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Discontinued operations net revenue and income before income taxes for the periods presented were as follows: Year Ended December 31, ----------------------------- 2003 2002 2001 (in thousands) Net sales $106,313 $ 96,142 $ 87,693 Income before income taxes 7,329 6,893 5,605 The following assets and liabilities are reclassified as held for sale for the periods presented as follows: December 31, (in thousands) Accounts and notes receivable-trade, net $10,626 Inventories, net 16,848 Prepaid expenses and other current assets 788 Current assets of discontinued operations held for sale $28,262 Property, plant and equipment, net $ 7,656 Identifiable intangible assets, net 4,022 Goodwill, net 5,771 Noncurrent assets of discontinued operations held for sale $17,449 Accounts payable $10,021 Accrued liabilities 10,185 Current liabilities of discontinued operations $20,206 Other noncurrent liabilities $ 1,269 Noncurrent liabilities of discontinued operations $ 1,269 NOTE 7 - INVENTORIES Inventories consist of the following: December 31, 2003 2002 (in thousands) Finished goods $123,290 $134,989 Work-in-process 41,997 39,065 Raw materials and supplies 40,300 40,438 $205,587 $214,492 NOTE 8- PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following: NOTE 9 - GOODWILL AND INTANGIBLE ASSETS Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. |
December 31, 2003 2002 (in thousands) Goodwill $ 963,264 $ 898,497 Indefinite-lived identifiable intangible assets: Trademarks $ 4,080 $ 4,080 Licensing agreements 165,621 149,254 Finite-lived identifiable intangible assets 76,774 82,675 Total identifiable intangible assets $ 246,475 $ 236,009 A reconciliation of changes in the Company's goodwill is as follows: December 31, 2003 2002 (in thousands) Balance, beginning of the year $ 898,497 $ 763,270 Acquisition activity 15,153 28,176 Changes to purchase price allocation (28,381) 40,025 Reclassification to assets held for sale(Note 6) (5,771) -- Impairment charges (Note 16) (360) -- Effects of exchange rate changes 84,126 67,026 Balance, end of the year $ 963,264 $ 898,497 The change in the net carrying value of goodwill in 2003 was primarily due to the final payment related to the Degussa Dental acquisition, several small acquisitions including the purchase of one of the Company's suppliers and additional investments in partially owned subsidiaries, foreign currency translation adjustments, reclassification to assets held for sale and changes to the purchase price allocations of Austenal, Degussa Dental and Friadent. |
NOTE 10 - ACCRUED LIABILITIES Accrued liabilities consist of the following: December 31, 2003 2002 (in thousands) Payroll, commissions, bonuses and other cash compensation $ 42,200 $ 44,490 Employee benefits 14,692 13,181 General insurance 15,852 14,965 Sales and marketing programs 15,944 15,424 Restructuring and other costs (Note 16) 7,781 15,190 Accrued Oraqix payments 16,000 -- Warranty liabilities 3,629 7,429 Other 56,586 80,104 $172,684 $190,783 A reconciliation of changes in the Company's warranty liability for 2003 is as follows: Warranty Liability December 31, (in thousands) Balance, beginning of the year $ 7,429 Accruals for warranties issued during the year 5,064 Accruals related to pre-existing warranties (1,328) Warranty settlements made during the year (4,663) Reclassification to liabilities of discontinued operations (3,378) Effects of exchange rate changes 505 Balance, end of the year $ 3,629 NOTE 11 - FINANCING ARRANGEMENTS Short-Term Borrowings Short-term bank borrowings amounted to $0.8 million and $3.2 million at December 31, 2003 and 2002, respectively. |
The rollforward of the common shares and the treasury shares outstanding is as follows: Common Treasury Outstanding Shares Shares Shares (in thousands) Balance at December 31, 2000 81,389 (3,971) 77,418 Exercise of stock options -- 500 500 Repurchase of common stock, at cost -- (38) (38) Balance at December 31, 2001 81,389 (3,509) 77,880 Exercise of stock options -- 519 519 Fractional share payouts (1) -- (1) Balance at December 31, 2002 81,388 (2,990) 78,398 Exercise of stock options -- 853 853 Balance at December 31, 2003 81,388 (2,137) 79,251 NOTE 14 - INCOME TAXES The components of income before income taxes from continuing operations are as follows: Year Ended December 31, 2003 2002 2001 (in thousands) United States ("U.S.") $113,994 $116,160 $131,010 Foreign 137,202 97,930 48,512 $251,196 $214,090 $179,522 The components of the provision for income taxes from continuing operations are as follows: Year Ended December 31, 2003 2002 2001 (in thousands) Current: U.S. federal $ 28,693 $ 47,627 $ 42,159 U.S. state 1,941 2,520 1,331 Foreign 18,298 28,737 11,297 Total 48,932 78,884 54,787 Deferred: U.S. federal 12,077 (7,586) 12,854 U.S. state 2,466 (908) 2,359 Foreign 17,868 59 (8,192) Total 32,411 (8,435) 7,021 $ 81,343 $ 70,449 $ 61,808 The reconcilation of the U.S. federal statutory tax rate to the effective rate is as follows: The tax effect of temporary differences giving rise to deferred tax assets and liabilities are as follows: Current and noncurrent deferred tax assets and liabilities are included in the following balance sheet captions: December 31, 2003 2002 (in thousands) Prepaid expenses and other current assets $ 41,427 $ 42,096 Income taxes payable (1,270) (577) Other noncurrent assets 26,800 9,327 Deferred income taxes (51,241) (27,039) Certain foreign subsidiaries of the Company have tax loss carryforwards of $30.6 million at December 31, 2003, of which $4.9 million expire through 2011 and $25.7 million may be carried forward indefinitely. |
Reconciliations of changes in the above plans' benefit obligations, fair value of assets, and statement of funded status are as follows: The amounts recognized in the accompanying Consolidated Balance Sheets are as follows: Other Postretirement Pension Benefits Benefits ----------------- ------------------ December 31, December 31, 2003 2002 2003 2002 (in thousands) Other noncurrent liabilities $ (67,854) $ (55,063) $ (10,711) $ (10,676) Other noncurrent assets 11,905 10,498 - - Accumulated other comprehensive loss 1,823 1,762 - - Net amount recognized $ (54,126) $ (42,803) $ (10,711) $ (10,676) Information for pension plans with an accumulated benefit obligation in excess of plan assets December 31, 2003 2002 (in thousands) Projected benefit obligation $ 122,569 $ 104,528 Accumulated benefit obligation 116,865 97,304 Fair value of plan assets 60,109 50,973 Components of the net periodic benefit cost for the plans are as follows: The weighted average assumptions used to determine benefit obligations for the Company's plans, principally in foreign locations, are as follows: The weighted average assumptions used to determine net periodic benefit cost for the Company's plans, principally in foreign locations, are as follows: Assumed health care cost trend rates have an impact on the amounts reported for postretirement benefits. |
Date Vice Chairman of the Board and Chief Executive Officer and a Director (Principal Executive Officer) /s/ Bret W. Wise March 15, 2004 - ------------------------- -------------------- Bret W. Wise Date Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Dr. Michael C. Alfano March 15, 2004 - ------------------------- -------------------- Dr. Michael C. Alfano Date Director /s/ Paula H. Cholmondeley March 15, 2004 - ------------------------- -------------------- Paula H. Cholmondeley Date Director /s/ Michael J. Coleman March 15, 2004 - ------------------------- -------------------- Michael J. Coleman Date Director /s/ William F. Hecht March 15, 2004 - ------------------------- -------------------- William F. Hecht Date Director /s/ Leslie A. Jones March 15, 2004 - ------------------------- -------------------- Leslie A. Jones Date Director /s/ Betty Jane Scheihing March 15, 2004 - ------------------------- -------------------- Betty Jane Scheihing Date Director /s/Edgar H. Schollmaier March 15, 2004 - ------------------------- -------------------- Edgar H. Schollmaier Date Director /s/ W. Keith Smith March 15, 2004 - ------------------------- -------------------- W. Keith Smith Date Director |
/s/ John C. Miles II March 28, 2003 - ------------------------- -------------------- John C. Miles II Date Chairman of the Board and Chief Executive Officer and a Director (Principal Executive Officer) /s/ Gerald K. Kunkle March 28, 2003 - ------------------------- -------------------- Gerald K. Kunkle Date President and Chief Operating Officer and a Director /s/ Bret W. Wise March 28, 2003 - ------------------------- -------------------- Bret W. Wise Date Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Dr. Michael C. Alfano March 28, 2003 - ------------------------- -------------------- Dr. Michael C. Alfano Date Director /s/ Burton C. Borgelt March 28, 2003 - ------------------------- -------------------- Burton C. Borgelt Date Director D1 /s/ Paula H. Cholmondeley March 28, 2003 - ------------------------- -------------------- Paula H. Cholmondeley Date Director /s/ Michael J. Coleman March 28, 2003 - ------------------------- -------------------- Michael J. Coleman Date Director /s/ William F. Hecht March 28, 2003 - ------------------------- -------------------- William F. Hecht Date Director /s/ Leslie A. Jones March 28, 2003 - ------------------------- -------------------- Leslie A. Jones Date Director /s/ Betty Jane Scheihing March 28, 2003 - ------------------------- -------------------- Betty Jane Scheihing Date Director /s/Edgar H. Schollmaier March 28, 2003 - ------------------------- -------------------- Edgar H. Schollmaier Date Director /s/ W. Keith Smith March 28, 2003 - ------------------------- -------------------- W. Keith Smith Date Director D1 Section 302 Certifications Statement I, John C. Miles II, certify that: 1. |
(14) D1 10.7 (a) Employment Agreement dated as of December 31, 1987 between the Company and John C. Miles II (5)* (b) Amendment to Employment Agreement between the Company and John C. Miles II dated February 16, 1996, effective January 1, 1996 (9)* 10.8 Employment Agreement dated as of December 10, 1992 between the Company and Michael R. Crane (5)* 10.9 Employment Agreement dated January 1, 1996 between the Company and W. William Weston (9)* 10.10 Employment Agreement dated January 1, 1996 between the Company and Thomas L. Whiting (9)* 10.11 Employment Agreement dated October 11,1996 between the Company and Gerald K. Kunkle Jr. (10)* 10.12 Employment Agreement dated April 20, 1998 between the Company and William R. Jellison (12)* 10.13 Employment Agreement dated September 10, 1998 between the Company and Brian M. Addison (12)* 10.14 Employment Agreement dated June 1, 1999 between the Company and J. Henrik Roos (13)* 10.15 Employment Agreement dated October 1, 2001 between the Company and Rudolf Lehner* 10.16 DENTSPLY International Inc. Directors' Deferred Compensation Plan effective January 1, 1997 (10)* 10.17 Supplemental Executive Retirement Plan effective January 1, 1999 (12)* 10.18 Written Description of Year 2001 Incentive Compensation Plan. |
Date President and Chief Operating Officer and a Director /s/ William R. Jellison March 28, 2002 - ------------------------- -------------------- William R. Jellison Date Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Dr. Michael C. Alfano March 28, 2002 - ------------------------- -------------------- Dr. Michael C. Alfano Date Director /s/ Burton C. Borgelt March 28, 2002 - ------------------------- -------------------- Burton C. Borgelt Date Director D1 /s/ Douglas K. Chapman March 28, 2002 - ------------------------- -------------------- Douglas K. Chapman Date Director /s/ Paula H. Cholmondeley March 28, 2002 - ------------------------- -------------------- Paula H. Cholmondeley Date Director /s/ Michael J. Coleman March 28, 2002 - ------------------------- -------------------- Michael J. Coleman Date Director /s/ C. Frederick Fetterolf March 28, 2002 - ------------------------- -------------------- C. Frederick Fetterolf Date Director /s/ William F. Hecht March 28, 2002 - ------------------------- -------------------- William F. Hecht Date Director /s/ Leslie A. Jones March 28, 2002 - ------------------------- -------------------- Leslie A. Jones Date Director /s/ Betty Jane Scheihing March 28, 2002 - ------------------------- -------------------- Betty Jane Scheihing Date Director /s/Edgar H. Schollmaier March 28, 2002 - ------------------------- -------------------- Edgar H. Schollmaier Date Director /s/ W. Keith Smith March 28, 2002 - ------------------------- -------------------- W. Keith Smith Date Director D1 EXHIBIT INDEX D1 * Management contract or compensatory plan. |
10.7 (a) Employment Agreement dated as of December 31, 1987 between the Company and John C. Miles II (5)* (b) Amendment to Employment Agreement between the Company and John C. Miles II dated February 16, 1996, effective January 1, 1996 (9)* 10.8 Employment Agreement dated as of December 10, 1992 between the Company and Michael R. Crane (5)* 10.9 Employment Agreement dated January 1, 1996 between the Company and W. William Weston (9)* 10.10 Employment Agreement dated January 1, 1996 between the Company and Thomas L. Whiting (9)* 10.11 Employment Agreement dated October 11,1996 between the Company and Gerald K. Kunkle Jr. (10)* 10.12 Employment Agreement dated April 20, 1998 between the Company and William R. Jellison (12)* 10.13 Employment Agreement dated September 10, 1998 between the Company and Brian M. Addison (12)* 10.14 Employment Agreement dated June 1, 1999 between the Company and J. Henrik Roos (13)* 10.15 Midwest Dental Products Corporation Pension Plan as amended and restated effective January 1, 1989 (7)* 10.16 Revised Ransom & Randolph Pension Plan, as amended effective as of September 1, 1985, restated as of January 1, 1989 (7)* 10.17 DENTSPLY International Inc. Directors' Deferred Compensation Plan effective January 1, 1997 (10)* 10.18(a) Asset Purchase and Sale Agreement, dated January 10, 1996, between Tulsa Dental Products, L.L.C. |
/s/ John C. Miles II March 19, 2001 - ------------------------- -------------------- John C. Miles II Date Chairman of the Board and Chief Executive Officer and a Director (Principal Executive Officer) /s/ Gerald K. Kunkle March 19, 2001 - ------------------------- -------------------- Gerald K. Kunkle Date President and Chief Operating Officer /s/ William R. Jellison March 19, 2001 - ------------------------- -------------------- William R. Jellison Date Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Burton C. Borgelt March 19, 2001 - ------------------------- -------------------- Burton C. Borgelt Date Director /s/ Douglas K. Chapman March 19, 2001 - ------------------------- -------------------- Douglas K. Chapman Date Director /s/ Michael J. Coleman March 19, 2001 - ------------------------- -------------------- Michael J. Coleman Date Director /s/ Cynthia P. Danaher March 19, 2001 - ------------------------- -------------------- Cynthia P. Danaher Date Director /s/ Arthur A. Dugoni March 19, 2001 - ------------------------- -------------------- Arthur A. Dugoni, D.D.S., M.S.D. |
Properties - ------------------- As of March 15, 2000, DENTSPLY maintains manufacturing facilities at the following locations: Leased Location Function or Owned - -------- -------- -------- York, Pennsylvania Manufacture and distribution of Owned artificial teeth and other dental laboratory products; export of dental products; corporate headquarters York, Pennsylvania Manufacture and distribution of Owned dental equipment and preventive dental products Des Plaines, Illinois Manufacture and assembly of dental Leased handpieces and components and dental x-ray equipment Franklin Park, Manufacture and distribution of Owned Illinois needles and needle-related products, primarily for the dental profession Milford, Delaware Manufacture and distribution of Owned consumable dental products Las Piedras, Manufacture of crown and bridge Owned Puerto Rico materials Elgin, Illinois Manufacture of dental x-ray film Owned holders, film mounts and accessories Maumee, Ohio Manufacture and distribution of Owned investment casting products Lakewood, Colorado Manufacture and distribution of Leased bone grafting materials and Hydroxylapatite plasma-feed coating materials Commerce, California Manufacture and distribution of Leased investment casting products Johnson City, Manufacture and distribution of Leased Tennessee endodontic instruments and materials Petropolis, Brazil Manufacture and distribution of Owned artificial teeth and consumable dental products Petropolis, Brazil Manufacture and distribution of Owned dental anesthetics Konstanz, Germany Manufacture and distribution of Owned consumable dental products; distribution of dental equipment Munich, Germany Manufacture and distribution of Owned endodontic instruments and materials Milan, Italy Manufacture and distribution of Leased dental x-ray equipment Mexico City, Mexico Manufacture and distribution of Owned dental products Plymouth, England Manufacture and distribution of Leased dental hand instruments Ballaigues, Manufacture and distribution of Owned Switzerland endodontic instruments Ballaigues, Manufacture and distribution of Owned Switzerland plastic components and packaging material Le Creux, Manufacture and distribution of Owned Switzerland endodontic instruments New Delhi, India Manufacture and distribution of Leased dental products Tianjin, China Manufacture and distribution of Leased dental products In addition, the Company maintains sales and distribution offices at certain of its foreign and domestic manufacturing facilities, as well as at six other United States locations and at 25 international locations in 18 foreign countries. |
(11) (b) Amendment to the 364-Day Competitive Advance, Revolving Credit and Guaranty Agreement dated as of October 21, 1999 among the Company, the guarantors named therein, the banks named therein, the Chase Manhattan Bank as Administrative Agent, and ABN Amro Bank, N.V. as Documentation Agent 4.2 (a) Commercial Paper Issuing and Paying Agency Agreement dated as of August 12, 1999 between the Company and the Chase Manhattan Bank (b) Commercial Paper Dealer Agreement dated as of August 12, 1999 between the Company and Goldman, Sachs & Co. 10.1 1992 Stock Option Plan adopted May 26, 1992 (4) 10.2 1993 Stock Option Plan (2) 10.3 1998 Stock Option Plan (1) 10.4 Nonstatutory Stock Option Agreement between the Company and Burton C. Borgelt (3) 10.5 (a) Employee Stock Ownership Plan as amended effective as of December 1, 1982, restated as of January 1, 1991 (7) (b) Second amendment to the DENTSPLY Employee Stock Ownership Plan (10) (c) Third Amendment to the DENTSPLY Employee Stock Ownership Plan (12) 10.6 (a) Retainer Agreement dated December 29, 1992 between the Company and State Street Bank and Trust Company ("State Street") (5) (b) Trust Agreement between the Company and State Street Bank and Trust Company dated as of August 11, 1993 (6) (c) Amendment to Trust Agreement between the Company and State Street Bank and Trust Company effective August 11, 1993 (6) 10.7 Employment Agreement dated January 1, 1996 between the Company and Burton C. Borgelt (9)* 10.8 (a) Employment Agreement dated as of December 31, 1987 between the Company and John C. Miles II (5)* (b) Amendment to Employment Agreement between the Company and John C. Miles II dated February 16, 1996, effective January 1, 1996 (9)* 10.9 Employment Agreement dated as of December 31, 1987, as amended as of February 8, 1990, between the Company and Leslie A. Jones (5)* 10.10 Employment Agreement dated as of December 10, 1992 between the Company and Michael R. Crane (5)* 10.11 Employment Agreement dated as of December 10, 1992 between the Company and Edward D. Yates (5)* 10.12 Employment Agreement dated January 1, 1996 between the Company and W. William Weston (9)* 10.13 Employment Agreement dated January 1, 1996 between the Company and Thomas L. Whiting (9)* 10.14 Employment Agreement dated October 11, 1996 between the Company and Gerald K. Kunkle Jr. (10)* 10.15 Employment Agreement dated April 20, 1998 between the Company and William R. Jellison (12)* 10.16 Employment Agreement dated September 10, 1998 between the Company and Brian M. Addison (12)* 10.17 Employment Agreement dated June 1, 1999 between the Company and J. Henrik Roos * 10.18 Midwest Dental Products Corporation Pension Plan as amended and restated effective January 1, 1989 (7)* 10.19 Revised Ransom & Randolph Pension Plan, as amended effective as of September 1, 1985, restated as of January 1, 1989 (7)* 10.20 DENTSPLY International Inc. Directors' Deferred Compensation Plan effective January 1, 1997 (10)* 10.21 (a) Asset Purchase and Sale Agreement, dated January 10, 1996, between Tulsa Dental Products, L.L.C. |
Philadelphia, Pennsylvania KPMG LLP January 20, 2000 DENTSPLY International Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, -------------------------------- 1999 1998 1997 -------------------------------- (in thousands, except per share amounts) Net sales $830,864 $795,122 $720,760 Cost of products sold 398,887 378,699 352,034 -------- -------- -------- Gross profit 431,977 416,423 368,726 Selling, general and administrative expenses 282,360 275,071 236,270 Restructuring and other costs --- 71,500 --- -------- -------- -------- Operating income 149,617 69,852 132,456 Other income and expenses: Interest expense 15,758 15,367 12,660 Interest income (1,118) (1,199) (1,654) Other (income) expense, net (3,042) 583 (556) -------- -------- -------- Income before income taxes 138,019 55,101 122,006 Provision for income taxes 48,156 20,276 47,452 -------- -------- -------- Net income $ 89,863 $ 34,825 $ 74,554 ======== ======== ======== Earnings per common share: Basic $ 1.70 $ .65 $ 1.38 Diluted 1.70 .65 1.37 Cash dividends declared per common share $ .23125 $ .21 $ .195 Weighted average common shares outstanding: Basic 52,754 53,330 53,937 Diluted 52,911 53,597 54,229 The accompanying Notes are an integral part of these Financial Statements. |
DENTSPLY International Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, ------------------- 1999 1998 Assets ------------------- Current assets: (in thousands) Cash and cash equivalents $ 7,276 $ 8,690 Accounts and notes receivable - trade, net 127,911 134,218 Inventories 135,480 139,235 Prepaid expenses and other current assets 44,001 40,309 -------- -------- Total Current Assets 314,668 322,452 Property, plant and equipment 180,536 158,998 Other noncurrent assets 14,963 67,799 Identifiable intangible assets, net 80,374 80,537 Costs in excess of fair value of net assets acquired, net 269,047 265,536 -------- -------- Total Assets $859,588 $895,322 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Notes payable and current portion of long-term debt $ 20,155 $ 16,270 Accounts payable 40,467 42,654 Accrued liabilities 80,922 99,427 Income taxes payable 34,676 36,025 -------- -------- Total Current Liabilities 176,220 194,376 Long-term debt 145,312 217,491 Other liabilities 46,445 48,113 Deferred income taxes 20,240 18,803 -------- -------- Total Liabilities 388,217 478,783 -------- -------- Minority interests in consolidated subsidiaries 2,499 2,738 -------- -------- Commitments and contingencies Stockholders' Equity: Preferred stock, $.01 par value; .25 million shares authorized; no shares issued --- --- Common stock, $.01 par value; 100 million shares authorized; 54.3 million shares and 54.3 million shares issued at December 31, 1999 and 1998, respectively 543 543 Capital in excess of par value 151,509 152,871 Retained earnings 402,408 324,745 Accumulated other comprehensive income (loss) (43,209) (14,730) Employee stock ownership plan reserve (6,458) (7,977) Treasury stock, at cost, 1.5 million and 1.7 million shares at December 31, 1999 and 1998, respectively (35,921) (41,651) -------- -------- Total Stockholders' Equity 468,872 413,801 -------- -------- Total Liabilities and Stockholders' Equity $859,588 $895,322 ======== ======== The accompanying Notes are an integral part of these Financial Statements. |
NOTE 8 - IDENTIFIABLE INTANGIBLE ASSETS - --------------------------------------- Identifiable intangible assets consist of the following: 1999 1998 -------- -------- (in thousands) Patents $ 45,954 $ 45,330 Trademarks 29,977 26,060 Licensing agreements 29,554 28,764 Product manufacturing rights 8,039 6,829 Non-compete agreements 5,708 5,092 Computer software development costs 5,172 3,705 Customer lists 4,422 4,422 Other 4,724 4,551 -------- -------- 133,550 124,753 Less: Accumulated amortization 53,176 44,216 -------- -------- $ 80,374 $ 80,537 ======== ======== NOTE 9 - ACCRUED LIABILITIES - ---------------------------- Accrued liabilities consist of the following: December 31, -------------------- 1999 1998 -------- -------- Payroll, commissions, bonuses (in thousands) and other cash compensation $ 17,634 $ 17,480 Employee benefits 7,915 7,015 General insurance 10,541 10,021 Restructuring and other costs 3,200 19,800 Other 41,632 45,111 -------- -------- $ 80,922 $ 99,427 ======== ======== NOTE 10 - FINANCING ARRANGEMENTS - -------------------------------- Short-Term Borrowings - --------------------- Short-term bank borrowings amounted to $19.4 million and $15.4 million at December 31, 1999 and 1998, respectively. |
The following is a summary of the status of the Plans as of December 31, 1999, 1998 and 1997 and changes during the years ending on those dates: ----Outstanding---- ----Exercisable---- Weighted Weighted Available Average Average for Exercise Exercise Grant Shares Price Shares Price Shares --------- -------- --------- -------- --------- December 31, 1996 1,917,988 $19.66 805,848 $18.64 1,552,500 Authorized/(Lapsed) --- (5,586) Granted 489,300 28.00 (489,300) Exercised (288,235) 18.26 --- Expired/Canceled (82,456) 19.60 82,456 --------- --------- December 31, 1997 2,036,597 21.87 1,090,921 19.71 1,140,070 Authorized/(Lapsed) --- 3,140,466 Granted 699,900 25.81 (699,900) Exercised (201,522) 18.66 --- Expired/Canceled (73,264) 23.87 73,264 --------- --------- December 31, 1998 2,461,711 23.19 1,360,967 20.83 3,653,900 Authorized/(Lapsed) --- 427,544 Granted 1,226,000 23.79 (1,226,000) Exercised (206,966) 19.47 --- Expired/Canceled (102,500) 25.17 102,500 --------- --------- December 31, 1999 3,378,245 $23.57 1,601,015 $22.43 2,957,944 ========= ========= The following table summarizes information about stock options outstanding under the Plans at December 31, 1999: -------Options Outstanding-------- -Options Exercisable- Weighted Number Average Number Outstanding Remaining Weighted Exercisable Weighted at Contractual Average at Average Range of December 31, Life Exercise December 31, Exercise Exercise Prices 1999 (in years) Price 1999 Price - --------------- ----------- ----------- -------- ----------- -------- $ 2.60 - $10.00 28,000 1.8 $ 7.66 28,000 $ 7.66 10.01 - 18.00 156,165 5.4 17.48 156,165 17.48 18.01 - 20.00 360,740 5.5 19.02 360,740 19.01 20.01 - 22.50 363,442 4.7 22.03 354,309 22.04 22.51 - 25.00 1,825,398 9.0 23.65 440,088 24.17 25.01 - 29.50 571,100 8.2 28.45 237,238 28.89 29.51 - 33.70 73,400 8.3 32.95 24,475 32.95 --------- --------- 3,378,245 7.8 $23.57 1,601,015 $22.43 ========= ========= The per share weighted average fair value of stock options granted during 1999, 1998 and 1997 was $9.24, $9.41 and $10.43, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 1999-expected dividend yield 1.04%, risk-free interest rate 6.16%, expected volatility 29%, and an expected life of 6.5 years; 1998-expected dividend yield .8%, risk-free interest rate 4.7%, expected volatility 29%, and an expected life of 6.5 years; and 1997-expected dividend yield .8%, risk-free interest rate 6.0%, expected volatility 26%, and an expected life of 6.5 years. |
NOTE 13 - INCOME TAXES - ---------------------- The components of income before income taxes are as follows: Year Ended December 31, -------------------------------- 1999 1998 1997 -------- -------- -------- (in thousands) United States $111,038 $ 47,416 $ 77,398 Foreign 26,981 7,685 44,608 -------- -------- -------- $138,019 $ 55,101 $122,006 ======== ======== ======== The components of the provision for income taxes are as follows: Year Ended December 31, -------------------------------- 1999 1998 1997 -------- -------- -------- Current: (in thousands) U.S. federal $ 33,813 $ 29,225 $ 27,407 U.S. state 1,497 589 4,350 Foreign 11,252 10,906 17,523 -------- -------- -------- Total 46,562 40,720 49,280 -------- -------- -------- Deferred: U.S. federal (1,943) (14,401) (1,671) U.S. state (274) (924) (191) Foreign 3,811 (5,119) 34 -------- -------- -------- Total 1,594 (20,444) (1,828) -------- -------- -------- $ 48,156 $ 20,276 $ 47,452 ======== ======== ======== The reconciliation of the U.S. federal statutory tax rate to the actual rate is as follows: Year Ended December 31, -------------------------------- 1999 1998 1997 -------- -------- -------- Statutory federal income tax rate 35.0% 35.0% 35.0% Effect of: State income taxes, net of federal benefit 0.6 0.7 2.3 Nondeductible amortization of goodwill 1.4 3.4 1.3 Foreign earnings at various rates 1.5 1.6 1.9 Foreign tax credit (5.0) (3.5) (1.9) Foreign losses with no tax benefit 0.9 1.7 1.2 Foreign sales corporation (1.0) (2.4) (0.2) Other 1.5 0.3 (0.7) -------- -------- -------- Actual income tax rate 34.9% 36.8% 38.9% ======== ======== ======== The tax effect of temporary differences giving rise to deferred tax assets and liabilities are as follows: December 31, 1999 December 31, 1998 ----------------------- ----------------------- Current Noncurrent Current Noncurrent Asset Asset Asset Asset (Liability) (Liability) (Liability) (Liability) ----------- ----------- ----------- ----------- (in thousands) Employee benefit accruals $ 1,306 $ 2,319 $ 1,075 $ 5,988 Product warranty accruals 1,481 --- 1,204 --- Facility relocation accruals 385 128 261 128 Insurance premium accruals 3,795 --- 3,060 --- Restructuring charges 5,192 14,420 7,269 14,164 Differences in financial reporting and tax basis for: Inventory 372 --- (286) --- Property, plant and equipment --- (22,894) --- (25,283) Identifiable intangible assets --- (10,694) --- (10,377) Other 6,457 (1,174) 5,255 115 Tax loss carryforwards in foreign jurisdictions --- 2,148 --- 7,834 Valuation allowance for tax loss carryforwards --- (2,148) --- (7,834) -------- -------- -------- -------- $ 18,988 $(17,895) $ 17,838 $(15,265) ======== ======== ======== ======== Current and noncurrent deferred tax assets and liabilities are included in the following balance sheet captions: December 31, -------------------- 1999 1998 -------- -------- (in thousands) Prepaid expenses and other current assets $ 20,771 $ 19,697 Income taxes payable (1,783) (1,859) Other noncurrent assets 2,345 3,538 Deferred income taxes (20,240) (18,803) The provision for income taxes was reduced due to utilization of tax loss carryforwards by $.3 million in 1999. |
(11) (b) Amendment to the 364-Day Competitive Advance, Revolving Credit and Guaranty Agreement dated as of October 21, 1999 among the Company, the guarantors named therein, the banks named therein, the Chase Manhattan Bank as Administrative Agent, and ABN Amro Bank, N.V. as Documentation Agent 91 4.2 (a) Commercial Paper Issuing and Paying Agency Agreement dated as of August 12, 1999 between the Company and the Chase Manhattan Bank 112 (b) Commercial Paper Dealer Agreement dated as of August 12, 1999 between the Company and Goldman, Sachs & Co. 120 10.1 1992 Stock Option Plan adopted May 26, 1992 (4) 10.2 1993 Stock Option Plan (2) 10.3 1998 Stock Option Plan (1) 10.4 Nonstatutory Stock Option Agreement between the Company and Burton C. Borgelt (3) 10.5 (a) Employee Stock Ownership Plan as amended effective as of December 1, 1982, restated as of January 1, 1991 (7) (b) Second amendment to the DENTSPLY Employee Stock Ownership Plan (10) (c) Third Amendment to the DENTSPLY Employee Stock Ownership Plan (12) 10.6 (a) Retainer Agreement dated December 29, 1992 between the Company and State Street Bank and Trust Company ("State Street") (5) (b) Trust Agreement between the Company and State Street Bank and Trust Company dated as of August 11, 1993 (6) (c) Amendment to Trust Agreement between the Company and State Street Bank and Trust Company effective August 11, 1993 (6) 10.7 Employment Agreement dated January 1, 1996 between the Company and Burton C. Borgelt (9) 10.8 (a) Employment Agreement dated as of December 31, 1987 between the Company and John C. Miles II (5) (b) Amendment to Employment Agreement between the Company and John C. Miles II dated February 16, 1996, effective January 1, 1996 (9) 10.9 Employment Agreement dated as of December 31, 1987, as amended as of February 8, 1990, between the Company and Leslie A. Jones (5) 10.10 Employment Agreement dated as of December 10, 1992 between the Company and Michael R. Crane (5) 10.11 Employment Agreement dated as of December 10, 1992 between the Company and Edward D. Yates (5) 10.12 Employment Agreement dated January 1, 1996 between the Company and W. William Weston (9) 10.13 Employment Agreement dated January 1, 1996 between the Company and Thomas L. Whiting (9) 10.14 Employment Agreement dated October 11, 1996 between the Company and Gerald K. Kunkle Jr. (10) 10.15 Employment Agreement dated April 20, 1998 between the Company and William R. Jellison (12) 10.16 Employment Agreement dated September 10, 1998 between the Company and Brian M. Addison (12) 10.17 Employment Agreement dated June 1, 1999 between the Company and J. Henrik Roos 135 10.18 Midwest Dental Products Corporation Pension Plan as amended and restated effective January 1, 1989 (7) 10.19 Revised Ransom & Randolph Pension Plan, as amended effective as of September 1, 1985, restated as of January 1, 1989 (7) 10.20 DENTSPLY International Inc. Directors' Deferred Compensation Plan effective January 1, 1997 (10) 10.21(a) Asset Purchase and Sale Agreement, dated January 10, 1996, between Tulsa Dental Products, L.L.C. |
Properties - ------------------- As of March 15, 1999, DENTSPLY maintains manufacturing facilities at the following locations: Leased Location Function or Owned - -------- -------- -------- York, Pennsylvania Manufacture and distribution of Owned artificial teeth and other dental laboratory products; export of dental products; corporate headquarters York, Pennsylvania Manufacture and distribution of Owned dental equipment and preventive dental products Des Plaines, Illinois Manufacture and assembly of dental Leased handpieces and components and dental x-ray equipment Franklin Park, Manufacture and distribution of Owned Illinois needles and needle-related products, primarily for the dental profession Milford, Delaware Manufacture and distribution of Owned consumable dental products Las Piedras, Manufacture of crown and bridge Owned Puerto Rico materials Elgin, Illinois Manufacture of dental x-ray film Owned holders, film mounts and accessories Maumee, Ohio Manufacture and distribution of Owned investment casting products Lakewood, Colorado Manufacture and distribution of Leased bone grafting materials and Hydroxylapatite plasma-feed coating materials Commerce, California Manufacture and distribution of Leased investment casting products Carlsbad, California Manufacture and distribution of Leased(1) intraoral cameras and computer imaging systems Johnson City, Manufacture and distribution of Leased Tennessee endodontic instruments and materials West Palm Beach, Manufacture and distribution of Leased Florida endodontic instruments and materials Petropolis, Brazil Manufacture and distribution of Owned artificial teeth and consumable dental products Petropolis, Brazil Manufacture and distribution of Owned dental anesthetics Dreieich, Germany Manufacture and distribution of Owned(2) artificial teeth and other dental laboratory products Konstanz, Germany Manufacture and distribution of Owned consumable dental products; distribution of dental equipment Munich, Germany Manufacture and distribution of Owned endodontic instruments and materials Milan, Italy Manufacture and distribution of Leased dental x-ray equipment Mexico City, Mexico Manufacture and distribution of Owned dental products Plymouth, England Manufacture and distribution of Leased dental hand instruments Blackpool, England Manufacture and distribution of Leased dental materials Ballaigues, Manufacture and distribution of Owned Switzerland endodontic instruments Ballaigues, Manufacture and distribution of Owned Switzerland plastic components and packaging material Le Creux, Manufacture and distribution of Owned Switzerland endodontic instruments Moscow, Russia Manufacture and distribution of Leased consumable dental products New Delhi, India Manufacture and distribution of Leased dental products Tianjin, China Manufacture and distribution of Leased dental products (1) Facility closed March 31, 1999 (2) Manufacturing discontinued March 31, 1999. |
(11) 10.1 1992 Stock Option Plan adopted May 26, 1992 (4) 10.2 1993 Stock Option Plan (2) 10.3 1998 Stock Option Plan (1) 10.4 Nonstatutory Stock Option Agreement between the Company and Burton C. Borgelt (3) 10.5 (a) Employee Stock Ownership Plan as amended effective as of December 1, 1982, restated as of January 1, 1991 (7) (b) Second amendment to the DENTSPLY Employee Stock Ownership Plan (10) (c) Third Amendment to the DENTSPLY Employee Stock Ownership Plan 10.6 (a) Retainer Agreement dated December 29, 1992 between the Company and State Street Bank and Trust Company ("State Street") (5) (b) Trust Agreement between the Company and State Street Bank and Trust Company dated as of August 11, 1993 (6) (c) Amendment to Trust Agreement between the Company and State Street Bank and Trust Company effective August 11, 1993 (6) 10.7 Employment Agreement dated January 1, 1996 between the Company and Burton C. Borgelt (9)* 10.8 (a) Employment Agreement dated as of December 31, 1987 between the Company and John C. Miles II (5)* (b) Amendment to Employment Agreement between the Company and John C. Miles II dated February 16, 1996, effective January 1, 1996 (9)* 10.9 Employment Agreement dated as of December 31, 1987, as amended as of February 8, 1990, between the Company and Leslie A. Jones (5)* 10.10 Employment Agreement dated as of December 10, 1992 between the Company and Michael R. Crane (5)* 10.11 Employment Agreement dated as of December 10, 1992 between the Company and Edward D. Yates (5)* 10.12 Employment Agreement dated January 1, 1996 between the Company and W. William Weston (9)* 10.13 Employment Agreement dated January 1, 1996 between the Company and Thomas L. Whiting (9)* 10.14 Employment Agreement dated October 11, 1996 between the Company and Gerald K. Kunkle Jr. (10)* 10.15 Employment Agreement dated April 20, 1998 between the Company and William R. Jellison 10.16 Employment Agreement dated September 10, 1998 between the Company and Brian M. Addison 10.17 Midwest Dental Products Corporation Pension Plan as amended and restated effective January 1, 1989 (7)* 10.18 Revised Ransom & Randolph Pension Plan, as amended effective as of September 1, 1985, restated as of January 1, 1989 (7)* 10.19 DENTSPLY International Inc. Directors' Deferred Compensation Plan effective January 1, 1997 (10)* 10.20 Asset Purchase and Sale Agreement, dated January 10, 1996, between Tulsa Dental Products, L.L.C. |
Philadelphia, Pennsylvania KPMG LLP January 21, 1999 DENTSPLY International Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, -------------------------------- 1998 1997 1996 -------------------------------- (in thousands, except per share amounts) Net sales $795,122 $720,760 $656,557 Cost of products sold 378,699 352,034 331,887 -------- -------- -------- Gross profit 416,423 368,726 324,670 Selling, general and administrative expenses 275,071 236,270 205,206 Restructuring and other costs 71,500 --- --- -------- -------- -------- Operating income 69,852 132,456 119,464 Other income and expenses: Interest expense 15,367 12,660 11,095 Interest income (1,199) (1,654) (1,024) Other (income) expense, net 583 (556) (1,567) -------- -------- -------- Income before income taxes 55,101 122,006 110,960 Provision for income taxes 20,276 47,452 43,738 -------- -------- -------- Net income $ 34,825 $ 74,554 $ 67,222 ======== ======== ======== Earnings per common share: Basic $ .65 $ 1.38 $ 1.25 Diluted .65 1.37 1.25 Cash dividends declared per common share $ .21 $ .195 $ .17 Weighted average common shares outstanding: Basic 53,330 53,937 53,840 Diluted 53,597 54,229 53,994 The accompanying Notes are an integral part of these Financial Statements. |
DENTSPLY International Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, ------------------- 1998 1997 Assets ------------------- Current assets: (in thousands) Cash and cash equivalents $ 8,690 $ 9,848 Accounts and notes receivable - trade, net 134,218 114,366 Inventories 139,235 124,748 Prepaid expenses and other current assets 40,309 28,065 -------- -------- Total Current Assets 322,452 277,027 Property, plant and equipment, net 158,998 147,130 Other noncurrent assets, net 67,799 13,314 Identifiable intangible assets, net 80,537 103,513 Costs in excess of fair value of net assets acquired, net 265,536 233,392 -------- -------- Total Assets $895,322 $774,376 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Notes payable and current portion of long-term debt $ 16,270 $ 24,005 Accounts payable 42,654 38,942 Accrued liabilities 99,427 71,563 Income taxes payable 36,025 34,839 -------- -------- Total Current Liabilities 194,376 169,349 Long-term debt 217,491 105,505 Other liabilities 48,113 43,954 Deferred income taxes 18,803 27,647 -------- -------- Total Liabilities 478,783 346,455 -------- -------- Minority interests in consolidated subsidiaries 2,738 3,988 -------- -------- Commitments and contingencies Stockholders' Equity: Preferred stock, $.01 par value; .25 million shares authorized; no shares issued --- --- Common stock, $.01 par value; 100 million shares authorized; 54.3 million shares and 54.2 million shares issued at December 31, 1998 and 1997, respectively 543 542 Capital in excess of par value 152,871 150,738 Retained earnings 324,745 301,058 Accumulated other comprehensive income (14,730) (16,720) Employee stock ownership plan reserve (7,977) (9,497) Treasury stock, at cost, 1.7 million and .1 million shares at December 31, 1998 and 1997, respectively (41,651) (2,188) -------- -------- Total Stockholders' Equity 413,801 423,933 -------- -------- Total Liabilities and Stockholders' Equity $895,322 $774,376 ======== ======== The accompanying Notes are an integral part of these Financial Statements. |
NOTE 2 - EARNINGS PER COMMON SHARE - ---------------------------------- The following table sets forth the computation of basic and diluted earnings per common share: Income Shares Per Share (Numerator) (Denominator) Amount ----------- ------------- --------- (in thousands, except per share amounts) Year Ended December 31, 1998 Basic EPS $ 34,825 53,330 $ .65 Incremental shares from assumed exercise of dilutive options and warrants - 267 -------- ------ Diluted EPS $ 34,825 53,597 $ .65 ======== ====== Year Ended December 31, 1997 Basic EPS $ 74,554 53,937 $1.38 Incremental shares from assumed exercise of dilutive options and warrants - 292 -------- ------ Diluted EPS $ 74,554 54,229 $1.37 ======== ====== Year Ended December 31, 1996 Basic EPS $ 67,222 53,840 $1.25 Incremental shares from assumed exercise of dilutive options and warrants - 154 -------- ------ Diluted EPS $ 67,222 53,994 $1.25 ======== ====== NOTE 3 - BUSINESS ACQUISITIONS - ------------------------------ In December 1998, the Company purchased 100% of the capital stock of Vereingte Dentalwerke GmbH ("VDW") and related companies for $50.9 million with an additional payment of $.9 million to be paid in 1999. |
NOTE 8 - IDENTIFIABLE INTANGIBLE ASSETS - --------------------------------------- Identifiable intangible assets consist of the following: 1998 1997 -------- -------- (in thousands) Patents $ 45,330 $ 47,519 Trademarks 26,060 47,440 Non-compete agreements 22,816 22,816 Licensing agreements 11,040 10,540 Product manufacturing rights 6,829 3,310 Customer lists 4,422 4,422 Other 8,256 4,381 -------- -------- 124,753 140,428 Less: Accumulated amortization 44,216 36,915 -------- -------- $ 80,537 $103,513 ======== ======== NOTE 9 - ACCRUED LIABILITIES - ---------------------------- Accrued liabilities consist of the following: December 31, -------------------- 1998 1997 -------- -------- Payroll, commissions, bonuses (in thousands) and other cash compensation $ 17,480 $ 16,554 Employee benefits 7,015 6,803 General insurance 10,021 7,313 Restructuring and other costs 19,800 - Other 45,111 40,893 -------- -------- $ 99,427 $ 71,563 ======== ======== NOTE 10 - FINANCING ARRANGEMENTS - -------------------------------- Short-Term Borrowings - --------------------- Short-term bank borrowings amounted to $15.4 million and $23.4 million at December 31, 1998 and 1997, respectively. |
The following is a summary of the status of the Plans as of December 31, 1998, 1997, and 1996 and changes during the years ending on those dates: ----Outstanding---- ----Exercisable---- Weighted Weighted Available Average Average for Exercise Exercise Grant Shares Price Shares Price Shares --------- -------- --------- -------- --------- December 31, 1995 1,732,122 $18.96 393,126 $16.74 1,894,378 Authorized --- (80,612) Granted 363,600 22.66 (363,600) Exercised (71,878) 16.71 --- Expired/Canceled (105,856) 20.38 102,334 --------- --------- December 31, 1996 1,917,988 19.66 805,848 18.64 1,552,500 Authorized --- (5,586) Granted 489,300 28.00 (489,300) Exercised (288,235) 18.26 --- Expired/Canceled (82,456) 19.60 82,456 --------- --------- December 31, 1997 2,036,597 21.87 1,090,921 19.71 1,140,070 Authorized --- 3,140,466 Granted 699,900 25.81 (699,900) Exercised (201,522) 18.66 --- Expired/Canceled (73,264) 23.87 73,264 --------- --------- December 31, 1998 2,461,711 $23.19 1,360,967 $20.83 3,653,900 ========= ========= The following table summarizes information about stock options outstanding under the Plans at December 31, 1998: -------Options Outstanding-------- -Options Exercisable- Weighted Number Average Number Outstanding Remaining Weighted Exercisable Weighted at Contractual Average at Average Range of December 31, Life Exercise December 31, Exercise Exercise Prices 1998 (in years) Price 1998 Price - --------------- ----------- ----------- -------- ----------- -------- $ 2.60 - $10.00 36,000 2.6 $ 6.54 36,000 $ 6.54 10.01 - 18.00 167,665 6.4 17.48 167,665 17.48 18.01 - 20.00 486,406 6.5 19.02 481,872 19.01 20.01 - 22.50 426,242 5.6 22.06 391,510 22.12 22.51 - 25.00 888,998 9.3 24.49 157,530 23.50 25.01 - 29.50 381,200 8.9 28.89 126,390 28.89 29.51 - 33.70 75,200 9.3 32.97 --- -- --------- --------- 2,461,711 7.7 $23.19 1,360,967 20.83 ========= ========= The per share weighted average fair value of stock options granted during 1998, 1997 and 1996 was $9.41, $10.43 and $8.65, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 1998-expected dividend yield 0.8%, risk-free interest rate 4.7%, expected volatility 29%, and an expected life of 6.5 years; 1997-expected dividend yield 0.8%, risk-free interest rate 6.0%, expected volatility 26%, and an expected life of 6.5 years; and 1996-expected dividend yield 0.8%, risk-free interest rate 6.4%, expected volatility 26%, and an expected life of 6.5 years. |
NOTE 13 - INCOME TAXES - ---------------------- The components of income before income taxes are as follows: Year Ended December 31, -------------------------------- 1998 1997 1996 -------- -------- -------- (in thousands) United States $ 47,416 $ 77,398 $ 77,619 Foreign 7,685 44,608 33,341 -------- -------- -------- $ 55,101 $122,006 $110,960 ======== ======== ======== The components of the provision for income taxes are as follows: Year Ended December 31, -------------------------------- 1998 1997 1996 -------- -------- -------- Current: (in thousands) U.S. federal $ 29,225 $ 27,407 $ 26,715 U.S. state 589 4,350 4,401 Foreign 10,906 17,523 15,630 -------- -------- -------- Total 40,720 49,280 46,746 -------- -------- -------- Deferred: U.S. federal (14,401) (1,671) (886) U.S. state (924) (191) (139) Foreign (5,119) 34 (1,983) -------- -------- -------- Total (20,444) (1,828) (3,008) -------- -------- -------- $ 20,276 $ 47,452 $ 43,738 ======== ======== ======== The reconciliation of the U.S. federal statutory tax rate to the actual rate is as follows: Year Ended December 31, -------------------------------- 1998 1997 1996 -------- -------- -------- Statutory federal income tax rate 35.0% 35.0% 35.0% Effect of: State income taxes, net of federal benefit 0.7 2.3 2.3 Nondeductible amortization of goodwill 3.4 1.3 1.2 Foreign losses with no tax benefit 1.7 1.2 .9 Foreign sales corporation (2.4) (0.2) --- Other (1.6) (0.7) --- -------- -------- -------- Actual income tax rate 36.8% 38.9% 39.4% ======== ======== ======== The tax effect of temporary differences giving rise to deferred tax assets and liabilities are as follows: December 31, 1998 December 31, 1997 ----------------------- ----------------------- Current Noncurrent Current Noncurrent Asset Asset Asset Asset (Liability) (Liability) (Liability) (Liability) ----------- ----------- ----------- ----------- (in thousands) Employee benefit accruals $ 1,075 $ 5,988 $ 952 $ 5,185 Product warranty accruals 1,204 --- 1,016 --- Facility relocation accruals 261 128 425 1,040 Insurance premium accruals 3,060 --- 2,515 --- Restructuring and other cost accruals 7,269 14,164 --- --- Differences in financial reporting and tax basis for: Inventory (286) --- 851 --- Property, plant and equipment --- (25,283) --- (24,043) Identifiable intangible assets --- (10,377) --- (10,126) Other 5,255 115 2,685 697 Tax loss carryforwards in foreign jurisdictions --- 7,834 --- 6,520 Valuation allowance for foreign tax credit and tax loss carryforwards --- (7,834) --- (6,520) -------- -------- -------- -------- $ 17,838 $(15,265) $ 8,444 $(27,247) ======== ======== ======== ======== Current and noncurrent deferred tax assets and liabilities are included in the following balance sheet captions: December 31, -------------------- 1998 1997 -------- -------- (in thousands) Prepaid expenses and other current assets $ 19,697 $ 11,096 Income taxes payable (1,859) (2,652) Other noncurrent assets, net 3,538 400 Deferred income taxes (18,803) (27,647) The provision for income taxes was reduced due to utilization of tax loss carryforwards by $297,000 in 1998. |
The pension provision for the German and Swiss plans included the following components: Year Ended December 31, -------------------------------- 1998 1997 1996 -------- -------- -------- (in thousands) Service cost $ 2,295 $ 1,995 $ 2,464 Interest cost on projected benefit obligations 2,780 2,622 3,171 Net investment return on plan assets (2,112) (1,317) (1,296) Net amortization and deferral (709) (651) (412) -------- -------- -------- $ 2,254 $ 2,649 $ 3,927 ======== ======== ======== The benefit obligation reconciliation, plan asset reconciliation, and fund status reconciliation for these retirement plans were as follows: December 31, ------------------------ 1998 1997 -------- -------- Reconciliation of Benefit Obligation: (in thousands) Benefit obligation at beginning of year $ 47,655 $ 47,792 Service cost 2,295 1,995 Interest cost 2,780 2,622 Employer contributions 937 851 Participant contributions 781 710 Actuarial (gains)losses (2,433) 1,657 Effect of exchange rate changes 2,865 (5,888) Benefits paid (2,438) (2,084) -------- -------- Benefit obligation at end of year $ 52,442 $ 47,655 Reconciliation of Plan Assets: Fair value of plan assets at beginning of year $ 27,508 $ 25,557 Actual return on assets 4,307 3,403 Foreign currency exchange rate changes 1,072 (2,181) Employer contributions 937 851 Participant contributions 781 710 Benefits paid (1,171) (832) -------- -------- Plan assets at fair value $ 33,434 $ 27,508 Reconciliation of Fund Status: Actuarial present value of projected benefit obligations $ 52,442 $ 47,655 Plan assets at fair value 33,434 27,508 -------- -------- Plan assets less than projected benefit obligations 19,008 20,147 Unrecognized obligation (1,320) (1,314) Unrecognized net gain 11,265 7,180 -------- -------- Pension liability $ 28,953 $ 26,013 The projected benefit obligations for these plans were determined using discount rates of 6.5 percent as of December 31, 1998 and 7.0 percent as of December 31, 1997 in Germany and 4.5 percent as of December 31, 1998 and 1997 in Switzerland. |
The following table sets forth the combined status of the plans: December 31, -------------------- 1998 1997 -------- -------- Accumulated postretirement benefit obligation: (in thousands) Retirees $ 5,592 $ 5,839 Fully eligible active plan participants 255 283 Other active plan participants 943 813 -------- -------- Accumulated postretirement benefit obligation at end of period 6,790 6,935 Unrecognized gain 3,312 3,372 -------- -------- Net postretirement benefit liability $ 10,102 $ 10,307 ======== ======== Reconciliation of benefit obligation: Accrued postretirement obligation at beginning of year $ 10,307 $ 10,299 Net periodic postretirement benefit cost 478 634 Benefit payments for year 683 626 -------- -------- Accrued postretirement benefit cost $ 10,102 $ 10,307 ======== ======== Year Ended December 31, -------------------------------- 1998 1997 1996 -------- -------- -------- Net periodic postretirement benefit (in thousands) cost included the following components: Service cost - benefits attributed to service during the period $ 124 $ 159 $ 188 Interest cost on accumulated Postretirement benefit obligation 478 605 764 Net amortization and deferral (124) (130) --- -------- -------- -------- Net periodic postretirement benefit cost $ 478 $ 634 $ 952 ======== ======== ======== For measurement purposes, the annual rate of increase in the per capita cost of covered healthcare benefits assumed for 1998 and thereafter was 7% in 1998 and 1997 and 10% in 1996. |
10.1 1992 Stock Option Plan adopted May (4) 26, 1992 10.2 1993 Stock Option Plan (2) 10.3 1998 Stock Option Plan (1) 10.4 Nonstatutory Stock Option Agreement (3) between the Company and Burton C. Borgelt 10.5 (a) Employee Stock Ownership Plan as (7) amended effective as of December 1, 1982, restated as of January 1, (b) Second Amendment to the DENTSPLY (10) Employee Stock Ownership Plan (c) Third Amendment to the DENTSPLY Employee 83 Stock Ownership Plan 10.6 (a) Retainer Agreement dated December (5) 29, 1992 between the Company and State Street Bank and Trust Company ("State Street") (b) Trust Agreement between the Company (6) and State Street Bank and Trust Company dated as of August 11, 1993 (c) Amendment to Trust Agreement (6) between the Company and State Street Bank and Trust Company effective August 11, 1993 10.7 Employment Agreement dated January (9) 1, 1996 between the Company and Burton C. Borgelt 10.8 (a) Employment Agreement dated as of (5) December 31, 1987 between the Company and John C. Miles II (b) Amendment to Employment Agreement (9) between the Company and John C. Miles II dated February 16, 1996, effective January 1, 1996 10.9 Employment Agreement dated as of (5) December 31, 1987, as amended as of February 8, 1990, between the Company and Leslie A. Jones 10.10 Employment Agreement dated as of (5) December 10, 1992 between the Company and Michael R. Crane 10.11 Employment Agreement dated as of (5) December 10, 1992 between the Company and Edward D. Yates 10.12 Employment Agreement dated January (9) 1, 1996 between the Company and W. William Weston 10.13 Employment Agreement dated January (9) 1, 1996 between the Company and Thomas L. Whiting 10.14 Employment Agreement dated October (10) 11, 1996 between the Company and Gerald K. Kunkle Jr. 10.15 Employment Agreement dated April 20, 85 1998 between the Company and William R. Jellison 10.16 Employment Agreement dated September 92 10, 1998 between the Company and Brian M. Addison 10.17 Midwest Dental Products Corporation (7) Pension Plan as amended and re- stated effective January 1, 1989 10.18 Revised Ransom & Randolph Pension (7) Plan, as amended effective as of September 1, 1985, restated as of January 1, 1989 10.19 DENTSPLY International Inc. (10) Directors' Deferred Compensation Plan effective January 1, 1997 10.20 Asset Purchase and Sale Agreement, (8) dated January 10, 1996, between Tulsa Dental Products, L.L.C. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Our financial statements include the following: CHINA ADVANCED TECHNOLOGY AND SUBSIDIARY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED APRIL 30, 2011 AND 2010 PAGE Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Changes in Shareholders’ Equity Consolidated Statements of Cash Flows Notes to the Consolidated Financial Statements -F-21 Report of Independent Registered Public Accounting Firm To the Board of Directors of China Advanced Technology (A Development Stage Company) Chapel Hill, North Carolina We have audited the accompanying consolidated balance sheets of China Advanced Technology and its subsidiary, Live Wise, Inc. (collectively the “Company”) as of April 30, 2011 and April 30, 2010, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the period for the years then ended and from the inception on May 1, 2008 to April 30, 2011. |
The new guidance makes targeted improvements to existing GAAP by: Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and ROCKETFUEL BLOCKCHAIN, INC. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2020 Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. |
/s/ Prager Metis CPAs LLC We have served as the Company’s auditors since 2018 Hackensack, New Jersey August 22, 2019 ROCKETFUEL BLOCKCHAIN, INC. Balance Sheets March 31, 2019 March 31, 2018 ASSETS Current assets: Cash $19,486 $300 Total current assets 19,486 Total assets $19,486 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable and accrued expenses $78,174 $3,500 Advances payable to related parties - Total current liabilities 78,174 3,805 Total liabilities 78,174 3,805 Stockholders’ deficit: Preferred stock; $0.001 par value; 50,000,000 and 0 shares authorized; and 0 shares issued and outstanding as of March 31, 2019 and 2018, respectively - - Common stock; $0.001 par value; 250,000,000 and 750,000,000 shares authorized; and 22,688,416 shares and 17,001,312 shares issued and outstanding as of March 31, 2019 and 2018, respectively 22,688 17,001 Additional paid-in capital 1,413,629 233,299 Accumulated deficit (1,495,005) (253,805) Total stockholders’ deficit (58,688) (3,505) Total liabilities and stockholders’ deficit $19,486 $300 The accompanying notes are an integral part of these financial statements. |
Statements of Cash Flows Year Ended March 31, 2019 Period from January 12, 2018 (date of inception) through March 31, 2018 Cash flows from operating activities: Net loss $(1,331,947) $(253,805) Adjustments to reconcile net loss to net cash flows used in operating activities Stock-based compensation 1,150,350 - Changes in assets and liabilities: Accounts payable and accrued expenses 171,088 3,500 Net cash flows used in operating activities (10,509) (250,305) Cash flows from financing activities: Proceeds from issuance of common stock 30,000 250,300 Proceeds from related party advances - Repayment of related party advances (305) - Net cash flows provided by financing activities 29,695 250,605 Net change in cash 19,186 Cash at beginning of period - Cash at end of period $19,486 $300 Supplemental disclosure of non-cash flow information: Common stock issued in consideration for consulting services $50,000 $- Effect of reverse-merger transaction on additional paid-in capital $96,414 $- Income taxes paid $- $- The accompanying notes are an integral part of these financial statements. |
The new guidance makes targeted improvements to existing GAAP by: Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. |
The new guidance makes targeted improvements to existing GAAP by: (i) requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (ii) requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (iii) requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; (iv) eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; (v) eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and (vi) requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. |
Involvement in Certain Legal Proceedings During the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of the Company: (1) Was a general partner or executive officer of any business by or against which any bankruptcy petition was filed, whether at the time of such filing or two years prior thereto; (2) Was convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) Was found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
Form September 8, 1987 3.1 Articles of Incorporation and Amendments thereto 3.2 By-Laws 4.1 Form of Stock Certificate Form 8-K July 5, 2002 10.1 Agreement and Plan of Reorganization - Trappers Pizza Form 10-KSB March 30, 2004 14.1 Code of Ethics Form 8-K September 12, 2013 10.2 Asset Purchase Agreement dated September 6, 2013 (Montana) 10.3 Nevada Claim Assignment dated September 6, 2013 10.4 Consulting Agreement (Red Rock) dated September 9, 2013 Form 10-Q November 19, 2013 3.3 Certificate of Amendment to Articles of Incorporation dated October 10, 2013 Form 10-K For the Year ended December 31, 2013 filed on July 1, 2015 10.5 Mutual Rescission Agreement executed May 23, 2015 10.6 Sub-Lease Agreement dated as of May 1, 2015 by and between Mostofi & Company, LLP and the Company This Form 10-K 31.1 Certification of principal executive officer and principal financial officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of principal executive officer and principal financial officer pursuant to 18 U.S.C. |
Involvement in Certain Legal Proceedings During the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of the Company: (1) Was a general partner or executive officer of any business by or against which any bankruptcy petition was filed, whether at the time of such filing or two years prior thereto; (2) Was convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) Was found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
Form S-18 - September 8, 1987 3.1 Articles of Incorporation and Amendments thereto 3.2 By-Laws 4.1 Form of Stock Certificate Form 8-K - July 5, 2002 10.1 Agreement and Plan of Reorganization - Trappers Pizza Form 10-KSB - March 30, 2004 14.1 Code of Ethics Form 8-K - September 12, 2013 10.2 Asset Purchase Agreement dated September 6, 2013 (Montana) 10.3 Nevada Claim Assignment dated September 6, 2013 10.4 Consulting Agreement (Red Rock) dated September 9, 2013 Form 10-Q - November 19, 2013 3.3 Certificate of Amendment to Articles of Incorporation dated October 10, 2013 This Form 10-K 10.5 Mutual Rescission Agreement executed May 23, 2015 10.6 Sub-Lease Agreement dated as of May 1, 2015 by and between Mostofi & Company, LLP and the Company 31.1 Certification of principal executive officer and principal financial officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of principal executive officer and principal financial officer pursuant to 18 U.S.C. |
Involvement in Certain Legal Proceedings During the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of the Company: (1) Was a general partner or executive officer of any business by or against which any bankruptcy petition was filed, whether at the time of such filing or two years prior thereto; (2) Was convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) Was found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
Date: March 13, 2013 By: /s/ Elwood Shepard Elwood Shepard, President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Date: March 13, 2013 By: /s/ Elwood Shepard Elwood Shepard, Director HEAVENLY HOT DOGS, INC. [A Development Stage Company] FINANCIAL STATEMENTS DECEMBER 31, 2012 HEAVENLY HOT DOGS, INC. [A Development Stage Company] CONTENTS PAGE Report of Independent Registered Public Accounting Firm Balance Sheets, December 31, 2012 and 2011 Statements of Operations, for the years ended December 31, 2012 and 2011 and from the re-entering of development stage on January 1, 1991 through December 31, 2012 Statement of Stockholders’ Equity (Deficit), from the re-entering of development stage on January 1, 1991 through December 31, 2012 Statements of Cash Flows, for the years ended December 31, 2012 and 2011 and from the re-entering of development stage on January 1, 1991 through December 31, 2012 Notes to Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Heavenly Hot Dogs, Inc. Salt Lake City, Utah We have audited the accompanying balance sheets of Heavenly Hot Dogs, Inc. [a development stage company] as of December 31, 2012 and 2011 and the related statements of operations, stockholders' equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2012 and for the period from the re-entering the development stage on January 1, 1991 through December 31, 2012. |
Involvement in Certain Legal Proceedings During the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of the Company: (1) Was a general partner or executive officer of any business by or against which any bankruptcy petition was filed, whether at the time of such filing or two years prior thereto; (2) Was convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) Was found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
Date: February 24, 2012 By: /s/ Elwood Shepard Elwood Shepard, President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Date: February 24, 2012 By: /s/ Elwood Shepard Elwood Shepard, Director HEAVENLY HOT DOGS, INC. [A Development Stage Company] FINANCIAL STATEMENTS DECEMBER 31, 2011 HEAVENLY HOT DOGS, INC. [A Development Stage Company] CONTENTS PAGE Report of Independent Registered Public Accounting Firm Balance Sheets, December 31, 2011 and 2010 Statements of Operations, for the years ended December 31, 2011 and 2010 and from the re-entering of development stage on January 1, 1991 through December 31, 2011 Statement of Stockholders’ Equity (Deficit), from the re-entering of development stage on January 1, 1991 through December 31, 2011 Statements of Cash Flows, for the years ended December 31, 2011 and 2010 and from the re-entering of development stage on January 1, 1991 through December 31, 2011 Notes to Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Heavenly Hot Dogs, Inc. Salt Lake City, Utah We have audited the accompanying balance sheets of Heavenly Hot Dogs, Inc. [a development stage company] as of December 31, 2011 and 2010 and the related statements of operations, stockholders' equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2011 and for the period from the re-entering the development stage on January 1, 1991 through December 31, 2011. |
Involvement in Certain Legal Proceedings During the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of the Company: (1) Was a general partner or executive officer of any business by or against which any bankruptcy petition was filed, whether at the time of such filing or two years prior thereto; (2) Was convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) Was found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
2011 By: /s/ Elwood Shepard Elwood Shepard, President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Date: March 8, 2011 By: /s/ Elwood Shepard Elwood Shepard, Director HEAVENLY HOT DOGS, INC. [A Development Stage Company] FINANCIAL STATEMENTS DECEMBER 31, 2010 HEAVENLY HOT DOGS, INC. [A Development Stage Company] CONTENTS PAGE Report of Independent Registered Public Accounting Firm Balance Sheets, December 31, 2010 and 2009 Statements of Operations, for the years ended December 31, 2010 and 2009 and from the re-entering of development stage on January 1, 1991 through December 31, 2010 Statement of Stockholders’ Equity (Deficit), from the re-entering of development stage on January 1, 1991 through December 31, 2010 Statements of Cash Flows, for the years ended December 31, 2010 and 2009 and from the re-entering of development stage on January 1, 1991 through December 31, 2010 Notes to Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Heavenly Hot Dogs, Inc. Salt Lake City, Utah We have audited the accompanying balance sheets of Heavenly Hot Dogs, Inc. [a development stage company] as of December 31, 2010 and 2009 and the related statements of operations, stockholders' equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2010 and for the period from the re-entering the development stage on January 1, 1991 through December 31, 2010. |
Involvement in Certain Legal Proceedings During the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of the Company: (1) Was a general partner or executive officer of any business by or against which any bankruptcy petition was filed, whether at the time of such filing or two years prior thereto; (2) Was convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) Was found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
Date: March 15, 2010 By: /s/ Elwood Shepard Elwood Shepard, President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Date: March 15, 2010 By: /s/ Elwood Shepard Elwood Shepard, Director HEAVENLY HOT DOGS, INC. [A Development Stage Company] FINANCIAL STATEMENTS DECEMBER 31, 2009 HEAVENLY HOT DOGS, INC. [A Development Stage Company] CONTENTS PAGE Report of Independent Registered Public Accounting Firm Balance Sheets, December 31, 2009 and 2008 Statements of Operations, for the years ended December 31, 2009 and 2008 and from the re-entering of development stage on January 1, 1991 through December 31, 2009 Statement of Stockholders’ Equity (Deficit), from the re-entering of development stage on January 1, 1991 through December 31, 2009 Statements of Cash Flows, for the years ended December 31, 2009 and 2008 and from the re-entering of development stage on January 1, 1991 through December 31, 2009 Notes to Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Heavenly Hot Dogs, Inc. Salt Lake City, Utah We have audited the accompanying balance sheets of Heavenly Hot Dogs, Inc. [a development stage company] as of December 31, 2009 and 2008 and the related statements of operations, stockholders' equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2009 and for the period from the re-entering the development stage on January 1, 1991 through December 31, 2009. |
Involvement in Certain Legal Proceedings During the past five years, no present or former director, person nominated to become a director, executive officer, promoter or control person of the Company: (1) Was a general partner or executive officer of any business by or against which any bankruptcy petition was filed, whether at the time of such filing or two years prior thereto; (2) Was convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (4) Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) Was found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
Date: March 10, 2009 By: /s/ Elwood Shepard Elwood Shepard, President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Date: March 10, 2009 By: /s/ Elwood Shepard Elwood Shepard, Director HEAVENLY HOT DOGS, INC. [A Development Stage Company] FINANCIAL STATEMENTS DECEMBER 31, 2008 HEAVENLY HOT DOGS, INC. [A Development Stage Company] CONTENTS PAGE Report of Independent Registered Public Accounting Firm Balance Sheets, December 31, 2008 and 2007 Statements of Operations, for the years ended December 31, 2008 and 2007 and from the re-entering of development stage on January 1, 1991 through December 31, 2008 Statement of Stockholders’ Equity (Deficit), from the re-entering of development stage on January 1, 1991 through December 31, 2008 Statements of Cash Flows, for the years ended December 31, 2008 and 2007 and from the re-entering of development stage on January 1, 1991 through December 31, 2008 Notes to Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors Heavenly Hot Dogs, Inc. Salt Lake City, Utah We have audited the accompanying balance sheets of Heavenly Hot Dogs, Inc. [a development stage company] as of December 31, 2008 and 2007 and the related statements of operations, stockholders' equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2008 and for the period from re-entering the development stage on January 1, 1991 through December 31, 2008. |
Orrstown implemented the following steps to mitigate the potential spread of COVID-19 and help its clients during this challenging time: •Launched an internal Pandemic Response Team at the outset of the COVID-19 pandemic; •Waived Orrstown fees on all foreign ATM transactions from March 18, 2020 through June 1, 2020 to encourage and support the use of this key delivery channel; •Waived late fees on all loan payments for 60 days through May 31, 2020 to assist those whose employment status and income may have been negatively impacted by the virus; •Designated a select group of loan specialists to work with clients needing special assistance or guidance; •Implemented strategic efforts to effectively operate most of the core operations of the Company in a remote work environment; •Instituted extensive preventative measures for workplace health and safety; •Conducted virtual, interactive webinars with lending clients and community groups in order to educate and support them on the SBA PPP process, including loan forgiveness; •Conducted media interviews and launched a multi-channel advertising campaign in all markets aimed at educating the community about SBA PPP funding; •Partnered with the American Bankers Association to execute their Banks Never Ask That campaign, aimed at educating clients and consumers on how to protect their privacy and money, especially during the pandemic as reports warn of heightened scam and fraud attempts; •Maintaining enhanced staffing levels at our Client Service Center to manage and support our increased call volume; •Continuing to educate clients and consumers on the various assistance programs available to them through the SBA, as well as other federal and state government resources; and •Continuing to perform branch transactions via drive-thru lanes or scheduled appointments at branch locations. |
Other Federal Laws and Regulations The Company’s operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: •Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; •Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; •Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the GLB Act; and •the USA PATRIOT Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
Other Federal Laws and Regulations The Company’s operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: • Privacy provisions of the Gramm-Leach-Bliley Act (the "GLB Act") and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the GLB Act; and • the USA PATRIOT Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
ASU 2016-01, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (viii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. |
Other Federal Laws and Regulations The Company’s operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: • Privacy provisions of the Gramm-Leach-Bliley Act (the "GLB Act") and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the GLB Act; and the • USA PATRIOT Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
When fully phased in on January 1, 2019, the Basel III Capital Rules will require the Company and Bank to maintain (i) a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% CET1 ratio as that buffer is phased in, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7% upon full implementation), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of Total capital (that is, Tier 1 plus Tier 2) to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average assets. |
Other Federal Laws and Regulations The Company’s operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: • Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and the • USA PATRIOT Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
When fully phased in on January 1, 2019, the Basel III Capital Rules will require the Company and Bank to maintain (i) a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% CET1 ratio as that buffer is phased in, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7% upon full implementation), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of Total capital (that is, Tier 1 plus Tier 2) to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average assets. |
These loans require follow-up by lenders on the information that may cause the potential weakness, and once resolved, the loan classification may be downgraded to “Substandard,” or alternatively, could be upgraded to “Pass.” The following summarizes the average recorded investment in impaired loans and related interest income recognized, on loans deemed impaired on a cash basis, and interest income earned but not recognized for the years ended December 31, 2014, 2013, 2012, and 2011: The following summarizes the average recorded investment in impaired loans and related interest income recognized for the period indicated for the year ending December 31: Activity in the allowance for loan losses for the years ended December 31, 2014, 2013, 2012, 2011 and 2010 is as follows: A summary of relevant asset quality ratios for the five years ended December 31, 2014 is as follows: Due to the trends in the national and local economies, as well as declines in real estate values in the Company’s market area, the allowance for loan losses grew for the period from 2010 through 2011, consistent with the increase in the ratio of net charge-offs to average loans outstanding. |
When fully phased in on January 1, 2019, the Basel III Capital Rules will require the Company and Bank to maintain (i) a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% CET1 ratio as that buffer is phased in, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7% upon full implementation), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of Total capital (that is, Tier 1 plus Tier 2) to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to average assets. |
These loans require follow-up by lenders on the information that may cause the potential weakness, and once resolved, the loan classification may be downgraded to “Substandard,” or alternatively, could be upgraded to “Pass.” The following summarizes the average recorded investment in impaired loans and related interest income recognized, on loans deemed impaired on a cash basis, and interest income earned but not recognized for the years ended December 31, 2013, 2012, and 2011: The following summarizes the average recorded investment in impaired loans and related interest income recognized for the periods indicated for the years ending December 31: Activity in the allowance for loan losses for the years ended December 31, 2013, 2012, 2011 and 2010 is as follows: A summary of the activity in the allowance for loan losses, for the years ended before December 31, 2010 based on prior presentation, is as follows: A summary of relevant asset quality ratios for the five years ended December 31, 2013 is as follows: Due to the trends in the national and local economies, as well as declines in real estate values in the Company’s market area, the allowance for loan losses continued to grow for the period from 2009 through 2011, consistent with the increase in the ratio of net charge-offs to average loans outstanding. |
- 26 - In addition to factors mentioned elsewhere in this Report or previously disclosed in our SEC reports (accessible on the SEC’s website at www.sec.gov or on our website at www.orrstown.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially from historical performance: • general political and economic conditions may be less favorable than expected; • developments concerning credit quality in various corporate lending industry sectors as well as consumer and other types of credit, may result in an increase in the level of our provision for credit losses, nonperforming assets, net charge-offs and reserve for credit losses; • customer borrowing, repayment, investment, and deposit practices generally may be less favorable than anticipated; and interest rate and currency fluctuations, equity and bond market fluctuations, and inflation may be greater than expected; • changes in interest rates or the mix of interest rates and maturities of our interest earning assets and interest bearing liabilities (primarily loans and deposits) may be less favorable than expected; • competitive product and pricing pressures among financial institutions within our markets may increase; • legislative or regulatory developments, including changes in laws or regulations concerning taxes, banking, securities, capital requirements and risk-based capital guidelines, reserve methodologies, deposit insurance and other aspects of the financial services industry, may adversely affect the businesses in which we are engaged or our financial results; • legal and regulatory proceedings, included changes resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act and related matters with respect to the financial services industry, including those directly involving the Company and its subsidiaries, could adversely affect the Company or the financial services industry generally; • pending and proposed changes in accounting rules, policies, practices, and procedures could adversely affect our financial results; • instruments and strategies used to manage exposure to various types of market and credit risk could be less effective than anticipated, and we may not be able to effectively mitigate our risk exposures in particular market environments or against particular types of risk; • terrorist activities or other hostilities, including the situation surrounding Iraq, may adversely affect the general economy, financial and capital markets, specific industries, and the Company; and • technological changes may be more difficult or expensive than anticipated. |
- 10 - Other Federal Laws and Regulations The Company’s operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: • Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and • USA Patriot Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
In addition to factors mentioned elsewhere in this Report or previously disclosed in our SEC reports (accessible on the SEC’s website at www.sec.gov or on our website at www.orrstown.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially from historical performance: • general political and economic conditions may be less favorable than expected; • developments concerning credit quality in various corporate lending industry sectors as well as consumer and other types of credit, may result in an increase in the level of our provision for credit losses, nonperforming assets, net charge-offs and reserve for credit losses; • customer borrowing, repayment, investment, and deposit practices generally may be less favorable than anticipated; and interest rate and currency fluctuations, equity and bond market fluctuations, and inflation may be greater than expected; • changes in interest rates or the mix of interest rates and maturities of our interest earning assets and interest bearing liabilities (primarily loans and deposits) may be less favorable than expected; • competitive product and pricing pressures among financial institutions within our markets may increase; • legislative or regulatory developments, including changes in laws or regulations concerning taxes, banking, securities, capital requirements and risk-based capital guidelines, reserve methodologies, deposit insurance and other aspects of the financial services industry, may adversely affect the businesses in which we are engaged or our financial results; • legal and regulatory proceedings, included changes resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act and related matters with respect to the financial services industry, including those directly involving the Company and its subsidiaries, could adversely affect the Company or the financial services industry generally; • pending and proposed changes in accounting rules, policies, practices, and procedures could adversely affect our financial results; - 28 - • instruments and strategies used to manage exposure to various types of market and credit risk could be less effective than anticipated, and we may not be able to effectively mitigate our risk exposures in particular market environments or against particular types of risk; • terrorist activities or other hostilities, including the situation surrounding Iraq, may adversely affect the general economy, financial and capital markets, specific industries, and the Company; and • technological changes may be more difficult or expensive than anticipated. |
Other Federal Laws and Regulations The Corporation’s operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: • Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and • USA Patriot Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
In addition to factors mentioned elsewhere in this Report or previously disclosed in our SEC reports (accessible on the SEC’s website at www.sec.gov or on our website at www.orrstown.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially from historical performance: • general political and economic conditions may be less favorable than expected; • developments concerning credit quality in various corporate lending industry sectors as well as consumer and other types of credit, may result in an increase in the level of our provision for credit losses, nonperforming assets, net charge-offs and reserve for credit losses; • customer borrowing, repayment, investment, and deposit practices generally may be less favorable than anticipated; and interest rate and currency fluctuations, equity and bond market fluctuations, and inflation may be greater than expected; • the mix of interest rates and maturities of our interest earning assets and interest bearing liabilities (primarily loans and deposits) may be less favorable than expected; • competitive product and pricing pressures among financial institutions within our markets may increase; • legislative or regulatory developments, including changes in laws or regulations concerning taxes, banking, securities, capital requirements and risk-based capital guidelines, reserve methodologies, deposit insurance and other aspects of the financial services industry, may adversely affect the businesses in which we are engaged or our financial results; • legal and regulatory proceedings and related matters with respect to the financial services industry, including those directly involving the Corporation and its subsidiaries, could adversely affect the Corporation or the financial services industry generally; • pending and proposed changes in accounting rules, policies, practices, and procedures could adversely affect our financial results; • instruments and strategies used to manage exposure to various types of market and credit risk could be less effective than anticipated, and we may not be able to effectively mitigate our risk exposures in particular market environments or against particular types of risk; • terrorist activities or other hostilities, including the situation surrounding Iraq, may adversely affect the general economy, financial and capital markets, specific industries, and the Corporation; and • technological changes may be more difficult or expensive than anticipated. |
Other Federal Laws and Regulations The Corporation’s operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: • Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and • USA Patriot Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
Other factors that can influence the Corporation’s credit loss experience, in addition to general economic conditions and borrowers’ specific abilities to repay loans, include: (i) the impact of declining real estate values on the portfolio of loans to residential real estate builders and developers; (ii) the repayment performance associated with residential mortgage loans and other loans supporting mortgage-related securities; (iii) the concentration of commercial real estate loans in the loan portfolio; (iv) consumer loan charge offs, which historically have experienced higher net charge-offs as a percentage of loans outstanding than other loan types; (v) the weakening housing market; (vi) the troubled state of financial and credit markets and the Federal Reserve positioning of monetary policy; (vii) sluggish job creation and rising unemployment, which have caused consumer spending to slow and the underlying impact on businesses’ operations and abilities to repay loans should consumer spending continue to slow; (viii) and continued slowing of domestic automobile sales. |
In addition to factors mentioned elsewhere in this Report or previously disclosed in our SEC reports (accessible on the SEC’s website at www.sec.gov or on our website at www.orrstown.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially from historical performance: • general political and economic conditions may be less favorable than expected; • developments concerning credit quality in various corporate lending industry sectors as well as consumer and other types of credit, may result in an increase in the level of our provision for credit losses, nonperforming assets, net charge-offs and reserve for credit losses; • customer borrowing, repayment, investment, and deposit practices generally may be less favorable than anticipated; and interest rate and currency fluctuations, equity and bond market fluctuations, and inflation may be greater than expected; • the mix of interest rates and maturities of our interest earning assets and interest bearing liabilities (primarily loans and deposits) may be less favorable than expected; • competitive product and pricing pressures among financial institutions within our markets may increase; • legislative or regulatory developments, including changes in laws or regulations concerning taxes, banking, securities, capital requirements and risk-based capital guidelines, reserve methodologies, deposit insurance and other aspects of the financial services industry, may adversely affect the businesses in which we are engaged or our financial results; • legal and regulatory proceedings and related matters with respect to the financial services industry, including those directly involving the Corporation and its subsidiaries, could adversely affect the Corporation or the financial services industry generally; • pending and proposed changes in accounting rules, policies, practices, and procedures could adversely affect our financial results; • instruments and strategies used to manage exposure to various types of market and credit risk could be less effective than anticipated, and we may not be able to effectively mitigate our risk exposures in particular market environments or against particular types of risk; • terrorist activities or other hostilities, including the situation surrounding Iraq, may adversely affect the general economy, financial and capital markets, specific industries, and the Corporation; and • technological changes may be more difficult or expensive than anticipated. |
Other Federal Laws and Regulations The Corporation’s operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: • Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and • USA Patriot Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
Factors that might cause such differences include, but are not limited to the following: (1) competitive pressures among financial institutions increasing significantly in the markets where the Corporation operates; (2) general business and economic conditions, either nationally or locally being less favorable than expected; (3) changes in the domestic interest rate environment could reduce the Corporation’s net interest income; (4) legislation or regulatory changes which adversely affect the ability of the Corporation to conduct its current or future operations; (5) acts or threats of terrorism and political or military actions taken by the United States or other governments and natural disasters globally or nationally could adversely affect general economic or industry conditions; (6) operational losses related to or resulting from: the risk of fraud by employees or persons outside of the Corporation, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of the internal control system, business continuation and disaster recovery, as well as security risks associated with “hacking” and “identity theft”; (7) negative publicity could damage the Corporation’s reputation and adversely impact its business and/or stock trades and prices; (8) acquisitions may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties; (9) the Corporation relies on other companies to provide key components of business infrastructure in the form of third party vendors. |
In addition to factors mentioned elsewhere in this Report or previously disclosed in our SEC reports (accessible on the SEC’s website at www.sec.gov or on our website at www.orrstown.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially from historical performance: • general political and economic conditions may be less favorable than expected; • developments concerning credit quality in various corporate lending industry sectors as well as consumer and other types of credit, may result in an increase in the level of our provision for credit losses, nonperforming assets, net charge-offs and reserve for credit losses; • customer borrowing, repayment, investment, and deposit practices generally may be less favorable than anticipated; and interest rate and currency fluctuations, equity and bond market fluctuations, and inflation may be greater than expected; • the mix of interest rates and maturities of our interest earning assets and interest bearing liabilities (primarily loans and deposits) may be less favorable than expected; • competitive product and pricing pressures among financial institutions within our markets may increase; • legislative or regulatory developments, including changes in laws or regulations concerning taxes, banking, securities, capital requirements and risk-based capital guidelines, reserve methodologies, deposit insurance and other aspects of the financial services industry, may adversely affect the businesses in which we are engaged or our financial results; • legal and regulatory proceedings and related matters with respect to the financial services industry, including those directly involving the Corporation and its subsidiaries, could adversely affect the Corporation or the financial services industry generally; • pending and proposed changes in accounting rules, policies, practices, and procedures could adversely affect our financial results; • instruments and strategies used to manage exposure to various types of market and credit risk could be less effective than anticipated, and we may not be able to effectively mitigate our risk exposures in particular market environments or against particular types of risk; • terrorist activities or other hostilities, including the situation surrounding Iraq, may adversely affect the general economy, financial and capital markets, specific industries, and the Corporation; and • technological changes may be more difficult or expensive than anticipated. |
Other Federal Laws and Regulations The Corporation’s operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: • Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and • USA Patriot Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
Factors that might cause such differences include, but are not limited to the following: (1) competitive pressures among financial institutions increasing significantly in the markets where the Corporation operates; (2) general business and economic conditions, either nationally or locally being less favorable than expected; (3) changes in the domestic interest rate environment could reduce the Corporation’s net interest income; (4) legislation or regulatory changes which adversely affect the ability of the Corporation to conduct its current or future operations; (5) acts or threats of terrorism and political or military actions taken by the United States or other governments and natural disasters globally or nationally could adversely affect general economic or industry conditions; (6) operational losses related to or resulting from: the risk of fraud by employees or persons outside of the Corporation, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of the internal control system, business continuation and disaster recovery, as well as security risks associated with “hacking” and “identity theft”; (7) negative publicity could damage the Corporation’s reputation and adversely impact its business and/or stock trades and prices; (8) acquisitions may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties; (9) the Corporation relies on other companies to provide key components of business infrastructure in the form of third party vendors. |
Other Federal Laws and Regulations The Corporation’s operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: • Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to “opt out” of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and • USA Patriot Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
Factors that might cause such differences include, but are not limited to the following: (1) competitive pressures among financial institutions increasing significantly in the markets where the Corporation operates; (2) general business and economic conditions, either nationally or locally being less favorable than expected; (3) changes in the domestic interest rate environment could reduce the Corporation’s net interest income; (4) legislation or regulatory changes which adversely affect the ability of the Corporation to conduct its current or future operations; (5) acts or threats of terrorism and political or military actions taken by the United States or other governments and natural disasters globally or nationally could adversely affect general economic or industry conditions; (6) operational losses related to or resulting from: the risk of fraud by employees or persons outside of the Corporation, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of the internal control system, business continuation and disaster recovery, as well as security risks associated with “hacking” and “identity theft”; (7) negative publicity could damage the Corporation’s reputation and adversely impact its business and/or stock trades and prices; (8) acquisitions may not produce revenue enhancements or cost savings at levels or within timeframes originally anticipated and may result in unforeseen integration difficulties; (9) the Corporation relies on other companies to provide key components of business infrastructure in the form of third party vendors. |
Other Federal Laws and Regulations Our operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: - Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to "opt out" of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; - Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; - Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and - USA Patriot Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
Exhibits, Financial Statement Schedules and Reports of Form 8-K. (a) The following documents are filed as part of this report: (1) - Financial Statements - The following consolidated financial statements of Orrstown Financial Services, Inc. and its subsidiaries, included in the annual report of the registrant to its shareholders for the year ended December 31, 2004, are incorporated by reference in Item 8: Consolidated balance sheets - December 31, 2004 and 2003 Consolidated statements of income - Years ended December 31, 2004, 2003, and 2002 Consolidated statements of shareholders' equity - Years ended December 31, 2004, 2003, and 2002 Consolidated statements of cash flows - Years ended December 31, 2004, 2003, and 2002 Notes to consolidated financial statements - December 31, 2004 (2) - Financial Statement Schedules - All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. |
(10.2) Salary continuation plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.3) Officer group term replacement plan for selected officers - incorporated by reference to the registrant's Form 10- K for the year ended December 31, 1999 (10.4) Director retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.5) Revenue neutral retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.6) Non-employee director stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated April 11, 2000 (10.7) Employee stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated March 31, 2000 (13) Annual report to security holders - filed herewith (14) Code of Ethics Policy for Senior Financial Officers - Incorporated by reference under Item 10 of this annual report (21) Subsidiaries of the registrant - filed herewith (23.1) Consent of independent auditors - filed herewith (31.1) Rule 13a - 14(a)/15d-14(a) Certification (Chief Executive Officer) - Filed herewith. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and we have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and (d) disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and we have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; (c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and (d) disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
Other Federal Laws and Regulations - ---------------------------------- Our operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: - Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to "opt out" of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; - Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; - Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and - USA Patriot Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
In addition to factors mentioned elsewhere in this Report or previously disclosed in our SEC reports (accessible on the SEC's website at www.sec.gov or on our website at www.orrstown.com), the following factors, among others, could cause actual results to differ materially from forward-looking statements and future results could differ materially from historical performance: - general political and economic conditions may be less favorable than expected; - developments concerning credit quality in various corporate lending industry sectors as well as consumer and other types of credit, may result in an increase in the level of our provision for credit losses, nonperforming assets, net charge-offs and reserve for credit losses; - customer borrowing, repayment, investment, and deposit practices generally may be less favorable than anticipated; and interest rate and currency fluctuations, equity and bond market fluctuations, and inflation may be grater than expected; - the mix of interest rates and maturities of our interest earning assets and interest bearing liabilities (primarily loans and deposits) may be less favorable than expected; - competitive product and pricing pressures among financial institutions within our markets may increase; - legislative or regulatory developments, including changes in laws or regulations concerning taxes, banking, securities, capital requirements and risk-based capital guidelines, reserve methodologies, deposit insurance and other aspects of the financial services industry, may adversely affect the businesses in which we are engaged or our financial results; - legal and regulatory proceedings and related matters with respect to the financial services industry, including those directly involving the Corporation and its subsidiaries, could adversely affect the Corporation or the financial services industry generally; - pending and proposed changes in accounting rules, policies, practices, and procedures could adversely affect our financial results; - instruments and strategies used to manage exposure to various types of market and credit risk could be less effective than anticipated, and we may not be able to effectively mitigate our risk exposures in particular market environments or against particular types of risk; - terrorist activities or other hostilities, including the situation surrounding Iraq, may adversely affect the general economy, financial and capital markets, specific industries, and the Corporation; and - technological changes, including the impact of the Internet on our businesses, may be more difficult or expensive than anticipated. |
Exhibits, Financial Statement Schedules and Reports of Form 8-K. - -------------------------------------------------------------------------- (a) (1) - List of Financial Statements The following consolidated financial statements of Orrstown Financial Services, Inc. and its subsidiaries, included in the annual report of the registrant to its shareholders for the year ended December 31, 2003, are incorporated by reference in Item 8: Consolidated balance sheets - December 31, 2003 and 2002 Consolidated statements of income - Years ended December 31, 2003, 2002, and 2001 Consolidated statements of shareholders' equity - Years ended December 31, 2003, 2002, and 2001 Consolidated statements of cash flows - Years ended December 31, 2003, 2002, and 2001 Notes to consolidated financial statements - December 31, 2003 (2) List of Financial Statement Schedules All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. |
(10.2) Salary continuation plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.3) Officer group term replacement plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.4) Director retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.5) Revenue neutral retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.6) Non-employee director stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated April 11, 2000 (10.7) Employee stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated March 31, 2000 (13) Annual report to security holders - filed herewith (14) Code of Ethics Policy for Senior Financial Officers - filed herewith (21) Subsidiaries of the registrant - filed herewith (23.1) Consent of independent auditors - filed herewith (31.1) Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - filed herewith (31.2) Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - filed herewith (32.1) Certification of Chief Executive Officer pursuant to 18 U.S.C. |
Signature Title Date /s/ Kenneth R. Shoemaker President, CEO and March 10, 2004 - --------------------------------- Director Kenneth R. Shoemaker /s/ Anthony F. Ceddia Director March 10, 2004 - --------------------------------- Dr. Anthony F. Ceddia /s/ Glenn W. Snoke Director March 10, 2004 - --------------------------------- Glenn W. Snoke /s/ Gregory A. Rosenberry Director March 10, 2004 - --------------------------------- Gregory A. Rosenberry /s/ Joel R. Zullinger Chairman of the March 10, 2004 - --------------------------------- Board and Director Joel R. Zullinger /s/ Jeffrey W. Coy Vice Chairman March 10, 2004 - --------------------------------- of the Board Jeffrey W. Coy and Director /s/ John S. Ward Director March 10, 2004 - --------------------------------- John S. Ward /s/ Denver L. Tuckey Secretary and March 10, 2004 - --------------------------------- Director Denver L. Tuckey /s/ Andrea Pugh Director March 10, 2004 - --------------------------------- Andrea Pugh Exhibit 13 Orrstown Financial Services, Inc. 2003 Annual Financial Report C O N T E N T S Page INDEPENDENT AUDITOR'S REPORT 1 CONSOLIDATED FINANCIAL STATEMENTS Balance sheets 2 Statements of income 3 Statements of changes in shareholders' equity 4 Statements of cash flows 5 Notes to consolidated financial statements 6 - 17 MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18 - 24 SUMMARY OF QUARTERLY FINANCIAL DATA 25 SELECTED FIVE-YEAR FINANCIAL DATA 26 MARKET, DIVIDEND AND INVESTOR INFORMATION 27 INDEPENDENT AUDITOR'S REPORT Board of Directors Orrstown Financial Services, Inc. Orrstown, Pennsylvania We have audited the accompanying consolidated balance sheets of Orrstown Financial Services, Inc. and its wholly-owned subsidiaries as of December 31, 2003 and 2002 and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2003. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and (c) disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and (c) disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
Other Federal Laws and Regulations Our operations are subject to additional federal laws and regulations applicable to financial institutions, including, without limitation: o Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require us to maintain privacy policies intended to safeguard customer financial information, to disclose the policies to our customers and to allow customers to "opt out" of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions; o Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; o Consumer protection rules for the sale of insurance products by depository institutions, adopted pursuant to the requirements of the Gramm-Leach-Bliley Act; and o USA Patriot Act, which requires financial institutions to take certain actions to help prevent, detect and prosecute international money laundering and the financing of terrorism. |
Accordingly, the entire allowance is available to absorb losses in any category: ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY-OWNED SUBSIDIARIES DEPOSITS The average amounts of deposits are summarized below: The following is a breakdown of maturities of time deposits of $100,000 or more as of December 31, 2002: (000 omitted) Three months or less $ 8,876 Over three months through twelve months 3,288 Over one year through three years 4,220 Over three years 1,462 -------- $ 17,846 ======== RETURN ON EQUITY AND ASSETS (APPLYING DAILY AVERAGE BALANCES) The following table presents a summary of significant earnings and capital ratios: (000 omitted) 2002 2001 2000 Average assets $ 385,765 $ 340,428 $ 285,903 Net income $ 5,915 $ 5,092 $ 4,172 Average equity $ 34,408 $ 29,612 $ 23,954 Cash dividends paid $ 1,722 $ 1,411 $ 1,270 Return on assets 1.53% 1.50% 1.46% Return on equity 17.19% 17.20% 17.42% Dividend payout ratio 29.12% 27.71% 30.48% Equity to asset ratio 8.92% 8.70% 8.38% ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY-OWNED SUBSIDIARIES CONSOLIDATED SUMMARY OF OPERATIONS Item 9. |
Exhibits, Financial Statement Schedules and Reports of Form 8-K. (a) (1) - List of Financial Statements The following consolidated financial statements of Orrstown Financial Services, Inc. and its subsidiaries, included in the annual report of the registrant to its shareholders for the year ended December 31, 2002, are incorporated by reference in Item 8: Consolidated balance sheets - December 31, 2002 and 2001 Consolidated statements of income - Years ended December 31, 2002, 2001, and 2000 Consolidated statements of shareholders' equity - Years ended December 31, 2002, 2001, and 2000 Consolidated statements of cash flows - Years ended December 31, 2002, 2001, and 2000 Notes to consolidated financial statements - December 31, 2002 (2) List of Financial Statement Schedules All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. |
(10.2) Salary continuation plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.3) Officer group term replacement plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, (10.4) Director retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.5) Revenue neutral retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.6) Non-employee director stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated April 11, (10.7) Employee stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated March 31, 2000 (13) Annual report to security holders - filed herewith (21) Subsidiaries of the registrant - filed herewith (23.1) Consent of independent auditors - filed herewith (99.1) Certification of Chief Executive Officer pursuant to 18 U.S.C. |
Signature Title Date --------- ----- ---- /s/ Kenneth R. Shoemaker President, CEO and March 25, 2003 - ----------------------------- Director Kenneth R. Shoemaker /s/ Anthony F. Ceddia Director March 25, 2003 - ----------------------------- Dr. Anthony F. Ceddia /s/ Glenn W. Snoke Director March 25, 2003 - ----------------------------- Glenn W. Snoke /s/ Gregory A. Rosenberry Director March 25, 2003 - ----------------------------- Gregory A. Rosenberry /s/ Joel R. Zullinger Chairman of the March 25, 2003 - ----------------------------- Board and Director Joel R. Zullinger /s/ Jeffrey W. Coy Vice Chairman March 25, 2003 - ----------------------------- of the Board Jeffrey W. Coy and Director /s/ John S. Ward Director March 25, 2003 - ----------------------------- John S. Ward /s/ Denver L. Tuckey Secretary and March 25, 2003 - ----------------------------- Director Denver L. Tuckey /s/ Andrea Pugh Director March 25, 2003 - ----------------------------- Andrea Pugh CERTIFICATION I, Kenneth R. Shoemaker, certify, that: 1. |
(10.2) Salary continuation plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.3) Officer group term replacement plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.4) Director retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.5) Revenue neutral retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, (10.6) Non-employee director stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated April 11, 2000 (10.7) Employee stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated March 31, 2000 (13) Annual report to security holders - filed herewith (21) Subsidiaries of the registrant - filed herewith (23.1) Consent of independent auditors filed herewith (27) Financial data schedule - filed herewith (d) Financial statement schedules None 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. |
Exhibits, Financial Statement Schedules and Reports of Form 8-K. - -------------------------------------------------------------------------- (a) (1) - List of Financial Statements The following consolidated financial statements of Orrstown Financial Services, Inc. and its subsidiaries, included in the annual report of the registrant to its shareholders for the year ended December 31, 2001, are incorporated by reference in Item 8: Consolidated balance sheets - December 31, 2001 and Consolidated statements of income - Years ended December 31, 2001, 2000, and 1999 Consolidated statements of shareholders' equity - Years ended December 31, 2001, 2000, and 1999 Consolidated statements of cash flows - Years ended December 31, 2001, 2000, and 1999 Notes to consolidated financial statements - December 31, 2001 (2) List of Financial Statement Schedules All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. |
(10.2) Salary continuation plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.3) Officer group term replacement plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.4) Director retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.5) Revenue neutral retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, (10.6) Non-employee director stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated April 11, 2000 (10.7) Employee stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated March 31, 2000 (13) Annual report to security holders - filed herewith (21) Subsidiaries of the registrant - filed herewith (23.1) Consent of independent auditors filed herewith (27) Financial data schedule - filed herewith (d) Financial statement schedules None 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. |
Accordingly, the entire allowance is available to absorb losses in any category: ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY-OWNED SUBSIDIARIES DEPOSITS The average amounts of deposits are summarized below: The following is a breakdown of maturities of time deposits of $100,000 or more as of December 31, 2000: Maturity (000 omitted) Certificates of Deposit Three months or less $ 14,366 Over three months through twelve months 8,694 Over one year through three years 6,825 Over three years 653 -------- $ 30,538 ======== RETURN ON EQUITY AND ASSETS (APPLYING DAILY AVERAGE BALANCES) The following table presents a summary of significant earnings and capital ratios: (dollar amounts in thousands) 2000 1999 1998 Average assets $ 285,903 $ 250,529 $ 212,149 Net income $ 4,172 $ 3,755 $ 3,119 Average equity $ 23,954 $ 22,067 $ 19,523 Cash dividends paid $ 1,270 $ 1,134 $ 986 Return on assets 1.46% 1.50% 1.47% Return on equity 17.42% 17.02% 15.97% Dividend payout ratio 30.48% 30.20% 31.61% Equity to asset ratio 8.38% 8.81% 9.2% ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY-OWNED SUBSIDIARIES CONSOLIDATED SUMMARY OF OPERATIONS Item 9. |
(10.2) Salary continuation plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.3) Officer group term replacement plan for selected officers - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.4) Director retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.5) Revenue neutral retirement plan - incorporated by reference to the registrant's Form 10-K for the year ended December 31, 1999 (10.6) Non-employee director stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated April 11, 2000 (10.7) Employee stock option plan of 2000 - incorporated by reference to the registrant's registration statement on Form S-8 dated March 31, 2000 (13) Annual report to security holders - filed herewith (21) Subsidiaries of the registrant - filed herewith (23.1) Consent of independent auditors filed herewith (27) Financial data schedule - filed herewith (d) Financial statement schedules None 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. |
Accordingly, the entire allowance is available to absorb losses in any category: Year Ended December 31 ------------------------------ Percentage Allowance of Loans to Amount Total Loans ------ ----------- (000 omitted) Commercial, financial and agricultural $ 114 7.98% Commercial - Real estate secured 0 0.00 Real estate - Construction 80 5.55 Real estate - Mortgage 1,055 73.63 Installment 184 12.84 Unallocated 0 0.00 ------- ------ Total $ 1,433 100.00% ======= ====== ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY DEPOSITS The average amounts of deposits are summarized below: The following is a breakdown of maturities of time deposits of $ 100,000 or more as of December 31, 1999: Maturity (000 omitted) -------- ------------- Certificates of Deposit Three months or less $ 3,858 Over three months through twelve months 2,245 Over one year through three years 4,349 Over three years 403 -------- $ 10,855 RETURN ON EQUITY AND ASSETS (APPLYING DAILY AVERAGE BALANCES) The following table presents a summary of significant earnings and capital ratios: (dollar amounts in thousands) 1999 1998 1997 ---- ---- ---- Average assets $ 250,529 $ 212,149 $ 172,366 Net income $ 3,755 $ 3,119 $ 2,606 Average equity $ 22,067 $ 19,523 $ 16,956 Cash dividends paid $ 1,134 $ 986 $ 903 Return on assets 1.50% 1.47% 1.51% Return on equity 17.02% 15.97% 15.37% Dividend payout ratio 30.20% 31.61% 34.65% Equity to asset ratio 8.81% 9.2% 9.84% ORRSTOWN FINANCIAL SERVICES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY CONSOLIDATED SUMMARY OF OPERATIONS Item 9. |
In addition to the impact of the COVID-19 pandemic on our revenues, quarterly fluctuations in our operating results also might be due to numerous other factors, including: •our ability to attract new distribution partners, including the length of our sales cycles, or to sell increased usage of our service to existing distribution partners; •technical difficulties or interruptions in our services; •changes in privacy protection and other governmental regulations applicable to our industry; •changes in our pricing policies or the pricing policies of our competitors; •the financial condition and business success of our distribution partners; •purchasing and budgeting cycles of our distribution partners; •acquisitions of businesses and products by us or our competitors; •competition, including entry into the market by new competitors or new offerings by existing competitors; •discounts offered to advertisers by upstream advertising networks; •our history of litigation; •our ability to hire, train and retain sufficient sales, client management and other personnel; •timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors; •concentration of marketing expenses for activities such as trade shows and advertising campaigns; •expenses related to any new or expanded data centers; and •general economic and financial market conditions. |
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