-----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, PQW6DiHBOF6VEKeR/aGHbUSw9lZi0+ktchbrqFSNnZlPgn/20+O87lD9R5zwZBDL NqqQMw1DOE5ha5zmOgqbPg== 0000930413-01-501490.txt : 20020410 0000930413-01-501490.hdr.sgml : 20020410 ACCESSION NUMBER: 0000930413-01-501490 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LBP INC CENTRAL INDEX KEY: 0000922984 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED STRUCTURAL METAL PRODUCTS [3440] IRS NUMBER: 133764357 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24094 FILM NUMBER: 1783712 BUSINESS ADDRESS: STREET 1: 200 MAMARONECK AVE CITY: WHITE PLAINS STATE: NY ZIP: 10601 BUSINESS PHONE: 9144212545 MAIL ADDRESS: STREET 1: 200 MAMARDNECK AVE CITY: WHITE PLAINS STATE: NY ZIP: 10601 FORMER COMPANY: FORMER CONFORMED NAME: LESLIE BUILDING PRODUCTS INC DATE OF NAME CHANGE: 19940511 10-Q 1 c22257_10q-.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: SEPTEMBER 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the transition period from _________________ to _________________ Commission File Number: 0-24094 LBP, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 13-3764357 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 200 MAMARONECK AVENUE, WHITE PLAINS, N.Y. 10601 (Address of principal executive offices) (Zip Code) (914) 421-2545 Registrant's Telephone Number including Area Code (Former name, former address and former fiscal year, if changed since last year) Indicate by check marks 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 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 _XX_ No _____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 5,002,890 shares of common stock as of November 3, 2001. LBP, INC. INDEX TO FINANCIAL STATEMENTS FILED WITH QUARTERLY REPORT OF REGISTRANT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2001 (UNAUDITED) -------------------------------------------------------- Page ---- PART I - FINANCIAL STATEMENT INFORMATION Consolidated Statement of Net Assets in Liquidation as of September 30, 2001 (Liquidation Basis) 3 Consolidated Statement of Changes in Net Assets in Liquidation Period May 16, 2001 to September 30, 2001 (Liquidation Basis) 4 Consolidated Statement of Operations Period January 1, 2001 to May 15, 2001 (Going Concern Basis) 5 Consolidated Balance Sheet as of December 31, 2000 (Going Concern Basis) 6 Consolidated Statement of Stockholders' Equity Period January 1, 2001 to May 15, 2001 (Going Concern Basis) 7 Consolidated Statement of Cash Flows Period January 1, 2001 to May 15, 2001 (Going Concern Basis) 8 Notes to Financial Statements 9-12 Item 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13-16 PART II - OTHER INFORMATION Not Applicable SIGNATURES 17 LBP, INC. CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION AS OF SEPTEMBER 30, 2001 (LIQUIDATION BASIS) (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) ASSETS Cash and cash equivalents $29,761 Prepaid expenses and other current assets 500 ------- 30,261 ------- LIABILITIES Accrued expenses and other liabilities including liquidation costs 1,262 ------- 1,262 ------- Net assets in liquidation (note 1) $28,999 ======= Number of common shares outstanding 5,003 ======= Net assets in liquidation per share $ 5.80 ======= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 3 LBP, INC. CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION FOR THE PERIOD MAY 16, 2001 TO SEPTEMBER 30, 2001 (LIQUIDATION BASIS) (UNAUDITED) (IN THOUSANDS) Shareholders' equity at May 15, 2001 (going concern basis) $ 29,184 Adjustments to reflect change to liquidation basis of accounting (note 1) (443) -------- Net assets in liquidation at May 15, 2001 28,741 Interest and dividend income 391 Provision for income tax (133) -------- NET ASSETS IN LIQUIDATION AT SEPTEMBER 30, 2001 $ 28,999 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 4 LBP, INC. CONSOLIDATED STATEMENT OF OPERATIONS (GOING CONCERN BASIS) (UNAUDITED) Year 2000 --------------------------- Nine Months Three Months January 1 Ended Ended To May 15 September 30, September 30, 2001 2000 2000 --------- ------------- ------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Investment income $ 827 $2,231 $ 666 General and administrative expenses 404 585 142 ------ ------ ------ Income before income taxes 423 1,646 524 Provision for income taxes 144 560 178 ------ ------ ------ NET INCOME $ 279 $1,086 $ 346 ====== ====== ====== Net income per common share: Basic $ .06 $ .22 $ .07 ====== ====== ====== Diluted $ .06 $ .22 $ .07 ====== ====== ====== Weighted average common shares outstanding: Basic 5,001 4,937 4,937 Diluted 5,002 4,949 4,949 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 5 LBP, INC. CONSOLIDATED BALANCE SHEET (GOING CONCERN BASIS) December 31, 2000 ------------ (IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS) ASSETS CURRENT ASSETS Cash and equivalents $ 8,776 Investments in securities 20,157 Prepaid expenses and other current assets 629 -------- TOTAL ASSETS $ 29,562 ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable, accrued expenses and other current liabilities $ 159 Discontinued operations 524 -------- TOTAL CURRENT LIABILITIES 683 -------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock par value $.01 per share: authorized 20,000,000 shares; issued 5,085,390 shares 51 Paid in capital 20,867 Retained earnings 8,225 -------- 29,143 Treasury stock at cost -- 89,000 shares (264) -------- TOTAL STOCKHOLDERS' EQUITY 28,879 -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,562 ======== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 6 LBP, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (GOING CONCERN BASIS) (UNAUDITED) Total Stock- Common Treasury Paid-in Retained holders Stock Stock Capital Earnings Equity - -------------------------------------------------------------------------------- (IN THOUSANDS) BALANCE - DECEMBER 31, 2000 $ 51 $(264) $20,867 $8,225 $28,879 Net income for period ended May 15, 2001 279 279 Exercise of employee stock options 7,500 shares 26 26 ---- ----- ------- ------ ------- BALANCE - MAY 15, 2001 $ 51 $(264) $20,893 $8,504 $29,184 ==== ===== ======= ====== ======= THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 7 LBP, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (GOING CONCERN BASIS) (UNAUDITED) January 1 Nine Months to Ended May 15, September 30, 2001 2000 -------- ------------- (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 279 $ 1,086 Adjustments to reconcile net income to cash flows from operating activities: (Gain) on sale of investment in trading securities (93) (222) Changes in prepaid expenses and other current assets 442 234 Changes in accounts payable, accrued expenses and other current liabilities (114) 257 -------- ------- NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 514 1,355 -------- ------- CASH FLOWS FROM DISCONTINUED OPERATIONS: Change in unliquidated net liabilities and assets 68 (33) -------- ------- NET CASH FLOWS PROVIDED BY DISCONTINUED OPERATIONS 68 (33) -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of securities 20,250 590 -------- ------- NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES 20,250 590 -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Exercise of employee stock options 26 -- -------- ------- NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 26 -- -------- ------- Net increase in cash and equivalents 20,858 1,912 Cash and equivalents at beginning of period 8,776 7,326 -------- ------- Cash and equivalents at end of period $ 29,634 $ 9,238 ======== ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: Cash paid (received) during the period for: Income taxes $ 94 $ (331) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. 8 LBP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) PLAN OF LIQUIDATION Subsequent to the June 1998 sale of the assets and business of Prime Acquisition Corp. ("Prime"), the Company's wholly-owned subsidiary, the Company made certain investments in securities intended to be short-term, in order to enhance stockholder value while efforts to acquire an operating company continued. The Company did not register as an investment company, initially relying on (and in compliance with) the exemption provided by Rule 3(a)(2), promulgated under the Investment Company Act of 1940, as amended (the "40 Act"). In March 2000, the Company filed an application with the Securities and Exchange Commission ("SEC") for an order pursuant to Section 3(b)(2) of the '40 Act, declaring that the Company is not an investment company. Alternatively, the Company requested a Section 6(c) exemption from all provisions of the '40 Act. The application was revised in May, June and July 2000. Thereafter, the SEC advised the Company that neither a Section 3(b)(2) order nor a Section 6(c) exemption could be granted under the then-current facts and circumstances of the Company's application. The Company continued through November 9, 2000 to discuss with the SEC the manner in which to respond to the SEC's concerns, but was unable to obtain a 3(b)(2) order or a 6(c) exemption. As an investment company, the Company would be required, among other things, to restructure its operations, capital structure, management and Board of Directors, and the Company's ability to acquire an operating business would be severely restricted. On November 16, 2000, the Company's Board of Directors determined that it would not be in the best interest of the Company's stockholders for the Company to register as an investment company pursuant to the '40 Act. Therefore, on January 11, 2001 the Board of Directors adopted the Company's Plan of Complete Liquidation, Dissolution and Termination of Existence, (the "Plan"), which was approved by the stockholders of the Company at the Company's annual stockholder' meeting on May 16, 2001. On June 29, 2001, the Company filed a Certificate of Dissolution in the Office of the Secretary of State of the State of Delaware. The Company has liquidated substantially all its non-cash assets. Pursuant to the Plan, after payment of all claims, obligations and expenses owing to the Company's creditors, cash distributions of cash on hand will be made to holders of the Company's Common Stock on a pro rata basis. If deemed necessary, appropriate or desirable by the Board of Directors, distributions will be made to one or more liquidating trusts established for the benefit of stockholders, subject to claims of creditors. The Company has no present plans to use a liquidating trust or trusts, but the Board of Directors believes the flexibility provided by the Plan with respect to the liquidating trusts to be advisable. On May 16, 2001, the Board of Directors determined that an interim liquidation distribution in the amount of approximately $27,500,000, equivalent to $5.50 per share (the "Interim Distribution") would be made to stockholders subject to approval of the Court of Chancery of the State of Delaware. On July 2, 2001, the Company petitioned the Delaware Court of Chancery seeking an order authorizing the Interim Distribution. A preliminary hearing was held on July 23, 2001. On August 3, 2001, the Company mailed and published Notices of Dissolution in accordance with the requirements of Section 280 of the Delaware General Corporation Law. Any person asserting a claim against the Company was required to present such claim on or before September 24, 2001. 9 LBP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On October 2, 2001, consistent with an order of the Delaware Chancery Court, the Company announced that it will make its initial liquidating distribution in the amount of $5.10 per share, on or about October 25, 2001 to holders of record of the Company's Common Stock on October 15, 2001. Such dividend is considered a return of capital and is subject to capital gains or loss tax. Future liquidating distributions will be made to holders of the Company's Common Stock as of the October 15, 2001 record date in accordance with Delaware law. At this time, the Company is unable to predict with certainty the amount and timing of such distributions. Notices published in compliance with the Delaware liquidation procedures resulted in one contingent claim for a reserve of $4 million relating to an existing indemnification obligation undertaken by the Company in connection with the sale of its business in June 1998. Because the clamant did not assert any loss and because the Company believes that the contingency is extremely remote, the Company will, unless an agreement is reached with the claimant, request the Chancery Court to determine the appropriate amount and duration of the reserve. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION As a result of the approval of the Plan by stockholders, the Company has adopted the liquidation basis of accounting for all periods subsequent to May 15, 2001. Under the liquidation basis of accounting, assets are stated at their estimated net realizable value and estimated costs of liquidating the Company are provided, to the extent that they are reasonably determinable. Anticipated investment income on the Company's cash and cash equivalents is not accrued. The valuation of assets and liabilities necessarily requires many estimates and assumptions, and there are substantial uncertainties in carrying out the provisions of the Plan. The actual amount of any liquidating distributions will depend upon a variety of factors not presently determinable. The valuations presented in the accompanying Statement of Net Assets in Liquidation represent estimates, based on present facts and circumstances, of the realizable values of assets, estimated liabilities and estimated costs of liquidation. Future investment income on cash and cash equivalents has not been accrued. Estimates of the costs of liquidation have been prepared based upon the assumption that the Company continues to comply with the periodic reporting requirements of the Securities and Exchange Commission. Accordingly, costs to comply with such reporting requirements and audit fees have been provided. However, the Company has filed a no action request with the SEC to allow it to cease reporting. Should the SEC consent to this request, actual costs could be less than the estimated costs which have been provided. The Consolidated Financial Statements presented herein for periods prior to the adoption of liquidation accounting on May 16, 2001 have been prepared by the Company in accordance with the accounting policies described in its December 31, 2000 Annual Report on Form 10-K and should be read in conjunction with the Notes to Consolidated Financial Statements which appear in that report. In the opinion of management, the information furnished in this Form 10-Q reflects all adjustments necessary for a fair statement of the results of operations as of and for the periods presented. All such adjustments are of a normal recurring nature. The Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include some information and notes necessary to conform with annual reporting requirements. 10 LBP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS INCOME TAXES The Company and its subsidiaries file separate Federal and state income tax returns. The Company's subsidiaries generally file separate state income tax returns on the same basis as the Federal income tax returns. (3) INVESTMENT IN SECURITIES On December 22, 1998, the Company's wholly-owned subsidiary, Prime, acquired, at a cost of $20 million, 800,000 shares of 10.5 percent Cumulative Convertible Preferred Stock, having a liquidation preference of $25 per share, of Impac Mortgage Holdings, Inc., ("Impac"). The shares were originally convertible into Common Stock of Impac (symbol"IMH") at $4.95 per share, or an aggregate of 4,040,000 shares. The terms of the acquisition provided for a downward adjustment of the conversion price if, among other things, certain earning levels were not attained by Impac through June 30, 1999. Subsequently, the conversion rate was adjusted to $4.72 per share, or an aggregate of 4,237,288 shares of common stock of IMH, representing approximately 15 percent of IMH common stock. In addition, Prime received as a dividend each quarter, the higher of 10.5 percent per annum or the dividend paid to common stockholders calculated on the shares of common stock into which the preferred stock is convertible. The Company recorded this investment at cost of $20,157,000. Between February 21 and April 30, 2001, the Company sold its investment in the Preferred Stock of Impac for $20.25 million, plus accrued interest through the date of sale. The Company obtained a fairness opinion in connection with the sale. The Company owned 90,530 shares of the common shares of The North Face, Inc. which had been written down to its market value of $368,000 at December 31, 1999. The original cost of these shares, considered to be trading securities, was $1.1 million. These shares were sold in February 2000 for $590,000, resulting in a gain of $222,000 in the first quarter of 2000. (4) DISCONTINUED OPERATIONS WHITE METAL In fiscal 1990, the Company discontinued the operations of White Metal Rolling and Stamping Corp. ("White Metal"), the Company's ladder manufacturing subsidiary. All manufacturing operations of White Metal ceased as of January 31, 1991 and substantially all of its remaining assets have since been liquidated. On September 30, 1994, White Metal filed a voluntary petition seeking liquidation under the provisions of chapter 7 of the United States Bankruptcy Code. The liabilities of White Metal were primarily product liability claims, and related costs, resulting from its discontinued ladder manufacturing business. While the Company was named as a defendant in certain actions commenced in connection with these claims, the Company has not been held responsible, and the Company disclaims any liability for the obligations of White Metal. There can be no assurance that in the future any claim brought against White Metal which is also asserted against the Company, will not result in liability. However, the Company intends to vigorously defend any White Metal claim asserted against it. On October 30, 2000, the chapter 7 trustee filed a Distribution Report with the Bankruptcy Court certifying distribution with respect to all claims filed before October 22, 1994, and on December 18, 2000, the trustee filed a Final Report with the Bankruptcy Court. 11 LBP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On May 7, 1996, the Company and its subsidiary, Prime, were served with a summons and complaint in an adversary proceeding commenced by the chapter 7 trustee of White Metal (the "Adversary Proceeding"). The Company's former parent company, and one of its subsidiaries were also served in the Adversary Proceeding. Pursuant to a Consent Order Settling and Compromising Claims, dated January 27, 2000 (the "Settlement"), by and among the trustee, on behalf of White Metal, the Company, Prime, LBP's former parent and its subsidiary, and Sears Roebuck & Co., Inc. ("Sears"), White Metal's largest creditor, the parties agreed to settle the Adversary Proceeding in consideration for payment by the defendants to White Metal's estate in the aggregate amount of $672,000, of which $485,500 was paid by Prime. The defendants, the trustee and Sears agreed to release each other, and their respective affiliates. In connection with the Settlement, the Adversary Proceeding was terminated. PRIME ACQUISITION CORP. On June 18, 1998, effective as of May 31, 1998, Prime sold substantially all its net assets and business for approximately $44 million in cash. Prime realized an after-tax gain of $12.6 million for the sale, and after payment of its outstanding debt, closing costs and income taxes, Prime had cash and investments of approximately $28 million. Prime agreed to indemnify the buyer as follows: (i) for up to $4 million of losses incurred by the buyer during the two years following the closing resulting from breaches of representations and warranties made by Prime, (ii) for up to $4 million of losses incurred by the buyer during the four years following the closing resulting from certain environmental matters, and (iii) for losses incurred by the buyer resulting from liabilities of Prime not assumed by the buyer. In connection with Prime's indemnification obligations, Prime deposited in escrow an aggregate of $25.4 million for a period of two years following the closing. During the escrow period, no claims were asserted by the buyer, and on June 20, 2000 the entire escrow fund was released to Prime. Prime was the sole operating subsidiary of the Company, and the Company and its subsidiaries do not now conduct any operations. The Company will continue to incur expenses associated with the management of its assets, its financial reporting obligations, and other administrative functions. The sale did not include the assets and liabilities of White Metal. On October 23, 2001, Prime was merged with and into the Company with the Company as the surviving corporation. 12 LBP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS On June 18, 1998, effective as of May 31, 1998, Prime Acquisition Corp. ("Prime"), the Company's wholly- owned subsidiary sold substantially all its net assets and business for approximately $44 million in cash. Prime realized an after-tax gain of $12.6 million from the sale, and after payment of its outstanding debt, closing costs and income taxes, Prime had cash and investments of approximately $28 million. Subsequent to the June 1998 sale of Prime's assets and business, the Company made certain short-term investments in order to enhance stockholder value while efforts to acquire an operating company continued. The Company did not register as an investment company, initially relying on (and in compliance with) the exemption provided by Rule 3(a)(2), promulgated under the Investment Company Act of 1940, as amended (the "40 Act"). In March 2000, the Company filed an application with the Securities and Exchange Commission ("SEC") for an order pursuant to Section 3(b)(2) of the Investment Company Act of 1940, as amended (the '40 Act) declaring that the Company is not an investment company. Alternatively, the Company requested a Section 6(c) exemption from certain provisions of the '40 Act. The application was amended in May, June and July 2000. Thereafter, the SEC advised the Company that neither a Section 3(b)(2) order nor a Section 6(c) exemption could be granted under the facts and circumstances of the Company's application. The Company continued through November 9, 2000 to discuss with the SEC the manner in which to respond to the SEC's concerns, but was unable to obtain a 3(b)(2) order or a 6(c) exemption. As an investment company, the Company would be required to restructure its operations, management and Board of Directors. On November 16, 2000, the Company's Board of Directors determined that it is not in the best interest of the Company's stockholders for the Company to register as an investment company pursuant to the '40 Act. On January 11, 2001, the Board of Directors adopted a Plan of Complete Liquidation, Dissolution and Termination of Existence (the "Plan"), which was approved by stockholders at the annual meeting of stockholders on May 16, 2001. As a result of the approval of the Plan, the Company has adopted the liquidation basis of accounting for all periods subsequent to May 15, 2001 which, among other things, requires that assets and liabilities be stated at their estimated net realizable value and that estimated costs of liquidating the Company be provided to the extent that they are reasonably determinable. Anticipated investment income on the Company's cash and cash equivalents is not accrued. RESULTS OF OPERATIONS Prime was the sole operating subsidiary of the Company, and the Company and its subsidiaries do not now conduct any operations. The Company's income consists primarily of investment income on its cash and cash equivalents. 13 LBP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the period ended May 15, 2001, general and administrative expenses included approximately $131,000 of expenses relating to the liquidation of the Company as well as $85,000 relating to a shareholder action that was subsequently terminated without liability to the Company or its directors. The shareholder action costs were later reimbursed by insurance. For the nine months ended September 30, 2000, general and administrative expenses included approximately $79,000 in connection with an application made to the Securities and Exchange Commission as described above as well as approximately $73,000 incurred in conducting due diligence relating to a possible acquisition. The acquisition target subsequently accepted a higher offer. LIQUIDITY AND CAPITAL RESOURCES At September 30, 2001, the Company had net assets in liquidation of $29.0 million, consisting primarily of cash and cash equivalents of $29.8 million, less accounts payable and a provision for the anticipated costs of liquidation. Approximately $25.5 was distributed to stockholders in October 2001 as the initial liquidating distribution. The amount of future cash distributions to stockholders depends on anticipated liquidation costs, the timing and amount of future liquidating distributions, interest rates on cash and cash equivalents, and the extent of future claims against the Company, if any. Pursuant to the Plan, subject to the payment or provision for payment of all contingent claims, obligations and expenses, future cash distributions of the available cash will be made to holders of the Company's Common Stock on a pro rata basis. The actual amount of any future liquidating distributions will depend upon a variety of factors not presently determinable. The valuations presented in the accompanying Statement of Net Assets in Liquidation represent estimates, based on present facts and circumstances, of the realizable values of assets, estimated liabilities and estimated costs of liquidation. Estimates of the costs of liquidation have been prepared based upon the assumption that the Company continues to comply with the periodic reporting requirements of the Securities and Exchange Commission. Accordingly, costs to comply with such reporting requirements and audit fees have been provided. However, the Company has filed a no action request with the SEC to allow it to cease reporting. Should the SEC consent to this request, actual costs could be less than the estimated costs which have been provided. FEDERAL INCOME TAXES As a result of changes in the ownership of the Company's Common Stock, the Company was a Personal Holding Company for Federal income tax purposes in 2000. As a result, in order to avoid double taxation on the Company, on November 16, 2000, the Board of Directors declared a special dividend of $.18 per share, payable on December 12, 2000, to stockholders of record at the close of business on November 27, 2000. 14 LBP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINGENT LIABILITIES In connection with the June 1998 sale of Prime's assets, Prime agreed to indemnify the buyer as follows: (i) for up to $4 million of losses incurred by the buyer during the two years following the closing resulting from breaches of representations and warranties made by Prime, (ii) for up to $4 million of losses incurred by the buyer during the four years following the closing resulting from certain environmental matters, and (iii) for losses incurred by the buyer resulting from liabilities of Prime not assumed by the buyer. In connection with Prime's indemnification obligations, Prime deposited in escrow an aggregate of $25.4 million for a period of two years following the closing. During the escrow period, no claims were asserted by the buyer, and on June 20, 2000 the entire escrow fund was released to Prime. In fiscal 1990, the Company discontinued the operations of White Metal Rolling and Stamping Corp. ("White Metal"), the Company's ladder manufacturing subsidiary. All manufacturing operations of White Metal ceased as of January 31, 1991 and substantially all of its remaining assets have since been liquidated. On September 30, 1994, White Metal filed a voluntary petition seeking liquidation under the provisions of chapter 7 of the United States Bankruptcy Code. The liabilities of White Metal were primarily product liability claims, and related costs, resulting from its discontinued ladder manufacturing business. While the Company was named as a defendant in certain actions commenced in connection with these claims, the Company has not been held responsible, and the Company disclaims any liability for the obligations of White Metal. There can be no assurance that in the future any claim brought against White Metal which is also asserted against the Company, will not result in liability. However, the Company intends to vigorously defend any White Metal claim asserted against it. On October 30, 2000, the chapter 7 trustee filed a Distribution Report with the Bankruptcy Court certifying distributions with respect to all claims filed before October 22, 1994, and on December 18, 2000, the trustee filed a Final Report with the Bankruptcy Court. INFLATION Future changes from current levels of inflation may be expected to impact the investment income earned by the Company on its temporary investments. 15 LBP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS AND RISK FACTORS This report contains certain statements, including the Company's long-term plans, which could be construed to be forward looking statements and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's current views, at the time such statements were made, with respect to future events, financial performance and funds which may be available for distribution to stockholders. Forward-looking statements are not guarantees of future performance; they are subject to risks and uncertainties. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. The Company has identified certain risk factors which could cause actual plans and results to differ substantially from those included in the forward-looking statements. These factors include certain contingent indemnification obligations and contingencies as described in Note 4 of Notes to Consolidated Financial Statements, anticipated liquidation costs, the timing and amount of future liquidating distributions, and interest rates on cash and cash equivalents. 16 LBP, INC. SIGNATURES Pursuant to the requirements 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. LBP, INC. Registrant By /s/ FREDRIC M. ZINN -------------------------- Fredric M. Zinn Principal Financial Officer November 12, 2001 17 -----END PRIVACY-ENHANCED MESSAGE-----