-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MAZR6wBKK33h4onG/ThqeQGjHXq/da1BvQcXr3SfUVMGSNU0/++pjvwWAEabaHvE vm64T7WBLGAPH321yXwuhw== 0000059544-99-000006.txt : 19990323 0000059544-99-000006.hdr.sgml : 19990323 ACCESSION NUMBER: 0000059544-99-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19990319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINCOLN INTERNATIONAL CORP CENTRAL INDEX KEY: 0000059544 STANDARD INDUSTRIAL CLASSIFICATION: TRANSPORTATION SERVICES [4700] IRS NUMBER: 61057092 STATE OF INCORPORATION: KY FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-05767 FILM NUMBER: 99569386 BUSINESS ADDRESS: STREET 1: 120 VILLAGE SQUARE STREET 2: SUITE 6 CITY: LOUISVILLE STATE: KY ZIP: 40243 BUSINESS PHONE: 5022458814 MAIL ADDRESS: STREET 1: 120 VILLAGE SQUARE STREET 2: SUITE 6 CITY: LOUISVILLE STATE: KY ZIP: 40253 10-K 1 FORM 10-K ANNUAL REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For fiscal year ended July 31, 1996 Commission File No. 0-5767 LINCOLN INTERNATIONAL CORPORATION (Exact name of registrant as specified in its charter) Kentucky # 61-0575092 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Suite No. 6, 120 Village Square Louisville, Kentucky 40243 Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (502) 245-8814 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered none none Securities registered pursuant to Section 12(g) of the Act: Common Stock (no-par) voting Title of class Common Stock (no-par) non-voting Title of class Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO State the aggregate market value of the voting stock held by non-affiliates of the Registrant. The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within 60 days prior to the date of filing. No regular market exists for either class of stock. Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the July 31, 1996. Common (voting) 100,000 Common (non-voting) 1,461,145 DOCUMENTS INCORPORATED BY REFERENCE (1) Annual Report-- 1995-1996 (2) Information Statement--1996 Portions of the above Annual Report and Information Statement to be issued are hereby incorporated by reference into Parts II and III. PART I ITEM 1: BUSINESS LINCOLN INTERNATIONAL CORPORATION (LINCOLN), incorporated in 1960, is engaged in the management of agricultural properties BOURBON STOCK YARDS (Bourbon) located in Louisville, Kentucky. BOURBON has been in continuous operation for 162 years and was merged into LINCOLN in 1978. LINCOLN INTERNATIONAL entered into a lease agreement with Kentucky Livestock Exchange, a division of Michigan Livestock Exchange, a Michigan corporation, wherein, LINCOLN leased its stockyards operations consisting of approximately seven acres with the term of the lease being for a period of 10 years beginning on July 15th, 1995, and ending on July 14th, 2005, with provisions for payment of rent based on monthly pre-tax profits with a minimum rent provision of $18,000.00 for the first two years. The lease agreement is based primarily on the number of head of farm animals similar to that type of revenue received prior to the execution of the lease. (See Part IV.) On October 15, 1996, LINCOLN filed a complaint against the lessees by which it is alleged that there has been a violation of the lease agreement, and LINCOLN sought a restraining order, temporary injunction and compensatory relief which, if not granted, could cause LINCOLN to lose its prime source of income because of the increased competition from the operation of the stockyards by these companies within close proximity of Bourbon's operations. (See Legal Proceedings Part III). Prior to the lease agreement of July 15th, 1995, Lincoln's business consists of that of normal stock yard operations of handling, receiving, shipping and reshipping, transferring and yarding of all common types of livestock including cows, feeder cattle, hogs, feeder pigs, slaughter cattle and sheep and other related stock yard activities at Louisville, Kentucky (among the largest in Kentucky). The following schedule sets forth the amount of receipt of farm animals during 1994 and 1995 prior to the lease agreement with Michigan Stock Exchange. Since sheep are of such a small number, they are not included within the receipts comparison. 1994 1995 Feeder cattle 137,676 132,184 Slaughter cattle 52,252 50,745 Hogs 47,664 45,875 Feeder pigs 11,532 11,390 Most of the animals received come from the Kentucky- Indiana area. There are numerous other smaller yards which provide little or no competition to BOURBON. Prior to the lease agreement, income was determined by the number of animals handled and poor market prices, weather conditions or disease over an extended period of time could materially affect the number of animals handled and thus affect its income. The animals are supplied by many farmers, none of which account for any material portion of the supply. (See Item 7 of Part II herein.) BOURBON is subject to the rules and regulations of and must file (publicly available) reports with, the Interstate Commerce Commission (ICC) and the United States Department of Agriculture (USDA). BOURBON'S disposal of its waste materials is in compliance with federal, state and local environmental laws. EMPLOYEES: As of July 31, 1996, LINCOLN employed three (3) administrative personnel. MAJOR BUSINESS SEGMENTS - FINANCIAL DATA The following is a report of the major business segments and the corresponding financial data. Prior to July 31, 1995, the Company considered its activities to comprise two segments: (1) financial lending and (2) agribusiness. After July 31, 1995, the company operated only an agribusiness. Summary data for 1996, 1995 and 1994 is as follows: 1996 1995 1994 Revenues: Finance $ 0 $ 58,625 $ 180,462 Agribusiness 298,272 1,296,663 1,316,632 Other 3,357 6,884 10,164 Consolidated $301,629 $1,362,172 $1,507,258 Operating profit (loss): Finance $ -2,925 $-15,243 $ 31,848 Agribusiness 86,314 161,081 132,454 Total segments 83,389 145,838 164,302 Corporate and other expenses -226,354 -246,312 -135,238 Income (loss) from operations -142,965 -100,474 29,064 Nonoperating income 732,496 123,082 2,452 Interest expense -80,405 -104,336 -100,519 Income (loss) before income taxes $509,126 $-81,728 $-69,003 Total assets: Finance $ 0 $ 491 $ 545,209 Agribusiness 1,127,211 1,283,533 1,333,934 Total segments 1,127,211 1,284,024 1,879,143 Corporate and other 231,574 339,342 80,426 Consolidated $1,358,785 $1,623,366 $1,959,569 Capital expenditures: Finance $ 0 $ 0 $ 0 Agribusiness 5,000 5,215 8,639 Total segments 5,000 5,215 8,639 Corporate and other 3,998 695 2,565 Consolidated $8,998 $5,910 $11,204 Depreciation and amortization: Finance $ 0 $ 286 $ 832 Agribusiness 52,853 57,118 55,726 Total segments 52,853 57,404 56,558 Corporate and other 3,181 10,423 15,974 Consolidated $56,034 $67,827 $72,532 ITEM 2: Properties The following are the various properties owned or leased by LINCOLN as of July 31, 1996. APPROXIMATE LEASE EXPI- TYPE OF SQUARE FEET RATION DATE LOCATION PROPERTY FLOOR SPACE (RENEWAL OPTIONS) LINCOLN ADMINISTRATIVE OFFICES Louisville, KY Offices 2,600.0 ft. 08/31/96 * * * * * * * * * BOURBON STOCK YARDS Louisville, KY Stock yard Owned real estate 19.5 acres & buildings Stock yard offices 10,460 ft. 02/1/2001 Louisville, KY Right-of-way NA 1997 (1) for stock yard Louisville, KY Warehouse 4,000.0 ft. Owned Louisville, KY Warehouse 9,000.0 ft. Owned * * * * * * * * * (1) The right-of-way is not essential to Bourbon's operations but does provide an easier access and egress from the facility. * * * * * * * * * The properties listed above are suitable and adequate for the various needs they supply. The total fixed annual rental for all of the above leased facilities (exclusive of taxes and other charges) was $40,253. ITEM 3: Legal Proceedings LINCOLN filed a complaint on October 15, 1996, seeking injunctive and compensatory relief arising from the breach of the lease of the real estate by Kentucky Livestock Exchange and Michigan Livestock Exchange, Inc. and sought relief by way of a Restraining Order and Injunction to prohibit the lessees from engaging in competitive actions of operating stockyard facilities within close proximity of Bourbon Stockyards in Louisville, Kentucky. Failure of the court to grant a restraining order or injunctive relief could materially affect Lincoln's stockyard operation due to the increased competition within the areas where the stockyards are to be developed or operated. Neither LINCOLN nor any of its subsidiaries is engaged in any other material legal proceedings. ITEM 4: Submission of Matters to a Vote of Security Holders The only item to be voted on at the annual meeting which will be held on the 6th day of December, 1996, is the election of directors. (See Part II, Item 10.) PART II ITEM 5: Market for Registrant's Common Stock and Related Stockholder Matters (1) There does not exist at the present time any regular market for any common stock of the Registrant, either the voting or non- voting. (2) There are approximately 1,800 shareholders of record of the common (non-voting) stock of LINCOLN. There are approximately 61 shareholders of record of the voting stock of LINCOLN. (3) The Registrant has never paid or declared any dividends. (4) The Registrant has filed a Schedule 13E-3 with the Securities and Exchange Commission as a "Tender Offer" wherein it will propose to purchase a maximum of 1,000,000 shares of the (no-par) (non- voting) common stock for a tender price of thirty-five ($.35) cents per share. The offering is still in effect although no specific activity has been instituted by Registrant. Reference is made to that filing for specific information and is incorporated by reference herein. ITEM 6: Selected Financial Data Years ending July 31 1996 1995 1994 1993 1992 Revenues 301629 1362172 1507258 1497505 1517356 Income (loss) before extraordinary items 494735 -87968 -73394 -105336 70167 Net income (loss) 494735 -87968 -73394 -105336 70167 Earnings (loss) per common share: Income (loss) before extraordinary items .31 -.05 -.04 -.07 .04 Net income (loss) .31 -.05 -.04 -.07 .04 Cash dividends 0 0 0 0 0 Total assets 1358785 1623366 1959569 2037796 2095261 Long-term obligations 387250 733640 819788 871068 888814 ITEM 7: Management's Discussion and Analysis of Financial Condition and Results of Operations Agri-Business Bourbon Stockyard During July, 1995, Lincoln International Corporation entered into an agreement with Michigan Livestock Exchange whereby Michigan Livestock Exchange leased the Bourbon Stockyard operations. During fiscal year 1996 the revenues of Bourbon Stockyard consisted of rental income. Net revenue from stockyard operations in 1995 decreased by approximately $12,000 or 1% from the fiscal year ended July 31, 1994. This decrease in revenue was the result of decreased receipts of approximately 2,000 head of cattle during the year. Operating costs for the year ended July 31, 1995 were down approximately $40,000 or 3% as compared to 1994. The primary decrease was in the costs of utilities and lost or stolen cattle. Bourbon does not have any accounts payable or capital commitments at July 31, 1996. All funds in excess of expenses are available to the parent. Consolidated operations Revenues from consolidated operations in 1996 decreased approximately $1,060,543 or 78% as compared to 1995. This decrease is primarily the result of the lease of the Bourbon Stockyard operation. Revenues from consolidated operations in 1995 decreased approximately $145,000 or 10% as compared to 1994. This decrease is primarily in the reduced revenue from the finance division. Operating costs for the year ended July 31, 1996, were down approximately $1,041,982 or 66% as compared to 1995. This decrease is primarily the result of the lease of the Bourbon Stockyard operation. Operating costs for the year ended July 31, 1995 were down approximately $10,000 or 1% as compared to 1994. The primary area of savings was in utilities. Operating costs, which include amortization and depreciation account for 174%, 114%, and 105% of net sales and operating revenues for the years 1996 to 1994 respectively. The company did not have any capital commitments at July 31, 1996. Working Capital at July 31, 1996 was approximately $144,000 as compared to a negative working capital position of approximately $117,000 at July 31, 1995. There were no defaults on loans payable during the year. The liquidity of the company will depend on the lease arrangement with Michigan Livestock Exchange and the development of the remaining property owned by the Company. ITEM 8: Consolidated Financial Statements and Supplementary Data The response to this item is contained within a separate section of this report. ITEM 9: Changes in and Disagreements with Accountants None. ITEM 10: NAME, PRINCIPAL OCCUPATION AND OTHER POSITIONS WITH DIRECTORS SHARES OWNED AS OF 07/31/96 LINCOLN FOR LAST 5 YEARS SINCE VOTING % NON-VOTING % Thurman L. Sisney, Chairman of the Board, President and CEO Director, Age 50 1994 91,463(1) 91.46% 287,329 18.00% Richard Dolin Director, Age 51 1996 100 .001% Ronald Osborn, 100 .10% 66 .001% Secretary/Treasurer of Lincoln International Corp, Age 57 ______________________________ Officers & Directors as a group 91,563 91.56% 287,495 18.00% (1) Includes shares held in names of Drivers and Drovers Diversified, Inc., a Kentucky corporation owned by Thurman L. Sisney. Management has no reason to believe that any of the persons so named above will be unable or unavailable to accept nominations but should this occur, votes will be given for such other person or persons, if any, as the Board of Directors may recommend. BUSINESS HISTORY OF DIRECTORS Thurman L. Sisney - Mr. Sisney is President, Chairman of the Board and Chief Executive Officer of Lincoln International Corporation. Mr. Sisney has a masters degree in business administration and law degree from the University of Louisville and has been in private practice since 1980. He has served as general counsel to the Kentucky Finance and Administration Cabinet as well as counsel and legislative liaison to the governor of Kentucky. Mr. Sisney has also served as General Counsel and Deputy Commissioner of Agriculture and the Kentucky Department of Agriculture. Mr. Sisney is very active in civic and charitable organizations in the community including but not limited to the board of trustees of the Louisville Conference of the United Methodist Church, Founder and President of the International Association of Convention and Hospitality and Industry Attorney's Association. Richard Dolin - Mr. Dolin is a graduate of the University of Louisville Law School where he obtained his Juris Doctorate degree, is a graduate of Louisville Presbyterian Theological Seminary where he obtained a certificate of double competency in law and theology and a master degree in Business Administration from Bellarmine College and has done doctoral work in business administration at the University of Kentucky. Mr. Dolin is associate pastor for the Harvey Browne Memorial Presbyterian Church in Louisville, Kentucky, and is responsible for adult education programs and out-reach activities and also serves as president of Nomos, Ltd., which provides consultation to small and medium sized profit and non-profit organizations regarding strategic planning, accounting, budgeting, and related items. Mr. Dolin also was involved in providing seminars on areas of leadership and management skills. Mr. Dolin is involved in many community activities including work for building homes for developmentally disabled adults and is involved in Chinese and American relationships. ITEM 11: The directors received compensation of Three Hundred ($300.00) Dollars per meeting and travel expenses. The directors fees and travel expense for 1995-1996 was $3,570. ITEM 12 and ITEM 13: LINCOLN intends to file an Information Statement pursuant to Regulation 14(c) which contains all of the information required by Part III which information is incorporated herein by reference. PART IV ITEM 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K Part IV which relates to Item 14 concerning exhibits, financial statement schedules and reports is hereby amended to include the following items by reference. (3) Articles of Incorporation and By-Laws: The articles and by-laws of Lincoln International Corporation were filed as a part of its Form 10 filing in September of 1971. (4) Form 8-K filed September, 1991, reporting sale and disposition of assets of Lincoln Finance Company, Inc. to Kentucky Finance Co., Inc. of three (3) of the four (4) finance companies operated by Registrant. (5) Articles of Merger of majority held subsidiary, Professional Services, Inc., into Registrant as filed on Form 10K for fiscal year 1991-1992. Form 10-K - 1995 (1) A copy of the lease agreement dated July 15, 1995, between LINCOLN INTERNATIONAL CORPORATION and Kentucky Livestock Exchange (BOURBON STOCKYARDS OPERATIONS) a division of Michigan Livestock Exchange, et al. Financial data and schedules are submitted separately as a separate schedule and are attached hereto. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Lincoln International Corporation has duly caused this report to be signed on its behalf, by the undersigned, President and Chief Executive Officer, Thurman L. Sisney, and by its principal Financial Officer and principal Accounting Officer, Secretary and Treasurer, Ronald Osborn, as thereunto duly authorized in the City of Louisville, Commonwealth of Kentucky, on the 29th day of October, 1996. LINCOLN INTERNATIONAL CORPORATION ____________________________ By: Thurman L. Sisney, President Date: ___________________________ ___________________________ By: Ronald Osborn, Sec./Treas. Date: ___________________________ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of LINCOLN INTERNATIONAL CORPORATION in the capacities and on the date indicated. SIGNATURE TITLE (1) Principal Executive Officers _________________________________ Thurman L. Sisney President & Chairman of the Board _________________________________ Ronald Osborn Secretary/Treasurer (2) Directors _________________________________ Thurman L. Sisney Director _________________________________ Richard Dolin Director LINCOLN INTERNATIONAL CORPORATION ANNUAL REPORT FORM 10-K INDEPENDENT AUDITOR'S REPORT The Board of Directors and Stockholders Lincoln International Corporation Louisville, Kentucky We have audited the consolidated balance sheets of Lincoln International Corporation listed in the accompanying index to Financial Statements (Item 14(a)) as of July 31, 1996 and 1995, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended July 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements listed in the accompanying Index to Financial Statements (Item 14(a)) present fairly, in all material respects, the consolidated financial position of Lincoln International Corporation as of July 31, 1996 and 1995, and the consolidated results of its operations and its cash flows for each of the three years in the period ended July 31, 1996, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, there is substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. POTTER & COMPANY, LLP Louisville, Kentucky September 26, 1996 LINCOLN INTERNATIONAL CORPORATION Index to Financial Statements Item 14(a) The following consolidated financial statements of Lincoln International Corporation and subsidiaries are incorporated by reference in Item 8: Consolidated balance sheets - July 31, 1996 and 1995 Consolidated statements of operations - years ended July 31, 1996, 1995, and 1994 Consolidated statements of stockholders' equity - years ended July 31, 1996, 1995, and 1994 Consolidated statements of cash flows - years ended July 31, 1996, 1995, and 1994 Notes to consolidated financial statements Supporting schedules for the three years ended July 31, 1996, 1995, and 1994: I - Condensed financial information (parent company only) II - Valuation and qualifying accounts and reserves All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto. SCHEDULE I LINCOLN INTERNATIONAL CORPORATION (PARENT COMPANY ONLY) CONDENSED BALANCE SHEETS July 31, 1996 and 1995 1996 1995 A S S E T S Current assets: Cash and cash equivalents $224,743 $331,447 Accounts receivable, net 12,409 21,251 Prepaid expenses and other current assets 0 7,091 Total current assets 237,152 359,789 Investments in subsidiaries 1,140,750 1,147,982 Net property, plant and equipment 1,121,633 1,260,885 Total assets $2,499,535 $2,768,656 L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y Current liabilities: Current maturities of long-term debt $9,256 $167,558 Accounts payable 11,085 60,370 Income taxes payable 14,366 0 Accrued expenses 57,940 83,832 Total current liabilities 92,647 311,760 Long-term debt, less current maturities 387,250 733,640 Advances from subsidiaries 583,170 1,312,557 Stockholders' equity: Common stock, $.50 stated value 780,573 811,537 Additional paid-in capital 469,446 465,052 Retained earnings (deficit) 186,449 -865,890 Total stockholders' equity 1,436,468 410,699 Total liabilities and stockholders' equity $2,499,535 $2,768,656 See accompanying notes. SCHEDULE I LINCOLN INTERNATIONAL CORPORATION (PARENT COMPANY ONLY) CONDENSED STATEMENTS OF OPERATIONS Years ended July 31, 1996, 1995, and 1994 1996 1995 1994 Revenues: Net service and operating revenues $300,199 $1,194,763 $1,254,838 Net product sales 0 119,689 111,803 Gain (loss) on sale of assets 715,210 -28,501 0 Miscellaneous income 570,834 26,223 0 1,586,243 1,312,174 1,366,641 Costs and expenses: Cost of service and operating revenues 230,009 914,457 863,045 Cost of products sold 0 104,169 97,982 Operating, general and administrative expenses 211,365 383,117 407,748 Interest expense - subsidiaries 0 19,399 51,493 Interest expense - other 70,932 104,336 100,519 512,306 1,525,478 1,520,787 Income (loss) before provision for income tax 1,073,937 -213,304 -154,146 Income tax 14,366 0 0 Income (loss) before equity in net earnings (losses) of subsidiaries 1,059,571 -213,304 -154,146 Equity in net earnings (losses) of subsidiaries -7,232 125,336 80,745 Net income (loss) $1,052,339 $-87,968 $-73,401 See accompanying notes. SCHEDULE I LINCOLN INTERNATIONAL CORPORATION (PARENT COMPANY ONLY) CONDENSED STATEMENTS OF CASH FLOWS Years ended July 31, 1996, 1995, and 1994 1996 1995 1994 Cash flows from operating activities: Net income (loss) $1,052,339 $-87,968 $-73,401 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 56,034 67,541 71,700 Equity in net (earnings) losses of consolidated subsidiaries 7,232 -125,336 -80,745 (Gain) loss on sale of property, equipment, and operating assets -715,210 28,501 0 Provision for losses on other receivables 19,032 0 3,081 Change in assets and liabilities: Increase in accounts receivables -10,190 -8,011 -2,124 (Increase) decrease in inventories 0 681 -73 Decrease in other current assets 7,091 3,963 1,522 Decrease in accounts payable -49,285 -33,306 -2,589 Increase (decrease) in accrued expenses -25,892 -744 7,334 Increase in income taxes payable 14,366 0 0 Net cash provided by (used in) operating activities 355,517 -154,679 -75,295 Cash flows from investing activities: Proceeds from disposal of property, equipment, and operating assets 807,426 24,440 0 Purchases of property and equipment -8,998 -5,910 -11,204 Net cash provided by (used in) investing activities 798,428 18,530 -11,204 Cash flows from financing activities: Net borrowings (repayments) under short-term notes payable 0 -90,379 -1,973 Increase (decrease) in advances from subsidiaries -729,387 649,259 86,187 Proceeds from long-term debt 757 1,389 25,489 Principal payments on long-term debt 505,449 -103,963 -30,983 Purchase of common stock for the treasury -26,570 0 0 Net cash provided by (used in) financing activities -1,260,649 456,306 78,720 Net increase (decrease) in cash and cash equivalents -106,704 320,157 -7,779 Cash and cash equivalents at beginning of year 331,447 11,290 19,069 Cash and cash equivalents at end of year $224,743 $331,447 $11,290 Supplemental disclosures of cash flow information: Cash paid during the year for interest $73,164 $123,629 $152,746 See accompanying notes. SCHEDULE I LINCOLN INTERNATIONAL CORPORATION (PARENT COMPANY ONLY) NOTES TO CONDENSED FINANCIAL STATEMENTS July 31, 1996 and 1995 1. Long-term debt Long-term debt consists of the following: 1996 1995 12% subordinated capital notes, various maturity dates, unsecured. $0 $170,852 Mortgage note payable, interest at 1.5% over prime, monthly payments of $7,566, including principal and interest, paid off February 1996, secured by real property. 0 730,346 Mortgage note payable, interest at 9.875%, monthly payments of $4,000, including principal and interest, balloon payment due February 2001, secured by real property. 396,506 0 396,506 901,198 Less current maturities 9,256 167,558 Totals $387,250 $733,640 Scheduled maturities of long-term debt during the five years subsequent to July 31, 1996 are as follows: 1997 $ 9,256 1998 10,213 1999 11,269 2000 12,433 2001 353,335 Total $ 396,506 2. Dividends Cash dividends paid to Lincoln International Corporation by its consolidated subsidiaries were $557,605, $0, and $0 for the fiscal years ended July 31, 1996, 1995 and 1994, respectively. The amounts are included in miscellaneous income. SCHEDULE I LINCOLN INTERNATIONAL CORPORATION (PARENT COMPANY ONLY) NOTES TO CONDENSED FINANCIAL STATEMENTS July 31, 1996 and 1995 3. Litigation The lessee of the stock yard has given written notice to terminate the lease effective December 31, 1996. The Company has filed a complaint in court against the lessee of the stock yard for breach of contract. The complaint requests suspension of the lessee's related operations in a geographic area believed to be in competition with the operations at the Company's stock yard and monetary damages. Management of the Company consider their position to be favorable. 4. Going Concern The uncertainty of the continuation of the operations at the stock yard and its profitability creates an uncertainty about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. SCHEDULE II LINCOLN INTERNATIONAL CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES Years ended July 31, 1996, 1995, and 1994 Column Column Column Column Column A B C D E Additions Balance Charged Charged Balance at to to Other at Beginning Costs & Accounts Deductions End Description of Year Expenses Describe Describe of Year Year ended July 31, 1996 Reserves deducted from assets: Allowance for losses: Accounts receivable 750 19,032 0 0 19,785 Loans receivable - finance 0 0 0 0 0 750 19,032 0 0 19,785 Accumulated amortization - Franchise license 0 0 0 0 0 750 19,032 0 0 19,785 Year ended July 31, 1995 Reserves deducted from assets: Allowance for losses: Accounts receivable 4,081 0 0 3,331 A 750 Loans receivable - finance 16,515 7,435 0 23,950 A,B 0 20,596 7,435 0 27,281 750 Accumulated amortization - Franchise license 75,529 6,294 0 81,823 C 0 96,125 13,729 0 109,104 750 Year ended July 31, 1994 Reserves deducted from assets: Allowance for losses: Accounts receivable 12,100 3,031 0 11,050 A 4,081 Loans receivable - finance 16,929 11,195 0 11,609 A 16,515 29,029 14,226 0 22,659 20,596 Accumulated amortization - Franchise license 67,137 8,392 0 0 75,529 96,166 22,618 0 22,659 96,125 (A) Write-off of doubtful accounts. (B) Includes reduction in allowance in the amount of $16,807 due to sale of finance receivables. (C) Sold Franchise license May 1, 1995. LINCOLN INTERNATIONAL CORPORATION CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT July 31, 1996, 1995, and 1994 INDEPENDENT AUDITOR'S REPORT To the Board of Directors and Stockholders Lincoln International Corporation Louisville, Kentucky We have audited the accompanying consolidated balance sheets of Lincoln International Corporation as of July 31, 1996 and 1995, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended July 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Lincoln International Corporation as of July 31, 1996 and 1995, and the consolidated results of its operations and its cash flows for each of the three years in the period ended July 31, 1996, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 15 to the financial statements, there is substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. POTTER & COMPANY, LLP September 26, 1996 LINCOLN INTERNATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS July 31, 1996 and 1995 A S S E T S 1996 1995 Current assets: Cash and cash equivalents $224,743 $332,682 Other receivables 12,409 22,708 Prepaid expenses 0 7,091 Total current assets 237,152 362,481 Net property, plant and equipment 1,121,633 1,260,885 Total assets $1,358,785 $1,623,366 L I A B I L I T I E S Current liabilities: Current maturities of long-term debt $9,256 $318,809 Accounts payable 11,085 60,370 Income taxes payable 14,391 6,240 Accrued expenses 57,940 93,609 Total current liabilities 92,672 479,028 Long-term debt, less current maturities 387,250 733,640 Total liabilities 479,922 1,212,668 S T O C K H O L D E R S' E Q U I T Y Stockholders' equity: Common stock, voting, $.50 stated value, 100,000 shares authorized, issued and outstanding 50,000 50,000 Common stock, nonvoting, $.50 stated value, 2,900,000 shares authorized, 1,461,145 shares issued and outstanding (1,523,074 shares at 1995) 730,573 761,537 Additional paid-in capital 469,446 465,052 Retained earnings (deficit) -371,156 -865,891 Total stockholders' equity 878,863 410,698 Total liabilities and stockholders' equity $1,358,785 $1,623,366 See accompanying notes. 2 LINCOLN INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Years ended July 31, 1996, 1995, and 1994 1996 1995 1994 Revenues: Net service and operating revenues $301,629 $1,183,858 $1,214,993 Net product sales 0 119,689 111,803 Finance charges and other income earned on finance receivables 0 58,625 180,462 Total revenues 301,629 1,362,172 1,507,258 Costs and expenses: Cost of service and operating revenues 230,009 931,305 916,635 Cost of products sold 0 104,169 97,982 Operating, general and administrative expenses 214,585 401,660 437,917 Provision for credit losses on finance receivables 0 6,409 5,665 Interest expense related to finance subsidiary 0 19,103 19,995 Total costs and expenses 444,594 1,462,646 1,478,194 Income (loss) from operations -142,965 -100,474 29,064 Other income (expense): Gain on sale of property, equipment, and operating assets 715,210 88,640 0 Interest expense -80,405 -104,336 -100,519 Miscellaneous income 17,286 34,442 2,452 Total other income (expense) 652,091 18,746 -98,067 Income (loss) before income taxes 509,126 -81,728 -69,003 Provision for income taxes 14,391 6,240 4,398 Net income (loss) $494,735 $-87,968 $-73,401 Net income (loss) per common share $.31 $-.05 $-.04 See accompanying notes. 3 LINCOLN INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years ended July 31, 1996, 1995, and 1994 Total Common Common Additional Retained Stock- Stock Stock Paid-in Earnings holders' Voting Nonvoting Capital (Deficit) Equity Balance at July 31, 1993 $50,000 $761,537 $465,052 $-704,522 $572,067 Net loss 0 0 0 -73,401 -73,401 Balance at July 31, 1994 50,000 761,537 465,052 -777,923 498,666 Net loss 0 0 0 -87,968 -87,968 Balance at July 31, 1995 50,000 761,537 465,052 -865,891 410,698 Purchase of 61,929 shares of common stock for the treasury 0 -30,964 4,394 0 -26,570 Net income 0 0 0 494,735 494,735 Balance at July 31, 1996 $50,000 $730,573 $469,446 $-371,156 $878,863 See accompanying notes. 4 LINCOLN INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended July 31, 1996, 1995, and 1994 1996 1995 1994 Cash flows from operating activities: Net income (loss) $494,735 $-87,968 $-73,401 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 56,034 67,827 72,532 Provision for credit losses on finance receivables 0 7,435 11,188 Provision for losses on other receivables 19,032 0 3,038 Reduction in allowance for credit losses due to sale of operating assets 0 -16,807 0 Gain on sale of property, equipment, and operating assets -715,210 -88,640 0 Change in assets and liabilities: Increase in other receivables -8,733 -7,976 -2,783 (Increase) decrease in inventories 0 681 -73 Decrease in prepaid expenses 7,091 4,082 1,522 Decrease in accounts payable -49,285 -33,340 -2,555 Increase in income taxes payable 8,151 1,842 1,414 Increase (decrease) in accrued expenses -35,669 -4,520 2,890 Decrease in deferred insurance commissions 0 -2,435 -535 Net cash provided by (used in) operating activities -223,854 -159,819 13,237 Cash flows from investing activities: Loans originated 0 -146,251 -407,876 Loans repaid 0 146,565 412,560 Proceeds from sale of loans 0 661,951 0 Proceeds from disposal of property, equipment and operating assets 807,426 24,690 0 Purchases of property and equipment -8,998 -5,910 -11,204 Net cash provided by (used in) investing activities $798,428 $681,045 $-6,520 See accompanying notes. 5 LINCOLN INTERNATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended July 31, 1996, 1995, and 1994 1996 1995 1994 Cash flows from financing activities: Net borrowings (repayments) under short-term notes payable $ 0 $-90,379 $-4,473 Proceeds from long-term debt 757 1,389 30,704 Principal payments on long-term debt -656,700 -120,792 -34,771 Purchase of common stock for the treasury -26,570 0 0 Net cash provided by (used in) financing activities -682,513 -209,782 -8,540 Net increase (decrease) in cash and cash equivalents -107,939 311,444 -1,823 Cash and cash equivalents at beginning of year 332,682 21,238 23,061 Cash and cash equivalents at end of year $224,743 $332,682 $21,238 Supplemental disclosures of cash flow information: Cash paid during the year for interest $84,924 $124,588 $152,724 Cash paid during the year for income taxes $6,240 $4,398 $2,984 See accompanying notes. 6 LINCOLN INTERNATIONAL CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996, 1995, and 1994 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of Lincoln International Corporation (the Company) is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. Company's Activities: Lincoln International Corporation owns property in the state of Kentucky which is leased to a stock yard operator. Through July 15, 1995, the Company operated the stock yard. Through April 30, 1995, the Company engaged in the operation of ice cream franchises in the Midwestern United States. On May 1, 1995, the Company sold its remaining territories and equipment of the ice cream operation. Through November 30, 1994, the Company engaged in the operation of a small consumer loan company in the state of Kentucky. On December 1, 1994, the Company sold all finance receivables and ceased operations at its one remaining small consumer loan company. Use of Estimates: Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported revenues and expenses. Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions are eliminated in consolidation. Cash and Cash Equivalents: For purposes of reporting cash flows, the Company considers all money market funds with a maturity of three months or less to be cash equivalents. 7 LINCOLN INTERNATIONAL CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996, 1995, and 1994 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Finance Receivables: All new direct cash loans of the Company have been recorded on the discount- basis. Income from discount-basis direct cash loans and retail contracts is calculated using a method which approximates the interest method. Accrual of interest income is suspended when a loan is contractually delinquent for ninety days or more at which time the loan is converted to interest-bearing. Income from interest-bearing loans is credited to income as and when collections are made. Extension fees and late charges on discount-basis direct cash loans and retail contracts are credited to income when collected. Insurance commissions are recognized over the terms of the related loans based on the straight-line method which approximates the interest method. Other Receivables: Royalties are recorded as income on the accrual basis. Expenses associated with franchise fees and royalties are charged as expense as incurred. Individual unit franchise fees are recorded as income when substantially all Company obligations have been completed. Property, Plant and Equipment: Property, plant and equipment are recorded at cost. Depreciation is provided over the following estimated useful lives: Buildings and improvements 20-40 years Yard and administration building 10-55 years Leasehold improvements 3- 5 years Machinery and equipment 3-12 years The Company uses the straight-line method of computing depreciation for financial statement purposes and accelerated methods for income tax purposes. Leasehold improvements are amortized using the straight-line method over the lease term. Franchise License: The Company amortizes the license using the straight-line method over 15 years which is the term of the franchise license agreement. 8 LINCOLN INTERNATIONAL CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996, 1995, and 1994 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes: The Company files a consolidated federal income tax return. Investment tax credits are treated as a reduction of the tax provision in the year in which the benefit is earned (flow-through method). Separate state income tax returns are filed for the Company and each subsidiary. Earnings Per Share: Earnings per share are based on the weighted average number of shares outstanding during each year. NOTE 2 - FINANCE RECEIVABLES Changes in the allowance for credit losses were as follows: Balance as of July 31, 1993 $16,929 Provision for credit losses 11,188 Loans charged off (17,132) Recoveries 5,530 Balance as of July 31, 1994 16,515 Provision for credit losses 7,435 Loans charged off and sold (24,977) Recoveries 1,027 Balance as of July 31, 1995 $ 0 On December 1, 1994, the finance receivables were sold. NOTE 3 - OTHER RECEIVABLES Other receivables consist of the following: 1996 1995 Accounts receivable $32,191 $22,001 Less allowance for doubtful accounts 19,782 750 12,409 21,251 Royalty receivables 0 1,457 Totals $12,409 $22,708 9 LINCOLN INTERNATIONAL CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996, 1995, and 1994 NOTE 4 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following: 1996 1995 Land $ 667,504 $ 713,022 Building and improvements 68,250 68,250 Yard and administration building 2,149,593 2,374,658 Machinery and equipment 331,330 446,600 Leasehold improvements 2,800 2,800 3,219,477 3,605,330 Less accumulated depreciation 2,097,844 2,344,445 Net property, plant and equipment $1,121,633 $1,260,885 Depreciation expense for the years ended July 31, 1996, 1995 and 1994 was $56,034, $61,533 and $66,238, respectively. NOTE 5 - LONG-TERM DEBT Long-term debt consists of the following: 1996 1995 12% subordinated capital notes, various maturity dates, unsecured. $ 0 $ 322,103 Mortgage note payable, interest at 1.5% over prime, monthly payments of $7,566, including principal and interest, paid off February 1996, secured by real property. 0 730,346 Mortgage note payable, interest at 9.875%, monthly payments of $4,000, including principal and interest, balloon payment due February 2001, secured by real property. 396,506 0 396,506 1,052,449 Less current maturities 9,256 318,809 Totals $387,250 $ 733,640 10 LINCOLN INTERNATIONAL CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996, 1995, and 1994 NOTE 5 - LONG-TERM DEBT (CONTINUED) Aggregate maturities required on long-term debt at July 31, 1996 are as follows: 1997 $ 9,256 1998 10,213 1999 11,269 2000 12,433 2001 353,335 Total $396,506 As of October 1, 1996, new terms were agreed to regarding the outstanding mortgage note payable above. The new terms include a revised interest rate of 8.75% and monthly payments of $3,283. No other terms were changed. NOTE 6 - INCOME TAXES The provision for income taxes consists of the following: 1996 1995 1994 Federal income taxes $ 2,310 $ 0 $ 0 State and local income taxes 12,081 6,240 4,398 Provision for income taxes $14,391 $6,240 $4,398 The Company has available at July 31, 1996 unused tax credits and operating loss carryforwards, which may provide future tax benefits. If not used, the carryforwards will expire as follows: Year of Tax Operating Loss Expiration Credits Carryforwards 2001 $61,247 $ 0 2002 0 0 2003 0 0 2004 0 0 2005 0 60,774 2006 0 216,677 2007 0 0 2008 0 89,623 2009 0 76,331 2010 0 59,836 $61,247 $503,241 11 LINCOLN INTERNATIONAL CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996, 1995, and 1994 NOTE 6 - INCOME TAXES (CONTINUED) The difference between the statutory income tax rate and the Company's effective tax rate is reconciled as follows: 1996 1995 1994 Amount Percent Amount Percent Amount Percent Federal taxes (benefit) at statutory rate $173,100 -34.0% $-27,800 -34.0% $-23,500 -34.0% Surtax exemption 0 .0% 0 0.0% 0 0.0% Tax effect of current operating loss available for carryover 0 0.0% 27,800 34.0% 23,500 34.0% Benefit due to operating loss carryforward -158,323 -31.1% 0 0.0% 0 0.0% Temporary differences -11,770 -2.3% -851 -1.0% 804 1.2% State and local income taxes, net of federal benefit 11,384 2.2% 7,091 8.6% 3,594 5.2% $14,391 2.8% $6,240 7.6% $4,398 6.4% A deferred tax asset due to the operating loss and tax credit carryforwards has not been recognized because it is more likely than not that it will not be realized based on current circumstances. NOTE 7 - MAJOR BUSINESS SEGMENTS The Company considers its activities to comprise two reportable segments: financial lending and agribusiness. Summary data is as follows: 1996 1995 1994 Revenues: Finance $ 0 $ 58,625 $ 180,462 Agribusiness 298,272 1,296,663 1,316,632 Other 3,357 6,884 10,164 Consolidated $301,629 $1,362,172 $1,507,258 12 LINCOLN INTERNATIONAL CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996, 1995, and 1994 NOTE 7 - MAJOR BUSINESS SEGMENTS (CONTINUED) 1996 1995 1994 Operating profit (loss): Finance $-2,925 $-15,243 $31,848 Agribusiness 86,314 161,081 132,454 Total segments 83,389 145,838 164,302 Corporate and other expenses -226,354 -246,312 -135,238 Income (loss) from operations -142,965 -100,474 29,064 Nonoperating income 732,496 123,082 2,452 Interest expense -80,405 -104,336 -100,519 Income (loss) before income taxes $509,126 $-81,728 $-69,003 Total assets: Finance $ 0 $ 491 $ 545,209 Agribusiness 1,127,211 1,283,533 1,333,934 Total segments 1,127,211 1,284,024 1,879,143 Corporate and other 231,574 339,342 80,426 Consolidated $1,358,785 $1,623,366 $1,959,569 Capital expenditures: Finance $ 0 $ 0 $ 0 Agribusiness 5,000 5,215 8,639 Total segments 5,000 5,215 8,639 Corporate and other 3,998 695 2,565 Consolidated $8,998 $5,910 $11,204 Depreciation and amortization: Finance $ 0 $ 286 $ 832 Agribusiness 52,853 57,118 55,726 Total segments 52,853 57,404 56,558 Corporate and other 3,181 10,423 15,974 Consolidated $56,034 $67,827 $72,532 13 LINCOLN INTERNATIONAL CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996, 1995, and 1994 NOTE 8 - SALE OF OPERATING ASSETS On December 1, 1994, the Company sold all finance receivables and ceased operations at its one remaining branch of Lincoln Finance Company, Inc., in Greensburg, Kentucky. Net finance receivables of $559,858 were sold along with office equipment with a net book value of $1,839 at a gain of $117,060. The building in Greensburg, Kentucky was sold on July 6, 1995, at a gain of $8,756 in a separate transaction. On May 1, 1995, a division of the Company, Linco Marketing sold the remaining territories and equipment of the Ice Cream Churn Franchises for $5,000, at a loss of $36,285. NOTE 9 - LEASE COMMITMENTS The Company and its subsidiaries lease facilities and equipment under written operating leases. Total rental expense amounted to $51,483 in 1996, $35,711 in 1995, and $33,855 in 1994. Future minimum rentals are as follows: Year ending July 31: 1997 $ 60,865 1998 60,865 1999 54,991 2000 50,878 2001 25,699 Totals $253,298 NOTE 10 - LEASE OF PROPERTY On July 15, 1995, the Company leased the property associated with the operation of its stock yard to another stock yard operator. Under the agreement, the Company will receive rent at a minimum of $18,000 a month for the first two years, plus a percentage of the pre-tax profits. After the initial two years, the company will receive a percentage of the pre-tax profits with no minimum payment required. The agreement expires July 31, 2005, but may be terminated by the company upon six months notice to the lessee. The lessee is responsible at its expense, for most repairs, insurance, utilities and property taxes associated with the property. 14 LINCOLN INTERNATIONAL CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996, 1995, and 1994 NOTE 11 - LEASE OF PROPERTY, PLANT AND EQUIPMENT The company is the lessor of property under operating leases. Following is a summary of the Company's investment in property, plant and equipment on operating leases as of July 31. 1996: Land $ 667,504 Buildings and Improvements 68,250 Yard building 2,149,593 2,885,347 Less accumulated depreciation 1,788,430 $1,096,917 Under the operating method of accounting for leases, the cost of the property, plant and equipment is recorded as an asset and is depreciated over its estimated useful life and the rental income is recognized as the lease rental payments are earned. All of the leases, except for the lease described in Note 10, are month-to-month. The minimum future rentals to be received on that lease at July 31, 1996 is $216,000 for the year ended July 31, 1997. Note 14 describes litigation regarding this lease. NOTE 12 - RESTATEMENT OF PRIOR YEARS FINANCIAL STATEMENTS The cost of common stock and additional paid-in capital at July 31, 1993 were restated to eliminate the cost of treasury stock. The restatement did not have an effect on total stockholders' equity. The changes were as follows: Before Changes Restated Common stock, voting $ 50,000 $ 0 $ 50,000 Common stock, nonvoting 766,160 -4,623 761,537 Additional paid-in capital 471,300 -6,248 465,052 Treasury stock -10,871 10,871 0 Retained earnings (deficit) -704,522 0 -704,522 Total stockholders' equity $572,067 $ 0 $572,067 15 LINCOLN INTERNATIONAL CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 1996, 1995, and 1994 NOTE 13 - ECONOMIC DEPENDENCY For the year ended July 31, 1996, the Company received approximately 71.6% of its operating revenues from the lessee of the stock yard. The amount of $216,000 was recognized as revenue and received during the year. NOTE 14 - LITIGATION The lessee of the stock yard has given written notice to terminate the lease effective December 31, 1996. The Company has filed a complaint in court against the lessee of the stock yard for breach of contract. The complaint requests suspension of the lessee's related operations in a geographic area believed to be in competition with the operations at the Company's stock yard and monetary damages. Management of the Company consider their position to be favorable. NOTE 15 - GOING CONCERN The uncertainty of the continuation of the operations at the stock yard and its profitability creates an uncertainty about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 16 EX-27 2
5 YEAR JUL-31-1996 AUG-01-1995 JUL-31-1996 224743 0 32191 19782 0 256184 3219477 2097844 1358785 92672 396506 780573 0 0 98290 1358785 0 301629 0 444595 0 19032 80405 509125 14391 494734 0 0 0 494734 .31 .31
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