
2003
|
$ | 2,730 | $ | .01793 | ||||
June
2003
|
2,468 | .01621 | ||||||
September
2003
|
13,370 | .08780 | ||||||
December
2003
|
7,827 | .05140 | ||||||
March
2004
|
2,848 | .01870 | ||||||
May
2004
|
11,892 | .07810 | ||||||
December
2004
|
14,953 | .09820 | ||||||
March
2005
|
22,171 | .14560 | ||||||
January
2006
|
5,558 | .03650 | ||||||
March
2006
|
3,761 | .02470 | ||||||
December
2006
|
6,852 | .04500 | ||||||
September
2007
|
22,841 | .15000 | ||||||
September
2008
|
893 | .00602 | ||||||
Total
CDR payments before reallocation
|
$ | 118,164 | $ | .77616 | ||||
September
2008 reallocation
|
$ | -- | $ | .01984 | ||||
Total
CDR payments
|
$ | 118,164 | $ | .79600 |
During
the quarter ended September 30, 2008, the Company revised certain estimates
utilized in estimating the CDR liability as a result of significant events and
the resolution of various matters that occurred in the fourth quarter of fiscal
year ended 2008. Those events included: (i) the summary judgments in
favor of the Litigation Trust against certain SIP Participants received on
September 24, 2008, (ii) the distribution of the final Allowed Claim on July 10,
2008, (iii) the withdrawal or dismissal of all remaining claims in
the fourth quarter of the fiscal year 2008, (iv) the closure of the Disputed
Claims Reserve and the final supplemental distribution from the Disputed Claims
Reserve on August 14, 2008, and (v) the cancellation of the Class C-5B shares in
the Disputed Interests Reserve and the reallocation of the cash balances
relating to those shares to the remaining CDR holders of record on September 25,
2008. As a result of those significant events that occurred in the
fiscal quarter ended September 30, 2008 and as
22
a
result of other facts and circumstances, the Company believes it is also better
able to estimate certain future cash flows in excess of book value that were
previously not considered estimable. However, due to the volatility in the
markets for equity, the Company has not included its fair value estimates of its
private equity investments in determining the CDR liability.
Since
September 30, 2008, the Company has estimated, and will continue to estimate,
the CDR liability based on the net equity of the Company after taking into
consideration future operating costs and expenses, and other expected cash
inflows in excess of book value, including estimated future interest income,
estimated recoveries and any potential net distributions from the Litigation
Trust which are currently estimated to be nominal. See
the risk factors discussed in Item 1A. “Risk Factors”, particularly the risks
entitled “Uncertainties Inherent in the CDR Liability Calculation” and
“Uncertainties Inherent in the Determination of Fair Market Value of the
Remaining Portfolio.”
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable.
23
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX
TO FINANCIAL STATEMENTS
Report
Of Independent Registered Public Accounting Firm
|
25
|
Consolidated
Statements Of Operations for the years ended September 30, 2009 and
2008
|
26
|
Consolidated
Balance Sheets as of September 30, 2009 and 2008
|
27
|
Consolidated
Statements Of Stockholders’ Equity for the years ended September 30, 2009
and 2008
|
28
|
Consolidated
Statements Of Cash Flows for the years ended September 30, 2009 and
2008
|
29
|
Consolidated
Statements Of Cash Flows, continued for the years ended September 30, 2009
and 2008
|
30
|
Notes
To Consolidated Financial Statements
|
31
|
24
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of Comdisco Holding Company,
Inc.:
We
have audited the accompanying consolidated balance sheets of Comdisco Holding
Company, Inc. and subsidiaries (the “Company”) as of September 30, 2009 and
2008, and the related consolidated statements of operations, stockholders’
equity, and cash flows for each of the years then ended. These
consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated
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. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Comdisco Holding
Company, Inc. and subsidiaries as of September 30, 2009 and 2008, and the
results of their operations and their cash flows for the years then ended, in
conformity with U.S. generally accepted accounting principles.
As
discussed in Note 4 to the consolidated financial statements, the Company
changed its method of accounting for uncertain tax positions effective October
1, 2007.
As
discussed in Note 7 to the consolidated financial statements, the Company
changed its method of accounting for financial instruments that are measured at
fair value on a recurring basis effective October 1, 2008.
/s/
KPMG LLP
Chicago,
Illinois
December
11, 2009
25
COMDISCO
HOLDING COMPANY, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(in
thousands except per share data)
Year
ended
September
30,
|
Year
ended
September
30,
|
|||||||
2009
|
2008
|
|||||||
Revenue
|
||||||||
Gain
on sale of equity and warrant securities, net of fees
|
$ | 3,949 | $ | 8,198 | ||||
Interest
income
|
559 | 1,962 | ||||||
Miscellaneous
income
|
25 | 76 | ||||||
Total
revenue
|
4,533 | 10,236 | ||||||
Costs
and expenses
|
||||||||
Selling,
general and administrative
|
4,477 | 5,693 | ||||||
Write-down
of privately held securities
|
22 | 1,564 | ||||||
Contingent
Distribution Rights
|
(1,038 | ) | 8,896 | |||||
Bad
debt recoveries
|
(2,741 | ) | (1,336 | ) | ||||
Foreign
exchange loss
|
207 | 95 | ||||||
Minority
interest
|
542 | -- | ||||||
Total
costs and expenses
|
1,469 | 14,912 | ||||||
Earnings
(loss) before income taxes
|
3,064 | (4,676 | ) | |||||
Income
tax expense
|
980 | 208 | ||||||
Net
earnings (loss)
|
$ | 2,084 | $ | (4,884 | ) | |||
Basic
and diluted earnings (loss) per common share
|
$ | 0.52 | $ | (1.21 | ) |
See
accompanying notes to consolidated financial statements.
26
COMDISCO
HOLDING COMPANY, INC.
CONSOLIDATED
BALANCE SHEETS
(in
thousands except number of shares and per share data)
September
30, 2009
|
September
30, 2008
|
|||||||
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 66,065 | $ | 57,554 | ||||
Cash
– legally restricted
|
4,994 | 4,982 | ||||||
Equity
investments
|
1,052 | 1,211 | ||||||
Income
tax receivables
|
4,105 | 11,667 | ||||||
Receivables
from securities sold
|
361 | 2 | ||||||
Other
receivables
|
25 | 31 | ||||||
Other
assets
|
288 | 17 | ||||||
Total
assets
|
$ | 76,890 | $ | 75,464 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Accounts
payable
|
$ | 246 | $ | 380 | ||||
Income
tax payables
|
10,235 | 10,139 | ||||||
Other
liabilities:
|
||||||||
Accrued
compensation
|
1,167 | 1,237 | ||||||
Contingent
Distribution Rights
|
21,431 | 22,469 | ||||||
Other
liabilities
|
346 | 187 | ||||||
Total
other liabilities
|
22,944 | 23,893 | ||||||
Total
liabilities
|
33,425 | 34,412 | ||||||
Stockholders’
equity
|
||||||||
Common
stock $.01 par value. Authorized
10,000,000 shares; issued 4,200,000 shares; 4,029,055 shares outstanding at both September 30, 2009 and September 30, 2008 |
72 | 72 | ||||||
Additional
paid-in capital
|
44,136 | 43,775 | ||||||
Accumulated
other comprehensive income
|
23 | 55 | ||||||
Retained
earnings
|
3,555 | 1,471 | ||||||
Common
stock held in treasury, at cost; 170,945
shares at both September 30, 2009 and September 30, 2008 |
(4,321 | ) | (4,321 | ) | ||||
Total
stockholders’ equity
|
43,465 | 41,052 | ||||||
$ | 76,890 | $ | 75,464 |
See
accompanying notes to consolidated financial statements.
27
COMDISCO
HOLDING COMPANY, INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
(in
thousands)
Common
Stock |
Additional
Paid-in capital |
Accumulated
other comprehensive income |
Retained
earnings |
Common
stock placed in treasury |
Total
|
|||||||||||||||||||
Balance
at September 30, 2007
|
$ | 72 | $ | 43,775 | $ | 5,470 | $ | 2,556 | $ | (4,321 | ) | $ | 47,552 | |||||||||||
Cumulative
effect of adoption of ASC Subtopic 740-10
|
3,799 | 3,799 | ||||||||||||||||||||||
Net
loss
|
(4,884 | ) | (4,884 | ) | ||||||||||||||||||||
Change
in unrealized gain
|
(5,415 | ) | (5,415 | ) | ||||||||||||||||||||
Total
comprehensive income
|
(10,299 | ) | ||||||||||||||||||||||
Balance
at September 30, 2008
|
72 | 43,775 | 55 | 1,471 | (4,321 | ) | 41,052 | |||||||||||||||||
Acquisition
of minority interest
|
361 | 361 | ||||||||||||||||||||||
Net
earnings
|
2,084 | 2,084 | ||||||||||||||||||||||
Change
in unrealized gain
|
(32 | ) | (32 | ) | ||||||||||||||||||||
Total comprehensive income
|
2,052 | |||||||||||||||||||||||
Balance
at September 30, 2009
|
$ | 72 | $ | 44,136 | $ | 23 | $ | 3,555 | $ | (4,321 | ) | $ | 43,465 |
See
accompanying notes to consolidated financial statements.
28
COMDISCO
HOLDING COMPANY, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in
thousands)
Year
Ended
September 30, 2009 |
Year
Ended
September 30, 2008 |
|||||||
Cash
flows from operating activities:
|
||||||||
Equity
and warrant proceeds net of fees
|
$ | 3,475 | $ | 8,037 | ||||
Interest,
bad debt recoveries and other revenue
|
3,315 | 3,326 | ||||||
Selling,
general and administrative expenses
|
(4,568 | ) | (5,976 | ) | ||||
Contingent
distribution rights payments
|
-- | (893 | ) | |||||
Income
tax receipts
|
5,762 | 4,859 | ||||||
Other,
including cash acquired
|
(95 | ) | -- | |||||
Net
cash provided by operating activities
|
7,889 | 9,353 | ||||||
Cash
flows from investing/financing activities:
|
||||||||
Acquisition
of Equiplease shares
|
(160 | ) | -- | |||||
Decrease
in legally restricted cash
|
-- | 32 | ||||||
Net
cash (used in) investing/provided by financing activities
|
(160 | ) | 32 | |||||
Effective
of exchange rates on cash and cash equivalents
|
782 | -- | ||||||
Net
increase in cash and cash equivalents
|
8,511 | 9,385 | ||||||
Cash
and cash equivalents at beginning of period
|
57,554 | 48,169 | ||||||
Cash
and cash equivalents at end of period
|
$ | 66,065 | $ | 57,554 |
See
accompanying notes to consolidated financial statements.
29
COMDISCO
HOLDING COMPANY, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in
thousands)
Year
Ended
September 30, 2009 |
Year
Ended
September 30, 2008 |
|||||||
Reconciliation
of net earnings (loss) to net cash provided by operating
activities:
|
||||||||
Net
earnings
(loss)
|
$ | 2,084 | $ | (4,884 | ) | |||
Adjustments
to reconcile net earnings to net cash provided by operating
activities:
|
||||||||
Income
tax receipts
|
6,741 | 4,651 | ||||||
Contingent
Distribution Rights
|
(1,038 | ) | 8,003 | |||||
Selling,
general, and administrative expenses
|
(91 | ) | (38 | ) | ||||
Write-down
of privately held securities
|
22 | 1,564 | ||||||
Receivables
of securities sold
|
(361 | ) | (2 | ) | ||||
Minority
interest expense, net of cash transfer
|
372 | -- | ||||||
Other,
including foreign exchange
|
160 | 59 | ||||||
Net
cash provided by operating activities
|
$ | 7,889 | $ | 9,353 |
See
accompanying notes to consolidated financial statements.
30
COMDISCO
HOLDING COMPANY, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
September
30, 2009, and 2008
Note
1 - Reorganization
On
July 16, 2001, Comdisco, Inc. and 50 of its domestic subsidiaries filed
voluntary petitions for relief under Chapter 11 of the United States Bankruptcy
Code in the Bankruptcy Court (consolidated case number 01-24795) (the “Filing”).
Comdisco Holding Company, Inc., as the successor company to Comdisco, Inc., for
SEC filing purposes, emerged from bankruptcy under a confirmed plan of
reorganization (the First Amended Joint Plan of Reorganization (the “Plan”))
that became effective on August 12, 2002 (the “Effective Date”). For financial
reporting purposes only, however, the effective date for implementation of
fresh-start reporting was July 31, 2002.
Implementation
of the Plan resulted in the reorganization of Comdisco, Inc. and its domestic
and foreign subsidiaries into Comdisco Holding Company, Inc. and three new
primary subsidiaries: (i) Comdisco Global Holding Company, Inc. (dissolved on
September 27, 2004), which managed the sale and run-off of the Company’s
reorganized European IT Leasing operations and assets; (ii) Comdisco, Inc.,
which managed the sale and run-off of the Company’s reorganized US Leasing
operations and assets; and (iii) Comdisco Ventures, Inc. (renamed Comdisco
Ventures Fund A LLC), which managed the sale and run-off of the Company’s
venture financing operations and assets (“Ventures”). The Company’s Corporate
Asset Management group (“CAM”) was responsible for the sale and run-off of
certain assets that remained after certain pre-emergence bankruptcy asset sales.
The CAM group’s operations were managed through Comdisco, Inc. Implementation of
the Plan also resulted in the reorganization of Prism Communication Services,
Inc. and its subsidiaries (“Prism”).
Comdisco
Holding Company, Inc. was formed on August 8, 2002 for the purpose of selling,
collecting or otherwise reducing to money in an orderly manner the remaining
assets of the Company and all of its direct and indirect subsidiaries, including
Comdisco, Inc. As more fully described in the Plan, the Company’s business
purpose is limited to the orderly sale or run-off of all its remaining assets.
Pursuant to the Plan and restrictions contained in its Certificate, the Company
is specifically prohibited from engaging in any business activities inconsistent
with its limited business purpose.
Consummation
of the Plan in August 2002 resulted in (i) the distribution of cash totaling
approximately $2.2 billion; (ii) the issuance of variable rate senior secured
notes due 2004 in aggregate principal amount of $400 million (the “Senior
Notes”); (iii) the issuance of 11% subordinated secured notes due 2005 in
aggregate principal amount of $650 million (the “Subordinated Notes”); (iv) the
issuance of 4.2 million shares of new common stock (“Common Stock”); (v) the
issuance of contingent distribution rights (the “CDRs”) to holders of the
predecessor company’s common stock; and (vi) the cancellation of the predecessor
company’s notes, notes payable, common stock and stock options.
Note
2 - Summary of Significant Accounting Policies
Basis
of Presentation
In
this annual report on Form 10-K, references to “the Company,” “Comdisco
Holding,” “we,” “us” and “our” mean Comdisco Holding Company, Inc., its
consolidated subsidiaries and Comdisco Ventures, Inc., and its predecessors,
except in each case where the context indicates otherwise. References to
“Comdisco, Inc.” mean Comdisco, Inc. and its subsidiaries, other than the Prism
entities, prior to the Company’s emergence from bankruptcy on August 12, 2002,
except where the context indicates otherwise.
During
the quarter ended December 31, 2008, management determined that it had not
correctly accounted for one of the inputs of the CDR liability calculation and
certain severance costs of a limited number of remaining employees. As a
result, the financial position and results of operations for the twelve months
ended September 30, 2009 reflect an increase to contingent distribution rights
expense and corresponding contingent distribution rights liability in the amount
of approximately $219,000 and a reduction to selling, general and administrative
expenses and accrued compensation of approximately $52,000.
31
During
the quarter ended March 31, 2009, management determined that it had not
correctly accounted for a minority interest in a limited
partnership. During the Company’s review and financial analysis
of the wind-down of its Canadian entities, the Company determined that, since
the inception of a certain Canadian limited partnership in 1988, it had not
properly accounted for the minority interest held in that partnership. Based on
financial records of the Canadian limited partnership, the Company recorded
minority interest expense of approximately $549,000 (including the foreign
exchange impact) and a corresponding decrease to contingent distribution rights
expense and contingent distribution rights liability in the amount of
approximately $203,000, resulting in a net reduction in earnings of
approximately $346,000 for the twelve months ended September 30,
2009.
During
the quarter ended September 30, 2009, management determined that
a liability to cover potential tax obligations for final tax clearance
in various jurisdictions should have been recorded in a prior period. Based on
financial records, the Company has recorded income tax expense of $360,000 and a
reduction in CDR liability expense of $133,000 for a net earnings impact of
$227,000.
Management
determined that the impact of these errors on previously issued interim and
annual consolidated financial statements was not material and determined that
the impact of correcting these errors in the interim and annual consolidated
financial statements was not material, and therefore reflected the corrections
in the respective quarterly periods.
The Company’s policy is to expense
legal costs as they are incurred.
Nature
of Operations
Comdisco
Holding Company, Inc. was formed on August 8, 2002 for the purpose of selling,
collecting or otherwise reducing to money in an orderly manner the remaining
assets of the Company and all of its direct and indirect subsidiaries, including
Comdisco, Inc. Prior to the bankruptcy, Comdisco, Inc. provided technology
services worldwide to help its customers maximize technology functionality,
predictability, and availability, while freeing them from the complexity of
managing their technology. Comdisco, Inc. offered leasing to key vertical
industries, including semiconductor manufacturing and electronic assembly,
healthcare, telecommunications, pharmaceutical, biotechnology and manufacturing.
Through its Comdisco Ventures group, Comdisco, Inc. provided equipment leasing
and other financing and services to venture capital-backed
companies.
On
September 11, 2009, in order to facilitate the wind down of the Company’s
foreign subsidiaries, the Company acquired all of the outstanding shares of
Equiplease, which owns a 1% interest in one of the Company’s Canadian
subsidiaries.
Use
of Estimates
The
preparation of the consolidated 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 reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries. Intercompany accounts and transactions have been
eliminated.
Translation
Adjustments
All
assets and liabilities denominated in foreign currencies are translated at the
exchange rate on the balance sheet date. Revenues, costs and expenses are
translated at average rates of exchange prevailing during the
period. Due to the substantially complete liquidation of its
foreign subsidiaries, translation adjustments are
32
included
in revenue if the adjustments are a gain and in cost and expenses if the
adjustments are a loss in the consolidated statements of
operations.
Income
Taxes
The
Company uses the asset and liability method to account for income
taxes. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences between the
financial settlement carrying amount of existing assets and liabilities and
their respective tax basis. The Company continues to provide a
valuation allowance for the remaining value of the deferred tax assets due to
uncertainties regarding future earnings. The Company establishes
liabilities or reduces assets for uncertain tax positions when the Company
believes certain tax positions are not more likely than not of being sustained
if challenged. Each fiscal quarter, the Company evaluates these
uncertain tax positions and adjusts the related tax assets and liabilities in
light of changing facts and circumstances.
Cash
and Cash Equivalents
Cash
and cash equivalents are comprised of highly liquid debt instruments with
original maturities of 90 days or less.
Equity
Investments
Marketable
equity securities: The Company classifies all marketable equity securities as
available-for-sale. These marketable equity securities are carried at fair
value, based on quoted market prices, with unrealized gains and losses excluded
from earnings and reported in accumulated other comprehensive income
(loss).
Equity
investments in private companies: Equity investments in private companies for
which there is no readily determinable fair value are carried at the lower of
cost or estimated fair market value as determined by the Company in consultation
with Windspeed Acquisition Fund GP, LLC (“Windspeed”). The Company, in
consultation with Windspeed, identifies and records losses on equity investments
in private companies when market and company specific events and circumstances
indicate that such assets might be impaired. The Company recorded a
write-down of equity securities for the year ended September 30, 2009 for
approximately $22,000. The Company recorded a write-down of equity
securities for the year ended September 30, 2008 for approximately $1,564,000
related to primarily one investment. All write-downs are considered
permanent impairments for financial reporting purposes.
Warrants:
The Company’s investments in warrants (received in connection with its lease or
other financings) are initially recorded at zero cost and carried in the
consolidated financial statements as follows:
|
·
|
Warrants
that meet the criteria for classification as available-for-sale are
carried at fair value based on quoted market prices with unrealized gains
excluded from earnings and reported in accumulated other comprehensive
income.
|
|
·
|
Warrants
that do not meet the criteria for classification as available-for-sale
continue to be carried at zero
value.
|
Contingent
Distribution Rights
The
Company estimates the CDR liability based on the net equity of the Company after
taking into consideration future operating costs and expenses, and other
expected cash inflows in excess of book value, including estimated future
interest income, estimated recoveries and the potential net distributions from
the Litigation Trust which are currently estimated to be
nominal. See the risk factors discussed in Item 1A. “Risk
Factors”, particularly the risks entitled “Uncertainties Inherent in the CDR
Liability Calculation” and “Uncertainties Inherent in the Determination of Fair
Market Value of the Remaining Portfolio.”
33
Earnings
Per Common Share
Earnings
per common share-basic are computed by dividing the net earnings (loss) to
common stockholders by the weighted average number of common shares outstanding
for the period.
Note
3 - Changes in Accounting
Effective October 1, 2007, the Company
adopted ASC Subtopic 740-10, "Accounting for Uncertainty in Income Taxes” which
clarifies the accounting for income taxes by prescribing the minimum recognition
threshold a tax position is required to meet before being recognized in the
financial statements. ASC Subtopic 740-10 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The impact of adopting this standard is
discussed in Note 4 - Income Taxes of Notes to Consolidated Financial
Statements.
Effective
October 1, 2008, the Company adopted the FASB ASC
Subtopic 820-10, “Fair Value Measurements” (“ASC Subtopic
820-10”). ASC Subtopic 820-10 defines fair value, establishes
a framework for measuring fair value in generally accepted accounting principles
and expands disclosures about fair value measurements. ASC Subtopic
820-10 applies to previous accounting pronouncements that require or permit fair
value measurements. The disclosures required by ASC Subtopic 820-10
are included in Note 7 – Fair Value Measurements of Notes to Consolidated
Financial Statements.
On October 1, 2008, the Company adopted
ASC Subtopic 825-10 “The Fair Value Option for Financial Assets and Financial
Liabilities. ASC Subtopic 825-10 permits entities to choose to elect, at
specified election dates, to measure eligible financial instruments at fair
value. The adoption of ASC Subtopic 825-10 did not have a material impact
on the Company’s financial condition or results of operations. The
disclosures required by ASC Subtopic 825-10 are included in Note 7 – Fair Value
Measurements of Notes to Consolidated Financial Statements.
On
April 1, 2009, the Company adopted ASC Subtopic 855-10, “Subsequent Events”
(“ASC Subtopic 855-10”), which establishes general standards of accounting and
disclosure for events that occur after the balance sheet date but before
financial statements are issued. ASC Subtopic 855-10 sets forth the
period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements, the circumstances under
which an entity should recognize events or transactions occurring after the
balance sheet date in its financial statements, and the disclosures that an
entity should make about events or transactions that occurred after the balance
sheet date. The adoption of ASC
Subtopic 855-10 did not have a material impact on the Company’s financial
condition or results of operations. The impact of adopting this
standard is discussed in Note 11 – Subsequent Events of Notes to Consolidated
Financial Statements.
In
June 2009, the FASB issued statement No. 168 “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles”
(“ASU 2009-01”) which establishes the FASB Accounting Standards Codification to
become the source of authoritative U.S. generally accepted accounting principles
to be applied by nongovernmental entities. The Accounting Standards
Codification (the “Codification”) will supersede all existing non-SEC accounting
and reporting standards. The Codification is effective for interim or
annual financial periods ending after September 15, 2009. The
adoption did not have a material impact on the Company’s financial condition or
results of operations.
Note
4 - Income Taxes
The
geographical sources of earnings (loss) before income taxes were as follows (in
thousands):
Year ended September 30, | ||||||||
2009
|
2008
|
|||||||
United
States
|
$ | 3,936 | $ | (3,779 | ) | |||
Outside
United States
|
(872 | ) | (897 | ) | ||||
$ | 3,064 | $ | (4,676 | ) |
34
The
components of the income tax expense were as follows (in
thousands):
Year ended September 30, | ||||||||
2009
|
2008
|
|||||||
Current:
|
||||||||
United
States
|
$ | 34 | $ | 89 | ||||
Outside
United States
|
946 | 119 | ||||||
Deferred:
|
-- | -- | ||||||
United
States
|
-- | -- | ||||||
Outside
United States
|
-- | -- | ||||||
$ | 980 | $ | 208 |
The
Company had zero income tax payments in the fiscal year end September 30, 2009
and paid $100,000 in the fiscal year end September 30, 2008.
The
reasons for the difference between the U.S. federal income tax rate and the
effective income tax rate for earnings were as follows:
Year ended September 30, | ||||||||
2009
|
2008
|
|||||||
U.S.
federal income tax rate
|
34.00 | % | (34.00 | )% | ||||
Increase
(reduction) resulting from:
|
||||||||
State
income taxes, net of U.S. federal tax benefit
|
0.00 | (4.80 | ) | |||||
Foreign
income tax rate differential
|
40.57 | 9.99 | ||||||
Non-deductible
CDR expenses
|
(11.52 | ) | 64.69 | |||||
Unrealized
gain on foreign exchange
|
(8.12 | ) | 0.69 | |||||
Change
in valuation allowance
|
(16.82 | ) | (29.54 | ) | ||||
Adjustment to deferred tax assets | (4.88 | ) | -- | |||||
Other,
net
|
(1.25 | ) | (2.58 | ) | ||||
Effective
income tax rate
|
31.98 | % | 4.45 | % |
Deferred
tax assets at September 30, 2009 and 2008 were as follows (in
thousands):
2009
|
2008
|
|||||||
Deferred
tax assets:
|
||||||||
Foreign
loss carryforwards
|
$ | 6,486 | $ | 7,029 | ||||
U.S.
NOL C/F - 382 Limit
|
-- | -- | ||||||
U.S.
and state NOL carryforward
|
132,098 | 132,643 | ||||||
AMT
credit carryforwards
|
74,547 | 74,519 | ||||||
Gross
deferred tax assets
|
213,131 | 214,191 | ||||||
Less:
valuation allowance
|
(213,131 | ) | (214,191 | ) | ||||
Net
deferred tax assets
|
$ | -- | $ | -- |
In
connection with fresh-start accounting, Comdisco, Inc.’s assets and liabilities
were recorded at their respective fair market values. Deferred tax assets and
liabilities were recognized for the tax effects of the differences
35
between
the fair values and the tax bases of the Company’s assets and liabilities. In
addition, deferred tax assets were recognized for future use of the company’s
net operating losses and other tax credits.
The
Company’s emergence from bankruptcy on July 31, 2002 for financial statement
purposes, constituted an ownership change under section 382 of the Internal
Revenue Code and the use of any of the Company’s NOLs and tax credits generated
prior to the ownership change, that were not reduced pursuant to the provisions
discussed above, would be subject to an overall annual limitation.
The Company believes the section 382 NOL limitation should have been reduced to
zero in prior years as the Company has been winding down and no longer is
operating its trade or business that generated the NOL. In the 2008 and
2009 financial statements, the Company has written off the NOLs, subject to
limitation under section 382, which has no impact on income tax expense or the
consolidated balance sheet due to the full valuation allowance on the NOL.
The Company continues to provide a valuation allowance for the remaining value
of the deferred tax assets due to uncertainties regarding future
earnings.
For
financial reporting purposes, the Company has $40,247,000 of foreign net
operating loss carryforwards, most of which have no expiration date. The Company
has recognized a valuation allowance of $6,486,000 to offset this deferred tax
asset. At September 30, 2009, the Company has available for U.S. federal income
tax purposes the following carryforwards (in thousands):
Year
scheduled to expire
|
Net
operating loss
|
||||
2022
|
$ | 35,423 | |||
2023
|
256,578 | ||||
2024
|
37,101 | ||||
2025
|
34,055 | ||||
$ | 363,157 |
For
U.S. federal income tax purposes, the Company has $74,547,000 of alternative
minimum tax (“AMT”) credit carryforwards available to reduce regular taxes in
future years. AMT credit carryforwards do not have an expiration date. The
Company does not believe that it is more likely than not that the Company will
generate sufficient future taxable income exclusive of reversing temporary
differences to realize the benefit of the AMT credit
carryforwards. As such, the Company has recognized a valuation
allowance of $74,547,000 to offset this deferred tax asset.
The
Company files income tax returns in the U.S. federal jurisdiction, the State of
Illinois and foreign jurisdictions. As discussed in Note 3, Changes in
Accounting of Notes to Consolidated Financial Statements, the Company adopted
ASC Subtopic 740-10 effective October 1, 2007 (which is the first day of the
Company's current fiscal year).
As of the date of this filing, the only
federal tax years open to exam are fiscal years ended September 30, 2005 through
September 30, 2008.
As of September 30, 2009, in the State
of Illinois, the Company was under audit for the tax years ended September 30,
2006 and 2007. The Company does not expect any additional tax
payments to be due as a result of this audit. There are no other
significant state audits in progress.
During the year ended September 30,
2009, the Company established liabilities of approximately $360,000 to cover
potential tax obligations for final tax clearance in various
jurisdictions.
The Company's Canadian subsidiary,
Comdisco Canada Limited, currently is in the process of resolving several tax
matters with federal and provincial tax authorities in Canada. The more
significant tax matters include, but are not limited to, a tax audit performed
by the Canada Revenue Agency ("CRA") for tax years ended September 30, 2001
through 2003 which was completed on September 29, 2008 and amended tax returns
and "Notices of Objection" to reassessments which were filed for several other
tax years. The Company continues to advance matters with the provinces of
Ontario and Quebec in respect of Notices of Objection and amended tax returns
filed
36
for
several tax years in those provinces. The open federal tax years for the
Canadian subsidiary are tax years ended September 30, 1998, 1999, 2002, and 2005
through 2008. The open tax years for the province of Ontario are tax years ended
September 30, 1998 and 2004 through 2008. The open tax year for the province of
Quebec is the tax year ended September 30, 1999. The open tax year for the
province of Alberta is the tax year ended September 30, 1999.
During
the fiscal year ended September 30, 2008, the Company’s Canadian subsidiary
received tax refunds totaling approximately USD $5,000,000 from the
Canadian taxing authorities. During the fiscal year ended September
30, 2009, the Company’s Canadian subsidiary received tax refunds totaling
approximately USD $6,000,000 from the Canadian taxing
authorities. However, such receipts are anticipated to be used to
satisfy Canadian taxes payable.
The Company’s UK subsidiary,
Equiplease, has open tax years in Canada for the years ended August 19, 1990
through August 19, 2009. The open tax year in the UK is the year
ended August 19, 2008.
The Company adopted the provisions of
ASC Subtopic 740-10 effective October 1, 2007. As a result of the implementation
of ASC Subtopic 740-10, the Company recognized a cumulative decrease in its
liability for taxes of $3,799,000, which was accounted for as an increase to the
October 1, 2007 balance of retained earnings. As of September 30, 2007, the
Company reported a net receivable balance for its Canadian
subsidiary. As part of the adoption of ASC Subtopic 740-10, the
Company now reports a gross receivable and a gross payable.
A
reconciliation of the beginning and ending amount of unrecognized tax benefits
is as follows (in thousands):
September
30,
|
September
30,
|
|
2009
|
2008
|
|
Beginning
balance
|
$
4,640,000
|
5,652,000
|
Decreases
related to settlements of certain tax audits
|
(274,000)
|
443,000
|
Decreases
related to prior year tax positions
|
--
|
(1,170,000)
|
Increases
related to prior year tax positions
|
360,000
|
--
|
Other
|
(205,000)
|
(285,000
|
Ending
balance
|
$4,521,000
|
4,640,000
|
The entire balance of $4,521,000, if
not realized, would impact the effective tax rate.
In the next twelve months, the
Company’s effective tax rate and the amount of unrecognized tax benefits could
be affected positively or negatively by the resolution of ongoing tax audits and
the expiration of certain statutes of limitations. The Company is unable to
project the potential range of tax impacts at this time.
The Company recognizes interest and
penalties accrued related to income tax reserves in respect of uncertain tax
positions in the income tax provision. As of September 30, 2009, accrued
interest and penalties amounted to $3,064,000. As of September 30,
2008, interest expense and penalties amounted to $2,655,000. For the year ended
September 30, 2009, interest income and the settlement of the Quebec audit, less
interest expense and penalties in the statement of operations totaled
$15,000. For the year ended September 30, 2008, interest expense and
penalties in the statement of operations totaled $207,000.
Note
5 – Equity Investments
On
February 23, 2004, the Company announced that its subsidiary, Comdisco, Inc.,
entered into agreements (collectively, the “Agreements”) with Windspeed for the
ongoing management and liquidation of Comdisco Ventures, Inc.’s warrant and
equity investment portfolio. The Agreements include substantially all of the
Company’s warrant and equity investment portfolio. Windspeed is entitled to
certain fixed and declining management fees. Additionally, Windspeed shares in
the net receipts from the sale of the Company’s investments in equity securities
at a set percentage. The Company has received approximately $67,856,000 in
proceeds (prior to
37
management
fees, sharing and a receivable from securities sold with Windspeed) since the
inception of the management agreement with Windspeed. Windspeed has received a
combined $11,426,000 in management fees and sharing through September 30, 2009.
Management fees are expensed when incurred and realized gains on the sale of
Equity Investments are reduced by sharing amounts under the management
agreement. Copies of the Amended and Restated Limited Liability Company
Agreement of Comdisco Ventures Fund A, LLC (the former Comdisco Ventures, Inc.),
dated as of February 20, 2004 by and among Comdisco, Inc., Windspeed and
Comdisco Ventures Fund B, LLC and the Limited Liability Company Agreement of
Comdisco Ventures Fund B, LLC, dated as of February 20, 2004, by and among
Comdisco, Inc., Windspeed and Windspeed Acquisition Fund, L.P. were filed with
the SEC on a Current Report on Form 8-K pursuant to Item 5 on February 23, 2004.
As reported on the Current Report on Form 8-K filed by the Company on April 11,
2006, the management agreement was extended for an additional two years, until
February 20, 2009. As reported on the Current Report on Form 8-K
filed by the Company on March 19, 2009, the management agreement was extended
for an additional two years, until February 20, 2011. As a result of
the Agreements, the ongoing management of the Company’s equity investments in
public and private companies is being provided by Windspeed.
Marketable
equity investments:
The
Company’s available-for-sale security holdings were as follows (in
thousands):
Cost
|
Gross
unrealized gains |
Gross
unrealized losses |
Market
value |
|||||||||||||
September
30, 2009
|
$ | -- | $ | 23 | $ | -- | $ | 23 | ||||||||
September
30, 2008
|
$ | -- | $ | 55 | $ | -- | $ | 55 |
Changes
in the valuation of available-for-sale securities are included as changes in the
unrealized holding gains (losses) in accumulated other comprehensive income. At
September 30, 2009, the Company held securities in three publicly-traded
companies one of which is to be held in escrow until December 23,
2009. The Company’s practice is to sell its marketable equity
securities within a reasonable period of time after the lock-up period
ends.
Realized
gains or losses are recorded on the trade date based upon the difference between
the proceeds and the cost basis determined using the specific identification
method. Realized gains, net of sharing and fees, are included in revenue in the
consolidated statements of operations. During the fiscal year ended September
30, 2009, the Company received $3,475,000 in proceeds (after sharing, management
fees and a receivable from securities sold) and realized a gain of $3,949,000 on
the sale of marketable equity securities.
Equity
investments in private companies:
The
Company’s policy for assessing the carrying value of equity investments in
privately held companies is, in consultation with Windspeed, to regularly review
the assumptions underlying the operating performance and cash flow forecasts.
The Company identifies and records impairment losses on Equity Investments when
market and customer specific events and circumstances indicate the carrying
value might be impaired. All write-downs are considered permanent impairments
for financial reporting purposes. The carrying value of the Company’s equity
investments in private companies was $1,029,000 at September 30, 2009 and
$1,156,000 at September 30, 2008. Write-downs of equity securities were $22,000
and $1,564,000 during fiscal years 2009 and 2008, respectively.
Note
6 - Common Stock and Other Comprehensive Income
When
the Company emerged from bankruptcy, 4,200,000 shares of new common stock were
issued. As of September 30, 2009, the Company had 4,029,055 shares of common
stock outstanding and 170,945 shares of common stock held in
treasury.
Consistent
with past practices, the Company intends to treat any future dividend
distribution for federal income tax purposes as part of a series of liquidating
distributions in complete liquidation of the Company.
38
The
Company’s Common Stock share amounts for basic and diluted earnings per share
calculations were as follows (in thousands):
Year
ended September 30,
|
||||||||
2009
|
2008
|
|||||||
Average
common shares issued
|
4,200 | 4,200 | ||||||
Average
common shares held in treasury
|
(171 | ) | (171 | ) | ||||
4,029 | 4,029 | |||||||
Net
earnings (loss) to common stockholders
|
$ | 2,084 | $ | (4,884 | ) | |||
Basic
and diluted earnings (loss) per common share
|
$ | 0.52 | $ | (1.21 | ) |
Accumulated
other comprehensive income (loss) consists of changes in the unrealized gains
related to the Company’s holdings in available-for-sale
investments. Total comprehensive income (loss) is as follows
(in thousands):
Year ended September 30, | ||||||||
2009
|
2008
|
|||||||
Unrealized
gains (losses) on investments:
|
||||||||
Unrealized
holding gains (losses) arising during the period
|
$ | 3,666 | $ | (379 | ) | |||
Reclassification
adjustment for gains included in
earnings before income taxes
|
(3,698 | ) | (5,036 | ) | ||||
Change
in net unrealized gains (losses) (A)
|
(32 | ) | (5,415 | ) | ||||
Net
earnings (loss)
|
2,084 | (4,884 | ) | |||||
Total
comprehensive income (loss)
|
$ | 2,052 | $ | (10,299 | ) |
Note
(A): No income tax effect on these gains (losses)
Note
7 - Fair Value Measurements
On
October 1, 2008, the Company adopted ASC Subtopic 820-10 for all financial
instruments and non-financial instruments accounted for at fair value on a
recurring basis. Fair value is defined by ASC Subtopic 820-10 as the price that
would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. ASC
Subtopic 820-10 establishes a three-level fair value hierarchy that prioritizes
the inputs used to measure fair value. The hierarchy requires entities to
maximize the use of observable inputs and minimize the use of unobservable
inputs. The three levels of inputs used to measure fair value are as
follows:
•
|
Level
1 – Quoted prices in active markets for identical assets and
liabilities.
|
•
|
Level
2 – Quoted prices in active markets for similar assets and liabilities, or
other inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the financial
instrument.
|
•
|
Level
3 – Unobservable inputs that are supported by little or no market activity
and that are significant to the fair value of the assets and liabilities.
This includes certain pricing models, discounted cash flow methodologies
and similar techniques that use significant unobservable
inputs.
|
39
All
of the Company’s financial assets that are measured at fair value on a recurring
basis are measured using Level 1 inputs. However, the Company records
the carrying value of its private equity investments at lower of cost or fair
market value which is measured using Level 3 inputs. The Company has not
included a tabular disclosure as the Company’s only financial assets that are
measured at fair value on a recurring basis in the consolidated balance sheet as
of September 30, 2009 are money market funds comprising approximately
$55,579,000 of the cash and cash equivalents balance and equity investments in
three public companies, which are measured at fair value based upon Level 1
inputs. The Company holds no financial liabilities that are measured at
fair value on a recurring basis.
On
October 1, 2008, the Company adopted ASC Subtopic
825-10 but did not elect the fair value option.
Fair
values were determined as follows:
The
carrying amounts of cash and cash equivalents approximates fair value because of
the short-term maturity of these instruments.
In
accordance with the provisions of ASC Topic 320, “Accounting for Certain
Investments in Debt and Equity Securities,” marketable equity investments
(equity investments having a readily determinable fair value) have a carrying
value and a fair value based on quoted market prices. The Company’s investment
in warrants of public companies were valued at the bid quotation. The Company’s
practice is to sell its marketable equity investments upon the expiration of the
lock-up period.
Equity
investments in private companies consist primarily of small investments in
approximately 50 private companies. Common stock and preferred stock investments
are carried at the lower of cost or fair market value in the Company’s financial
statements. Warrants in non-public companies are carried at zero
value. The carrying value of equity investments in private
companies is $1,029,000 and the fair market value measured using Level 3 inputs
is $2,215,000. These investments are subject to significant
volatility and are difficult to value. The fair value of the Company’s equity
investments in private companies, including warrants, was determined in
consultation with Windspeed based on a variety of factors, including, but not
limited to, quoted trading levels for publicly-traded securities in similar
industries and/or markets, industry and company multiples, industry acceptance
in the market place, liquidity discounts due to lock ups, estimated revenue, and
customer, product and market share growth by the respective companies in the
portfolio. Substantially all of these factors are outside the control of the
Company and are subject to significant volatility. There can be no assurance
that the Company will be able to realize the estimated fair market value.
Furthermore, the current estimated fair market value is subject to significant
concentration risk, since as of September 30, 2009, 96 percent of the estimated
fair market value of the entire portfolio is concentrated in ten individual
companies and approximately 80 percent of the estimated amount is in three
individual companies.
Note
8 - Quarterly Financial Data (Unaudited)
Summarized
quarterly financial data for the fiscal years ended September 30, 2009 and 2008,
are as follows (in thousands except per share data):
Quarter
ended
|
||||||||||||||||||||||||||||||||
December
31,
|
March
31,
|
June
30,
|
September
30,
|
|||||||||||||||||||||||||||||
2008
|
2007
|
2009
|
2008
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||||||
Total
revenue
|
$ | 381 | $ | 6,552 | $ | 282 | $ | 2,356 | $ | 973 | $ | 758 | $ | 2,897 | $ | 571 | ||||||||||||||||
Net
earnings (loss)
|
$ | (72 | ) | $ | 1,848 | $ | 37 | $ | 1,186 | $ | (144 | ) | $ | (1,021 | ) | $ | 2,263 | $ | (6,897 | ) | ||||||||||||
Basic
and diluted earnings
(loss)
per common share
|
$ | (0.02 | ) | $ | 0.46 | $ | 0.01 | $ | 0.29 | $ | (0.04 | ) | $ | (0.25 | ) | $ | 0.57 | $ | (1.71 | ) |
40
Note
9 - Other Financial Information
Legally
restricted cash represents cash and cash equivalents that are related to the
Company’s employee incentive compensation plans, and cash and cash equivalents
held in escrow or in similar accounts to ensure indemnification obligations of
the Company. Legally restricted cash is comprised of the following (in
thousands):
September
30,
2009
|
September
30,
2008
|
|||||||
Incentive
compensation escrows
|
$ | 455 | $ | 453 | ||||
Indemnification
reserve
|
4,000 | 4,000 | ||||||
Other
escrows
|
539 | 529 | ||||||
$ | 4,994 | $ | 4,982 |
The
incentive compensation escrow is deferred compensation defined by the Plan held
until an employee terminates with the Company. The
indemnification reserve is a specific reserve set aside by the Company for any
potential indemnified losses in lieu of the litigation trustee purchasing
insurance coverage. Other escrows include management fee escrows and
a bank guaranty held in the Netherlands.
Other liabilities consist of the
following (in thousands):
September
30,
2009
|
September
30,
2008
|
|||||||
Accrued
compensation
|
$ | 1,167 | $ | 1,237 | ||||
CDRs
|
21,431 | 22,469 | ||||||
Other
liabilities
|
346 | 187 | ||||||
$ | 22,944 | $ | 23,893 |
Accrued
compensation: The liability for accrued compensation includes payroll
and estimated amounts payable under the Company’s Bankruptcy court approved
compensation plans.
CDR’s: As
of September 30, 2008, the Company revised certain estimates utilized in
estimating the CDR liability as a result of significant events and the
resolution of various matters that occurred in the fourth quarter of fiscal year
ended 2008. Those events included: (i) the summary judgments in favor
of the Litigation Trust against certain SIP Participants received on September
24, 2008, (ii) the distribution of the final Allowed Claim on July 10, 2008,
(iii) the withdrawal or dismissal of all remaining claims in the
fourth quarter of the fiscal year 2008, (iv) the closure of the Disputed Claims
Reserve and the final supplemental distribution from the Disputed Claims Reserve
on August 14, 2008, and (v) the cancellation of the Class C-5B shares in the
Disputed Interests Reserve and the reallocation of the cash balances relating to
those shares to the remaining CDR holders of record on September 25,
2008. As a result of those significant events that occurred in the
fiscal quarter ended September 30, 2008 and as a result of other facts and
circumstances, the Company believes it is also better able to estimate certain
future cash flows in excess of book value that were previously not considered
estimable. However, due to the volatility in the markets for equity, the Company
has not included its fair value estimates in determining the CDR
liability.
As
of September 30, 2008, the Company has estimated, and will continue to estimate,
the CDR liability based on the net equity of the Company after taking into
consideration future operating costs and expenses, and other expected cash
inflows in excess of book value, including estimated future interest income,
estimated recoveries and the potential net distributions from the Litigation
Trust which are currently estimated to be nominal. See
the risk factors discussed in Item 1A. “Risk Factors”, particularly the risks
entitled “Uncertainties Inherent in the CDR Liability Calculation” and
“Uncertainties Inherent in the Determination of Fair Market Value of the
Remaining Portfolio.”
41
Note
10 - Operations by Geographic Areas
The
following table presents total revenue by geographic location based on the
location of the Company’s offices (in thousands):
Year
ended September 30,
|
||||||||
2009
|
2008
|
|||||||
North
America
|
$ | 4,528 | $ | 10,227 | ||||
Europe
|
5 | 9 | ||||||
$ | 4,533 | $ | 10,236 |
The
following table presents total assets and cash by geographic location based on
the location of the Company’s offices as of September 30 (in
thousands):
2009
|
2008
|
|||||||||||||||
Total
Assets |
Cash
|
Total
Assets |
Cash
|
|||||||||||||
North
America
|
$ | 76,427 | $ | 70,648 | $ | 75,077 | $ | 62,149 | ||||||||
Europe
|
463 | 411 | 387 | 387 | ||||||||||||
Total
|
$ | 76,890 | $ | 71,059 | $ | 75,464 | $ | 62,536 |
Note
11 - Subsequent Events
The
Company has evaluated events and transactions subsequent to the balance sheet
date through the filing date of these Consolidated Financial Statements on Form
10-K with the United States Securities and Exchange Commission on December 11,
2009. Based on this evaluation, the Company is not aware of any
events or transactions that occurred subsequent to the balance sheet date but
prior to filing that would require recognition or disclosure in its Consolidated
Financial Statements.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM
9A. CONTROLS AND PROCEDURES
(1) Evaluation
of Disclosure Controls and Procedures
Randolph
I. Thornton, the sole officer of the Company, has evaluated the effectiveness of
the Company’s disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the
period covered by this report. Based on such evaluation, the Company’s sole
officer has concluded that, as of the end of such period, the Company’s
disclosure controls and procedures are effective in recording, processing,
summarizing and reporting, on a timely basis, information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act.
(2) Management
Report on Internal Control Over Financial Reporting
Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial
reporting is defined in Rule 13a-15(f) and 15d-15(f) under the
42
Exchange
Act as a process designed by, or under the supervision of, the Company’s sole
officer and effected by the Company’s board of directors, management and other
personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and includes those
policies and procedures that:
·
|
pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
Company;
|
|
·
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company
are being made only in accordance with authorizations of management and
the sole director of the Company; and
|
|
·
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that
could have a material effect on the financial
statements.
|
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risks that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of September 30, 2009. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework.
Based
on management’s assessment, management believes that, as of September 30, 2009,
the Company’s internal control over financial reporting is
effective.
This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission, and extensions thereby, that permit the Company to provide
only management’s report in this annual report.
(3) Change
in Internal Controls
There
have not been any changes in the Company’s internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fourth fiscal quarter that have materially affected, or
are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
ITEM
9B. OTHER INFORMATION
Not
applicable.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Directors
and Executive Officers
As
discussed in Part I above, all the individuals serving on the Board of Directors
resigned their position as directors on August 12, 2004 except for Randolph I.
Thornton who has continued on as sole director. Also, on the same date, all the
officers of the Company resigned their respective officer positions. Before
resigning their
43
positions
as directors, the Board of Directors appointed Randolph I. Thornton as Chief
Executive Officer, President and Secretary of the Company. Mr. Thornton’s
appointment as the Company’s Initial Disbursing Agent also became effective at
this time. As Initial Disbursing Agent, Mr. Thornton has assumed the roles and
responsibilities performed by the former Board of Directors and officers of the
Company, including all measures which are necessary to complete the
administration of the reorganized Debtors’ Plan and Chapter 11 cases. The
Company’s Board of Directors took this action as the next step in the wind down
of operations pursuant to the Plan. Because the Company’s equity securities are
not listed on any stock exchange or traded on Nasdaq, the Company is not
required to comply with the corporate governance requirements mandated by stock
exchanges and Nasdaq.
Sole
Officer and Director
Randolph
I. Thornton (Age 64 - Director since August 2002)
Effective
August 12, 2004, Mr. Thornton was appointed Chief Executive Officer, President
and Secretary of the Company as well as Initial Disbursing Agent and sole
director. Prior to his retirement in January 2004, he was a Managing Director
and Senior Credit Officer of Citigroup, Inc. where he managed hundreds of
corporate reorganization matters in a thirty-three year career. He currently
serves as non-executive Chairman for National Energy & Gas Transmission,
Inc. and Core-Mark International, Inc.
Audit
Committee Financial Expert
Until
August 12, 2004, the Audit Committee of the Board of Directors was comprised
entirely of independent outside directors. Since August 12, 2004, Mr. Thornton
has been performing the functions of the Audit Committee. Mr. Thornton qualifies
as an “audit committee financial expert,” as defined in Item 407(d)(5)(ii) of
Regulation S-K, but is not considered independent as that term is defined in
Item 407 of Regulation S-K. The Company is not required to have a three-person
audit committee consisting of independent directors because its equity
securities are not listed on a stock exchange or traded on Nasdaq.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our director and executive officer, and
persons who beneficially own more than 10 percent of a registered class of our
equity securities, to file with the SEC initial reports of ownership and reports
of changes in ownership of our Common Stock and any changes in that ownership
with the SEC. Based solely on our review of copies of the reports filed with the
SEC and written representations of our director and officer, we believe all
persons subject to Section 16(a) reporting filed the required reports on time in
fiscal year 2009.
Code
of Ethics
On
December 3, 2007, the Company updated and made effective its revised Code of
Conduct Applicable to the Chief Executive Officer and Authorized
Representatives. The Company updated and made effective its revised Code of
Conduct for its employees in June 2009. Copies are available on the Company’s
website. Any waivers from the Codes of Conduct, or amendments thereto, by the
Company will be disclosed through its website at www.comdisco.com and in future
filings. To date, the Company has granted no such waivers.
ITEM
11. EXECUTIVE COMPENSATION
Effective
August 12, 2004, Randolph I. Thornton was appointed Chief Executive Officer,
President and Secretary of the Company as well as Initial Disbursing Agent and
sole director. Mr. Thornton is the sole executive officer and is referred to in
this section as the “named executive officer.”
Compensation
Discussion and Analysis
All
payments to Mr. Thornton are made pursuant to the Disbursing Agent Agreement.
The Board of Directors determined that the most efficient way to wind down the
business was to adopt the compensation program
44
set
forth in the Disbursing Agent Agreement which specifies an hourly rate for the
services provided by the Disbursing Agent. This approach is consistent with the
Company’s overall objective of efficiently selling, collecting and otherwise
reducing to money the remaining assets of the Company and its subsidiaries. The
Board of Directors set the hourly wage paid to the Disbursing Agent at $400 per
hour in 2004. The rate does not vary and does not depend on corporate
performance.
Summary
Compensation Table
Name
and Principal Position
|
Fiscal
Year
|
Salary($)
|
All
Other Compensation($)
Note
(1)
|
Total
($)
|
||||||||||
Randolph
I. Thornton
|
2009
|
-- | 115,100 | 115,100 | ||||||||||
Chief
Executive Officer,
|
2008
|
-- | 94,400 | 94,400 | ||||||||||
President
and Secretary
|
2007
|
-- | 111,100 | 111,100 |
(1) |
Amount
reflects total payments earned by Mr. Thornton pursuant to the Disbursing
Agent Agreement at the rate of $400 per
hour.
|
Plan-Based
Awards, Equity Awards and Options
The
Company does not have any plan-based awards, equity awards or stock options
available to the named executive officer. Accordingly, no plan-based awards,
equity awards or stock options were outstanding or aggregated by the named
executive officer during fiscal year 2009. The Company does not plan to issue
any plan-based awards, equity awards or stock options to the named executive
officer in the future.
Pension
Benefits, Deferred Compensation and Potential Payments
The
Company did not provide any pension benefits or deferred compensation to the
named executive officer during fiscal year 2009. The Company does not plan to
provide any pension benefits or deferred compensation to the named executive
officer in the future. The Disbursing Agent Agreement does not provide for any
potential payments other than the hourly rate described above.
Compensation
of Directors
The
Disbursing Agent’s compensation for the fiscal year ended September 30, 2009 is
set forth in the compensation table above. Mr. Thornton did not receive
additional compensation for serving as a director in fiscal year
2009.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDERS MATTERS
Common
Stock Owned by Certain Beneficial Owners
The
following table reflects the number of shares of Common Stock beneficially owned
on December 1, 2009 by all persons whom we know to be beneficial owners of 5
percent or more of our Common Stock, based on a review of public
filings.
45
Stockholders
Owning at Least 5 percent of the Company’s Common Stock
Name
and Address
|
Shares
Beneficially Owned |
Percent
of
Class
|
||
Berkshire
Hathaway, Inc.
1440
Kiewit Plaza
Omaha,
Nebraska 68131
|
(1)
|
1,538,377
|
38.18%
|
|
Davidson
Kempner Partners
885
Third Avenue
New
York, New York 10022
|
(2)
|
946,753
|
23.50%
|
|
Kinetics
Asset Management, Inc.
470
Park Avenue South
4th
Floor South, New York, NY, 10016
|
(3)
|
203,400
|
5.05%
|
|
Haphazard
Investors LLC
141
Heather Lane
Mill
Neck, NY 11765
|
(4)
|
204,495
|
5.08%
|
(1)
|
The
information with respect to 1,538,377 shares of Common Stock beneficially
owned by Berkshire Hathaway, Inc. is based on its amended Report on
Schedule 13F-HR for the period ended September 30, 2009, filed with the
SEC on November 24, 2009.
|
(2)
|
The
information with respect to 946,753 shares of Common Stock beneficially
owned by Davidson Kempner Partners is based on a Report on its amended
Schedule 13G, dated and filed with the SEC on February 14,
2006.
|
(3)
|
The
information with respect to 203,400 shares of Common Stock beneficially
owned by Kinetics Asset Management, Inc. is based on its Report on
Schedule 13F-HR for the period ended September 30, 2009, filed with the
SEC on November 12, 2009.
|
(4)
|
The
information with respect to 204,495 shares of Common Stock beneficially
owned by Haphazard Investors LLC is based on a Report on its Schedule 13G,
dated and filed with the SEC on December 31,
2008.
|
Common
Stock Owned by Directors and Executive Officers
Mr.
Thornton (who is the Company’s sole officer and director) does not beneficially
own any shares of the Company’s common stock in the Company as of December 1,
2009. The address of the sole director and named executive officers is c/o
Comdisco Holding Company, Inc., 5600 North River Road, Rosemont, Illinois
60018.
Equity
Compensation Plan Information
The
Company has not reserved any equity securities for compensation to its employees
or its sole officer.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
During
the Company’s prior fiscal year, the Company did not participate in any
transaction in which any related person had or would have a direct or indirect
material interest. No such transaction is currently proposed. Section 3.4 of the
Disbursing Agent Agreement prohibits the Disbursing Agent from directly or
indirectly selling or otherwise transferring any of the assets of the Company to
a related person.
Randolph
I. Thornton, sole director of the Company, is not considered independent as that
term is defined in Item 407 of Regulation S-K.
46
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit
Committee of the Board of Directors
The
Audit Committee and the Board of Directors adopted a charter, setting forth the
structure, powers and responsibilities of the Audit Committee. The Audit
Committee met four times in fiscal year 2009. Mr. Thornton, as sole director and
Initial Disbursing Agent, performed the functions of the Audit Committee for the
fiscal year 2009. The Company is not required to have a three-person committee
consisting of independent directors because its equity securities are not listed
on a stock exchange or trade on Nasdaq.
One
of Mr. Thornton’s primary responsibilities is to provide oversight of the
integrity of the Company’s financial statements and financial reporting process.
To fulfill these oversight responsibilities, Mr. Thornton has reviewed and
discussed with management and the independent auditors the audited financial
statements included in the Company’s Annual Report on Form 10-K for the fiscal
year ended September 30, 2009, and has reviewed and discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 114, The Auditor’s Communication With Those Charged With
Governance, as amended. In addition, Mr. Thornton received from the independent
auditors written reports disclosing that they are not aware of any relationships
between the auditors and the Company that, in their professional judgment, may
reasonably be thought to bear on their independence, consistent with
Independence Standards Board Standard Number 1, Independence Discussions with
Audit Committees. Mr. Thornton also reviewed and discussed with the independent
auditors all relationships the auditors have with the Company to determine and
satisfy itself regarding the auditors’ objectivity and independence. Mr.
Thornton has also considered whether the provision of non-audit services by the
independent auditors to the Company for the most recent fiscal year and the fees
and costs billed and expected to be billed by the independent auditors for those
services are compatible with maintaining their independence.
Based
on the review and discussions described in this report, Mr. Thornton determined
that the Company’s audited consolidated financial statements be included in the
Company’s Annual Report on Form 10-K for the fiscal year ended September 30,
2009, for filing with the SEC.
Mr.
Thornton, as sole director and Disbursing Agent, appointed KPMG LLP as
independent auditors for the Company for the fiscal year 2010.
Principal
Accountant Audit Fees and Services Fees
The
following table describes fees for professional audit services rendered by KPMG,
the Company’s principal accountant, for the audit of our annual financial
statements for the fiscal years ended September 30, 2009 and September 30, 2008
and fees billed for other services rendered by KPMG during those
periods.
Type
of Fee
|
2009
|
2008
|
||||||
Audit
Fees (1)
|
$ | 375,000 | $ | 360,700 | ||||
Audit
Related Fees
|
-- | -- | ||||||
Tax
Fees (2)
|
-- | 20,375 | ||||||
All
Other Fees
|
-- | -- | ||||||
Total
|
$ | 375,000 | $ | 381,075 |
(1)
|
Audit
Fees, including those for statutory audits, include the aggregate fees
paid by the Company during the fiscal year indicated for professional
services rendered by KPMG for the audit of the Company’s annual financial
statements and review of financial statements included in the Company’s
Forms 10-Q.
|
(2)
|
Tax
Fees include the aggregate fees paid by the Company during the fiscal year
indicated for professional services rendered by the principal accountant
for tax compliance, tax advice and tax
planning.
|
Procedures
For Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditor
47
Pursuant
to its charter, the Audit Committee of Comdisco Holding Company’s Board of
Directors is responsible for reviewing and approving, in advance, any audit and
any permissible non-audit engagement or relationship between Comdisco and its
independent auditors. Mr. Thornton, as sole director and Initial Disbursing
Agent, has assumed that responsibility. KPMG’s engagement to conduct the audit
of Comdisco Holding Company, Inc. was approved by the Audit Committee.
Additionally, each permissible non-audit engagement or relationship between
Comdisco and KPMG has been reviewed and approved by the Audit Committee, as
provided in its charter.
We
have been advised by KPMG that all of the work done in conjunction with its
audit of Comdisco Holding Company’s financial statements for the most recently
completed fiscal year was performed by permanent full time employees and
partners of KPMG.
PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
List of documents filed as part of this report:
Financial
Statements
See
Index to Financial Statements contained in Item 8, Financial Statements and
Supplementary Data, above.
Financial
Statement Schedules
All
Financial Statement Schedules have been omitted because (i) the required
information is not present in amounts sufficient to require submission of the
schedule, (ii) the information required is included in the Financial Statements
or the Notes thereto or (iii) the information required in the schedules is not
applicable to the Company.
3.
Exhibits
The
following exhibits are filed herewith or are incorporated by reference to
exhibits previously filed with the Commission:
Exhibit
No. |
Description
of Exhibit
|
|
2.1
|
Joint
Plan of Reorganization of Comdisco, Inc. and its Affiliated Debtors and
Debtors in Possession (Incorporated by reference to Exhibit 99.3 filed
with Comdisco, Inc.’s Current Report on Form 8-K dated April 26, 2002, as
filed with the Commission on May 10, 2002, File No.
1-7725).
|
|
2.2
|
First
Amended Joint Plan of Reorganization of Comdisco, Inc. and its Affiliated
Debtors and Debtors in Possession (Incorporated by reference to Exhibit
2.2 filed with Comdisco, Inc.’s Current Report on Form 8-K dated July 30,
2002, as filed with the Commission on August 9, 2002, File No.
1-7725).
|
|
2.3
|
Findings
of Fact, Conclusions of Law, and Order Under 11 U.S.C. ss.ss.1129(a) and
(b) and Fed. R. Bankr. P. 3020 Confirming the First Amendment Plan of
Reorganization of Comdisco, Inc. and its Affiliated Debtors and Debtors in
Possession (Incorporated by reference to Exhibit 2.1 filed with Comdisco,
Inc.’s Current Report on Form 8-K dated July 30, 2002, as filed with the
Commission on August 9, 2002, File No. 1-7725).
|
|
3.1
|
Certificate
of Incorporation of Registrant, dated August 8, 2002 and amended as of
August 12, 2004 (Incorporated by reference to Exhibit 3.1 filed with the
Company’s Annual Report on Form 10-K dated September 30, 2004, as filed
with the Commission on December 14, 2004, File No.
0-49968).
|
|
3.2
|
By-Laws
of Registrant, adopted as of August 9, 2002 (Incorporated by reference to
Exhibit 3.2 filed with the Company’s Annual Report on Form 10-K dated
September 30, 2002, as filed
with
|
48
Exhibit
No. |
Description
of Exhibit
|
|
the
Commission on January 14, 2003, File No. 0-49968).
|
||
4.1
|
Rights
Agent Agreement between the Registrant and Mellon Investor Services
L.L.C., as Rights Agent, dated as of August 12, 2002 (Incorporated by
reference to Exhibit 4.5 filed with the Company’s Annual Report on Form
10-K dated September 30, 2002, as filed with the Commission on January 14,
2003, File No. 0-49968)
|
|
10.1*
|
Motion,
dated as of May 24, 2002, and Order, dated as of June 18, 2002, Pursuant
to 11 U.S.C. Sections 105(a) and 363(b)(1) Approving and Authorizing the
Debtors’ Stay Bonus Plan and Management Incentive Plan, dated June 18,
2002 (Incorporated by reference to Exhibit 10.1 filed with the Company’s
Annual Report of Form 10-K dated September 30, 2002, as filed with the
Commission on January 14, 2003, File No. 0-49968).
|
|
10.2*
|
First
Letter from Ronald C. Mishler to the Official Committee of Unsecured
Creditors of Comdisco, Inc., dated May 29, 2002 (Incorporated by reference
to Exhibit 10.2 filed with the Company’s Annual Report of Form 10-K dated
September 30, 2002, as filed with the Commission on January 14, 2003, File
No. 0-49968).
|
|
10.3*
|
Second
Letter from Ronald C. Mishler to the Official Committee of Unsecured
Creditors of Comdisco, Inc., dated July 3, 2002 (Incorporated by reference
to Exhibit 10.3 filed with the Company’s Annual Report of Form 10-K dated
September 30, 2002, as filed with the Commission on January 14, 2003, File
No. 0-49968).
|
|
10.4
|
Motion
for an Order in Furtherance of the First Amended Joint Plan of
Reorganization of Comdisco, Inc. and its Affiliates Seeking Authority to
Complete the Administration of the Reorganized Debtors’ Reorganization
Plan and Chapter 11 Cases, dated February 17 2004, (Incorporated by
reference to Exhibit 99.2 filed with the Company’s Report on Form 8-K
dated February 17, 2004, as filed with the Commission on February 18,
2004, File No. 0-49968)
|
|
10.5
|
Amended
and Restated Limited Liability Company Agreement of Comdisco Ventures Fund
A, LLC, dated as of February 20, 2004, by and among Comdisco, Inc.,
Windspeed Acquisition Fund GP, LLC and Comdisco Ventures Fund B, LLC
(Incorporated by reference to Exhibit 99.1 filed with the Company’s Report
on Form 8-K dated February 23, 2004, as filed with the Commission on
February 23, 2004, File No. 0-49968)
|
|
10.6
|
Limited
Liability Company Agreement of Comdisco Ventures Fund B, LLC, dated as of
February 20, 2004, by and among Comdisco, Inc., Windspeed Acquisition Fund
GP, LLC and Windspeed Acquisition Fund, L.P (Incorporated by reference to
Exhibit 99.2 filed with the Company’s Report on Form 8-K dated February
23, 2004, as filed with the Commission on February 23, 2004, File No.
0-49968)
|
|
10.7*
|
Disbursing
Agent Agreement. (Incorporated by reference to Exhibit 10.9 filed with the
Company’s Annual Report on Form 10-K dated December 14, 2004 as filed with
the commission on December 14, 2004, File No. 0-49968.)
|
|
10.8
|
Second
Amended and Restated Limited Liability Company Agreement of Comdisco
Ventures Fund A, LLC, dated as of April 11, 2006, by and among Comdisco,
Inc., Windspeed Acquisition Fund GP, LLC and Comdisco Ventures Fund B, LLC
(Incorporated by reference to Exhibit 10.1 filed with the Company’s Report
on Form 8-K dated April 11, 2006, as filed with the Commission on April
11, 2006, File No. 0-49968)
|
|
10.9
|
Amended
and Restated Limited Liability Company Agreement of Comdisco Ventures Fund
B, LLC, dated as of April 11, 2006, by and among Comdisco, Inc., Windspeed
Acquisition Fund GP, LLC and Windspeed Acquisition Fund, L.P.
(Incorporated by reference to Exhibit 10.2 filed with the Company’s Report
on Form 8-K dated April 11, 2006, as filed with the Commission on April
11, 2006, File No. 0-49968)
|
|
10.10
|
Third
Amended and Restated Limited Liability Company Agreement of Comdisco
Ventures Fund A, LLC, dated as of March 16, 2009, by and among Comdisco,
Inc., Windspeed Acquisition Fund GP, LLC and Comdisco Ventures Fund B, LLC
(Incorporated by reference to Exhibit 10.1 filed with the Company’s Report
on Form 8-K dated March 19, 2009, as filed with the Commission on March
19, 2009, File No. 0-49968)
|
|
21.1
|
Subsidiaries
of the registrant (Filed herewith).
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14(a0 and Rule 15d-14(a)
of the Exchange
|
49
Exhibit
No. |
Description
of Exhibit
|
|
Act,
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(Filed herewith).
|
||
32.1
|
Certification
of the Chief Executive Officer and Principal Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (Furnished
herewith).
|
*
Management contract or compensatory plan or arrangement.
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.
COMDISCO
HOLDING COMPANY, INC.
Dated:
December 11, 2009
|
By:
/s/Randolph I. Thornton
|
Name:
Randolph I. Thornton
|
|
Title:
Chief Executive Officer and President
(Principal Executive Officer) |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the
capacities indicated on December 11, 2009.
SIGNATURE
|
DATE
|
/s/
Randolph I. Thornton
|
December
11, 2009
|
Name:
Randolph I. Thornton
|
|
Title: Chief Executive
Officer and President
(Principal Financial and Accounting Officer) Sole
Director
|
50