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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
Commission File No. 1-3172
WEST INDIES SUGAR CORPORATION
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(Name of Small Business Issuer in its Charter)
Delaware 65-0723427
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(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
200 Northeast 2nd Drive, Homestead, FL 33030
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( Address of Principal Executive Offices) (Zip Code)
(305) 248-4254
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(Issuer's Telephone Number, including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
None
This Report is filed pursuant to an undertaking contained in a registration
statement filed under the Securities act of 1933.
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Check whether the Issuer: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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: No: X
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Check if there is no disclosure of delinquent filers in response to
Item 405 of regulation SB contained in this form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB [X]
State Issuer's revenues for the fiscal year ended September 30, 1997:
$ 18,509
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There is no active market for the Issuer's voting stock and,
accordingly, no ability to calculate any value for the voting stock of
non-affiliates.
State the number of shares outstanding of each of the Issuer's classes
of common stock:
Class Number of Shares
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Common Stock, $1 par value 550,014
(Partial Liquidation Certificates)
Transitional Small Business Disclosure Format
Yes No X
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TABLE OF CONTENTS
Item Page
PART I
1. Description of Business 4
2. Description of Properties 9
3. Legal Proceedings 9
4. Submission of Matters to a Vote of Security Holders 9
PART II
5. Market for Common Equity and Related Stockholder Matters 10
6. Management's Discussion and Analysis or Plan of Operations 10
7. Financial Statements 11
8. Changes in and Disagreements with Accountants on Accounting 11
and Financial Disclosure.
PART III
9. Directors, Executive Officers, Promoters and Control 11
Persons; Compliance with Section 16(a) of the
Exchange Act
10. Executive Compensation 14
11. Security Ownership of Certain Beneficial Owners and 16
Management
12. Certain Relationships and Related Transactions 17
PART IV
13. Exhibits, List and reports on form 8-K 17
SIGNATURES 18
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 20
FINANCIAL STATEMENTS 21
EXHIBIT INDEX 31
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
West Indies Sugar Corporation ( herein, the "Company," "West Indies"
or the "Registrant") was incorporated in Delaware in 1932 as the successor to a
Cuban sugar business reorganized as a result of the Great Depression. For the
next several decades, West Indies operated a substantial sugar production,
refining and related agricultural business in the Caribbean basin focusing
primarily on Cuba, but also including substantial holdings in the Dominican
Republic.
As a producer of agricultural commodity products, the Company's
business was subject, among other things, to conditions of international trade.
These were characterized by wide price fluctuations and political factors
affecting the Company's geographic operating areas. Beginning in the 1950s,
conditions in these areas were marked by growing political instability, which
was unfavorable for the Company's long-term business outlook. Partly as a
result of such factors, the Company disposed of its sugar production properties
in the Dominican Republic in 1956 and distributed proceeds to its stockholders
in partial liquidation of its business.
Prior to 1960, the Company conducted operations in Cuba through six
wholly-owned subsidiaries, Compania Central Altagracia, S.A. ( "Altagracia"),
Miranda Sugar Estates ("Miranda"), Compania Agricola Hato del Medio, S.A.,
Compania Oriental Agricola y de Almacenes, S.A., Canera Cruces, S.A. and
Compania Agricola Maibio, S.A. The Company, through its subsidiaries, was
engaged primarily in the business of growing sugar cane and producing sugar and
molasses therefrom. Its refining and production facilities included four sugar
mills, three of which, Central Palma, Central Santa Ana and Central Alto Cedro,
were owned and operated by Altagracia and one, Central Miranda, was owned and
operated by Miranda. The remaining subsidiaries concentrated on the growing and
harvesting of cane and other agricultural products on owned or leased land.
The Cuban properties owned by the Company's subsidiaries included
approximately 246,000 acres composed of cane land, forests, pastures, farm land
and reserve land, all
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located in Cuba's eastern most province of Oriente. Interspersed with these
lands were towns, small settlements, loading stations, utilities (including
water supply systems, roads, electric generating facilities and 300 miles of
Company-owned standard gauge railroad), dairies, livestock facilities, a tree
nursery, quarries, a hospital, airstrips, maintenance shops, office facilities,
housing, stores and warehouses. The Company's subsidiaries also owned a full
range of vehicles and other equipment necessary for operations, including 32
locomotives, 1,600 pieces of rolling stock, an airplane, and a fleet of
automobiles, trucks, farm and heavy machinery.
As part of their operations, the Company's subsidiaries also had
agricultural products on hand and in the course of sale, cash on hand, accounts
receivable, prepaid items and all the normal and customary attributes of an
on-going business.
The Company's business in Cuba was materially and adversely affected by
developments stemming from the Cuban Revolution which culminated in the coming
to power of Fidel Castro Ruiz. Commencing in 1959 and throughout 1960, the new
revolutionary government of Cuba, principally through its "National Institute of
Agrarian Reform" ("INRA"), began systematically to intervene, appropriate,
nationalize or otherwise expropriate the properties of the Company's Cuban
subsidiaries. Officers and agents of the subsidiaries filed protests and took
such other steps, including the initiation of legal action, as they believed
were allowed by Cuban law against these activities.
In July 1960, a law was promulgated by the Cuban Council of Ministers
authorizing the President and the Prime Minister to order the "nationalization
through expropriation by eminent domain" of the property and enterprises of
United States nationals. According to the legislation, experts were to be
appointed to appraise the expropriated property and payment was to be made in
Cuban state bonds. The bonds were to bear interest at not less than 2% per
annum and to be amortized over 30 years. Thus, on its face, the legislation
recognized the obligation of the Cuban state to pay a fair price for the
Company's property taken for public purposes. However, under the law, both
interest and principal on the bonds were made contingent, to be payable only
from a special fund derived solely from earnings resulting from future Cuban
sugar sales to the United States in excess of thresholds unilaterally set by
the Cuban government. To the extent interest was not earned in any year, it
was deemed to be "extinguished". Consistent with a new Cuban Constitution
imposed by the revolutionary government, the legislation also removed
expropriation cases from the jurisdiction of the Cuban courts, thereby
rendering useless the legal actions filed by the Company's subsidiaries against
the taking. Finally, in August 1960, acting pursuant to the new law, the
President and Prime Minister adopted a resolution which directly and explicitly
ordered the nationalization by the Cuban state of the properties and rights of
the Company's Cuban subsidiaries (to the extent that they had not been taken
already).
To the best of the Company's knowledge, no appraisers were ever
appointed and the Cuban government never complied with its own legislation. No
special payment fund was ever established, as relations between the United
States and Cuba soon deteriorated to the point where virtually no commerce was
carried on between the two countries. As a result, since the
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time of the compulsory expropriation of the Company's Cuban subsidiaries,
neither the Company nor any subsidiary has received any payment, nor tender of
payment, for the properties. The Company believes that the 1960 nationalization
legislation, in the form enacted and to the extent implemented, amounted in
substance to a sham and did not provide fair and adequate compensation for the
taking. The Company does not believe that payment for valuable property rights
purportedly taken by eminent domain can be made contingent on arbitrary events
controlled by the entity doing the taking. Therefore, the Company believes that
its Cuban properties were confiscated in flagrant violation of settled
principles of international law. As a result, it is the Company's position that
neither the Cuban state nor anyone claiming through the Cuban state can have any
lawful title to the properties, unless and until the Company is properly
compensated for them.
In accordance with the United States International Claims Settlement
Act of 1949, the Company, in February 1966, filed with the Foreign Claims
Settlement Commission (the "FCSC") established under that act a detailed claim
relating to the taking of the Company's properties by the Cuban government. The
purpose of this filing was to document from available records the Company's
loss by means of a formal submission to a recognized tribunal, and to set a
value which would be recognized by the United States government at such time as
it might seek to negotiate or otherwise obtain reparations from Cuba on account
of claims held by United States nationals resulting from the expropriation.
Unlike some other countries, such as Canada where Cuban assets were seized and
used to satisfy the claims of those countries' nationals, in general, Cuban
assets in the United States were insufficient to satisfy claims of United
States private citizens. The Company has never received the benefit of any of
its claims being satisfied from Cuban or any other sources. In February 1971,
the FCSC issued a decision ultimately certifying the value of the loss suffered
by the Company at $ 84.9 million (in 1959 Dollars) and recognizing that
interest of 6% should accrue on the loss from August 1960 until settlement.
According to the records of the FCSC, the Company believes that its claim is
the sixth largest claim of a United States national among 5,911 claims
processed by the FCSC.
Based on the FCSC award and the passage of more than 37 years since
the incurrence of the loss, the Company's claim to date, including simple
interest, amounts to approximately $275 million.
Following the expropriation of the properties of its nationals in all
sectors of the Cuban economy, the United States enacted legislation and
implemented regulations resulting in an economic embargo of Cuba. The embargo
has remained in place, with various modifications from time to time, since
1962. In the intervening years, the economic embargo has come to include broad
sanctions prohibiting United States nationals from doing business with Cuba.
However, since the United States has not maintained a blockade of Cuba, that
country has continued to trade in international markets as circumstances have
permitted. In recent years, with the dissolution of the Soviet Union and its
Eastern European client states after 1989, a number of the principal trading
partners of the United States, including Canada, Mexico and the European
Community, have accounted for an increasing volume of trade with Cuba.
Nationals of those countries, encouraged by the Castro regime and their own
governments,
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have financed significant sectors of the Cuban economy and in some cases
acquired interests in Cuban state enterprises. The Company understands that
commerce with such nationals, whether through traditional forms of financial
support such as loans or the direct investment in property rights, has extended
to properties expropriated from United States nationals. As a result, foreign
nationals in Cuba are today carrying on business operations, and thereby
supporting the Cuban economy, making use of properties expropriated by Cuban
authorities from United States nationals without payment. Although the Company
has no direct knowledge at this time, such use and involvement by foreign
nationals could extend to properties and other assets formerly owned and
operated by the Company's Cuban subsidiaries.
The Company believes that one or more of its sugar mills remain in
productive operation, supported by their associated agricultural lands and
infrastructure. Moreover, the Company believes that the Cuban sugar industry
remains heavily dependent on foreign financing sources. The Company's belief is
based on information passed on by sources familiar with the Cuban sugar industry
and by general press reports. The Company believes that its four mills were
among the larger and more efficient mills in the industry when they were
expropriated and thus are more likely to have been kept in use and their lands
continued in cane cultivation.
In 1996, the United States Congress passed, and President Clinton
signed, the Cuban Liberty and Solidarity Act of 1996, popularly known as the
Helms-Burton Bill or "Libertad". Among other things, this statute sought to
confer on United States nationals who were claimants against Cuba for
expropriated property certain rights to recover up to treble damages (plus
interest) from persons defined in the law as "traffickers" in such property.
Recoveries were to be effected through the use of legal proceedings in United
States federal courts. While the underlying policy of Helms-Burton was to
accelerate a change to a transition government in Cuba, Title III of the law
created, for the first time since the 1960 expropriations, a private right of
action for American nationals to obtain monetary value for their claims by
authorizing lawsuits against private parties who were deemed to be dealing in
stolen property. Under Title III, the Company, as a "certified" claimant with a
claim passed on by the FCSC, would also be afforded certain procedural
advantages, such as priority in the initiation of an action, no new burden of
proof as to valuing the claim, and the FCSC decision as sufficient public notice
to traffickers of the Company's claim to title to the properties. Given the
widespread expropriation of American property and the significance of certified
claims, the law was expected to have a chilling effect on foreign investment in
the Cuban economy and thus accelerate the transition to a democratic form of
government in Cuba. The statute does not
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forbid foreign nationals to trade with Cuba. However, it does put them on
notice that if they deal with property stolen from American nationals they can
be sued for damages.
The implementation of Helms Burton has been opposed by other countries,
most vociferously by those whose nationals are believed to be dealing in the
stolen property. As enacted, the legislation allows the effectiveness of the
Title III right of action provisions to be suspended by the President
indefinitely for six month periods at a time, which suspension right the
President has exercised several times in apparent deference to principal US
trading partners. As a result of the continued suspensions, the Company cannot
predict whether the Title III provisions will ever become effective. Moreover,
if they do become effective and actions are brought, it is likely, in cases such
as these, that certain aspects of the law will be challenged and that resolution
of asserted claims will take a protracted period of time. Finally, the Company
does not have direct knowledge as to who, if anyone, subject to the jurisdiction
of the US may be trafficking (as defined by the law) in the expropriated
property of the Company's Cuban subsidiaries. The Company believes that such
knowledge can best be obtained from additional investigation, which likely would
include an on-site inspection of its former operating properties in Cuba. In
seeking to conduct any such investigation, the Company may not be able to gain
access to the necessary sites and it may not be able to obtain records necessary
to support trafficking claims.
Management believes that, in light of the Libertad statute, it will be
necessary to determine whether the Company should be prepared to bring an action
against persons found to be trafficking in the Company's property. If such
action is deemed best to recover value for stockholders, the Company may prepare
to take such action. Management also believes that, whether or not connected
with Libertad, due consideration must be given to other courses of action
leading to some settlement of the Company's claim. The object of such
consideration and any resulting course of action would be to return value to the
Company's stockholders.
According to provisions of the economic sanctions affecting United
States nationals, it is unlawful to conduct business, directly or indirectly,
with Cuba without a license. Licenses are issued on a case by case basis by the
Office of Foreign Assets Control ("OFAC") of the United States Treasury
Department. Prior to Title III of Libertad, the binding settlement of an
expropriation claim by a United States national could be construed as conducting
business with Cuba. Title III (which remains suspended by Presidential order)
contains an explicit provision which makes it clear that the prosecution (and
presumably the binding settlement) of a claim requires no license. Thus, the
authority of United States nationals to reach binding settlements of their
claims, especially where Cuban property interests are concerned, remains
unclear. However, in 1997 at least one United States national with a certified
claim accepted payments, in the nature of a limited release from Helms Burton
liability, from a foreign entity seeking to implement a venture involving the
claimant's expropriated Cuban assets. The Company understands that the
arrangement received a license from OFAC.
Pending resolution of the Title III provision, the Company similarly
intends to explore the possible settlement of its claim with any interested
parties, including without limitation foreign nationals seeking to make Cuban
investments or Cuban governmental entities, which it deems to have reasonable
prospects of realizing value for the Company's stockholders. Thus far, the
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Company has had some preliminary indications of interest, but no negotiations,
and it cannot be predicted whether it will have any such negotiations, or, if it
does, what will be their outcome. In the event that the prosecution of the
Company's claim or any related settlement discussions so require, the Company
may seek to obtain such licenses as it can from United States authorities as
would facilitate its efforts. The Company is not able to predict at this time,
if any such license were applied for, what would be the outcome of such
application. The failure to obtain a license under circumstances where the
United States otherwise would claim that a binding settlement violated the
embargo regulations could materially and adversely affect the Company's ability
to obtain value for stockholders.
Due to the more rapid development of events with Cuba in recent years,
Management intends to follow more closely such events as affect the Company's
claim. In the past, the Company was inclined to allow United States government
agencies, such as the Department of State, to represent its interests as part
of a general pattern of settlement of the claims of American nationals against
Cuba. However, in view of the long passage of time without results from
governmental channels, the increasing activities in the private sector, and the
seeming unwillingness of the current US administration to implement measures
such as Title III of Libertad, Management believes that the Company must depend
more on its own efforts to prosecute its claim for value, rather than on the
efforts of others.
As a result of the foregoing, the Company's sole remaining business
activity is the pursuit of its claim against the Peoples' Republic of Cuba for
the expropriation of the Company's Cuban properties without compensation. The
Company intends to pursue that claim vigorously by all lawful means.
ITEM 2. DESCRIPTION OF PROPERTIES.
The Registrant's operating properties were expropriated by the Cuban
government in 1960. It currently has no tangible properties. See Item 1 for a
description of the Registrant's properties prior to the expropriation.
ITEM 3. LEGAL PROCEEDINGS.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no matters submitted to a vote of the Registrant's
security holders for a number of years. The Registrant is in the process of
bringing current its required filings with the Securities and Exchange
Commission. After the filing of this Annual Report on Form 10-KSB,
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the Registrant intends, as promptly as practicable, to take such stockholder
action as it deems advisable to reconstitute its Board of Directors, and to
consider such amendments to its constituent instruments (its Certificate of
Incorporation and By-laws) as the Board of Directors recommends.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Registrant's only class of security outstanding is Common Stock,
$1 par value, as evidenced by Partial Liquidation Certificates ("Common
Stock"). After the Registrant's properties were expropriated in 1960 (see Item
1), the Registrant's Common Stock was delisted by the New York Stock Exchange.
To the best of the Registrant's knowledge, there is no active trading market
for the Common Stock. At the present time, according to such records as are
available to the Registrant, there are 550,014 shares of Common Stock
outstanding owned by approximately 1,400 holders of record.
No dividends have been paid by the Registrant since its stockholders
approved a Plan of Complete Liquidation in 1960. All remaining assets have been
reserved for pursuit of the Registrant's claim arising from the expropriation
and the orderly liquidation of its affairs. As a result, the Registrant does not
expect to pay dividends or make similar payments to stockholders, except in
connection with its liquidation or other payment resulting from obtaining value
on its Cuban claim. However, the Registrant has no contractual restrictions on
its ability to pay dividends.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Registrant's only business relates to carrying out a plan of
complete liquidation, which it expects will involve the prosecution and/or
settlement of its claim against Cuba for expropriating the Registrant's
operating subsidiaries and their property. Since the Registrant has no ongoing
operations and its only activities since 1960 have been related to the claim,
Management believes that period-to-period differences in financial results are
not particularly meaningful, except as a general measurement of the
Registrant's financial capability to pursue its claim from existing sources of
funds. Because the Registrant essentially remained dormant for many years, it
required minimal expenditures to monitor the Cuban claim and administer its
affairs. However, due to political and other developments affecting relations
with Cuba (which have tended to increase claims settlement prospects), the
Registrant's level of activities has increased in recent periods. Consequently,
Management believes that the cost of administering the Registrant's affairs is
also likely to continue to increase in the near term. To a significant degree,
such costs result from the Registrant's continued status as technically a
"public" company under the federal securities laws, which require compiling
information and filing reports and thereby entail greater compliance costs for
professional and other fees. The Registrant's assets capable of being devoted
to these ends are limited. As a result, Management is considering whether other
steps may have to be taken, such as incurring debt or seeking additional equity
from existing stockholders or outside parties, in order to fund increased
expenditures. At this time, Management cannot predict whether any such
financing will be necessary or, if it becomes necessary, when that will occur,
or on what terms it may be available.
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ITEM 7. FINANCIAL STATEMENTS
The financial statements required to be filed pursuant to this Item 7.
are included in this Annual Report on Form 10-KSB. A list of the financial
statements filed herewith is set forth in Item 13. "Exhibits, List and Reports
on Form 8-K".
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
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The Registrant's Certificate of Incorporation calls for it to be
managed by a Board of Directors consisting of such number of directors as are
fixed in the By-laws from time to time, but in no event less than five
directors. At the time of the approval by the Registrant's stockholders of its
liquidation in 1960, the number of directors had been fixed at eight. Since it
has been many years since the Registrant has held a meeting of stockholders for
the purpose of electing directors, at the present time, the Board of Directors
consists of only one individual as shown below. As soon as practicable the
Registrant intends to call upon its stockholders for the purpose, among other
things, of electing a reconstituted Board of Directors. Such Board of Directors
is likely to be of a more compact size than the body prescribed by the
Registrant's Certificate of Incorporation as in effect prior to its cessation of
any active business. Such stockholder action may also include additional changes
to the Registrant's Certificate of Incorporation in order to reflect changes in
Delaware law and the current nature of the Registrant after the 37 years since
its properties were expropriated.
The table below shows the Registrant's current director and its
executive officers, all the latter of whom have been elected to serve at the
pleasure of the Board of Directors and until the next meeting of the
Registrant's stockholders, and provides certain information concerning those
persons.
PRINCIPAL OCCUPATION/
NAME & POSITION AGE EMPLOYMENT
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Elliot H. Stein 79 Investment executive, Chairman,
Emeritus, Stifel Financial Corp, for more than
the past five years; director of the
Registrant for more than the past five years;
Chairman of the Registrant since 1995;
director of D& K Wholesale Drug
Wendy Norris 36 1986 to 1991, executrix of Estate of
Bruce Norris; 1991 to present, trustee
of testamentary trust of Bruce Norris;
1995 to present, President of the Registrant.
Roger Trombino 58 Business consultant; 1992 to
present, director of Affiliated,Inc., a
software development/publishing firm;
1995 to present, Executive Vice
President of the Registrant; 1996 to
present, Vice President & Treasurer of
Independent Purchasing Cooperative,
Inc., a Subway franchisee-owned organization
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Steven L. Risi 42 1988 to present, Chief Financial Officer
of Risi Holdings Group, an investment
company; 1995 to present, Treasurer of
the Registrant; 1996 to present,
director of Nashville Country Club,
Inc., a publicly traded entertainment
company.
James A. Testa 49 Attorney; Partner, Testa & Monfried,
Princeton, NJ, April 1997 to present;
Shareholder, Buchanan Ingersoll,
Princeton, NJ, October 1994 to
April 1997; Partner, Willkie Farr &
Gallagher, New York prior to March 1994;
Secretary of the Registrant for more
than the last five years.
The Registrant is filing this report pursuant to Section 15(d) of the
Exchange Act. The Registrant is required to file reports pursuant to that
section because of an undertaking contained in a registration statement filed
under the Securities Act of 1933. The Registrant's duty to file such reports
would be suspended for any fiscal year at the beginning of which it had less
than 300 stockholders of record. Because of a substantial number of very small
stockholdings by individuals, however, the Registrant consistently has been
owned by more than 300 stockholders of record. Although it has minimal assets
(excepting its claim against Cuba) and believes that such assets, together with
its number of stockholders, would not require it to register its securities and
report initially as a public company under Section 12(g) of the Exchange Act
(where the test is at least $1.0 million in assets and not less than 500 record
stockholders), nevertheless, the Registrant believes its Section 15(d)
undertaking remains operative.
Based on the fact that the Registrant is filing this Report pursuant
to the above-referenced Section 15(d) and does not have a class of security
registered under Section 12(g), the Registrant believes that Regulation S-K,
Item 405, concerning certain disclosures of non-compliance with Section 16(a)
of the Exchange Act is not applicable to it in this Report.
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ITEM 10. EXECUTIVE COMPENSATION.
For the fiscal years ended September 30, the Registrant paid
compensation to its chief executive officer and principal executive officers
(the "named executives") for services in all capacities as shown in the
following table:
SUMMARY COMPENSATION TABLE (1)
- --------------------------------------------------------------------------------
Name and Principal Position Year Annual Compensation-
Other Annual
Compensation ($)
- --------------------------------------------------------------------------------
Wendy Norris, President and 1997 -0-
Chief Executive Officer (2) 1996 -0-
1995 -0-
Elliot H. Stein, Chairman 1997 -0-
1996 -0-
1995 -0-
Roger Trombino, Executive Vice 1997 55,750
President (2) 1996 39,000 (3)
1995 -0-
Steven L. Risi, Treasurer (2) 1997 55,968
1996 33,900 (3)
1995 -0-
- --------------------------------------------------------------------------------
(1) Pursuant to regulations of the Securities and Exchange Commission, certain
columns in the form of Summary Compensation Table which are not applicable have
been omitted.
(2) Ms. Norris, Mr. Trombino and Mr. Risi were elected to their respective
positions in 1995.
(3) Prior to September 1, 1997, Messrs. Trombino and Risi were remunerated
through consulting fees based on time spent in pursuit of the Company's
business. Effective September, 1997, the Company entered into consulting
agreements with Messrs. Trombino and Risi, terminable by either party on 30 days
notice, providing compensation to each at the rate of $4,000 per month.
The Registrant has no other benefit or remuneration plans or programs
in effect at the present time. It has no other contracts in effect with
any of the named executives.
There are no standard arrangements or fees regarding service as a
director of the
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Registrant. It has been the Registrant's historical practice to reimburse
directors and officers for travel expenses in connection with attendance at
meetings. The Registrant contemplates that, in connection with convening a
stockholder meeting and the election to office of one or more additional
directors following the updating of its publicly filed reports, policies will
be developed for compensating directors for service as such.
The Registrant has one director comprising its entire Board of
Directors and, accordingly, no compensation committee. Given the nature of the
Registrant's status, i.e. in liquidation since 1960, and its resources, i.e. all
remaining liquid assets appropriated for the expenses of liquidation and
prosecution of the claim against the Cuban government, the Board of Directors
has not established policies relating to compensating the chief executive
officer or any of the other named executives. The Registrant contemplates that,
in connection with any reconstitution of its Board of Directors the adoption of
policies relating to the remuneration of executives will be reviewed. It is not
possible to predict at this time what policies, if any, will be adopted.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the shares of Common Stock, the only
class of voting securities of the Registrant, owned beneficially by each person
who is known by the Registrant to own beneficially at least five percent of such
securities:
- --------------------------------------------------------------------------------
NAME & ADDRESS AMOUNT PERCENT OF
CLASS
- --------------------------------------------------------------------------------
Wendy Norris, as Trustee of 136,886 24.9
Testamentary Trust of Bruce A. Norris (1)
3 Tondan Lane
Lattingtown, NY 11560
Alphabet Investment Fund et al. (2) 128,480 23.4
222 North LaSalle Street
Chicago, IL 60601
Louis W. Triay, as Trustee of the Julio Lobo 125,000 22.7
Trust (3)
Regal House, Suite C, 2nd Floor
P O Box 147
Queensway
Gibraltar
- --------------------------------------------------------------------------------
(1) Wendy Norris is a beneficiary and the sole trustee of the trust. As such,
she exercises sole investment and voting power with respect to the shares held
therein.
(2) According to a filing with the Securities and Exchange Commission, Alphabet
Investment Fund (the "Fund") held 124,775 shares. The Registrant understands
that the Fund is an investment vehicle consisting of a number of trusts for
members of the Crown Family who are the partners thereof. Members of the Crown
Family, trusts for the benefit of members of the Crown Family, entities in
which such members have interests and affiliates own an additional number of
shares as follows: Income Charitable Fund C u/w of Edward Crown 3,277 shares;
Lester Crown, Trustee of the Exempt Trust u/w of Ann Chemer 321 shares; and
Clinton Realty, L.L.C. 107 shares. The Registrant understands that the General
Partners of the Fund, the trustees under the Income Charitable Fund C and the
trustee under the Exempt Trust each has sole investment and voting power over
the shares held therein. The Crown Family members of Clinton Realty, L.L.C.
have informed the Registrant that they share investment and voting power with
an unrelated third party over the shares held in that entity.
16
<PAGE> 17
(3) The Company understands that the above trust was established in and is
being administered in accordance with the laws of Gibraltar. The property held
in the trust includes the outstanding shares of three Panamanian corporations,
Sugar Trading & Shipping Company S.A., Memphis Securities Corp. and Pacific
Securities Corp., which hold of record 57,051 shares, 23,009 shares and 44,940
shares, respectively. The Company understands that the principal beneficiaries
of the trust are the two daughters of Julio Lobo, Maria Luisa Lobo and Leonor
Lobo de Gonzalez, that the trustee of the trust currently exercises sole
investment and voting power over the shares (through its holdings in the
Panamanian corporations), and that a proceeding is in progress in Gibraltar to
wind up the trust and cause the distribution of its assets to the
beneficiaries.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None
PART IV
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.
(a) (1) Financial Statements
INDEPENDENT AUDITORS' REPORT 20
Balance Sheet 21
Statements of operations 22
Statements of stockholders' equity 23
Statements of cash flows 24
Notes to financial statements 25
(2) Financial Statement Schedules
None
(3) Exhibits
The Registrant intends to file any required exhibits when
available by amendment to this report.
(b) Reports on Form 8-K
None
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 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 this 13th day of
January, 1998.
WEST INDIES SUGAR CORPORATION
By /s/ Wendy Norris
----------------------------
Title: President
18
<PAGE> 19
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.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Wendy Norris President and Chief Executive January 13, 1998
- ----------------- Officer (principal executive officer)
/s/ Elliot Stein Chairman of the Board; January 13, 1998
- ----------------- Director
/s/ Steven Risi Treasurer (principal financial January 13, 1998
- ----------------- and accounting officer)
19
<PAGE> 20
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
West Indies Sugar Corporation
Miami, Florida
We have audited the accompanying balance sheet of West Indies Sugar Corporation
as of September 30, 1997 and the related statements of operations,
stockholders' equity and cash flows for the two years then ended. 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 audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of West Indies Sugar Corporation,
at September 30, 1997 and the results of its operations and its cash flows for
the two years then ended in conformity with generally accepted accounting
principles.
Miami, Florida
December 15, 1997 BDO Seidman, LLP
20
<PAGE> 21
WEST INDIES SUGAR CORPORATION
BALANCE SHEET
================================================================================
<TABLE>
<CAPTION>
1997
September 30,
- ------------------------------------------------------------------------------
<S> <C>
ASSETS
CURRENT
Cash and cash equivalents $346,180
Other 2,569
- ------------------------------------------------------------------------------
Total current assets 348,749
- ------------------------------------------------------------------------------
$348,749
==============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
Accounts payable and accrued expenses $ 3,635
- ------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 3,635
- ------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $1 par; 550,231 shares authorized;
550,014 shares outstanding 550,014
Deficit (204,900)
- ------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 345,114
- ------------------------------------------------------------------------------
$348,749
==============================================================================
</TABLE>
See accompanying notes to financial statements.
21
<PAGE> 22
WEST INDIES SUGAR CORPORATION
STATEMENTS OF OPERATIONS
================================================================================
<TABLE>
<CAPTION>
1997 1996
Years ended September 30,
- -------------------------------------------------------------------------------
<S> <C> <C>
Interest income $ 18,509 $ 27,962
Other - 14,090
- -------------------------------------------------------------------------------
Total income 18,509 42,052
- -------------------------------------------------------------------------------
Consulting and professional fees 177,405 144,195
General and administrative expenses 7,352 30,190
- -------------------------------------------------------------------------------
Total expenses 184,757 174,385
- -------------------------------------------------------------------------------
NET LOSS BEFORE INCOME TAXES BENEFIT (166,248) (132,333)
Income Taxes Benefit - (4,470)
- -------------------------------------------------------------------------------
NET LOSS $ (166,248) $ (127,863)
===============================================================================
Weighted average number
of common shares outstanding 550,014 550,014
===============================================================================
Net loss per common share $ (0.30) $ (0.23)
===============================================================================
</TABLE>
See accompanying notes to financial statements.
22
<PAGE> 23
WEST INDIES SUGAR CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
===================================================================================================================
Common Stock Retained Total
-------------------- Earnings Stockholders'
Shares Amount (Deficit) Equity
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at October 1, 1995 550,014 $ 550,014 $ 89,211 $ 639,225
Net (loss) - - (127,863) (127,863)
- -------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1996 550,014 $ 550,014 $ (38,652) $ 511,362
- -------------------------------------------------------------------------------------------------------------------
Net (loss) - - (166,248) (166,248)
- -------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1997 550,014 $ 550,014 $ (204,900) $ 345,114
===================================================================================================================
</TABLE>
See accompanying notes to financial statements.
23
<PAGE> 24
WEST INDIES SUGAR CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
=========================================================================================================
1997 1996
Years ended September 30,
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
NET LOSS $ (166,248) $ (127,863)
Adjustments to reconcile net (loss) to cash
flows used in operating activities:
Decrease (increase) in other current assets 6,061 (4,512)
(Decrease) increase in accounts payable
and accrued expenses (41,434) 39,114
Decrease in income taxes payable (28,604) -
- ---------------------------------------------------------------------------------------------------------
Net cash used in operating activities (230,225) (93,261)
- ---------------------------------------------------------------------------------------------------------
Net decrease in cash (230,225) (93,261)
Cash and other short term investments,
beginning of period 576,405 669,666
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 346,180 $ 576,405
=========================================================================================================
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 9,841 $ -
Cash paid for taxes $ 37,743 $ -
</TABLE>
See accompanying notes to financial statements.
24
<PAGE> 25
]
WEST INDIES SUGAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SUMMARY OF Organization and Business
SIGNIFICANT
ACCOUNTING The Company was organized in Delaware in 1932 and has been
POLICIES inactive since 1960. (See Note 3). In February 1960, the
stockholders of the Company approved a plan of complete
liquidation of the Company.
Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an
initial maturity of three months or less to be cash
equivalents.
Net Loss Per Common Share
Net loss per common share is based on the weighted average
number of shares of common stock outstanding.
Future Accounting Pronouncements
In February 1997 the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
No. 128 "Earnings Per Share". FAS No. 128 simplifies the
standards for computing earnings per share ("EPS")
previously found in APB No. 15 "Earnings per Share." It
replaces the presentation of primary EPS with a
presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital
structures and requires a reconciliation of the numerator
and denominator of the diluted EPS computation. The Company
will adopt FAS No. 128 for its fiscal year ending
September 30, 1998 and its
25
<PAGE> 26
WEST INDIES SUGAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
implementation is not expected to have a material effect on
the financial statements.
In June 1997, the Financial Accounting Standards Board
issued a new disclosure standard. Results of operations and
financial position will be unaffected by implementation of
this new standard. Statement of Financial Accounting
Standards (SFAS) No. 130, Reporting Comprehensive Income,
establishes standards for reporting and display of
comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all
changes in equity except those resulting from investments
by owners and distributions to owners. Among other
disclosures, SFAS No. 130 requires that all items that are
required to be recognized under current accounting
standards as components of comprehensive income be reported
in a financial statement that is displayed with the same
prominence as other financial statements. This new standard
is effective for financial statements for periods beginning
after December 15, 1997 and requires comparative
information for earlier years to be restated. Due to the
recent issuance of this standard, management has been
unable to fully evaluate the impact, if any, it may have on
future financial statement disclosures.
Income Taxes
The Company has adopted the provisions of Statement of
Financial Accounting Standards (SFAS) 109, Accounting for
Income taxes. Under the asset and liability method of SFAS
109, deferred taxes are recognized for differences between
financial statement and income tax bases of assets and
liabilities.
2. INCOME TAXES The Company has available a net operating loss carryforward,
totaling approximately $269,000, which expires through the
year 2013. This net operating loss would result in a
potential deferred tax asset of approximately $100,000.
Additionally, the Company has a deferred tax asset of
approximately $6.9 million related to the write-down of the
Cuban property.
26
<PAGE> 27
WEST INDIES SUGAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
The Company has established a valuation allowance against
the balance of the deferred tax assets, as realization of
the asset is not considered more likely than not.
3. CLAIMS Prior to 1960, the Company conducted operations in Cuba
through six wholly owned subsidiaries, Compania Central
Altagracia, S.A. ("Altagracia"), Miranda Sugar Estates
("Miranda"), Compania Agricola Hato del Medio, S.A.,
Compania Oriental Agricola y de Almacenes, S.A., Canera
Cruces, S.A. and Compania Agricola Maibio, S.A. The
Company, through its subsidiaries, was engaged primarily in
the business of growing sugar cane and producing sugar and
molasses therefrom. Its refining and production facilities
included four sugar mills, three of which, Central Palma,
Central Santa Ana and Central Alto Cedro were owned and
operated by Altagracia and one, Central Miranda, was owned
and operated by Miranda. The remaining subsidiaries
concentrated on the growing and harvesting of cane and
other agricultural products on owned or leased land.
The Cuban properties owned by the Company's subsidiaries
included approximately 246,000 acres of land composed of
cane lands, forests, pastures, farm land and reserve land,
all located in the province of Oriente. Interspersed with
these lands were towns, small settlements, loading
stations, utilities (including water supply systems, roads,
electric generating facilities and 300 miles of
company-owned standard gauge railroad) dairies, livestock
facilities, housing, stores and warehouses. The Company's
subsidiaries also owned a full range of vehicles and other
equipment necessary for operations, including 32
locomotives, 1,600 pieces of rolling stock, an airplane,
and a fleet of automobiles, trucks, farm and heavy
machinery.
As part of their operations, the Company's subsidiaries
also had agricultural products on hand and in the course of
sale, cash on hand, accounts receivable, prepaid items and
all the normal and customary attributes of an ongoing
business.
The Company's business in Cuba was materially and adversely
affected by developments stemming from the Cuban Revolution
which culminated in the overthrow of the Battista regime
and the coming to power of Fidel Castro Ruiz.
27
<PAGE> 28
WEST INDIES SUGAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
Commencing in 1959 and throughout 1960, the new
revolutionary government of the Republic of Cuba,
principally through its "Natural Institute of Agrarian
Reform" ("INRA") whose head was Fidel Castro Ruiz, began
systematically to intervene, appropriate, nationalize or
otherwise expropriate the properties of the Company's Cuban
subsidiaries. Offices and agents of the subsidiaries filed
protests and took such other steps, including the
initiation of legal action, as they believed were allowed
by Cuban law against these activities.
In July 1960, a law was promulgated by the Cuban Council of
Ministers authorizing the President and Prime Minister to
order the "nationalization, through expropriation by
eminent domain," of property and enterprises of United
States nationals. According to the legislation, experts
were to be appointed to appraise the expropriated property
and payment was to be made in Cuban state bonds. The bonds
were to bear interest at not less than 2% per annum and to
be amortized over not less than 30 years. Thus, on its
face, the legislation seemed to recognize the obligation of
the Cuban state to pay a fair price for the Company's
property taken for public purposes. However, under the
legislation, interest and principal on the bonds were to be
payable only from a special fund derived solely from
earnings resulting from Cuban sugar sales to the United
States in excess of thresholds unilaterally set by the
Cuban government. To the extent interest was not earned in
any year, it was deemed to be "extinguished." Consistent
with a new Cuban Constitution, imposed by the revolutionary
government, the legislation removed expropriation cases
from the jurisdiction of the Cuban courts, thereby
rendering useless the legal actions filed by the Company's
subsidiaries against the taking. Finally, in August 1960,
acting pursuant to the new law, the President and Prime
Minister adopted a resolution which directly ordered the
nationalization by the Cuban state of the properties and
rights of the Company's Cuban subsidiaries.
Since the compulsory expropriation of the Company's Cuban
subsidiaries, neither the Company nor any subsidiary has
received any payment, nor tender of payment, for the
properties. To the best of the Company's knowledge, no
appraisals were ever performed by Cuban authorities
relating to the expropriated property.
28
<PAGE> 29
WEST INDIES SUGAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
In accordance with the International Claims Settlement Act
of 1949, the Company, in February 1966, filed with the
United States Foreign Claims Settlement Commission (the
"FCSC") a detailed claim relating to the taking of its
properties by the Cuban government. The purpose of that
filing was to document, from available records, the
Company's loss by means of a formal submission to a
recognized tribunal, and to set a value which would be
recognized by the United States Government at such time as
it might seek to negotiate or otherwise obtain reparations
from Cuba on account of the expropriation. In February
1971, the FCSC issued a decision certifying the value of
the loss suffered by the Company at $84.9 million and
recognizing that interest of 6% should accrue on the loss
from August 1960 until settlement. According to the records
of the FCSC, the Company's claim is the sixth largest claim
among 5,911 Cuban claims processed by the FCSC.
Based upon the FCSC award and the passing of nearly 37
years since the incurrance of the loss, the Company's claim
to date, including simple interest, amounts to
approximately $273 million.
Following the expropriation of the properties of its
nationals, the United States enacted legislation and
regulations resulting in an economic embargo of Cuba, which
has remained in place, with modifications from time to
time, since 1962. In the intervening years, the economic
embargo has come to include a broad range of sanctions
prohibiting United States nationals from doing business in
Cuba. In 1996, after an incident in which the Cuban
military downed civilian aircraft approaching Cuba, the
United States Congress passed, and the President signed
into law, the Cuban Liberty and Democratic Solidarity Act
of 1996, popularly known as the Helms-Burton Bill or
"LIBERTAD." Among other things, this statute generally
confers on United States nationals who were claimants
against Cuba for expropriated property certain rights to
recover treble damages (plus interest) from "traffickers"
in such property, utilizing proceedings in United States
federal courts. The provisions of LIBERTAD permitting
damage actions against traffickers have been opposed by
other countries, primarily those whose nationals are
believed to be dealing in the property, and the
effectiveness of these provisions has been suspended twice
by the President. As the President is afforded the power to
suspend the litigation provisions indefinitely for six
29
<PAGE> 30
WEST INDIES SUGAR CORPORATION
NOTE TO FINANCIAL STATEMENTS
================================================================================
month periods at a time, the Company cannot predict whether
these provisions will ever become effective.
As a result of the foregoing, the Company does not believe
it would be prudent to assign an estimated value to the
investment in its Cuban subsidiaries or to the related
claim, and, accordingly, the carrying value thereof has
been fully reserved.
4. FAIR VALUE OF The Company's financial instruments consist principally of
FINANCIAL cash and cash equivalents, other receivables, and current
INSTRUMENTS payables. The carrying amount of such financial instruments
approximates their estimated fair value as of September 30,
1997. The estimated fair value is not necessarily
indicative of the amounts the Company could realize in a
current market exchange or of future earnings or cash
flows.
5. COMMITMENTS Effective September 1, 1997, the Company entered into
AND consulting agreements with two of its officers at a rate of
CONTINGENCIES $4,000 per month each. The agreement may be terminated by
either party on a 30 day notice.
30
<PAGE> 31
EXHIBIT INDEX
TO
FORM 10-KSB
OF
WEST INDIES SUGAR CORPORATION
NUMBER TITLE
3.1 Registrant's Certificate of Incorporation,
including all Amendments (to be filed by amendment)
3.2 Registrant's By-laws (to be filed by amendment)
27.1 Financial Data Schedule
31
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<CASH> 346,180
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 348,749
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 348,749
<CURRENT-LIABILITIES> 3,635
<BONDS> 0
0
0
<COMMON> 550,014
<OTHER-SE> (204,900)
<TOTAL-LIABILITY-AND-EQUITY> 345,114
<SALES> 0
<TOTAL-REVENUES> 18,509
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 184,757
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (166,248)
<INCOME-TAX> 0
<INCOME-CONTINUING> (166,248)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (166,248)
<EPS-PRIMARY> (.30)
<EPS-DILUTED> (.30)
</TABLE>
