This amended Form 10-K is filed for the purpose of including the registrant's
1995 Annual Report, and the registrant's Proxy Statement, dated March 8, 1996,
as Exhibits 13 and 28, respectively. The Annual Report and Proxy Statement
were inadvertently omitted as exhibits in the Form 10-K filed by the registrant
on March 22, 1996. No changes, other than the inclusion of Exhibits 13 and 28,
were made to Form 10-K by this amendment.
The registrant's Annual Report and Proxy Statement were submitted
electronically to the Securities and Exchange Commission in other filings
on March 8, 1996.
Form 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-6237
THE ZIEGLER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1148883
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
215 North Main Street, West Bend, Wisconsin 53095
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 334-5521
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $1.00 Par Value
AGGREGATE MARKET VALUE OF VOTING STOCK HELD
BY NON-AFFILIATES OF THE REGISTRANT:
$47,418,676.50 based on the average of the bid and asked prices
of such stock ($19.500 per share) on February 23, 1996
Number of shares outstanding of registrant's classes of common stock, as of
February 23, 1996:
Class Shares Outstanding
Common Stock, 2,431,727
$1.00 Par Value
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [ X ]
DOCUMENTS INCORPORATED BY REFERENCE:
1. Portions of the Annual Report to Shareholders for the year ended
December 31, 1995 are incorporated by reference into Part II of this
Report.
2. Portions of the annual Proxy Statement prepared for the 1996 Annual
Meeting of Shareholders are incorporated by reference into Parts I and
III.
<PAGE>
FORM 10-K
THE ZIEGLER COMPANIES, INC.
PART I
Item 1. Business
(a) The Ziegler Companies, Inc. (the "Company") is a holding
company which owns eight operating subsidiary companies. Seven of the
companies are engaged in financially oriented businesses and the other
company is engaged in recycling, reclaiming and disposing of industrial
chemicals and solvents and providing pollution abatement services. The
Company's principal executive offices are at 215 North Main Street, West
Bend, Wisconsin 53095 and its telephone number is (414) 334-5521. There was
no material change in the nature of the business done by The Ziegler
Companies, Inc. and its subsidiaries during 1995.
The Company's subsidiaries include an investment banking
and brokerage firm, B. C. Ziegler and Company which conducts retail
brokerage services, and engages in underwriting and distributing debt
securities of hospitals and health care institutions, long-term care
facilities, municipal entities, churches, schools, and other corporations
through an operating division Ziegler Securities. Ziegler Leasing
Corporation concentrates on leasing equipment to health care providers and
commercial enterprises. Ziegler Financing Corporation provides construction
and interim loan services primarily to churches. Ziegler Thrift Trading,
Inc. is a discount brokerage firm. Ziegler Asset Management, Inc. provides
money management services to individuals and institutions. First Church
Financing Corporation was organized to issue mortgage-backed bonds
collateralized by first mortgages on church buildings and properties.
Ziegler Collateralized Securities, Inc. was organized to issue bonds
collateralized by pools of equipment leases and other debt instruments. WRR
Environmental Services Co., Inc. recycles, reclaims and disposes of
industrial chemicals and solvents and provides clean-up services with
respect to sites with environmental damage.
(b) The Company's operations are conducted through four
industry segments, namely, (1) broker-dealer, (2) lease financing, (3) real
estate financing and (4) corporate and other. The industry segments are
each served by a separate subsidiary or group of subsidiaries; therefore,
all expenses and assets can be directly identified with segment revenues.
Inter-company revenues consist primarily of interest income earned on loans
between subsidiaries, management and other administrative fees charged
between subsidiaries, intercompany security execution charges, and dividends
received by the Company from subsidiaries. All other significant revenues
are derived from transactions with unaffiliated parties in the United
States.
Revenues, net of intercompany transactions, Income Before
Taxes, and Assets of each segment are as follows:
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993
(In Thousands)
<S> <C> <C> <C>
REVENUES (net of intercompany transactions)
Broker-Dealer $ 37,680 $ 30,324 $ 35,238
Lease Financing 11,678 11,872 11,606
Real Estate Financing 197 328 351
Corporate and Other 5,654 4,557 3,146
$ 55,209 $ 47,081 $ 50,341
INCOME BEFORE TAXES
Broker-Dealer $ 3,625 $ 686 $ 5,484
Lease Financing 1,067 1,206 1,751
Real Estate Financing 122 (70) 64
Corporate and Other 1,523 1,300 125
$ 6,337 $ 3,122 $ 7,424
ASSETS
Broker-Dealer $ 53,681 $ 56,636 $ 47,195
Lease Financing 68,625 67,984 66,498
Real Estate Financing 4,281 5,045 7,924
Corporate and Other 29,258 22,775 20,006
$155,845 $152,440 $141,623
</TABLE>
<PAGE>
BROKER-DEALER
B. C. Ziegler and Company ("BCZCO")
A major portion of BCZCO's business is the underwriting and
distributing of debt securities of hospitals and other health and long-term
care providers. All health care and substantially all public finance
underwriting functions are consolidated under Ziegler Securities ("ZSD"), an
operating division of BCZCO. While these activities are the prime source of
BCZCO's income, other contributions to earnings result from underwriting
profits from underwriting and distributing debt issues for churches and
schools, from the sale of lease-backed and GNMA and FNMA certificate-backed
bonds, from the sale of various mutual funds which it sponsors, and from the
sale of other financial products, including unit investment trusts, deferred
annuities, certificates of deposit, insurance and other mutual funds. BCZCO
intends to continue all of these underwriting and sales activities.
Total revenues of BCZCO in 1995 were $32,039,000 as compared with
$25,787,000 in 1994. Net income in 1995 was $1,555,000 as compared with
1994 net income of $3,000.
BCZCO began operations as an insurance agency in 1902 and at the
present time maintains direct agency contracts with 26 insurance companies
offering diversified lines of coverage, including life, property, casualty
and fidelity insurance. It underwrote its first publicly offered security
issue in 1913 for a church in West Bend, Wisconsin. Since then, it has
concentrated on providing investment banking services to nonprofit
corporations, with particular emphasis on health care providers, long-term
care and retirement communities and churches.
During 1995, Ziegler Securities managed 14 new issues of tax-exempt and
taxable healthcare debt securities totaling $452,755,000. During 1995,
Ziegler Securities also managed 38 issues for long-term care and retirement
facilities totaling $442,790,000. For purposes of comparison, during 1994,
Ziegler Securities managed 18 issues of tax-exempt and taxable healthcare
debt securities totaling $502,895,000. Ziegler Securities also managed 37
issues for long-term care and retirement facilities totaling $302,275,000 in
1994.
BCZCO underwrote and sold 23 bond issues for various churches, schools
and other non-profit institutions, totaling approximately $67,408,000 in
1995 compared to 21 issues totaling approximately $66,176,000 in 1994.
As of December 31, 1995, BCZCO had 24 retail brokerage offices located
throughout the United States which play a vital role in the distribution of
the taxable and tax-exempt issues underwritten by BCZCO. In 1995, the
services offered by BCZCO's retail brokers were expanded to include
solicited equity trading. Securities are sold by BCZCO as a broker-dealer
to individuals, financial institutions and other dealers. In addition,
BCZCO maintains a limited secondary market for debt securities it has
underwritten as an accommodation to its investor clientele.
BCZCO continues to underwrite and offer a variety of investment
products and continues to develop new investment products.
BCZCO also sponsors and acts as the primary distributor for the
Principal Preservation Portfolios, Inc. family of mutual funds. This open-
end diversified investment company offers nine distinct mutual fund
portfolios having total net assets over $320,000,000 as of December 31,
1995.
Ziegler Mortgage Securities, Inc. II ("ZMSI-II"), in its tenth year of
operation, issued four series of "AAA" rated bonds in the total amount of
$10,925,000 during 1995. BCZCO owns a portion of the capital stock of ZMSI-
II, and acts as underwriter for the offerings of bonds by it. ZMSI-II bonds
are rated "AAA" by Standard & Poor's Corporation and are backed by
Government National Mortgage Association ("GNMA") certificates, Federal
National Mortgage Association ("FNMA") certificates or by a combination of
GNMA and FNMA certificates. The GNMA certificates are fully modified pass-
through mortgage certificates backed by a pool of Federal Housing Authority
("FHA") loans or Veterans Administration ("VA") loans, and provide for
payment of principal and interest and other proceeds of the mortgage loans
to the registered holder of the GNMA certificates. Such payments are
guaranteed by GNMA, which guarantee is supported by the full faith and
credit of the United States. The FNMA certificates represent interests in
pools of loans backed by mortgages on one to four family residences. The
mortgage loans may be conventional mortgage loans or mortgage loans insured
by the FHA or guaranteed by the VA. Payment of principal and interest and
other proceeds from the mortgage loans will be made to the registered
holders of the FNMA certificates. FNMA certificates are guaranteed solely
by the FNMA and are not backed by the full faith and credit of the United
States.
In 1995, BCZCO underwrote and sold one series of lease-backed bonds for
Ziegler Collateralized Securities, Inc. ("ZCSI") in the total amount of
$7,200,000. The bonds were collateralized by pools of equipment leases and
other debt instruments organized and sold to ZCSI by a sister company,
Ziegler Leasing Corporation.
BCZCO is one of the nation's oldest health care underwriters. BCZCO
experiences competition in most potential taxable health care bond
underwritings due in part to the fact that debt financing for health care
providers can also be accomplished by bank borrowing or by mortgage
financing with institutional lenders. Competition in the underwriting of
tax-exempt issues is from other major investment bankers and, in certain
instances, from commercial banks. This competition for underwriting volume
over the past several years has caused a general decline in the level of
compensation paid for investment banking services in connection with the
healthcare market.
It is anticipated that significant changes in the manner in which
health care is delivered in the United States will occur over the next
several years, either because of competitive forces in the marketplace or
government mandates. There can be no guarantee of the continuing
availability of health care, long-term care and corporate debt issues in
adequate volume for BCZCO and other competitive investment bankers and
underwriters. The availability of suitable underwritings for BCZCO is
related to a variety of factors, among which are the general level of
interest rates, the need for replacing or upgrading facilities, the
development of new medical technology, changes in government programs and
private contracts relating to reimbursement of health care providers,
consolidation and integration within the health care industry, and the
demographic characteristics of the United States' population.
BCZCO is a broker-dealer registered with the Securities and Exchange
Commission and with the security regulatory bodies of 50 states and the
District of Columbia. It is a member of the National Association of
Securities Dealers, Inc. ("NASD") and the Securities Investor Protection
Corporation ("SIPC"). It is subject to the rules and regulations
established and administered by these various regulatory and self-regulatory
agencies. Failure to comply with any of these rules and regulations could
result in censure, fines, suspension or expulsion. Suspension could be
imposed for varying periods of time and could have a materially adverse
effect upon BCZCO for at least the period of suspension. Expulsion would
effectively preclude it from engaging in the securities business. The
various rules and regulations to which it is subject govern such matters as
sales methods, recordkeeping requirements, net capital requirements,
relationships between brokers and relationships between broker-dealers and
the public.
Under the Securities Act of 1933 and other applicable Federal and state
securities laws and regulations, an underwriter is subject to substantial
potential liability for material misstatements or omissions in the
prospectus used to describe each issue of securities being underwritten and
offered to the public.
Underwriting involves substantial economic risk. An underwriter may
incur losses if it is unable to resell the securities it has committed to
purchase, or if it is forced to liquidate all or part of its commitment at
less than the purchase price. Ziegler Securities also acts as remarketing
agent with respect to variable rate municipal obligations with investor put
options. The aggregate principal amount of bonds as to which Ziegler
Securities is remarketing agent is approximately $569,905,000. As a general
matter, bonds which are not successfully remarketed by Ziegler Securities
can be paid at par through a liquidity facility maintained by the borrower,
at Ziegler Securities' demand. However, remarketing often involves a
temporary holding of such bonds by Ziegler Securities for its own account,
with the resulting market risk. Ziegler Securities finances its cash needs
for remarketing activity through the Company's capital and bank credit
lines.
The securities industry in general is presently experiencing increased
litigation from customers related to compliance with laws and industry rules
related to the sales of securities.
BCZCO includes an independent insurance agency, which is subject to
various rules and regulations which are generally imposed at the state
level.
Ziegler Thrift Trading, Inc. ("ZTT")
ZTT is a discount brokerage firm organized in the State of Minnesota.
ZTT is an order execution specialist for stocks, corporate bonds and options
and can execute orders on any exchange and the over-the-counter market.
Since ZTT has no research department and no salesmen, ZTT's commission
charges are approximately 50% to 70% less than those of regular brokerage
firms. The minimum commission charge is $34.50.
ZTT is registered with the Securities and Exchange Commission and is a
member of the National Association of Securities Dealers, Inc. and the
Securities Investor Protection Corporation. It is licensed as a broker-
dealer in 41 states and the District of Columbia. The company is
headquartered in downtown Minneapolis and has three branch offices in St.
Paul, Minnesota, along with two newly acquired branch offices in the
suburban Chicago area..
In addition to its core business, ZTT provides reduced commission
brokerage services to the customers of banks in Minnesota and Wisconsin. In
1990, ZTT opened a satellite facility in the Eastern Heights Bank, St. Paul,
Minnesota, on the home office campus of a major international manufacturing
firm. In early 1994, this satellite facility began offering full service
brokerage services, under the division name Ziegler Investment Services. In
February 1995, the full service office relocated to the new Eastern Heights
Bank at 670 McKnight Road North, St. Paul. In addition, a new discount
branch of ZTT was opened in the same building. In September, 1995, ZTT
purchased the assets of the discount brokerage business of another broker-
dealer in the suburban Chicago area. The purchase is intended to provide
access for ZTT to the Chicago area market for discount brokerage services.
In 1995 ZTT's gross revenues were $4,434,000 and net income was
$677,000 compared to net income of $382,000 in 1994 on gross revenues of
$3,474,000.
LEASE FINANCING
Ziegler Leasing Corporation ("ZLC")
ZLC concentrates on leasing equipment to the health care industry, but
also writes a substantial volume of leases on commercial and industrial
equipment. ZLC's portfolio consists primarily of full payout finance
leases, leveraged leases and non-cancelable operating leases. A major
portion of its net investment in lease transactions is in full payout
finance leases wherein most of the usual ownership risks are passed to the
lessee, and the lease income represents the excess of the lease contract's
receivable (during an initial non-cancelable lease term) plus estimated
equipment residual value over the cost of the leased equipment. The income
is recognized over the term of the lease. Leveraged leases have essentially
the same characteristics as finance leases, except that third parties
furnish financing in the form of long-term debt that provides for no
recourse against ZLC or the Company. The investment in leveraged leases
less the related deferred income taxes represents the net investment in
leveraged leases for purposes of computing periodic net income. Income is
prorated to the years in which such net investment is positive. Under the
operating method of accounting for leases, ZLC retains most of the usual
risks and rewards of ownership, and reports as income the monthly lease
payments when due and charges income with depreciation on the leased
equipment on a straight-line basis over the lease term, and allows for
residual value at the end of the term.
ZLC experiences substantial competition from commercial banks and other
leasing companies. In addition, ZLC's revenues are subject to pressures
created by changes in the health care delivery system in the United States.
ZLC's gross revenue in 1995 was $10,498,000 as compared with
$10,842,000 in 1994. Net income was $716,000 in 1995 as compared with
$764,000 in 1994.
At December 31, 1995, ZLC's investment in leases and notes totaled
$50,547,000 compared with $47,331,000 at December 31, 1994.
REAL ESTATE FINANCING
Ziegler Financing Corporation ("ZFC")
ZFC is engaged in the business of making construction and interim loans
to selected churches, primarily those whose capital needs are too small to
justify an underwriting through BCZCO. ZFC earned net income in 1995 of
$74,000, compared to a net loss of $42,000 in 1994. Total revenues were
$327,000 in 1995 compared to $364,000 in 1994. At the end of 1995, there
were no loans, notes and related accrued interest outstanding from unrelated
entities. This compares to approximately $5,258,000 at the end of 1994.
The results of future operations of ZFC will depend upon the demand for
suitable loans at profitable yields. The acquisition of construction and
interim loans is highly competitive in that commercial banks, savings and
loan associations, mortgage bankers, real estate trusts, and other
construction lenders are aggressively seeking high quality loans. In
addition to competitive conditions, yields depend to a large extent upon the
type of property securing the loans, the term of the loan, the credit of
borrowers, the reputation of the builder, the condition of the money market
at the time the loan is acquired, and other factors.
ZFC has obtained substantially all of its funds for investment in
construction and interim loans through the sale of short-term notes by the
Company. These notes have maturities of nine months or less and have a
shorter term, in most cases, than the loans made by ZFC. As selected loans
in the health and long-term care fields become available, ZFC intends to
operate on a leveraged basis, that is, with substantial amounts of debt in
relation to net worth. This policy will be reviewed from time to time on
the basis of experience and current factors. In addition, operations on a
leveraged basis can result in a decline of earnings or loss because of
inability to pay maturing debt obligations without disadvantageous
liquidation of loans or new borrowings at higher rates of interest.
Inability to pay maturing debt could result from defaults on loans held by
ZFC or inability to make short-term borrowings.
First Church Financing Corporation ("FCFC")
This subsidiary was incorporated on May 3, 1990 for the purpose of
issuing mortgage-backed bonds collateralized by a pool of notes secured by
first mortgages on church buildings and properties. The notes and mortgages
in the pool typically originate from church financings which are too small
in principal amount to support a separate public offering of bonds. One
series of bonds totaling $4,223,000 was issued by FCFC in 1995.
CORPORATE AND OTHER
The Ziegler Companies, Inc. ("ZCO")
In 1994, ZCO purchased a one third equity interest in Heartland Capital
Company L.L.C. ("HCC"), a Wisconsin limited liability company which is in
the business of making construction loans to finance the construction or
rehabilitation of affordable housing projects. The total subscription price
paid to date by ZCO is $825,000. The return on the investment recognized by
ZCO for 1995 was approximately $225,000. The return on this investment of
ZCO is dependent upon various factors, including the demand for affordable
housing, the ability of HCC to maintain a spread between HCC's cost of funds
and the interest rates charged to developers, and the successful management
of the risk of default by developers on the loans made by HCC. The volume
of HCC's lending activities has lagged original projections, due in major
part to competition from major commercial banks and others. In addition,
the corporation providing HCC with management services experienced
significant changes in personnel in 1995.
In addition, ZCO has purchased automobile installment loans from one
originating company, and holds such loans until the aggregate amount of such
loans is sufficient for a third party to purchase the loans in bulk for the
purpose of securitizing them.
Ziegler Asset Management, Inc. ("ZAMI")
This subsidiary was organized in June of 1991 to provide money
management services to individuals and institutional accounts. The equity
investment strategy utilized by ZAMI for individual accounts seeks out
companies that have demonstrated a superior record of growing their
earnings, increasing their dividends and maintaining strong balance sheets.
With respect to institutional accounts, ZAMI has utilized sub-advisors to
help the clients meet their investment objectives, risk limitations and
liquidity requirements. As of December 31, 1995, ZAMI had approximately
$587,000,000 of assets under management. ZAMI realized net income of
$48,000 in 1995, compared to $97,000 in 1994.
In 1995, ZAMI underwent changes in key management personnel, and in
early 1996 replaced BCZCO as investment adviser for certain mutual funds of
Principal Preservation Portfolios, Inc.
Ziegler Collateralized Securities, Inc. ("ZCSI")
This subsidiary was organized in August of 1991 for the purpose of
issuing bonds collateralized by pools of leases and other debt instruments
packaged and sold to ZCSI by Ziegler Leasing Corporation. In 1995 one
series of bonds was issued by ZCSI totaling $7,200,000. It is anticipated
that future series will be offered on a regular basis. In accordance with a
written management agreement, management fees paid to Ziegler Leasing
Corporation have been limited to the amounts which prevented ZCSI from
incurring a loss. As a result, ZCSI had no net income in 1995, 1994 or
1993.
WRR Environmental Services Co., Inc. ("WRR")
WRR was founded in 1970 and owns and operates a licensed hazardous
waste treatment and waste solvent recycling facility located in Eau Claire,
Wisconsin. WRR recycles spent industrial solvents for re-use and blends
waste solvents for use as alternative energy sources for businesses in EPA
permitted liquid injection incinerators and cement kilns. WRR also offers
several other services such as processing dry cleaner filters, remediation
of polluted industrial sites, and emergency spill response.
WRR obtains raw materials for its recycling operations directly from
the primary users of chemicals and solvents. Virgin chemicals are purchased
and blended with certain of WRR's reclaimed blended products, or are sold as
new products. WRR is not dependent on a single supplier or a few suppliers
for its raw materials.
WRR is regulated by the United States Environmental Protection Agency
("EPA") and the Wisconsin Department of Natural Resources ("DNR"). On
September 30, 1988 WRR obtained a final hazardous waste operating permit
from the EPA making it the first fully licensed treatment, storage and
disposal facility in the State of Wisconsin.
In 1983, WRR's Eau Claire facility was placed on the National Priority
List of sites regulated by the Superfund Act ("CERCLA") because shallow well
testing of ground water directly underneath the plant site disclosed traces
of contaminants. WRR is subject to a DNR consent order for further testing
and surface water control related to the contaminants. Although still
subject to the consent order and to remedial action under the federal
Research, Conservation, and Recovery Act ("RCRA"), WRR was removed from the
National Priority List effective February 5, 1993.
In addition, WRR has disposed of wastes at other sites which have been
placed on the National Priority List and at sites which may be added to the
List. Under CERCLA any party that disposed of waste at any facility that
requires remediation may be held jointly and severally liable for a portion
of, or the entire cost of, such remediation. In some cases, EPA will expend
funds to remedy a site, and then seek reimbursement from those parties who
disposed of wastes at the site. The total reserve of WRR on account of
potential liability for remediation of environmentally damaged sites at
December 31, 1995 was $717,000. See the section of this filing entitled
"Environmental Matters" for additional information.
In 1995, through a wholly-owned subsidiary named WRR Northwest
Enterprises Co., Inc., WRR purchased the assets of a company located
adjacent to WRR's plant. WRR's subsidiary has continued the business lines
formerly operated by the selling company, namely the installation, servicing
and sale of truck equipment. The purchase was made, in part, to provide WRR
with control over neighboring commercial real estate.
WRR's gross margin in 1995 was $3,762,000 as compared to $3,087,000 in
1994. Net income was $918,000 in 1995, compared to $529,000 in 1994.
GENERAL
None of the Company's businesses are subject to governmental
renegotiation of profits; none are dependent on a single customer or a few
customers nor are any of them dependent on a single supplier of raw
materials or a few suppliers of raw materials. In no case are patents,
trademarks, licenses or franchises important nor are any of the businesses
seasonal. None of the businesses engage in significant operations outside
the United States.
ENVIRONMENTAL MATTERS
Compliance with Federal, state and local laws and regulations which
have been enacted or adopted relating to the protection of the environment
have had no material effect upon the capital expenditures, earnings and
competitive position of the registrant and its financial services
subsidiaries.
WRR is strictly regulated by the EPA and the DNR. More stringent
future regulations enacted by these agencies regarding the control of air
and water pollution as well as waste disposal sites could result in
increased operating costs and capital expenditures.
WRR has disposed of wastes at other recycling sites which may be added
to the National Priority List, and may be required to share in the cost of
the clean-up of these sites. As of December 31, 1995, WRR had been
identified as a potentially responsible party ("PRP") in connection with
three sites. For the first site, a reserve of $128,000 was established
based on WRR's review of documents, its knowledge of the site and its
experience with the clean-up of similar sites. No engineering studies have
yet been done to arrive at a more reliable cost estimate. Payments on this
site are expected to occur over the next five years. The estimated cost of
cleaning up a second site is between $10,000,000 and $30,000,000 based on
preliminary estimates from various consulting firms. Based on the
identification of other PRPs and the present interim allocation schedule,
WRR should be responsible for costs ranging from $500,000 to $1,800,000. In
accordance with Financial Accounting Standards Board Interpretation No. 14,
Reasonable Estimation of the Amount of a Loss, WRR established a reserve of
$589,000 to cover its share of the clean-up costs of this second site.
Payments on this site are expected to occur over the next five years. In
June 1994, WRR was notified by the United States Environmental Protection
Agency ("EPA") that WRR is a PRP at a third site to which WRR delivered
materials from 1982 to 1985. WRR's review of the remediation investigation
and feasibility study, and other materials prepared by EPA on account of
this site, indicates that WRR has valid defenses to any action by EPA to
collect remediation costs. EPA's estimate of WRR's proportionate share of
anticipated remediation costs at this third site approximates $200,000. No
reserve has been established for this third site.
While WRR is jointly and severally liable on all three sites,
management is not aware of circumstances which could lead to non-performance
by the other PRP's when viewed as a group. No potential insurance recovery
or reimbursements from WRR's liability insurance carriers have been accrued
in the financial statements. The reserve for accrued loss contingencies
totaled approximately $717,000 and $633,000 at December 31, 1995 and 1994,
respectively.
EMPLOYEES
As of March 1, 1996, 476 persons were employed full time and 92 persons
were employed part time by the Company and its subsidiaries.
EXECUTIVE OFFICERS OF THE COMPANY
Information regarding the executive officers of the Company, which is
not part of the Company's March 8, 1996 Proxy Statement is as follows:
<TABLE>
<CAPTION>
Name Age Office
<S> <C> <S>
R. D. Ziegler 69 Chairman of the Board
P. D. Ziegler 46 President and Chief Executive Officer
S. C. O'Meara 46 Senior Vice President and General Counsel
L. R. Van Horn 42 Senior Vice President - Finance
V. C. Van Vooren 64 Senior Vice President and Treasurer
J. C. Vredenbregt 42 Assistant Treasurer and Controller
J. R. Schmidt 36 Corporate Secretary
</TABLE>
The term of office of each officer is one year or until his successor
is elected and qualified. There is no arrangement or understanding between
any officer and any other person pursuant to which he was elected as an
officer.
Mr. R. Douglas Ziegler was elected Chairman of the Board of The Ziegler
Company, Inc. and B. C. Ziegler and Company on April 21, 1986. Mr. Ziegler
joined the Company on January 1, 1973, became President and Chief Executive
Officer on June 15, 1973 and served as Chief Executive Officer until
December 31, 1989. Mr. Ziegler has been a Director of B. C. Ziegler and
Company, the Company's principal subsidiary, from January 26, 1953 to April
21, 1969, and again became a Director on October 2, 1972. He is presently a
Director of Johnson Controls, Inc. and Principal Preservation Portfolios,
Inc. Mr. Ziegler is the father of Mr. P. D. Ziegler and uncle of Mr. B. C.
Ziegler III.
Mr. Peter D. Ziegler was elected President of The Ziegler Company, Inc.
and B. C. Ziegler and Company on April 21, 1986, and became Chief Executive
Officer of both companies on January 1, 1990. He previously served as
Executive Vice President since January 1, 1985. He is presently a director
of West Bend Mutual Insurance Company, West Bend, Wisconsin and Trustmark
Insurance Company, Lake Forest, Illinois. Mr. Ziegler is the son of R. D.
Ziegler, Chairman of the Company and a first cousin of Mr. B. C. Ziegler
III, a Director of the Company.
Mr. S. Charles O'Meara began employment with the Company and B. C.
Ziegler and Company as Senior Vice President and General Counsel on January
15, 1993.
Mr. Lynn R. Van Horn was elected Senior Vice President - Finance of the
Company and B. C. Ziegler and Company on March 19, 1990. He joined B. C.
Ziegler and Company as Director of Finance on May 1, 1984 and was elected
Vice President - Finance on March 25, 1985.
Mr. Vernon C. Van Vooren is Treasurer of The Ziegler Companies, Inc.
and was elected Senior Vice President of the Company on January 15, 1980.
He currently heads the commercial paper department of B. C. Ziegler and
Company. Mr. Van Vooren has announced that he will retire from the Company
effective March 31, 1996.
Mr. Jeffrey C. Vredenbregt was elected Assistant Treasurer and
Controller of the Company and B. C. Ziegler and Company on July 1, 1987. On
March 15, 1993, he was elected Vice President of B. C. Ziegler and Company
and continues in his capacities of Assistant Treasurer and Controller.
Ms. Janine R. Schmidt was elected Corporate Secretary of the Company
and B. C. Ziegler and Company on November 24, 1992.
Item 2. Properties
B. C. Ziegler and Company owns an office building located
at 215 North Main Street in West Bend, Wisconsin 53095 which serves as the
home office for the Company and all subsidiaries except WRR Environmental
Services Co., Inc., Ziegler Thrift Trading, Inc. and the Ziegler Securities
Division of B. C. Ziegler and Company. This three-story building has
approximately 77,000 square feet of space.
B. C. Ziegler and Company also owns two buildings located
at 237-239 and 241-243 North Main Street, West Bend, Wisconsin 53095. These
buildings contain four residential rental units and four rental units for
businesses. The business rental units are currently leased to businesses
which are not affiliated with The Ziegler Companies, Inc. or any of its
subsidiaries.
B. C. Ziegler and Company rents commercial space for its
various retail brokerage offices under leases with terms that are typically
three years or less.
Ziegler Securities Division occupies leased premises at One
South Wacker Drive, Suite 3080, Chicago, Illinois 60606; 5729 Park Plaza
Court, Indianapolis, Indiana 46220; 111 Second Avenue, N.E., Suite 915, St.
Petersburg, Florida 33701; 1850 Mt. Diablo Boulevard, Suite 640, Walnut
Creek, California 94596; and 1350 I Street, N.W., Suite 850, Washington,
D.C. 20005.
Ziegler Leasing Corporation's midwest regional offices
occupy leased premises at 11479 North Pine Drive, Suite 22, Parker, Colorado
80134; 3017 Douglas Boulevard, Suite 300, Roseville, California 95661; and
2500 Old Alabama Road, Suite 23, Roswell, Georgia 30076.
Ziegler Thrift Trading, Inc. occupies leased premises at
733 Marquette Avenue, Suite 106, Minneapolis, Minnesota 55402, 336 Robert
Street North, Suite 210, St. Paul, Minnesota 55101, Building 224-2S-34, 3M
Center Building, St. Paul, Minnesota 55144 and 670 McKnight Road North,
Eastern Heights Bank Building, St. Paul, Minnesota 55119, 21 West Van Buren,
Naperville, Illinois 60540; and 10526 West Cermak, Westchester, Illinois
60154.
All branch offices of B. C. Ziegler and Company, Ziegler
Securities, Ziegler Leasing Corporation and Ziegler Thrift Trading, Inc. are
located in leased premises with varying terms from one to ten years.
Ziegler Leasing Corporation and Ziegler Collateralized
Securities, Inc. had, as of December 31, 1995, investments in leased
equipment of $42,272,000 and $8,815,000, respectively.
WRR Environmental Services Co., Inc. owns an office
building and recycling plant located at 5200 State Road 93, Eau Claire,
Wisconsin 54701 which is the sole operating plant for WRR. The office
building and plant buildings are located on approximately nine acres of land
southeast of the city of Eau Claire. In 1994, WRR purchased an additional
19 acres of land in the vicinity of its operating plant. In 1995, through
its wholly-owned subsidiary, WRR Northwest Enterprises Co., Inc., WRR
purchased an approximately six acre site with improvements located at 5100
Highway 93 South, Eau Claire, Wisconsin, for use as a manufacturing, sales
and service facility for truck equipment.
The Company owns one small parcel of partially-improved
land in West Bend, Wisconsin, aggregating about 16 acres, which has been
held for long-term investment.
B. C. Ziegler and Company owns approximately 40 acres of
unimproved land in West Bend, Wisconsin, which is held for future use as the
potential site of the Company's home office.
Item 3. Pending Legal Proceedings
Neither the Company nor any of its subsidiaries has any
material pending legal proceedings other than ordinary routine litigation
incidental to the respective businesses, and other than the three pending
environmental matters at Eau Claire, Wisconsin, Zionsville, Indiana, and
Griffith, Indiana described under the caption "Environmental Matters" above.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted during the fourth quarter of the
fiscal year 1995 to a vote of security holders.
<PAGE>
PART II
Item 5. Market for the Company's Common Stock and Related Security Holder
Matters
Information about the range of bid and asked quotations for
the Company's common stock on the American Stock Exchange for each quarter
during the Company's 1995 and 1994 fiscal years and information about the
cash dividends paid on the Company's common stock for each quarter during
1995 and 1994 may be found on page 37 of the Company's 1995 Annual Report to
Shareholders. Such information is incorporated herein by reference as if
fully set forth herein.
Item 6. Selected Financial Data
Information about the Company's operating revenue, net
income, earnings per share of common stock, cash dividends per share
declared, total assets, long-term obligations, short-term notes payable,
shareholders' equity and book value per share for the fiscal years 1991
through 1995 may be found on page 34 of the Company's 1995 Annual Report to
Shareholders. Such information is incorporated herein by reference as if
fully set forth herein.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Information about the Company's analysis of financial
conditions and results of operations for the fiscal years 1995, 1994 and
1993 may be found on pages 32 and 33 of the Company's 1995 Annual Report to
Shareholders. All of the foregoing information is incorporated herein by
reference as if fully set forth herein.
Item 8. Financial Statements and Supplementary Data
The Company's consolidated financial statements containing
consolidated balance sheets for the fiscal years 1995 and 1994 may be found
on page 11 of the Company's 1995 Annual Report to Shareholders; consolidated
statements of income for the fiscal years 1995, 1994 and 1993 and
consolidated statements of cash flows for the fiscal years 1995, 1994 and
1993 may be found on pages 12 through 14 of the Company's 1995 Annual Report
to Shareholders; consolidated statements of stockholders' equity for 1995,
1994 and 1993 may be found on page 15 of the Company's 1995 Annual Report to
Shareholders. The consolidated notes to financial statements, together with
the report of Arthur Andersen LLP, may be found on pages 16 through 26 of
the Company's 1995 Annual Report to Shareholders. Such consolidated
financial statements and report of Arthur Andersen LLP are incorporated
herein by reference, see Exhibit 13 at page 61.
Item 9. Disagreements with Accountants on Accounting and Financial
Disclosure
There have been no reportable events during the fiscal
years 1995 or 1994.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Company
Information about the Company's directors and those persons
nominated to become directors may be found on pages 3, 4, and 5 of the
Company's March 8, 1996 Proxy Statement. Such information is incorporated
by reference as if fully set forth herein.
Information regarding the executive officers, which is not
a part of the Company's Proxy Statement, is set forth in Part I above.
Item 11. Executive Compensation
Information required under Item 11 about the compensation
paid by the Company to its Chief Executive Officer and other executive
officers of the Company may be found in the Company's March 8, 1996 Proxy
Statement, which information is incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information concerning principal securities holders and
securities holdings of management which may be found on pages 2 and 3 of the
Company's March 8, 1996 Proxy Statement is incorporated by reference as if
fully set forth herein.
Item 13. Certain Relationship and Related Transactions
There have been no transactions since the beginning of
fiscal year 1995, or any currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries was or
is to be party in which the amount exceeds $60,000 and in which any
director, executive officer, any nominee for election as a director, any
security holder owning of record or beneficially more than 5% of the Common
Stock of the Company, or any member of the immediate family of any of the
foregoing persons had or will have a direct material interest, with the
exception of the following transactions:
Mr. B. C. Ziegler III, current Director, is a shareholder,
director and officer of Z/L Media Corporation, which is the general managing
partner of KXRM Partnership, Colorado Springs, Colorado. KXRM has entered
into two leases with Ziegler Leasing Corporation, a subsidiary of the
Company. Monthly lease payments total $3,675.87.
<PAGE>
PART IV
Item 14(a). Document List
1. Financial Statements
The following financial statements are incorporated herein
by reference in Part II, Page 14 at Item 8 above.
(i) Consolidated balance sheets - December 31, 1995 and 1994.
(ii) Consolidated statements of income - years ended December
31, 1995, 1994 and 1993.
(iii) Consolidated statements of cash flows - years ended
December 31, 1995, 1994 and 1993.
(iv) Consolidated statements of stockholders' equity - years
ended December 31, 1995, 1994 and 1993.
(v) Consolidated notes to financial statements - December 31,
1995 and 1994.
(vi) Report of Independent Public Accountants.
2. Supplementary Data and Financial Statement Schedule
The following financial statement schedule in response to
this Item 14(a) is submitted as a separate section of this
report:
Report of Independent Public Accountants on Supplemental
Schedule.
SCHEDULE II - Valuation and Qualifying Accounts.
Report of Independent Public Accountants on and Financial
Statements of Ziegler Mortgage Securities, Inc. II (Commission
file number: 33-92454).
3. Exhibits Required by Securities and Exchange Commission
Regulation S-K:
(3) a. Articles of Incorporation of the Company, previously
filed as Exhibit C to the Company's Proxy Statement
dated March 8, 1993.
b. By-Laws of the Company, previously filed as Exhibit D
of the Company's Proxy Statement dated March 8, 1993.
(4) Instruments Defining the Rights of Security Holders -
Indentures and Guaranty Agreement incorporated herein by
reference under item 10 below.
(9) Voting Trust Agreements - Not applicable pursuant to
Regulation S-K, Item 601.
(10) Material Contracts
a. Form of Indemnification Agreement incorporated by
reference to Exhibit A to the Notice of Special
Meeting and Proxy Statement on July 11, 1986.
b. Trust Indenture dated as of December 1, 1991 between
Ziegler Leasing Corporation and M&I First National
Bank as it relates to $10,000,000 principal amount of
Five-Year Extendable Notes, Series 1991 incorporated
by reference to Exhibit 4.1 to Registration Statement
on Form S-1, Commission File No. 33-43082.
c. Trust Indenture dated December 1, 1991 between
Ziegler Collateralized Securities, Inc. and M&I First
National Bank incorporated by reference to Exhibit
4.1 to Registration Statement on Form S-3, filed
September 11, 1991, Commission File No. 33-42723;
First Supplemental Indenture between Ziegler
Collateralized Securities, Inc. and M&I First
National Bank, dated December 1, 1991 incorporated by
reference to Exhibit 4.1 to current report on Form 8-
K for Ziegler Collateralized Securities, Inc., dated
December 12, 1991, Commission File No. 33-42723;
Second Supplemental Indenture between Ziegler
Collateralized Securities, Inc. and M&I First
National Bank, dated July 1, 1992 incorporated by
reference to Exhibit 4.1 to current report on Form 8-
K for Ziegler Collateralized Securities, Inc., dated
July 17, 1992, Commission File No. 33-42723; Fourth
Supplemental Indenture between Ziegler Collateralized
Securities, Inc. and M&I First National Bank dated
July 15, 1993 incorporated by reference to Exhibit
4.1A of Amendment No. 3 to Ziegler Collateralized
Securities, Inc. Form S-3 Registration Statement,
filed July 20, 1993, Commission File No. 33-42723;
Seventh Supplemental Indenture between Ziegler
Collateralized Securities, Inc. and M&I First
National Bank, dated as of July 15, 1993,
incorporated by reference to Exhibit 4.1A of
Amendment No. 4 to Ziegler Collateralized Securities,
Inc. Form S-3 Registration Statement, filed August
31, 1995, Commission File No. 33-42723.
d. Third Supplemental Indenture between Ziegler
Collateralized Securities, Inc. and M&I First
National Bank, dated June 1, 1993.
e. Fifth Supplemental Indenture between Ziegler
Collateralized Securities, Inc. and M&I First
National Bank, dated December 1, 1993.
f. Sixth Supplemental Indenture, between Ziegler
Collateralized Securities, Inc. and M&I First
National Bank, dated October 1, 1994.
g. Guaranty Agreement between The Ziegler Company, Inc.
and M&I First National Bank dated December 1, 1991
incorporated by reference to Exhibit 4.4 to the
Registration Statement on Form S-3, Commission File
No. 33-42723.
h. $10,000,000 Credit Agreement between Ziegler Leasing
Corporation and First Wisconsin National Bank of
Milwaukee, dated May 15, 1991 incorporated by
reference to Item 14(a)3.(10)e of Part IV of the
Company's 1993 Form 10-K.
i. $5,000,000 Term Loan Agreement between Ziegler
Leasing Corporation and M&I Marshall & Ilsley Bank,
dated December 28, 1992 incorporated by reference to
Item 14(a)3.(10)e of Part IV of the Company's 1992
Form 10-K.
Executive Compensation Plan and Arrangements
j. Nonstatutory Stock Option Agreement referred to in
portions of the Company's March 8, 1996 Proxy
Statement, which information is incorporated by
reference in Item 11 of Part III of this Form 10-K.
k. 1993 Employees' Stock Incentive Plan incorporated by
reference from the March 8, 1993 Proxy Statement.
(11) Statement Re Computation of Per Share Earnings.
(12) Statements Re Computation of Ratios - Not applicable
pursuant to Regulation S-K, Item 601.
(13) 1995 Annual Report to Shareholders.
(18) Letter Re Change in Accounting Principles - Not applicable.
(19) Previously Unfiled Document - Not applicable.
(22) Subsidiaries of the Company.
(23) Published Report Regarding Matters Submitted to Vote of
Security Holders - Not applicable.
(24) Consent of Independent Certified Public Accountants.
(25) Power of Attorney - Not applicable.
(27) Financial Data Schedule
(28) Additional Exhibits
a) March 8, 1996 Proxy Statement.
(29) Information from reports furnished to state insurance
regulatory authorities - Not applicable.
Item 14(b). Reports on Form 8-K
There were no reports on Form 8-K filed during the year
ended December 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, as amended, the registrant has duly caused this report to be
signed on its behalf by the undersigned, hereunto duly authorized.
THE ZIEGLER COMPANIES, INC.
March 18, 1996 By: /s/ Janine R. Schmidt
Janine R. Schmidt
Corporate Secretary
Pursuant to the requirements of the Securities and Exchange Act of
1934, as amended, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates
indicated.
March 18, 1996 /s/ R. Douglas Ziegler
R. Douglas Ziegler
Chairman of the Board, Director
March 18, 1996 /s/ Peter D. Ziegler
Peter D. Ziegler
President and Chief Executive Officer,
Director
March 18, 1996 /s/ John C. Frueh
John C. Frueh, Director
March 18, 1996 /s/ John R. Green
John R. Green, Director
March 18, 1996 /s/ William R. Holmquist
William R. Holmquist, Director
March 18, 1996 /s/ Peter R. Kellogg
Peter R. Kellogg, Director
March 18, 1996 /s/ Patrick D. J. Kenny
Patrick D. J. Kenny, Director
March 18, 1996 /s/ Frederick J. Wenzel
Frederick J. Wenzel, Director
March 26, 1996 /s/ Bernard C. Ziegler III, Director
Bernard C. Ziegler III, Director
March 18, 1996 /s/ Lynn R. Van Horn
Lynn R. Van Horn
Senior Vice President - Finance
(Principal Financial Officer)
March 18, 1996 /s/ Jeffrey C. Vredenbregt
Jeffrey C. Vredenbregt
Assistant Treasurer and Controller
(Principal Accounting Officer)
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
<S> <S> <C>
Exhibit No.: Page
3(a). Articles of Incorporation n/a
3(b). By-Laws n/a
4. Instruments Defining the Rights of Security Holders n/a
9. Voting Trust Agreements n/a
10(a). Indemnification Agreement n/a
10(b). Ziegler Leasing Corporation Trust Indenture n/a
10(c). Ziegler Collateralized Securities, Inc. Trust Indenture n/a
10(d). Ziegler Collateralized Securities, Inc.
Third Supplemental Indenture 22
10(e). Ziegler Collateralized Securities, Inc.
Fifth Supplemental Indenture 36
10(f). Ziegler Collateralized Securities, Inc.
Sixth Supplemental Indenture 48
10(g). Guaranty Agreement n/a
10(h). Ziegler Leasing Corporation Credit Agreement n/a
10(i). Ziegler Leasing Corporation Term Agreement n/a
10(j). Nonstatutory Stock Option Agreement n/a
10(k). 1993 Employees' Stock Incentive Plan n/a
11. Computation of Net Income per Common Share 60
12. Statements Re Computation of Ratios n/a
13. 1995 Annual Report to Shareholders of the Company 61
18. Letter Re Change in Accounting Principles n/a
19. Previously Unfiled Document n/a
22. Subsidiaries of the Company 62
23. Published Report Regarding Matters Submitted to Vote of
Security Holders n/a
24. Consent of Arthur Andersen LLP, Independent Public
Accountants 63
25. Power of Attorney n/a
27. Financial Data Schedule 64
28. Proxy Statement of the Company, March 8, 1996 65
29. Information From Reports Furnished to State Insurance
Regulatory Authorities n/a
</TABLE>
<PAGE>
EXHIBIT 10(d)
ZIEGLER COLLATERALIZED SECURITIES, INC.,
Issuer
AND
M&I FIRST NATIONAL BANK,
Trustee
THIRD SUPPLEMENTAL INDENTURE
Dated as of June 1, 1993
to
INDENTURE
DATED AS OF DECEMBER 1, 1991
CREATING $3,340,000 PRINCIPAL AMOUNT
COLLATERALIZED BONDS, SERIES 3
<PAGE>
THIRD SUPPLEMENTAL INDENTURE, dated as of June 1, 1993, between
ZIEGLER COLLATERALIZED SECURITIES, INC., a Wisconsin corporation (together
with its successors as provided in the Indenture referred to be low, the
"Issuer"), and M&I FIRST NATIONAL BANK, a national banking association with
its principal office located at West Bend, Wisconsin (together with its
successors as provided in the Indenture referred to below, the "Trustee"),
as trustee under a Indenture dated as of December 1, 1991 (as amended, the
"Indenture").
PRELIMINARY STATEMENT
Section 10.01 of the Indenture provided, among other things,
that the Issuer, when authorized by its Board of Directors, and the Trustee
may at any time and from time to time enter into an indenture supplemental
to the Indenture to authorized a Series of Bonds, and to specify certain
terms of each Series of Bonds. The Board of Directors of the Issuer has
duly authorized the creation of a Series of Bonds with a aggregate principal
amount of $3,340,000 to be known as the Collateralized Bonds, Series 3
("Series 3 Bonds"), and the Issuer and the Trustee are executing and
delivering this Third Supplemental Indenture in order to provide for the
Series 3 Bonds.
GRANTING CLAUSES
The Issuer hereby grants to the Trustee, in trust as provided in
the Indenture, for the exclusive benefit of the Holders of the Series 3
Bonds, all of the Issuer's right, title and interest in and to (a) the
leases described in Schedule A to this Third Supplemental Indenture which
the Issuer is delivering to the Trustee herewith; (b) the Equipment leased
pursuant to the leases described in Schedule A subject to the option of the
respective Lessors thereunder to purchase such Equipment; (c) the Principal
and Interest Payment Account for the Series 3 Bonds; and (d) all proceeds,
of every kind and nature whatsoever, including, without limitation, proceeds
of proceeds, and the conversions, voluntary or involuntary, of any of the
foregoing into cash or other liquidated property, to secure the Series 3
Bonds equally and ratably without prejudice, priority or distinction between
any Series 3 Bonds and any other Series 3 Bonds by reason of difference in
time of issuance or otherwise, and to secure the payment of the principal
of, and interest on, the Series 3 Bonds in accordance with their terms, all
of the sums payable under the Indenture of this Third Supplemental Indenture
with respect to the Series 3 Bonds and compliance with the provisions of the
Indenture and this Third Supplemental Indenture with respect to the Series 3
Bonds all as provided in the Indenture and this Third Supplemental
Indenture.
Section 1. Terms Defined in the Indenture.
All terms used in this Third Supplemental Indenture which are
defined in the Indenture, either directly or by reference therein, have the
meanings assigned to them therein, except to the extent such terms are
defined in this Third Supplemental Indenture or the context clearly requires
otherwise.
Section 2. Designation.
The Series 3 Bonds shall be designated as Collateralized Bonds,
Series 3.
Section 3. Form of Series 3 Bonds.
The Series 3 Bonds shall be in substantially the following form:
[FORM OF FACE OF BONDS]
$_________ No. _________
ZIEGLER COLLATERALIZED SECURITIES, INC.
_% COLLATERALIZED BOND, Series 3,
Stated First Interest Interest Payable Issue
Maturity Payment Date on the 1st Day of Date CUSIP
December 1, 1993 December and June 06-30-93
Ziegler Collateralized Securities, Inc., a corporation duly
organized and existing under the laws of the State of Wisconsin (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
___________________________________ or registered assigns, the principal sum
of__________________ Dollars on or prior to the date set forth above (the
"Stated Maturity") and to pay interest on the unpaid portion of said
principal sum from the date hereof, through the day immediately preceding
the date on which such principal sum becomes due and payable, on the 1st day
of the months set forth above in each year, and to pay interest on any
overdue principal and on overdue interest, at the rate per anum specified in
the title of this Bond.
The first such payment of interest will be made on the first
interest payment date set forth above. Except as herein otherwise provided
with respect to interest payable on the date the principal of this Bond
becomes due and payable (whether at Stated Maturity, by redemption or
otherwise) interest on this Bond shall be payable on each Semianual Payment
Date through the day immediately preceding the Semianual Payment Date. The
interest so payable on any Semianual Payment Date, and any redemption of
Bonds that may be made on any Redemption Date, will, as provided in the
Indenture referred to on the reverse hereof, be paid to the person in whose
name this Bond (or one or more Predecessor Bonds) is registered on the
Regular Record Date for such Semianual Payment Date or Redemption Date,
which shall be the close of business on the fifteenth day of the calendar
month preceding that in which such Semianual Payment Date or Redemption Date
occurs (whether or not a Business Day). Any such redemption not made on the
Redemption Date or interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the registered Holder on the Regular
Record Date, and may be paid to the Person in whose name this Bond (or one
or more Predecessor Bonds) is registered on a Special Record Date for the
payment of such defaulted redemption proceeds and interest to be fixed by
the Trustee, notice whereof shall be given to Bondholders not less than 10
days prior to such Special Record Date, or may be paid, at any time in an
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Bonds may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
The principal of and interest on this Bond are payable in such
coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts, at the office or
agency of the Issuer designated for such purpose in the United States of
America; provided that interest may be paid, at the option of the Issuer, by
check mailed to the Person entitled thereto at his address as it appears on
the Bond Register.
Reference is made to the further provisions of this Bond set
forth on the reverse hereof, which shall have the same effect as though
fully set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Bond shall not be entitled
to any benefit under the Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, Ziegler Collateralized Securities, Inc., has
caused this instrument to be signed, manually or in facsimile, by its
President or a Vice President and by its Secretary or an Assistant Secretary
and a facsimile of its corporate seal to be imprinted hereon.
Dated: _________, 19_.
ZIEGLER COLLATERALIZED SECURITIES, INC.
By:/s/Lynn R. Van Horn
Lynn R. Van Horn,
President
Attest:
/s/ Janine R. Schmidt
Janine R. Schmidt
Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the series of Bonds referred to in the within-
mentioned Indenture.
M&I FIRST NATIONAL BANK
West Bend, Wisconsin,
Trustee
By:
Authorized Officer
[FORM OF REVERSE OF BOND]
COLLATERALIZED BOND
This Bond is one of a duly authorized issue of Bonds of the
Issuer, designated as its Collateralized Bonds (herein called the "Bonds"),
issued and to be issued in one or more Series, and is part of the Series of
Bonds designated on the face hereof (herein called the "Bonds of this
Series"), all issued and to be issued under an Indenture dated as of
December 1, 1991 (as amended, herein called the "Indenture"), between the
Issuer and M&I First National Bank (the "Trustee"), which term includes any
successor Trustee under the Indenture, to which Indenture and all indentures
supplemental thereto (including the indenture supplemental thereto which
authorized the Bonds of this Series) reference is hereby made for a
statement of the respective rights thereunder of the Issuer, the Trustee and
the Holders of the Bonds, and the terms upon which the Bonds are, and are to
be, authenticated and delivered. All terms used in this Bond which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
As provided in the Indenture, the Bonds are issuable in Series
which may vary as in the Indenture provided or permitted. All Bonds of each
Series are equally and ratably secured to the extent provided by the
supplemental indenture authorizing such Series. This Bond is ode of the
Series specified in its title.
If no Event of Default as defined in the Indenture shall have
occurred and be then continuing, the Issuer, at its option, may redeem the
Outstanding Bonds of this Series in whole or in part, and if in part, by lot
in such manner as may be determined by the Trustee, on any December 1 or
June 1 on or after December 1, 1995 at a Redemption Price equal to 100% of
the principal amount of the Bonds to be redeemed (plus interest accrued and
unpaid on such Bonds to but not including the Redemption Date).
The Bonds of this Series are subject to Mandatory Redemption at
any time in whole or in part, and if in part, by lot in such manner as may
be determined by the Trustee at a Redemption Price equal to 100% of the
principal amount of the Bonds to be redeemed (plus interest accrued and
unpaid on such Bonds to but not including the Redemption Date) to the extent
of any cash deposit made by the Issuer to the Trustee in connection with the
release of any Defaulted Lease as soon as practicable following such
deposit.
The Bonds of this Series are subject to Mandatory Redemption in
whole or in part, and if in part, by lot in such manner as may be determined
by the Trustee at the Redemption Prices (expressed as percentages of the
principal amount of the Series 3 Bonds to be redeemed) as set forth below
(plus interest accrued and unpaid on such Bonds to but not including the
Redemption Date) to the extent of any proceeds received by the Issuer as a
result of the early termination of any Lease and the purchase of the related
Equipment by the Lessee thereunder as soon as practicable following the
receipt of such proceeds by the Issuer.
Redemption Period Redemption Price
Prior to June 30, 1995 101%
On or after June 30, 1995 100%
If a Event of Default as defined in the Indenture shall occur
and be continuing, the principal of all the Bonds, or of all the Bonds of
any Series, may become or be declared due and payable in the manner and with
the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond may be registered on the Bond
Register of the Issuer, upon surrender of this Bond for registration of
transfer at the office or agency of the Issuer in the United States of
America, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Trustee duly executed
by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Bonds of the same Series and maturity, of
authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of
this Bond, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Bond is registered as the
owner hereof for the purpose of receiving payment as herein provided and for
all other purposes, whether or not this Bond be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Bonds under
the Indenture at any time by the Issuer with the consent of the Holders of a
majority in aggregate principal amount of Bonds at the time Outstanding (as
defined in the Indenture), in cash Outstanding Bonds of all Series are to be
affected, or with the consent of the Holders of a majority in aggregate
principal amount of the Bonds at the lime Outstanding of each Series to be
affected, in case one or more, but less than all, of the Series of Bonds
then Outstanding are to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal
amount of the Bonds at the time Outstanding, and of Bonds at the time
Outstanding of each Series to be affected in case one or more, but less than
all, such Series are to be affected, on behalf of the Holders of all the
Bonds, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Bond shall
be conclusive and binding upon such Holder and upon all future Holders of
this Bond and of any Bond issued upon the registration of transfer hereof or
in exchange thereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Bond.
The term "Issuer" as used in this Bond includes any successor
under the Indenture.
The Bonds are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof, as provided in
the Indenture and subject to certain limitations therein set forth. The
Bonds are exchangeable for a like aggregate principal amount of Bonds of the
same Series and maturity of a different authorized denomination, as
requested by the Holder surrendering same.
No reference herein to the Indenture and no provision of this
Bond or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Bond at the times, place and rate, and in the coin or currency, herein
prescribed.
Section 4. Aggregate Principal Amount.
The aggregate principal amount of Series 3 Bonds that may be
authenticated and delivered under the Indenture and this Third Supplemental
Indenture is limited to $3,340,000 except for Bonds authenticated and
delivered upon registration of, transfer of, or in exchange for, or in lieu
of, other Series 3 Bonds pursuant to Sections 3.04, 3.05, 3.06, 10.06 or
12.04 of the Indenture.
Section 5. Maturity and Interest Rates.
Series 3 Bonds shall mature and shall bear interest rates as
follows:
Stated Maturity Amount Interest Rate
June 1, 1994 1,050,000 5.00%
December 1, 1994 520,000 5.25%
June 1, 1995 520,000 5.50%
December 1, 1995 400,000 5.75%
June 1, 1996 370,000 6.00%
December 1, 1996 170,000 6.25%
June 1, 1997 170,000 6.50%
December 1, 1997 70,000 6.75%
June 1, 1998 70,000 6.75%
Section 6. Semiannual Payment Date.
With respect to the Series 3 Bonds, the term Semiannual Payment
Dates shall mean December l and June 1.
Section 7. Redemption of Series 3 Bonds.
The Series 3 Bonds shall be subject to mandatory and optional
redemption prior to maturity, to the extent specifically set forth in the
form of Bond for Series 3 contained in this Third Supplemental Indenture.
Section 8. Redemption Date.
The Series 3 Bonds are subject to redemption at the option of
the Issuer in whole or in part on any December l or June l on or after
December l, 1995. The Series 3 Bonds are subject to mandatory redemption at
any time.
Section 9. Representations and Warranties.
The Issuer hereby makes to the best of its knowledge, the
following representations and warranties with respect to the Leases set
forth on Schedule A below:
(a) The information set forth in the Schedule of Leases
is true and correct in all material respects at the date or
dates respecting which such information is furnished;
(b) Each Lease by its terms permits the Lessor to assign
such Lease and its rights and interests thereunder without the
consent of the Lessee thereunder;
(c) As of the date of execution and delivery of this
Supplemental Indenture, each Lease is in full force and effect
and the Issuer has granted to the Trustee as security for the
Bonds a security interest in the issuer's right, title and
interest in and to such Lease and the related Equipment which
security interest has been perfected by filing pursuant to the
Uniform Commercial Code of Wisconsin and with respect to each
item of the Equipment, a filing pursuant to the Uniform
Commercial Code of the jurisdiction where such item of Equipment
is located and where the principal place of business of the
Lessee under the related lease is located, provided that in
general no fixture filings have been made with respect to the
Equipment;
(d) The Issuer acquired the leases in good faith,
without notice of any and adverse claim;
(e) As of the date of execution and delivery of this
Supplemental Indenture, the Issuer is the sole legal owner of
each Lease and the Issuer or the Lessee under such lease is the
sole owner of the related Equipment free and clear of all liens,
security interests and other encumbrances (except for a security
interest which secures the Bonds of such Series or indebtedness
of the Issuer which is subordinate to the prior payment of
principal and interest on the Series 3 Bonds and which is
subordinate to the security interests securing such Series of
Bonds) (a "Subordinate Security Interest"), and immediately upon
the transfer and assignment herein contemplated (and assuming
that the Trustee complies with its obligations under the
Indenture and this Supplemental Indenture and has not in its
individual capacity taken any action to grant any interest in
any Lease to any other Person), except for a Subordinate
Security Interest, the Trustee shall have good title to, and
will be the sole legal owner of, each Lease free and clear of
all liens, security interests and other encumbrances and will
have a valid perfected security interest in the Issuer's right,
title and interest to the related Equipment;
(f) As of the date of execution and delivery of this
Supplemental Indenture, the terms of each Lease have not been
waived, altered or modified in any material respect, except by
written instruments included in the Lease File;
(g) As of the date of execution and delivery of this
Supplemental Indenture, insurance policies are in effect which
provide coverage against loss or damage to each item of
Equipment in an amount at least equal to the full insurable
value thereof; and
(h) (i) The aggregate schedules rental payments under
the Leases securing Series 3 Bonds during the six-month periods
ending on each Semiannual Payment Date for such Series of Bonds
to and including the final Stated Maturity of the Series 3 Bonds
together with other funds then held by the Trustee for payment
of principal and interest on the Bonds of such Series on such
Semiannual Payment Date, after deducting all Servicer's fees and
Trustee's fees respecting such Leases and Series 3 Bonds
accruing during such period; plus (ii) such additional funds
held by the Trustee at the commencement of such six-month period
for the purpose of paying the principal of the Bonds of such
series due on such semiannual Payment Date, equal or exceed the
principal of and interest on the Series 3 Bonds which is due and
payable on such Semiannual Payment Date.
It is understood and agreed that the representations and warranties set
forth in this Supplemental Indenture (with respect to representations and
warranties which are as of a particular date, in each case of such date)
shall survive delivery of the respective Lease Files to the Trustee and
shall continue throughout the terms of the Indenture and this Supplemental
Indenture.
Section 10. Ratio of Net Investment in Leases to Outstanding Principal
Amount of Series.
The Issuer covenants and agrees that so long as any Series 3
Bonds are Outstanding, the Issuer's aggregate net investment (determined in
accordance with generally accepted accounting principles) in the Leases
securing the Series 3 Bonds together with any cash held by the Trustee as
collateral for the Series 3 Bonds (excluding cash held in an amount equal to
the then accrued but unpaid interest on the Series 3 Bonds) shall at all
times be in an amount not less than 110% of the aggregate principal amount
of the Series 3 Bonds then Outstanding.
Section 11. Ratification of Indenture.
As supplemented and amended by this Third Supplemental
Indenture, the Indenture is in all respects ratified and confirmed and the
Indenture as previously amended and as so supplemented by this Third
Supplemental Indenture shall be read, taken and construed as one and the
same instrument.
Section 12. Counterparts.
This Third Supplemental Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Third Supplemental Indenture to be duly executed by their respective
officers thereunto duly authorized and their respective seals duly attested
to be hereunto affixed all as of the day and year first above written.
ZIEGLER COLLATERALIZED
SECURITIES, INC.
By:/s/Lynn R. Van Horn
Lynn R. Van Horn, President
Attest:
/s/ Janine R. Schmidt
Janine R. Schmidt, Secretary
M&I FIRST NATIONAL BANK
West Bend, Wisconsin,
Trustee
By:/s/ R. L. Stephenson
Sr. Vice Pres.
Attest:
M. F. Hron
Vice President
Acknowledgment of Ziegler Collateralized Securities, Inc.
STATE OF WISCONSIN )
) SS.
COUNTY OF WASHINGTON )
On this 24th day of June, 1993, before me, a Notary Public in
and for said county, the undersigned officer, personally appeared L. R. Van
Horn and J. R. Schmidt, and severally knowledged themselves to be the
President and Secretary, respectively, of ZIEGLER COLLATERALIZED SECURITIES,
INC., a Wisconsin corporation, and that they, as such officers, being
authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by themselves as
such and President and Secretary, respectively.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.
Notary Public, Washington County
/s/ Bonnie Zanow
My commission 4/27/97
[NOTARIAL SEAL]
Acknowledgment of M&I First National Bank
STATE OF WISCONSIN )
) SS.
COUNTY OF WASHINGTON )
On this 25th day of June, 1993, before me, a Notary Public in
and for said county, appears R. T. Stephenson and M.F. Hron of M&I FIRST
NATIONAL BANK, West Bend, Wisconsin, Trustee, to me personally known, who
being by me duly sworn, did say that they are the Sr. Vice President and
Vice President, respectively, of M&I FIRST NATIONAL BANK, West Bend,
Wisconsin, and that the seal affixed to said instrument is the corporation
seal of the said Association and that said instrument was signed and sealed
on behalf of the said Association by authority of its Board of Directors,
and that the said R. T. Stephenson and M.F. Hron acknowledged said
instrument to be the free act and deed of said Association.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.
/s/ Sandra L. Smallish
[NOTARIAL SEAL] Notary Public, Washington County
My Commission 11/10/96
<PAGE>
EXHIBIT 10(e)
ZIEGLER COLLATERALIZED SECURITIES, INC.
Issuer
AND
M&I FIRST NATIONAL BANK,
Trustee
FIFTH SUPPLEMENTAL INDENTURE
Dated as of December 1, 1993
to
INDENTURE
Dated as of December 1, 1991 as amended
CREATING $3,500,000 PRINCIPAL AMOUNT
COLLATERALIZED BONDS, SERIES 4
<PAGE>
FIFTH SUPPLEMENTAL INDENTURE, dated as of December 1, 1993,
between ZIEGLER COLLATERALIZED SECURITIES, INC., a Wisconsin corporation
(together with its successors as provided in the Indenture referred to
below, the "Issuer"), and M&I FIRST NATIONAL BANK, a national banking
association with its principal office located at West Bend, Wisconsin
(together with its successors as provided in the Indenture referred to
below, the "Trustee"), as trustee under an Indenture dated as of December 1,
1991, (as amended, the "Indenture").
PRELIMINARY STATEMENT
Section 10.01 of the Indenture provides, among other things,
that the Issuer, when authorized by its Board of Directors, and the Trustee
may at any time and from time to time enter into an indenture supplemental
to the Indenture to authorize a Series 4 of Bonds, and to specify certain
terms of each Series 4 of Bonds. The Board of Directors of the Issuer has
duly authorized the creation of a Series 4 of Bonds with its aggregate
principal amount of $3,500,000 to be known as the Collateralized Bonds,
Series 4 (the "Series 4 Bonds"), and the Issuer and the Trustee are
executing and delivering this Fifth Supplemental Indenture in order to
provide for the Series 4 Bonds.
GRANTING CLAUSES
The Issuer hereby grants to the Trustee, in trust as provided in
the Indenture, for the exclusive benefit of the Holders of the Series 4
Bonds, all of the Issuer's right, title and interest in and to (a) the
Pooled Assets described in Schedule A to this Fifth Supplemental Indenture
which the Issuer is delivering to the Trustee herewith, (b) the Equipment
leased and/or financed pursuant to the Pooled Assets described in Schedule A
subject to the option of the respective Lessors/Debtors thereunder to
purchase or prepay the principal on such Equipment, (c) the Principal and
Interest Payment Account for the Series 4 Bonds, and (d) all proceeds, of
every kind and nature whatsoever, including, without limitation, proceeds of
proceeds, and the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquidated property, to secure the Series 4
Bonds equally and ratably without prejudice, priority or distinction between
any Series 4 Bonds and any other Series 4 Bonds by reason of difference in
time of issuance or otherwise, and to secure the payment of the principal
of, and interest on, the Series 4 Bonds in accordance with their terms, all
of the sums payable under the Indenture of this Fifth Supplemental Indenture
with respect to the Series 4 Bonds and compliance with the provisions of the
Indenture and this Fifth Supplemental Indenture with respect to the Series 4
Bonds all as provided in the Indenture and this Fifth Supplemental
Indenture.
Section 1. Terms Defined in the Indenture.
All terms used in this Fifth Supplemental Indenture which are
defined in the Indenture, either directly or by reference therein, have the
meanings assigned to them therein, except to the extent such terms are
defined in this Fifth Supplemental Indenture or the context clearly requires
otherwise.
Section 2. Designation.
The Series 4 Bonds shall be designated as Collateralized Bonds,
Series 4.
Section 3. Form of Series 4 Bonds.
The Series 4 Bonds shall be in substantially the following form:
[FORM OF FACE OF BOND]
$____________ No.______________
ZIEGLER COLLATERALIZED SECURITIES, INC.
__% COLLATERALIZED BOND, Series 4 __,
Stated First Interest Interest Payable Issue
Maturity Payment Date on the 1st Day of Date CUSIP
June 1, 1994 December and June 12-30-93
Ziegler Collateralized Securities, Inc., a corporation duly
organized and existing under the laws of the State of Wisconsin (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
_____________ ____________ or registered assigns, the principal sum of
_________________ ___________________ Dollars on or prior to the date set
forth above (the "Stated Maturity") and to pay interest on the unpaid
portion of said principal sum from the date hereof, through the day
immediately preceding the date on which such principal sum becomes due ad
payable, on the 1st day of the months set forth above in each year, and to
pay interest on any overdue principal and on overdue interest, at the rate
per anum specified in the title of this Bond.
The first such payment of interest will be made on the first
interest payment date set forth above. Except as herein otherwise provided
with respect to interest payable on the date the principal of this Bond
becomes due and payable (whether at Stated Maturity, by redemption or
otherwise) interest on this Bond shall be payable on each Semiannual Payment
Date through the day immediately preceding the Semiannual Payment Date. The
interest so payable on any Semiannual Payment Date, and any redemption of
Bonds that may be made on any Redemption Date, will, as provided in the
Indenture referred to on the reverse hereof, be paid to the Person in whose
name this Bond (or one or more Predecessor Bonds) is registered on the
Regular Record Date for such Semiannual Payment Date or Redemption Date,
which shall be the close of business on the fifteenth day of the calendar
month preceding that in which such Semiannual Payment Date or Redemption
Date occurs (whether or not a Business Day). Any such redemption not made
on the Redemption Date or interest not so punctually paid or duly provided
for (excluding interest the payment of which is deferred pursuant to the
proviso set forth in the first paragraph of this Bond) shall forthwith cease
to be payable to the registered Holder on the Regular Record Date, and may
be paid to the Person in whose name this Bond (or one or more Predecessor
Bonds) is registered on a Special Record Date for the payment of such
defaulted redemption proceeds and interest to be fixed by the Trustee,
notice whereof shall be given to Bondholders not less than 10 days prior to
such Special Record Date, or may be paid, at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Bonds may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
The principal of and interest on this Bond are payable in such
coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts, at the office or
agency of the Issuer designated for such purpose in the United States of
America; provided that interest may be paid, at the option of the Issuer, by
check mailed to the Person entitled thereto at his address as it appears on
the Bond Register.
Reference is made to the further provisions of this Bond set
forth on the reverse hereof, which shall have the same effect as though
fully set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Bond shall not be entitled
to any benefit under the Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, ZIEGLER COLLATERALIZED SECURITIES, INC., has
caused this instrument to be signed, manually or in facsimile, by its
President or a Vice President and by its Secretary or an Assistant Secretary
and a facsimile of its corporate seal to be imprinted hereon.
Dated: December 1, 1993.
ZIEGLER COLLATERALIZED
SECURITIES, INC.
[SEAL]
By/s/ Lynn R. Van Horn
Lynn R. Van Horn, President
Attest:
/s/ Janine R. Schmidt
Janine R. Schmidt, Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Series 4 of Bonds referred to in the within-
mentioned Indenture.
M&I FIRST NATIONAL BANK,
Trustee
/s/ R. T. Stephenson
Authorized Officer
[FORM OF REVERSE OF BOND]
COLLATERALIZED BOND
This Bond is one of a duly authorized issue of Bonds of the
Issuer, designated as its Collateralized Bonds (herein called the "Bonds"),
issued and to be issued in one or more Series 4, and is part of the Series 4
of Bonds designated on the face hereof (herein called the "Bonds of this
Series 4"), all issued and to be issued under an Indenture dated as of
December 1, 1991 (as amended, herein called the "Indenture"), between the
Issuer and M&I First National Bank (the "Trustee"), which term includes any
successor Trustee under the Indenture, to which Indenture and all indentures
supplemental thereto (including the indenture supplemental thereto which
authorized the Bonds of this Series 4) reference is hereby made for a
statement of the respective rights thereunder of the Issuer, the Trustee and
the Holders of the Bonds, and the terms upon which the Bonds are, and are to
be, authenticated and delivered. All terms used in this Bond which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
As provided in the Indenture, the Bonds are issuable in Series 4
which may vary as in the Indenture provided or permitted. All Bonds of each
Series 4 are equally and ratably secured to the extent provided by the
supplemental indenture authorizing such Series 4. This Board is one of the
Series 4 specified in its title.
If no Event of Default as defined in the Indenture shall have
occurred and be then continuing, the Issuer, at its option, may redeem the
Outstanding Bonds of this Series 4 in whole or in part, and if in part, by
lot in such manner as may be determined by the Trustee, on or after December
1 or June 1 on or after June 1, 1996 at a Redemption Price equal to 100% of
the principal amount of the Bonds to be redeemed (plus interest accrued and
unpaid on such Bonds to but not including the Redemption Date).
The Bonds of this Series 4 are subject to Mandatory Redemption
at any time in whole or in part, and if in part, by lot in such manner as
may be determined by the Trustee at a Redemption Price equal to 100% of the
principal amount of the Bonds to be redeemed (plus interest accrued and
unpaid on such Bonds to but not including the Redemption Date) to the extent
of any proceeds received by the Issuer as a result of the purchase of any
Defaulted Pooled Asset by the Servicer therefor or the Guarantor as soon as
practicable following the receipt of such proceeds by the Issuer.
The Bonds of this Series 4 are subject to Mandatory Redemption
in whole or in part, and if in part, by lot in such manner as may be
determined by the Trustee at the Redemption Prices (expressed as percentages
of the principal amount of the Series 4 Bonds to be redeemed) as set forth
below (plus interest accrued and unpaid on such Bonds to but not including
the Redemption Date) to the extent of any proceeds received by the Issuer as
a result of the early termination of any Pooled Asset and the purchase of
the related Equipment by the Lessee or Debtor thereunder as soon as
practicable following the receipt of such proceeds by the Issuer.
Redemption Period Redemption Price
Prior to December 30, 1995 101%
On or after December 30, 1995 100%
If an Event of Default as defined in the Indenture shall occur
and be continuing, the principal of all the Bonds, or of all the Bonds of
any Series 4, may become or be declared due and payable in the manner and
with the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond may be registered on the Bond
Register of the Issuer, upon surrender of this Bond for registration of
transfer at the office or agency of the Issuer in the United States of
America, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Trustee duly executed
by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Bonds of the same Series 4 and maturity, of
authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of
this Bond, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Bond is registered as the
owner hereof for the purpose of receiving payment as herein provided and for
all other purposes, whether or not this Bond be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Bonds under
the Indenture at any time by the Issuer with the consent of the Holders of a
majority in aggregate principal amount of Bonds at the time Outstanding (as
defined in the Indenture), in case Outstanding Bonds of all Series 4 are to
be affected, or with the consent of the Holders of a majority in aggregate
principal amount of the Bonds at the time Outstanding of each Series 4 to be
affected, in case one or more, but less than all, of the Series 4 of Bonds
then Outstanding are to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal
amount of the Bonds at the time Outstanding, and of Bonds at the time
Outstanding of each Series 4 to be affected in case one or more, but less
than all, such Series 4 are to be affected, on behalf of the Holders of all
the Bonds, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waver by the Holder of this Bond shall be
conclusive and binding upon such Holder and upon all future Holders of this
Bond and of any Bond issued upon the registration of transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent
or waiver is made upon this Bond.
The term "Issuer" as used in this Bond includes any successor
under the Indenture.
The Bonds are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof, as provided in
the Indenture and subject to certain limitations therein set forth. The
Bonds are exchangeable for a like aggregate principal amount of Bonds of the
same Series 4 and maturity of a different authorized denomination, as
requested by the Holder surrendering same.
No reference herein to the Indenture and no provision of this
Bond or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Bond at the times, place and rate, and in the coin or currency, herein
prescribed.
Section 4. Aggregate Principal Amount.
The aggregate principal amount of Series 4 Bonds that may be
authenticated and delivered under the Indenture and this Fifth Supplemental
Indenture is limited to $3,500,000 except for Bonds authenticated and
delivered upon registration of, transfer of, or in exchange for, or in lieu
of, other Series 4 Bonds pursuant to Sections 3.04, 3.05, 3.06, 10.06 or
12.04 of the Indenture.
Section 5.Maturity and Interest Rates.
The Series 4 Bonds shall mature and shall bear interest rates as
follows:
Stated Maturity Amount Interest Rate
December 1, 1994 $825,000 4.75%
June 1, 1995 $410,000 5.00%
December 1, 1995 $390,000 5.25%
June 1, 1996 $430,000 5.50%
December 1, 1996 $445,000 5.75%
June 1, 1997 $325,000 6.00%
December 1, 1997 $325,000 6.25%
June 1, 1998 $175,000 6.50%
December 1, 1998 $175,000 6.50%
Section 6. Semiannual Payment Dates.
With respect to the Series 4 Bonds, the term Semiannual Payment
Dates shall mean June 1 and December 1.
Section 7. Redemption of Series 4 Bonds.
The Series 4 Bonds shall be subject to mandatory and optional
redemption prior to maturity, to the extent specifically set forth in the
form of Bond for Series 4 contained in this Fifth Supplemental Indenture.
Section 8. Representations and Warranties.
The Issuer hereby makes to the best of its knowledge, the
following representations and warranties with respect to the Pooled Assets
set forth on Schedule A hereto:
(a) The information set forth in the Schedule of Pooled Assets
is true and correct in all material respects at the date or dates
respecting which such information is furnished;
(b) Each Pooled Asset by its terms permits the Lessor/Debtor
to assign such Pooled Asset and its rights and interests thereunder
without the consent of the Lessee/Debtor thereunder.
(c) As of the date of execution and delivery of this
Supplemental Indenture, each Pooled Asset is in full force and effect
and the Issuer has granted to the Trustee as security for the Bonds a
security interest in the issuer's right, title and interest in and to
such Pooled Asset and the related Equipment which security interest
has been perfected by filing pursuant to the Uniform Commercial Code
of Wisconsin and with respect to each item of the Equipment, a filing
pursuant to the Uniform Commercial Code of the jurisdiction where such
item of Equipment is located and where the principal place of business
of the Lessee/Debtor under the related Pooled Asset is located,
provided that in general no fixture filings have been made with
respect to the Equipment;
(d) The Issuer acquired the Pooled Assets in good faith,
without notice of any adverse claim;
(e) As of the date of execution and delivery of this
Supplemental Indenture, the Issuer is the sole legal owner of each
Pooled Asset and the Issuer or the Lessee/Debtor under such Pooled
Asset is the sole owner of the related Equipment free and clear of all
liens, security interests and other encumbrances (except for a
security interest which secures the Bonds of such Series 4 or
indebtedness of the Issuer which is subordinate to the prior payment
of principal and interest on the Series 4 Bonds and which is
subordinate to the security interest securing such Series 4 of Bonds)
(a "Subordinate Security Interest"), and immediately upon the transfer
and assignment herein contemplated (and assuming that the Trustee
complies with its obligations under the Indenture and this
Supplemental Indenture and has not in its individual capacity taken
any action to grant any interest in any Pooled Asset to any other
Person), except for a Subordinate Security Interest, the Trustee shall
have good title to, and will be the sole legal owner of, each Pooled
Asset free and clear of all liens, security interests and other
encumbrances and will have a valid perfected security interest in the
Issuer's right, title and interest to the related Equipment;
(f) As of the date of execution and delivery of this
Supplemental Indenture, the terms of each Pooled Asset have not been
waived, altered or modified in any material respect, except by written
instruments included in the Pooled Asset File;
(g) As of the date of execution and delivery of this
Supplemental Indenture, insurance policies are in effect which provide
coverage against loss of or damage to each item of Equipment in an
amount at least equal to the full insurable value thereof; and
(h) The aggregate scheduled rental payments under the Pooled
Assets securing Series 4 Bonds during the six-month periods ending on
each Semiannual Payment Date for such Series 4 of Bonds to and
including the final Stated Maturity of the Series 4 Bonds after
deducting all Servicer's fees and Trustee's fees respecting such
Pooled Assets and Series 4 Bonds accruing during such period equal or
exceed the principal of and interest on the Series 4 Bonds which is
due and payable on such Semiannual Payment Date.
It is understood and agreed that the representations and warranties set
forth in this Supplemental Indenture (with respect to representations and
warranties which are as of a particular date, in each case as of such date)
shall survive delivery of the respective Pooled Asset Files to the Trustee
and shall continue throughout the terms of the Indenture and this
Supplemental Indenture.
Section 9. Ratio of Net Investment in Pooled Assets to Outstanding
Principal Amount of Series 4 Bonds.
The Issuer covenants and agrees that so long as any Series 4
Bonds are Outstanding, the Issuer's aggregate net investment (determined in
accordance with generally accepted accounting principles) in the Pooled
Assets securing the Series 4 Bonds together with any cash held by the
Trustee as collateral for the Series 4 Bonds (excluding cash held in an
amount equal to the then accrued but unpaid interest on the Series 4 Bonds)
shall at all times be in an amount not less than 110% of the aggregate
principal amount of the Series 4 Bonds then Outstanding.
Section 10. Ratification of Indenture.
As supplemented and amended by this Fifth Supplemental
Indenture, the Indenture as previously amended is in all respects ratified
and confirmed and the Indenture as previously amended and as so supplemented
by this Fifth Supplemental Indenture shall be read, taken and construed as
one and the same instrument.
Section 11. Counterparts.
This Fifth Supplemental Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Fifth Supplemental Indenture to be duly executed by their respective
officers thereunto duly authorized and their respective seals duly attested
to be hereunto affixed all as of the day and year first above written.
ZIEGLER COLLATERALIZED
SECURITIES,INC.
[SEAL]
By/s/ Lynn R. Van Horn
Lynn R. Van Horn, President
Attest:
/s/ Janine R. Schmidt
Janine R. Schmidt, Secretary
M&I FIRST NATIONAL BANK
West Bend, Wisconsin, as Trustee
[SEAL] By/S/ R. T. Stephenson
Title:Sr. Vice Pres.
Attest:
/s/ M. F. Hron
Title: Vice Pres.
Acknowledgment of Ziegler Collateralized Securities, Inc.
STATE OF WISCONSIN )
) SS.
COUNTY OF WASHINGTON )
On this 30th day of December, 1993, before me, a Notary Public
in and for said county, the undersigned officer, personally appeared L. R.
Van Horn and J. R. Schmidt, severally acknowledged themselves to be the
President and Secretary, respectively, of ZIEGLER COLLATERALIZED SECURITIES,
INC., a Wisconsin corporation, and that they, as such officers, being
authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by themselves as
such President and Secretary, respectively.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.
Notary Public, Washington County
My Commission
[NOTARIAL SEAL]
Acknowledgment of M&I First National Bank
STATE OF WISCONSIN )
) SS.
COUNTY OF WASHINGTON )
On this 28th day of December, 1993, before me, a Notary Public
in and for said County, appeared R. L. Stephenson and M. F. Hron of M&I
FIRST NATIONAL BANK, West Bend, Wisconsin, Trustee, to me personally known,
who being by me duly sworn, did say that they are the Sr. Vice President and
Vice President, respectively, of M&I FIRST NATIONAL BANK, West Bend,
Wisconsin, and that the seal affixed to said instrument is the corporate
seal of the said Association and that said instrument was signed and sealed
on behalf of the said Association by authority of its Board of Directors,
and that the said R. L. Stephenson and M. F. Hron acknowledged said
instrument to be the free act an deed of said Association.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.
Notary Public, Washington County, Wisconsin
My Commission
<PAGE>
EXHIBIT 10(f)
ZIEGLER COLLATERALIZED SECURITIES, INC.
Issuer
AND
M&I FIRST NATIONAL BANK,
Trustee
SIXTH SUPPLEMENTAL INDENTURE
Dated as of October 1, 1994
to
INDENTURE
Dated as of December 1, 1991, as amended
CREATING $5,000,000 PRINCIPAL AMOUNT
COLLATERALIZED BONDS, SERIES 5
<PAGE>
SIXTH SUPPLEMENTAL INDENTURE, dated as of October 1, 1994,
between ZIEGLER COLLATERALIZED SECURITIES, INC., a Wisconsin corporation
(together with its successors as provided in the Indenture referred to
below, the "Issuer"), and M&I FIRST NATIONAL BANK, a national banking
association with its principal office located at West Bend, Wisconsin
(together with its successors as provided in the Indenture referred to
below, the "Trustee"), as trustee under an Indenture dated as of December 1,
1991, (as amended, the "Indenture").
PRELIMINARY STATEMENT
Section 10.01 of the Indenture provides, among other things,
that the Issuer, when authorized by its Board of Directors, and the Trustee
may at any time and from time to time enter into an indenture supplemental
to the Indenture to authorize a Series 5 of Bonds, and to specify certain
terms of each Series 5 of Bonds. The Board of Directors of the Issuer has
duly authorized the creation of a Series 5 of Bonds with an aggregate
principal amount of $5,000,000 to be known as the Collateralized Bonds,
Series 5 (the "Series 5 Bonds"), and the Issuer and the Trustee are
executing and delivering this Sixth Supplemental Indenture in order to
provide for the Series 5 Bonds.
GRANTING CLAUSES
The Issuer hereby grants to the Trustee, in trust as provided in
the Indenture, for the exclusive benefit of the Holders of the Series 5
Bonds, all of the Issuer's right, title and interest in and to (a) the
Pooled Assets described in Schedule A to this Sixth Supplemental Indenture
which the Issuer is delivering to the Trustee herewith, (b) the Equipment
leased and/or financed pursuant to the Pooled Assets described in Schedule A
subject to the option of the respective Lessors/Debtors thereunder to
purchase or prepay the principal on such Equipment, (c) the Principal and
Interest Payment Account for the Series 5 Bonds, and (d) all proceeds, of
every kind and nature whatsoever, including, without limitation, proceeds of
proceeds, and the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquidated property, to secure the Series 5
Bonds equally and ratably without prejudice, priority or distinction between
any Series 5 Bonds and any other Series 5 Bonds by reason of difference in
time of issuance or otherwise, and to secure the payment of the principal
of, and interest on, the Series 5 Bonds in accordance with their terms, all
of the sums payable under the Indenture of this Sixth Supplemental Indenture
with respect to the Series 5 Bonds and compliance with the provisions of the
Indenture and this Sixth Supplemental Indenture with respect to the Series 5
Bonds all as provided in the Indenture and this Sixth Supplemental
Indenture.
Section 1. Terms Defined in the Indenture.
All terms used in this Sixth Supplemental Indenture which are
defined in the Indenture, either directly or by reference therein, have the
meanings assigned to them therein, except to the extent such terms are
defined in thiS Sixth Supplemental Indenture or the context clearly requires
otherwise.
Section 2. Designation.
The Series 5 Bonds shall be designated as Collateralized Bonds,
Series 5.
Section 3. Form of Series 5 Bonds.
The Series 5 Bonds shall be in substantially the following form:
[FORM OF FACE OF BOND]
$____________ No.______________
ZIEGLER COLLATERALIZED SECURITIES, INC.
__% COLLATERALIZED BOND, Series 5
Stated First Interest Interest Payable Issue
Maturity Payment Date on the 1st Day of Date CUSIP
Ziegler Collateralized Securities, Inc., a corporation duly
organized and existing under the laws of the State of Wisconsin (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
_____________ ____________ or registered assigns, the principal sum of
_________________ ___________________ Dollars on or prior to the date set
forth above (the "Stated Maturity") and to pay interest on the unpaid
portion of said principal sum from the date hereof, through the day
immediately preceding the date on which such principal sum becomes due and
payable, on the 1st day of the months set forth above in each year, and to
pay interest on any overdue principal and on overdue interest, at the rate
per annum specified in the title of this Bond.
The first such payment of interest will be made on the first
interest payment date set forth above. Except as herein otherwise provided
with respect to interest payable on the date the principal of this Bond
becomes due and payable (whether at Stated Maturity, by redemption or
otherwise) interest on this Bond shall be payable on each Semiannual Payment
Date through the day immediately preceding the Semiannual Payment Date. The
interest so payable on any Semiannual Payment Date, and any redemption of
Bonds that may be made on any Redemption Date, will, as provided in the
Indenture referred to on the reverse hereof, be paid to the Person in whose
name this Bond (or one or more Predecessor Bonds) is registered on the
Regular Record Date for such Semiannual Payment Date or Redemption Date,
which shall be the close of business on the fifteenth day of the calendar
month preceding that in which such Semiannual Payment Date or Redemption
Date occurs (whether or not a Business Day). Any such redemption not made
on the Redemption Date or interest not so punctually paid or duly provided
for (excluding interest the payment of which is deferred pursuant to the
proviso set forth in the first paragraph of this Bond) shall forthwith cease
to be payable to the registered Holder on the Regular Record Date, and may
be paid to the Person in whose name this Bond (or one or more Predecessor
Bonds) is registered on a Special Record Date for the payment of such
defaulted redemption proceeds and interest to be fixed by the Trustee,
notice whereof shall be given to Bondholders not less than 10 days prior to
such Special Record Date, or may be paid, at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Bonds may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
The principal of and interest on this Bond are payable in such
coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts, at the office or
agency of the Issuer designated for such purpose in the United States of
America; provided that interest may be paid, at the option of the Issuer, by
check mailed to the Person entitled thereto at his address as it appears on
the Bond Register.
Reference is made to the further provisions of this Bond set
forth on the reverse hereof, which shall have the same effect as though
fully set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Bond shall not be entitled
to any benefit under the Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, ZIEGLER COLLATERALIZED SECURITIES, INC., has
caused this instrument to be signed, manually or in facsimile, by its
President or a Vice President and by its Secretary or an Assistant Secretary
and a facsimile of its corporate seal to be imprinted hereon.
Dated: October 1, 1994.
ZIEGLER COLLATERALIZED
SECURITIES, INC.
[SEAL]
By/s/Lynn R. Van Horn
Lynn R. Van Horn, President
Attest:
/s/ Janine R. Schmidt
Janine R. Schmidt, Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Series 5 of Bonds referred to in the within-mentioned
Indenture.
M&I FIRST NATIONAL BANK, Trustee
Authorized Officer
[FORM OF REVERSE OF BOND]
COLLATERALIZED BOND
This Bond is one of a duly authorized issue of Bonds of the
Issuer, designated as its Collateralized Bonds (herein called the "Bonds"),
issued and to be issued in one or more Series 5, and is part of the Series 5
of Bonds designated on the face hereof (herein called the "Bonds of this
Series 5"), all issued and to be issued under an Indenture dated as of
December 1,1991 (as amended, herein called the "Indenture"), between the
Issuer and M&I First National Bank (the "Trustee"), which term includes any
successor Trustee under the Indenture, to which Indenture and all indentures
supplemental thereto (including the indenture supplemental thereto which
authorized the Bonds of this Series 5) reference is hereby made for a
statement of the respective rights thereunder of the Issuer, the Trustee and
the Holders of the Bonds, and the terms upon which the Bonds are, and are to
be, authenticated and delivered. All terms used in this Bond which are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
As provided in the Indenture, the Bonds are issuable in Series 5
which may vary as in the Indenture provided or permitted. All Bonds of each
Series 5 are equally and ratably secured to the extent provided by the
supplemental indenture authorizing such Series 5. This Bond is one of the
Series 5 specified in its title.
If no Event of Default as defined in the Indenture shall have
occurred and be then continuing, the Issuer, at its option, may redeem the
Outstanding Bonds of this Series 5 in whole or in part, and if in part, by
lot in such manner as may be determined by the Trustee, on or after April 1,
1997 at a Redemption Price equal to 100% of the principal amount of the
Bonds to be redeemed (plus interest accrued and unpaid on such Bonds to but
not including the Redemption Date).
The Bonds of this Series 5 are subject to Mandatory Redemption
at any time in whole or in part, and if in part, by lot in such manner as
may be determined by the Trustee at a Redemption Price equal to 100% of the
principal amount of the Bonds to be redeemed (plus interest accrued and
unpaid on such Bonds to but not including the Redemption Date) to the extent
of any proceeds received by the Issuer as a result of the purchase of any
Defaulted Pooled Asset by the Servicer therefor or the Guarantor as soon as
practicable following the receipt of such proceeds by the Issuer.
The Bonds of this Series 5 are subject to Mandatory Redemption
in whole or in part, and if in part, by lot in such manner as may be
determined by the Trustee at the Redemption Prices (expressed as percentages
of the principal amount of the Series 5 Bonds to be redeemed) as set forth
below (plus interest accrued and unpaid on such Bonds to but not including
the Redemption Date) to the extent of any proceeds received by the Issuer as
a result of the early termination of any Pooled Asset and the purchase of
the related Equipment by the Lessee or Debtor thereunder as soon as
practicable following the receipt of such proceeds by the Issuer.
Redemption Period Redemption Price
Prior to October 19, 1996 101%
On or after October 19,1996 100%
If an Event of Default as defined in the Indenture shall occur
and be continuing, the principal of all the Bonds, or of all the Bonds of
any Series 5, may become or be declared due and payable in the manner and
with the effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond may be registered on the Bond
Register of the Issuer, upon surrender of this Bond for registration of
transfer at the office or agency of the Issuer in the United States of
America, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Trustee duly executed
by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Bonds of the same Series 5 and maturity, of
authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
Prior to the due presentment for registration of transfer of
this Bond, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Bond is registered as the
owner hereof for the purpose of receiving payment as herein provided and for
all other purposes, whether or not this Bond be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Bonds under
the Indenture at any time by the Issuer with the consent of the Holders of a
majority in aggregate principal amount of Bonds at the time Outstanding (as
defined in the Indenture), in case Outstanding Bonds of all Series 5 are to
be affected, or with the consent of the Holders of a majority in aggregate
principal amount of the Bonds at the time Outstanding of each Series 5 to be
affected, in case one or more, but less than all, of the Series 5 of Bonds
then Outstanding are to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal
amount of the Bonds at the time Outstanding, and of Bonds at the time
Outstanding of each Series 5 to be affected in case one or more, but less
than all, such Series 5 are to be affected, on behalf of the Holders of all
the Bonds, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Bond shall
be conclusive and binding upon such Holder and upon all future Holders of
this Bond and of any Bond issued upon the registration of transfer hereof or
in exchange therefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Bond.
The term "Issuer" as used in this Bond includes any successor
under the Indenture.
The Bonds are issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof, as provided in
the Indenture and subject to certain limitations therein set forth. The
Bonds are exchangeable for a like aggregate principal amount of Bonds of the
same Series 5 and maturity of a different authorized denomination, as
requested by the Holder surrendering same.
No reference herein to the Indenture and no provision of this
Bond or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Bond at the times, place and rate, and in the coin or currency, herein
prescribed.
Section 4. Aggregate Principal Amount.
The aggregate principal amount of Series 5 Bonds that may be
authenticated and delivered under the Indenture and this Sixth Supplemental
Indenture is limited to $5,000,000 except for Bonds authenticated and
delivered upon registration of, transfer of, or in exchange for, or in lieu
of, other Series 5 Bonds pursuant to Sections 3.04,3.05,3.06, 10.06 or 12.04
of the Indenture.
Section 5. Maturity and Interest Rates.
The Series 5 Bonds shall mature and shall bear interest rates as
follows:
Stated Maturity Amount Interest Rate
October 1, 1995 $800,000 6.25%
April 1, 1996 $625,000 6.50%
October 1, 1996 $600,000 6.75%
April 1, 1997 $650,000 6.75%
October 1, 1997 $650,000 7.00%
April 1, 1998 $600,000 7.00%
October 1, 1998 $525,000 7.25%
April 1, 1999 $215,000 7.25%
October 1, 1999 $215,000 7.50%
April 1, 2000 $ 30,000 7.50%
October 1, 2000 $ 30,000 7.75%
April 1, 2001 $ 30,000 7.75%
October 1, 2001 $ 30,000 7.75%
Section 6. Semiannual Payment Dates.
With respect to the Series 5 Bonds, the term Semiannual Payment
Dates shall mean April and October l.
Section 7. Redemption of Series 5 Bonds.
The Series 5 Bonds shall be subject to mandatory and optional
redemption prior to maturity, to the extent specifically set forth in the
form of Bond for Series 5 contained in this Sixth Supplemental Indenture.
Section 8. Representations and Warranties.
The Issuer hereby makes to the best of its knowledge, the
following representations and warranties with respect to the Pooled Assets
set forth on Schedule A hereto:
(a) The information set forth in the Schedule of Pooled
Assets is true and correct in all material respects at the date
or dates respecting which such information is furnished;
(b) Each Pooled Asset by its terms permits the
Lessor/Debtor to assign such Pooled Asset and its rights and
interests thereunder without the consent of the Lessee/Debtor
thereunder.
(c) As of the date of execution and delivery of this
Supplemental Indenture, each Pooled Asset is in full force and
effect and the Issuer has granted to the Trustee as security for
the Bonds a security interest in the issuer's right, title and
interest in and to such Pooled Asset and the related Equipment
which security interest has been perfected by filing pursuant to
the Uniform Commercial Code of Wisconsin and with respect to
each item of the Equipment, a filing pursuant to the Uniform
Commercial Code of the jurisdiction where such item of Equipment
is located and where the principal place of business of the
Lessee/Debtor under the related Pooled Asset is located,
provided that in general no fixture filings have been made with
respect to the Equipment;
(d) The Issuer acquired the Pooled Assets in good faith,
without notice of any adverse claim;
(e) As of the date of execution and delivery of this
Supplemental Indenture, the Issuer is the sole legal owner of
each Pooled Asset and the Issuer or the Lessee/Debtor under such
Pooled Asset is the sole owner of the related Equipment free and
clear of all liens, security interests and other encumbrances
(except for a security interest which secures the Bonds of such
Series 5 or indebtedness of the Issuer which is subordinate to
the prior payment of principal and interest on the Series 5
Bonds and which is subordinate to the security interest securing
such Series 5 of Bonds or any blanket lien or prior security
interest of any other secured party of the Lessee or Debtor
under the Pooled Assets, as the case may be, against which
purchase priority in favor of the Issuer or its affiliates has
not been established) (a "Subordinate Security Interest"), and
immediately upon the transfer and assignment herein contemplated
(and assuming that the Trustee complies with its obligations
under the Indenture and this Supplemental Indenture and has not
in its individual capacity taken any action to grant any
interest in any Pooled Asset to any other Person), except for a
Subordinate Security Interest, the Trustee shall have good title
to, and will be the sole legal owner of, each Pooled Asset free
and clear of all liens, security interests and other
encumbrances and will have a valid perfected security interest
in the Issuer's right, title and interest to the related
Equipment;
(f) As of the date of execution and delivery of this
Supplemental Indenture, the terms of each Pooled Asset have not
been waived, altered or modified in any material respect, except
by written instruments included in the Pooled Asset File;
(g) As of the date of execution and delivery of this
Supplemental Indenture, insurance policies are in effect which
provide coverage against loss of or damage to each item of
Equipment in an amount at least equal to the full insurable
value thereof; and
(h) The aggregate scheduled rental payments under the
Pooled Assets securing Series 5 Bonds during the six-month
periods ending on each Semiannual Payment Date for such Series 5
of Bonds to and including the final Stated Maturity of the
Series 5 Bonds after deducting all Servicer's fees and Trustee's
fees respecting such Pooled Assets and Series 5 Bonds accruing
during such period equal or exceed the principal of and interest
on the Series 5 Bonds which is due and payable on such
Semiannual Payment Date.
It is understood and agreed that the representations and warranties set
forth in this Supplemental Indenture (with respect to representations and
warranties which are as of a particular date, in each case as of such date)
shall survive delivery of the respective Pooled Asset Files to the Trustee
and shall continue throughout the terms of the Indenture and this
Supplemental Indenture.
Section 9. Ratio of Net Investment in Pooled Assets to Outstanding
Principal Amount of Series 5 Bonds.
The Issuer covenants and agrees that so long as any Series 5
Bonds are Outstanding, the Issuer's aggregate net investment (determined in
accordance with generally accepted accounting principles) in the Pooled
Assets securing the Series 5 Bonds together with any cash held by the
Trustee as collateral for the Series 5 Bonds (excluding cash held in an
amount equal to the then accrued but unpaid interest on the Series 5 Bonds)
shall at all times be in an amount not less than 122% of the aggregate
principal amount of the Series 5 Bonds then Outstanding.
Section 10. Ratification of Indenture.
As supplemented and amended by this Sixth Supplemental
Indenture, the Indenture as previously amended is in all respects ratified
and confirmed and the Indenture as previously amended and as so supplemented
by this Sixth Supplemental Indenture shall be read, taken and construed as
one and the same instrument.
Section 11. Counterparts.
This Sixth Supplemental Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and
the same instrument.
Section 12. Modification of Section 4.02(e) of the Indenture.
Section 4.02(e) of the Indenture is hereby amended to add the
following language in the tenth line of Section 4.02(e) immediately
following the word "above":
(iii) or any blanket lien or prior security interest of
any other secured party of the Lessee or Debtor
under the Pooled Assets, as the case may be, against
which purchase priority in favor of the Issuer or
its affiliates has not been established
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Sixth Supplemental Indenture to be duly executed by their respective
officers thereunto duly authorized and their respective seals duly attested
to be hereunto affixed all as of the day and year first above written.
ZIEGLER COLLATERALIZED
SECURITIES, INC.
[SEAL]
By/s/Lynn R. Van Horn
Lynn R. Van Horn, President
Attest:
/s/ Janine R. Schmidt
Janine R. Schmidt, Secretary
M&I FIRST NATIONAL BANK
West Bend, Wisconsin,
as Trustee
[SEAL]
By/s/ R.T. Stephenson
Title:Exec. Vice Pres.
Attest:
/s/ M. F. Hron
Title: Vice Pres.
Acknowledgment of Ziegler Collateralized Securities, Inc.
STATE OF WISCONSIN )
) SS.
COUNTY OF WASHINGTON )
On this 19th day of October, 1994, before me, a Notary Public in
and for said county, the undersigned officer, personally appeared L. R. Van
Horn and J. R. Schmidt, severally acknowledged themselves to be the
President and Secretary, respectively, of ZIEGLER COLLATERALIZED SECURITIES,
INC., a Wisconsin corporation, and that they, as such officers, being
authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by themselves as
such President and Secretary, respectively.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.
Notary Public, Washington County
/s/ Bonnie Zanow
[NOTARIAL SEAL] My Commission 4/27/97
Acknowledgment of M&I First National Bank
STATE OF WISCONSIN )
) SS.
COUNTY OF WASHINGTON )
On this 19th day of October, 1994, before me, a Notary Public
in and for said County, appeared R. L Stephenson and M. F. Hron of M&I FIRST
NATIONAL BANK, West Bend, Wisconsin, Trustee, to me personally known, who
being duly sworn, did say that they are the Executive Vice President and
Vice President respectively, of M&I FIRST NATIONAL BANK, West Bend,
Wisconsin, and that the seal affixed to said instrument is the corporate
seal of the said Association and that said instrument was signed and sealed
on behalf of said Association by authority of its Board of Directors, and
that the said R. T. Stephenson and M. F. Hron acknowledged said instrument
to be free act and deed of said Association.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.
Notary Public, Washington County
[NOTARIAL SEAL] My Commission
<PAGE>
EXHIBIT 11
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
<S> <C> <C> <C>
Weighted Average Shares Outstanding
Before Adjustments 2,375,528 2,385,920 2,382,957
Incremented Shares Related to
Restricted Common Stock (1) 16,440 2,666 -
Weighted Average Shares Outstanding 2,391,968 2,388,586 2,382,957
Net Income $4,044,321 $2,005,056 $4,531,024
Per Share Amount $1.69 $ .84 $1.90
</TABLE>
(1) Calculation is based on the treasury stock method using average market
price.
<PAGE>
EXHIBIT 13
1995 ANNUAL REPORT TO SHAREHOLDERS OF THE COMPANY
<PAGE>
EXHIBIT 22
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
Percentage of
Subsidiaries of the Registrant Subsidiary Voting Stock Owned
The Ziegler Companies, Inc. Incorporated by Registrant
<S> <S> <C>
B. C. Ziegler and Company Wisconsin 100%
Ziegler Leasing Corporation Wisconsin 100%
Ziegler Financing Corporation Wisconsin 100%
Ziegler Thrift Trading, Inc. Minnesota 100%
Ziegler Asset Management, Inc. Wisconsin 100%
Ziegler Collateralized Securities, Inc. Wisconsin 100%
First Church Financing Corporation Wisconsin 100%
WRR Environmental Services Co., Inc. Wisconsin 100%
</TABLE>
The Registrant and all of the above subsidiaries are included in the
accompanying consolidated financial statements. Ziegler Leasing Corporation
owns all of the common stock of Ziegler Medical Equipment Group, Inc., a
corporation which refurbishes medical equipment for resale to health care
providers. WRR Environmental Services Co., Inc. owns all of the common
stock of WRR Northwest Enterprises Co., Inc., whose operations are described
above in this Form 10-K under the heading "Corporate and Other" in Part I,
Item 1.
<PAGE>
EXHIBIT 24
CONSENT OF ARTHUR ANDERSEN LLP
INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Annual Report on Form 10-K of The Ziegler
Companies, Inc. of our report dated February 2, 1996, included in the 1995
Annual Report to Shareholders of The Ziegler Companies, Inc.
We also consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-39543) of The Ziegler Companies, Inc. and related
Prospectus pertaining to The Ziegler Company, Inc.'s 1989 Employees' Stock
Purchase Plan and in the Registration Statement (Form S-8 No. 33-74636) of
The Ziegler Companies, Inc. and related Prospectus pertaining to The Ziegler
Company, Inc. 1993 Employees' Stock Incentive Plan, of our report dated
February 2, 1996, with respect to the financial statements of The Ziegler
Companies, Inc. incorporated by reference in this Annual Report (Form 10-K)
for the year ended December 31, 1995.
We also consent to the incorporation by reference in the Registration
Statement (Form S-3 No. 33-42723) of Ziegler Collateralized Securities, Inc.
and related Prospectus of our report dated February 2, 1996, with respect to
the financial statements of The Ziegler Companies, Inc. incorporated by
reference in this Annual Report (Form 10-K) for the year ended December 31,
1995.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
March 22, 1996.
<PAGE>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
<PAGE>
EXHIBIT 28
PROXY STATEMENT
March 8, 1996
<PAGE>
THE ZIEGLER COMPANIES, INC.
SUPPLEMENTAL SCHEDULE TO
THE FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995, 1994 AND 1993
Report of independent public accountants on supplemental schedule
SCHEDULE II Valuation and Qualifying Accounts
Report of independent public accountants and financial statements of Ziegler
Mortgage Securities, Inc. II (Commission file number: 33-28290, 33-21324,
33-10076, 33-1726 on Form 10-K [33-28290]).
All other schedules are not submitted because they are not applicable or not
required or because the required information is included in the financial
statements as incorporated by reference or notes thereto.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
To the Board of Directors of
The Ziegler Companies, Inc.:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in The Ziegler Companies, Inc.
Annual Report to Shareholders incorporated by reference in this Form 10-K,
and have issued our report thereon dated February 2, 1996. Our audit was
made for the purpose of forming an opinion on those statements taken as a
whole. The schedule on page 68 is the responsibility of the Company's
management and is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
February 2, 1996.
<PAGE>
<TABLE>
SCHEDULE II
THE ZIEGLER COMPANIES, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
Additions
Charged to
Balance at Additions Other Balance at
December 31, Charged to Accounts Deductions December 31,
Description 1994 Expense (Note 3) (Note 1) 1995
<S> <C> <C> <C> <C> <C>
Reserve for loan
losses (Note 2) $1,051,619 $219,405 $624,964 $ (387,018) $1,508,970
<CAPTION>
Additions
Charged to
Balance at Additions Other Balance at
December 31, Charged to Accounts Deductions December 31,
Description 1993 Expense (Note 3) (Note 1) 1994
<S> <C> <C> <C> <C> <C>
Reserve for loan
losses (Note 2) $2,519,931 $335,685 $711,729 $(2,515,726) $1,051,619
<CAPTION>
Additions
Charged to
Balance at Additions Other Balance at
December 31, Charged to Accounts Deductions December 31,
Description 1992 Expense (Note 3) (Note 1) 1993
<S> <C> <C> <C> <C> <C>
Reserve for loan
losses (Note 2) $2,251,704 $165,746 $536,327 $ (433,846) $2,519,931
NOTES:
(1) These deductions represent charge-offs for the purpose for which the reserve was established.
(2) The reserve is offset against the corresponding assets in the balance sheet.
(3) The additions represent adjustments to prior charge-offs.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Ziegler Mortgage Securities, Inc. II:
We have audited the accompanying balance sheets of ZIEGLER MORTGAGE
SECURITIES, INC. II (a Wisconsin corporation) as of December 31, 1995 and
1994, and the related statements of operations, changes in stockholders'
equity and cash flows for each of the three years in the period ended
December 31, 1995. 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 financial position of Ziegler Mortgage
Securities, Inc. II as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
February 2, 1996.
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
ASSETS
Cash $ 83,353 $ 87,263
Money market investments, at cost which
approximates market 341,861 104,483
Demand note with The Ziegler Companies, Inc.,
at cost, which approximates market - 402,205
Total cash and cash equivalents 425,214 593,951
Cash and investments held by trustee, at cost,
which approximates market 4,207,178 4,142,583
Accrued interest receivable 855,783 844,075
Mortgage Certificates, held by trustee (net
of purchase discount of $3,425,237 and
$3,453,038, respectively) 116,345,952 113,401,638
Deferred issuance costs 3,378,116 3,409,878
Total assets $125,212,243 $122,392,125
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued interest payable $ 3,716,958 $ 3,613,928
Mortgage Certificate-Backed Bonds payable 119,908,000 117,018,000
Payable to B. C. Ziegler and Company 67,285 240,197
Total liabilities 123,692,243 120,872,125
Stockholders' Equity:
Preferred Stock, $.10 par value, non-voting,
$9.00 non-cumulative dividend, $100
redemption price;
200,000 shares authorized,
15,000 shares issued and
outstanding, respectively 1,500,000 1,500,000
Common stock, $1 par value,
56,000 shares authorized,
20,000 shares issued and outstanding 20,000 20,000
Retained earnings - -
Total stockholders' equity 1,520,000 1,520,000
Total liabilities and
stockholders' equity $125,212,243 $122,392,125
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Revenues:
Interest income $10,395,747 $10,129,823 $14,773,591
Gain on sale of mortgage
certificates 228,031 1,014,811 2,237,059
Total revenues 10,623,778 11,144,634 17,010,650
Expenses:
Interest expense 9,764,637 9,654,473 14,443,586
Amortization of deferred
issuance costs 359,513 1,111,631 2,138,311
Management fee 349,925 158,801 179,930
General and administrative 149,703 219,729 248,823
Total expenses 10,623,778 11,144,634 17,010,650
Income before income taxes - - -
Provision for income taxes - - -
Net income $ - $ - $ -
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<TABLE>
ZIEGLER MORTGAGE SECURITIES, INC. II
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
Common Stock Preferred Stock Total
Number Number Stock-
of of Retained holders'
Shares Amount Shares Amount Earnings Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1992 20,000 $20,000 20,000 $2,000,000 $ - $2,020,000
Net income - - - - - -
Balance at
December 31, 1993 20,000 20,000 20,000 2,000,000 - 2,020,000
Redemption of preferred
stock - - (5,000) (500,000) - (500,000)
Net income - - - - - -
Balance at
December 31, 1994 20,000 20,000 15,000 1,500,000 - 1,520,000
Net income - - - - - -
Balance at
December 31, 1995 20,000 $20,000 15,000 $1,500,000 $ - $1,520,000
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ - $ - $ -
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Gain on sale of Mortgage
Certificates (228,031) (1,014,811) (2,237,059)
Discount accretion on
Mortgage Certificates (123,337) (116,878) (163,050)
Amortization of deferred
issuance costs 359,513 1,111,631 2,138,311
Change in assets and
liabilities:
Decrease (Increase) in -
Funds held by trustee (64,595) 20,874,119 (16,403,461)
Accrued interest
receivable (11,708) 119,467 406,615
Receivable from
B. C. Ziegler and Company - - 24,679
Increase (Decrease) in -
Payable to B. C. Ziegler
and Company (172,912) (26,943) 124,504
Accrued interest payable 103,030 (1,430,566) (1,294,567)
Net cash provided by (used in)
operating activities (138,040) 19,516,019 (17,404,028)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired through merger - 55,249 -
Sale and redemption of Mortgage
Certificates 8,011,228 33,126,215 64,362,572
Purchase of Mortgage Certificates (10,604,175) (20,681,090) (15,208,792)
Net cash provided by (used in)
investing activities (2,592,947) 12,500,374 49,153,780
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Mortgage Certificate-
Backed Bonds 10,597,250 20,749,705 15,134,070
Principal payments on Mortgage
Certificate-Backed Bonds (8,035,000) (52,154,000) (46,495,000)
Redemption of preferred stock - (500,000) -
Net cash provided by (used in)
financing activities 2,562,250 (31,904,295) (31,360,930)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ (168,737) $ 112,098 $ 388,822
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 593,951 481,853 93,031
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 425,214 $ 593,951 $ 481,853
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid during the year $ 9,661,607 $11,085,000 $15,738,000
Income taxes paid during
the year $ - $ - $ -
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING ACTIVITIES:
Assets acquired through merger,
primarily Mortgage Certificates $ - $ 2,096,000 $ -
Liabilities assumed through
merger, primarily Mortgage
Certificate-Backed Bonds $ - $ 2,151,000 $ -
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
ZIEGLER MORTGAGE SECURITIES, INC. II
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(1) Organization -
Ziegler Mortgage Securities, Inc. II (the "Company") is a limited
purpose finance company. The Company was organized to facilitate the
financing of mortgage loans. The common stock of the Company is owned
equally by The Ziegler Companies, Inc. and James G. Pouros.
(2) Summary of Significant Accounting Policies -
Mortgage Certificates are carried at par value less unamortized
purchase discount. The purchase discount on the Mortgage Certificates
is amortized over the life of the related outstanding Mortgage
Certificate- Backed Bonds (the "Bonds") using the bonds outstanding
method which approximates the effective interest rate method. The
market values of the Mortgage Certificates at December 31, 1995 and
1994 were approximately $124,478,000 and $112,825,000, respectively.
Deferred bond issuance costs consist of underwriting discounts and
other expenses of issuance and distribution. Such costs are amortized
over the life of the outstanding Bonds using the bonds outstanding
method which approximates the effective interest rate method.
Cash equivalents are defined as unrestricted short-term investments
maturing within three months of the date of purchase. The $402,205
demand note as of December 31, 1994 with The Ziegler Companies, Inc. is
for funds deposited with The Ziegler Companies, Inc. which have been
invested in daily reverse repurchase agreements collateralized by
securities guaranteed by the full faith and credit of the United
States.
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
dates of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results could differ
from those estimates.
(3) Mortgage Certificates -
The Mortgage Certificates consist of GNMA Certificates (comprising 89%
of the portfolio as of December 31, 1995) guaranteed by the Government
National Mortgage Association ("GNMA") and/or Guaranteed Mortgage
Pass-Through Certificates (comprising 11% of the portfolio) issued by
the Federal National Mortgage Association ("FNMA") (collectively the
"Mortgage Certificates"). The full and timely payment of the principal
and interest on the GNMA Certificates is guaranteed by GNMA. The GNMA
guaranty is backed by the full faith and credit of the United States
government. FNMA guarantees the payment of principal and interest on
the FNMA Certificates but the FNMA guaranty is not backed by the full
faith and credit of the United States government.
Principal and interest payments received from the Mortgage Certificates
are controlled by the trustee. These funds are utilized to meet the
semiannual interest payments on the Bonds, to reduce the outstanding
principal balance of the Bonds and to pay certain operating expenses of
the Company.
(4) Mortgage Certificate-Backed Bonds Payable -
Bonds outstanding at December 31, 1995, consist of the following:
<TABLE>
<CAPTION>
Outstanding
Principal
Original Amounts
Date of Stated Principal at
Series Rate Bonds Maturity Amounts 12/31/95
<C> <C> <C> <C> <C> <C>
10 8.90% 10/1/86 10/1/21 $ 8,200,000 $ 2,455,000
16 9.00% 5/1/87 1/1/22 4,500,000 2,284,000
18 9.15% 6/1/87 5/1/22 7,372,000 5,804,000
19 9.15% 6/1/87 5/1/22 5,750,000 3,805,000
20 9.00% 7/1/87 6/1/22 5,418,000 3,498,000
21 9.00% 7/1/87 6/1/22 5,266,000 4,881,000
22 9.10% 8/1/87 2/1/21 5,650,000 2,451,000
24 9.20% 10/1/87 2/1/22 5,237,000 4,985,000
33 9.10% 4/1/88 10/15/21 7,054,000 3,658,000
34 9.35% 6/1/88 5/15/23 4,163,000 3,325,000
39 9.40% 8/1/88 8/15/23 5,780,000 3,808,000
40 9.50% 9/1/88 9/15/23 6,800,000 3,917,000
41 9.30% 10/1/88 10/15/23 4,655,000 4,201,000
42 9.20% 10/1/88 10/15/23 4,000,000 3,610,000
45 9.45% 2/1/89 1/15/24 3,950,000 3,827,000
47 9.75% 5/1/89 2/15/24 3,744,000 1,700,000
49 8.45% 7/1/89 7/15/22 2,740,000 2,612,000
52 9.35% 5/1/90 5/15/20 3,000,000 597,000
55 9.00% 9/1/90 10/01/20 3,244,000 683,000
60 8.30% 6/1/91 6/15/24 3,326,000 3,229,000
61 8.00% 9/1/91 11/15/19 3,390,000 1,492,000
62 7.25% 2/1/92 4/15/22 2,925,000 1,545,000
63 7.60% 5/1/92 5/15/22 3,400,000 1,795,000
64 7.40% 6/1/92 6/15/22 3,300,000 1,683,000
65 7.00% 1/1/93 1/15/28 3,029,000 2,974,000
66 7.00% 1/1/93 1/15/28 3,000,000 2,948,000
67 6.40% 3/1/93 12/15/13 3,585,000 3,360,000
68 6.25% 4/1/93 5/01/23 3,000,000 2,609,000
69 6.00% 5/1/93 5/01/23 3,022,000 2,607,000
70 6.00% 3/1/94 11/15/28 3,390,000 3,350,000
71 7.00% 4/1/94 9/20/23 3,015,000 2,767,000
72 7.00% 4/1/94 10/15/23 2,897,000 2,859,000
73 7.00% 4/1/94 4/15/24 3,130,000 3,063,000
74 7.10% 5/1/94 2/15/24 3,145,000 3,104,000
75 7.10% 6/1/94 2/15/24 3,290,000 3,237,000
76 7.35% 9/1/94 9/15/29 2,535,000 2,512,000
77 8.00% 2/1/95 10/15/29 3,066,000 3,049,000
78 7.50% 4/1/95 9/15/29 2,597,000 2,597,000
79 6.75% 6/1/95 6/15/22 2,622,000 2,612,000
80 7.00% 9/1/95 7/15/23 2,640,000 2,640,000
160,827,000 118,133,000
</TABLE>
<TABLE>
<CAPTION>
American Mortgage Securities, Inc.
Mortgage Certificate-Backed Bonds
<C> <C> <C> <C> <C> <C>
5 7.35% 3/1/92 3/01/22 3,000,000 1,775,000
$163,827,000 $119,908,000
</TABLE>
The stated maturities are the dates on which Bonds will be fully paid
assuming no prepayments are received on the Mortgage Certificates which
serve as collateral for the Bonds and no Bonds are called. The stated
maturities of the Bonds will be shortened by prepayments on the
Mortgage Certificates and by any Bond calls.
The Bonds can be redeemed each month without premium under the
following circumstances:
The Company must call the Bonds, to the extent funds are
available, commencing in the twelfth month following the original
issuance of each series or commencing at such time as the
aggregate balance in the redemption fund, as defined in the
prospectus, for each series that reaches $100,000; whichever
occurs first.
The Bonds of any series may be redeemed in whole by the Company
after the third anniversary of the original issuance and,
commencing with Series 16 bonds, at any time as the outstanding
principal amount of such series is less than 10% of the aggregate
principal amount of such series originally issued.
Bondholders can present their Bonds for redemption each month
commencing with the second calendar month following the month in
which each series is originally issued. The Company will redeem
such Bonds to the extent funds are available.
The market values in the secondary bond market of the Bonds outstanding
as of December 31, 1995 and 1994, approximated $120,264,000 and
$111,150,000, respectively.
(5) Related Parties -
B. C. Ziegler and Company, a wholly-owned subsidiary of The Ziegler
Companies, Inc. which owns 50% of the Company's outstanding stock, is
the sole underwriter for the Bonds issued by the Company. In its
capacity as underwriter, B. C. Ziegler and Company received a fee for
its services equal to a percent of the Bonds offered by the Company.
B. C. Ziegler and Company provided management and administrative
services to the Company for which, pursuant to a management agreement
with the Company, they were entitled to receive a management fee not to
exceed .375% of the aggregate outstanding principal amount of bonds
issued by the Company at the last day of the month preceding each
semiannual payment date. Any calculated management fee is
retroactively reduced to such amount (not less than zero) as will
prevent the Company from suffering a loss for each fiscal year.
As of December 31, 1995 and 1994, the Company owed B. C. Ziegler and
Company $67,285 and $97,561, respectively, for accrued management fees.
As of December 31, 1994, the Company also owed B. C. Ziegler and
Company $142,636 which was AMSI indebtedness to B. C. Ziegler and
Company at the time of the merger discussed below. During 1994, the
Company redeemed 5,000 shares of the preferred stock from B. C. Ziegler
and Company, the sole owner of the Company's preferred stock, for
$500,000.
(6) Merger -
Effective December 30, 1994, the Company merged with American Mortgage
Securities, Inc. ("AMSI"), another limited purpose finance company
organized to facilitate the financing of mortgage loans. Prior to the
merger, AMSI was owned 50% by The Ziegler Companies, Inc. and 50% by
Mr. James G. Pouros. The Company was the surviving corporation and
assumed all the assets and liabilities of AMSI at year end 1994. These
assets and liabilities, primarily one outstanding bond issue totaling
$1,961,000 which is collateralized by a separate pool of Mortgage
Certificates totaling $1,966,000, at amortized cost, are included in
the Company's Balance Sheet as of December 31, 1994. The merger
produced no effect on the Company's 1994 operations since it was not
effective until year end.
THE ZIEGLER COMPANIES, INC.
1995 ANNUAL REPORT
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Financial Highlights 3
Letter to Shareholders 4-7
Overview of The Ziegler Companies, Inc. 8-13
Summary of Operations 15-16
Officers and Directors 49-52
Investor Information 54-55
</TABLE>
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
For the Year Ended
December 31,
1995 1994
<S> <C> <C>
Total Revenues $55,209,000 $48,474,000
Income Before Income Taxes 6,337,000 3,122,000
Net Income 4,044,000 2,005,000
Per share
Net Income $1.69 $ .84
Dividends Declared $ .87 $ .72
Average Common Shares Outstanding 2,391,968 2,388,586
Number of Common Shareholders 537 590
</TABLE>
Corporate Creed
We believe in the American free enterprise system. We shall consistently
treat our customers, employees, shareholders and community with honesty,
dignity, fairness and respect. We will conduct our business with the highest
ethical standards.
<PAGE>
Letter to Shareholders
Dear Shareholders:
1995 was a better year for The Ziegler Companies, Inc.
We entered 1995 on the heels of very difficult 1994 fixed income
markets. The year started slowly, but finished very strongly with the fourth
quarter being the most profitable. While we made progress in 1995, there is
still much to be accomplished in providing a more satisfactory return to you,
the shareholders, on your capital invested in our Company.
In 1995, earnings per share were $1.69 versus 84 cents in 1994. Net
income grew to $4,044,000 from $2,005,000 in 1994. Total revenues grew 17%,
to a record $55,209,000. Book value per share rose to $21.48 from $20.68 at
year-end 1994.
1995 marked the 44th consecutive year that cash dividends have been paid
on your Company's common shares. Cash dividends declared in 1995 were 87
cents per share compared to 72 cents per share in 1994. Included in the 87
cents per share was an extra dividend of 35 cents per share declared in the
fourth quarter of 1995. Dividend policy is reviewed by your directors on a
quarterly basis. The historically large year-end extra dividends should not
create expectations by shareholders for the same in the future. However, as
stated in previous shareholder letters, a higher payout of earnings will be
considered an alternative until an adequate return on shareholders' equity is
achieved. We will continually assess the operational needs, as well as
investment opportunities, in determining how to allocate excess capital.
Buyback of outstanding shares is just such an opportunity when shares are
available at the right price. In 1995, additional shares were repurchased at
a substantial discount to book value, pursuant to an existing buyback
authority. With the dramatic changes taking place in our core financial
service businesses, it is more probable today than it has been in the past,
that capital will be utilized for investment opportunities.
The securities industry was blessed by astonishingly strong capital
markets in 1995. The Dow Jones Industrial Average cracked the 5000 barrier
and the Standard & Poor's 500 Index (with dividends) advanced 37.6% in 1995.
The equity markets drew much of their strength from the bond market, where
yields declined almost as much as they had increased in 1994. By year-end,
the yield on the long U.S. Treasury bond dropped through 6%. Despite
legislative proposals for a flat tax, the municipal market rallied strongly as
well. New issuance of long-term municipal bonds in 1995 was $156 billion,
down from $165 billion in 1994. However, December of 1995 was the fifth
straight month in which issuance volume exceeded 1994 levels.
B.C. Ziegler and Company (BCZCO), your largest subsidiary company,
capitalized on the strong markets and posted improved operating results.
Contributing to BCZCO's performance were the following:
-- Ziegler Securities Division (ZSD) substantially increased revenues
and profitability.
- The Healthcare Finance Group increased its ranking and
market share as a nationally recognized investment banker to
the healthcare industry.
- The Senior Living Finance Group had a great year by
recapturing its number one industry underwriting ranking,
capturing twice the market share of its nearest competitor
and generating an increased and substantial profit
contribution to ZSD.
- Diversification of ZSD's revenue base was achieved through
the establishment of the Special Products Group, which on an
agency basis provides advice and guidance for clients using
derivatives. Further diversification took the form of a
joint venture to provide a turnkey medical office building
program.
-- The General Corporate Finance Division profitability was down
slightly from 1994, while church and school underwriting volume
was up slightly for the year.
-- Our new Preferred Stock Division, which began operations in
December of 1994, was profitable and a meaningful contributor to
earnings in every month of 1995. The legislative proposal to
reduce the dividend received deduction is currently restricting
liquidity in this market.
-- The Retail Division went through a year of transition in 1995:
Revenues and profits were down from 1994. From May through early
September, all of our investment brokers became "full-service"
brokers as we implemented solicited equity transactions for all of
our investment brokers and clients. We believe we accomplished
this with a strong focus on adding value to our clients'
portfolios with high quality independent research and efficient
execution. By year-end, we had installed personal computers in
most of our sales offices.
-- Sales and support activities relating to Principal Preservation
Portfolios (PPP), our family of mutual funds, showed improved
profitability from 1994. PPP ended the year with total assets of
$320,000,000. In general, the investment performance of the nine
portfolios was solid and bodes well for sales in 1996.
-- BCZCO's independent insurance agency's profitability dropped in
1995. While new business was up substantially, a soft market
caused the loss of existing business. Further, performance-based
commissions were down and Ziegler Financial Agency, in its first
full year of operations, was a slight drag on earnings.
Ziegler Thrift Trading, Inc. (ZTT) contributed record profits in 1995 as
the result of:
-- Record retail ticket volume was propelled by the robust equity
markets.
-- A new office which was opened in St. Paul, Minnesota.
-- An acquisition of a discount brokerage business in Naperville,
Illinois in September.
Ziegler Leasing Corporation (ZLC) profits declined in 1995, primarily as
a result of a decline in booked leases, as well as a softening of residual
values in certain equipment categories. ZLC continues to show restraint when
bidding new business in the face of market conditions that don't allow us an
adequate return on capital. At mid-year we bought out our minority partners
at Ziegler Medical Equipment Group. The loss narrowed in this business from
1994. The biggest challenge facing ZLC is to distinguish itself as a value-
added service provider with potential customers in an intensively competitive
environment.
With another year of excellent performance numbers in both its equity
and fixed income managed accounts, Ziegler Asset Management, Inc. (ZAMI) saw
assets under management grow to $587,000,000. However, profitability was well
below plan as the result of the subsidization of new products and services.
We brought in new leadership in January 1996 to focus the strengths of ZAMI.
WRR Environmental Services Co., Inc. (WRR), posted record profits in
1995. These earnings came primarily as the result of the diversification
efforts of the last few years, whereby management entered related businesses
that haven't been subject to the classic margin pressure an industry
experiences when it matures. The hazardous waste processing industry has not
been a growth industry the last few years and is mature. WRR's remediation
services are an example of a new service that contributed meaningfully in
1995.
In March of 1996, Vernon C. Van Vooren will retire as Senior Vice
President-Treasurer after 32 years of service. Vern always went out of his
way to befriend new employees and make them feel at home, no matter at what
level in the company they were employed. Vern built and ran our commercial
paper department which was vital to our success. He will always be remembered
by his clients for immediate and quality service, by his fellow managers as
the "conservative conscience" of BCZCO, and by everyone for his high ethical
standards.
At the April 1995 annual meeting, Peter R. Kellogg was elected to your
Board of Directors. Peter is the CEO and Senior Partner of Spear Leeds &
Kellogg, the largest specialist firm making markets in listed stocks on the
New York Stock Exchange and American Stock Exchange. He brings as counsel to
our organization broad and successful experiences in the financial services
and broker/dealer industry.
In 1996, William R. Holmquist will retire from the Board of Directors.
Bill has served as a Director for 20 years and was active in management for 32
years, retiring as the Senior Vice President of Marketing in 1989. During
Bill's lengthy leadership as the head of our retail division, he gained the
respect, loyalty and friendship of all those with whom he came in contact. He
was respected by all for his fairness and sharp mind, and saw to it everyone
had fun. As a director, he balanced well his loyalty to shareholders and
support for management. We extend our most sincere appreciation for the many
contributions Bill made over 38 years of service to the Ziegler organization.
On the legislative front, Congress overrode President Clinton's veto to
pass the Private Securities Litigation Reform Act of 1995. This is a very
significant and welcome piece of legislation which should sharply curtail
frivolous securities litigation. Once again, the reports of the death of the
Glass-Steagal Act were premature. Our hopes of having a relatively level
playing field with the banks were again thwarted by the special interests of
banks, securities firms and the insurance industry. As of this writing,
Congress and the President are still debating a budget. I find the threats of
a U.S. government default on its obligations to be irresponsible. The
absolute integrity of the full faith and credit of the U.S. government's
securities is essential to the capital markets, in not only this country, but
the world. The implications of a default are incomprehensible.
As we look ahead, the need for change to respond to the marketplace is a
part of any business, and is certainly inherent in the securities industry and
our business. Profound change is reshaping our businesses. These changes
bring stress to an organization - along with opportunities. We have a young
and energetic management team that has embraced these changes and is driven to
succeed. In doing so, they have and will carry the same values and high
ethical standards for which your Company has always stood.
1995 was a year of improvement for your Company. 1996 holds many
opportunities and challenges. Our collective goal of building shareholder
value has never been clearer. Delivering on that goal is the work of all of
our valued employees. On their behalf, I thank you, this corporation's
owners, for the confidence you continue to demonstrate by investing your
capital in The Ziegler Companies, Inc.
Sincerely,
/s/ Peter D. Ziegler
Peter D. Ziegler
President & CEO
<PAGE>
THE ZIEGLER COMPANIES, INC.
<TABLE>
<CAPTION>
<S> <S>
Business Activity
B. C. ZIEGLER AND COMPANY
Ziegler Securities Division Strategic consulting, merger and
Healthcare Finance acquisition, and investment banking
services to hospitals, physician
organizations, healthcare systems,
medical office developers
Senior Living Finance Strategic consulting and investment
banking services to non-profit
senior living providers
Special Products Advisor/consultant to healthcare
providers on asset and liability
management techniques
General Corporate Finance Debt financing to churches and
independent schools nationwide for
construction, land/facilities
purchase, refinancing of debt or
construction loans
Retail Division Full-service retail distribution of
investment securities and services
through 24 retail offices serving
investors nationwide
Sponsor of Niche family of mutual funds,
Principal Preservation Portfolios distributed through investment
brokers, banks and financial
planners
Preferred Stock Division Institutional sales and trading of
nonconvertible preferred stock to
client base of major domestic
institutional investors and
broker/dealers
Independent Insurance Agency Independent agency providing
complete insurance programs for
individuals, families and
businesses, primarily in
southeastern Wisconsin
</TABLE>
<PAGE>
THE ZIEGLER COMPANIES, INC.
<TABLE>
<CAPTION>
Competitive Advantages
<S> <S>
B. C. ZIEGLER AND COMPANY
Ziegler Securities Division Largest specialty investment
Healthcare Finance banking firm serving exclusively
healthcare clients nationwide
Unique product applications and
financing solutions
Senior Living Finance Designated investment banker to
American Association of Homes &
Services for the Aging
Largest data and research base for
non-profit senior living facilities
Special Products Strong economic value added to new
and existing financings
General Corporate Finance Largest underwriter nationally
selling taxable securities for
churches/schools
Retail Division Reputation for stability and
integrity in industry
High level of individual client
service
Proprietary products and
distribution capability for firm's
investment banking services
Unique, personalized investment
broker support
Sponsor of Provides individualized service to
Principal Preservation Portfolios brokers in Midwest
In-house transfer agent, custodian
and fund accounting services
Preferred Stock Division Strong market position in a niche
market
Highly experienced staff; low
overhead for operations
Independent Insurance Agency Diverse insurance company
representation, with a
distinguishing value-added service
approach
</TABLE>
<PAGE>
THE ZIEGLER COMPANIES, INC.
<TABLE>
<CAPTION>
Highlights
<S> <S>
B. C. ZIEGLER AND COMPANY
Ziegler Securities Division Ranked fifth nationally in senior-
Healthcare Finance managed tax-exempt healthcare
bonds; highest ranking off Wall
Street
Provided consulting and advisory
services to the largest not-for-
profit sale transaction ever
completed
Senior Living Finance Ranked first among underwriters of
tax-exempt bonds for senior living
facilities
22% market share
Senior managed 38 financings, with
par value $443 million
Special Products Completed more than 35 transactions
in 1995 related to bond issues
exceeding $1 billion
General Corporate Finance Solely managed 23 issues in 1995,
with par value of $67 million
Retail Division Expansion of products and services
in 1995; added high quality,
independent equity investing
services
Initiated an investment broker
recruitment and training program;
expanded number of producing
brokers
Improved technology in branch
investment offices
Sponsor of Asset base in excess of $320
Principal Preservation Portfolios million
Double tax-free fund for Wisconsin
investors
Preferred Stock Division One of the largest domestic trading
operations dedicated exclusively to
preferred stock
Trading strategy of primarily risk-
free trading
Independent Insurance Agency Increased agency volume 50% in
financial benefits area
</TABLE>
<PAGE>
THE ZIEGLER COMPANIES, INC.
<TABLE>
<CAPTION>
Business Activity
<S> <S>
ZIEGLER LEASING CORPORATION Equipment financing for healthcare
providers, commercial and
industrial clients nationwide
Refurbishing and remarketing of
pre-owned medical equipment through
Ziegler Medical Equipment Group,
Inc.
ZIEGLER THRIFT TRADING, INC. Provides quick, efficient order
execution and clearing for all
types of securities at discounted
commission rates
Cashless stock option financing
ZIEGLER ASSET MANAGEMENT, INC. Investment adviser to individual
retail and institutional
portfolios: clients include high
net worth individuals; corporate,
governmental, charitable and non-
profit organizations; mutual funds
Qualified retirement plans for
corporate accounts
WRR ENVIRONMENTAL SERVICES CO., INC. Waste management, chemical
processing, laboratory services,
waste transportation services,
emergency response; site
remediation and restoration
</TABLE>
<PAGE>
THE ZIEGLER COMPANIES, INC.
<TABLE>
<CAPTION>
Competitive Advantages
<S> <S>
ZIEGLER LEASING CORPORATION Specialization in healthcare
provides clients with valuable
assistance in financing structures
ZIEGLER THRIFT TRADING, INC. Self-clearing for superior service
Specialized services: Free dividend
reinvestment, free check-writing
money market funds, mutual funds,
electronic payments and
disbursements, free quotes, 24-hour
order taking
ZIEGLER ASSET MANAGEMENT, INC. Highly experienced investment
management team
Experienced in serving clients in
healthcare and senior living
industries
Proprietary investment products
Long-term record developing short-
term cash management services
WRR ENVIRONMENTAL SERVICES CO., INC. Provides full range of value-added
services to meet all environmental
needs of clients
</TABLE>
<PAGE>
THE ZIEGLER COMPANIES, INC.
<TABLE>
<CAPTION>
Highlights
<S> <S>
ZIEGLER LEASING CORPORATION Financed more than $300 million of
equipment since 1971
Expanded sales force to
aggressively market directly to
healthcare market
ZIEGLER THRIFT TRADING, INC. Record earnings in 1995
More than 50% of new accounts from
referrals
In 1995, acquired two offices in
Illinois, opened an office in St.
Paul, Minnesota
Investment consultant services
available
ZIEGLER ASSET MANAGEMENT, INC. Strong asset growth since
established in 1991
Manages in excess of $575 million
Extensive healthcare/senior living
client base
Excellent equity and fixed-income
performance
WRR ENVIRONMENTAL SERVICES CO., INC. 150% growth in revenue over past
five years
Record profits in 1995
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Financial Statements
Table of Contents
<S> <C>
Consolidated Balance Sheets 17
Consolidated Statements of Income 18
Consolidated Statements of Cash Flows 19-20
Consolidated Statements of Stockholders' Equity 21
Notes to Consolidated Financial Statements 22-37
Report of Independent Public Accountants 38
Management's Discussion and Analysis 39-46
</TABLE>
<PAGE>
1995 Summary of Operations
A holding company with eight principal subsidiaries, The Ziegler Companies,
Inc. ("ZCO") provides a wide range of financial services for businesses,
institutions and individuals. B. C. Ziegler and Company ("BCZCO"), Ziegler
Leasing Corporation ("ZLC"), Ziegler Financing Corporation ("ZFC"), Ziegler
Thrift Trading, Inc. ("ZTT"), Ziegler Asset Management, Inc. ("ZAMI"), Ziegler
Collateralized Securities, Inc. ("ZCSI"), and First Church Financing
Corporation ("FCFC") are financial services companies; WRR Environmental
Services Co., Inc. ("WRR") recycles, reclaims and disposes of industrial
chemicals and solvents and provides pollution abatement services.
Operational results for ZCO and its subsidiaries are as follows:
B. C. Ziegler and Company, including Ziegler Securities: BCZCO is one of the
nation's leading investment banking firms specializing in underwriting and
marketing tax-exempt and taxable debt securities for hospitals, clinics,
medical office developers and other healthcare related entities and churches.
In addition, BCZCO is the nation's leading underwriter for senior living
facilities. Ziegler Securities, headquartered in Chicago, is a major
operating division of BCZCO and is responsible for all healthcare, senior
living and municipal finance activities of BCZCO.
In addition to traditional underwriting services offered to its clients,
Ziegler Securities also provides financial advisory and consulting services to
healthcare clients through the Ziegler Healthcare Affiliates division. Other
financial services offered through Ziegler Securities include asset and
liability management, special products for capital restructurings and interest
rate management strategies.
During 1995, Ziegler Securities managed 14 new issues of tax-exempt and
taxable healthcare debt securities totaling $452,755,000. During 1995,
Ziegler Securities also managed 38 issues for long-term care retirement
facilities totaling $442,790,000.
The corporate finance group of BCZCO, which performs underwriting in
connection with offerings of taxable bonds for non-profit institutions,
brought 23 bond issues to market in 1995 on behalf of churches, private
schools and other non-profit institutions. The offerings had a total
principal amount of $67,408,000.
BCZCO provides retail investment brokerage services through 24 offices
nationwide. In 1995, solicited equity investing services were instituted at
all retail investment offices, a service supported by high quality independent
research.
BCZCO serves as principal underwriter, and provides certain other functions,
for Principal Preservation Portfolios, Inc., an open-end investment company.
This family of mutual funds had total assets of approximately $320,000,000 at
December 31, 1995, as compared with total assets of approximately $250,000,000
at December 31, 1994.
BCZCO has owned and operated a general independent insurance agency since its
founding in 1902 with offices located in West Bend and Milwaukee, Wisconsin.
The agency maintains direct agency contracts with 26 insurance companies.
Diversified coverages including, but not limited to, life, health, property,
casualty and fidelity insurance are available for personal and business
insurance customer needs. Ziegler Financial Agency, a general agency,
distributes financial insurance-based products through BCZCO and an existing
network of Wisconsin-based independent insurance agencies.
In 1995, total BCZCO revenues were $32,039,000, compared to $25,787,000 in
1994, a 24% increase. Total expenses were $29,592,000 in 1995, compared to
$25,899,000 in 1994, a 14% increase. The resulting net income was $1,555,000
in 1995, compared to $3,000 in 1994.
Ziegler Leasing Corporation: ZLC leases diagnostic, laboratory and operating
equipment to hospitals, clinics and other healthcare providers, and leases a
variety of commercial equipment to financial institutions, insurance companies
and manufacturing concerns. ZLC provides other financing alternatives,
including non-recourse notes and purchase money security notes in addition to
its leasing alternatives. ZLC also refurbishes and remarkets pre-owned
medical equipment through its wholly-owned subsidiary, Ziegler Medical
Equipment Group, Inc. ZLC's total revenues were $10,498,000 in 1995, compared
to $10,842,000 in 1994. Net income was $716,000 in 1995 compared to $764,000
in 1994. Seventy-nine leases or notes involving equipment costing $18,891,000
were activated in 1995.
Ziegler Thrift Trading, Inc.: Headquartered in Minneapolis, this subsidiary
is Minnesota's oldest discount brokerage firm. ZTT has three branch offices
in St. Paul, two of which are located in lobbies of a major financial
institution. In the third quarter of 1995, ZTT acquired two branch offices in
the western Chicago suburbs of Naperville and Westchester. Investors use ZTT
to trade stocks, bonds and options with a commission savings of up to 70% of
commissions charged by full commission firms. ZTT provides a wide range of
services to its customers, including a dividend reinvestment program, free
safekeeping, cashless stock option services, and investment consulting. Net
income was $677,000 in 1995 compared to $382,000 in 1994.
Ziegler Asset Management, Inc.: ZAMI is the investment adviser or money
manager entity in the Ziegler family of companies. Entering the industry in
mid-1991, ZAMI has shown rapid growth, from $48,000,000 in assets under
management in 1991 to $587,000,000 in assets under management at the end of
1995. Growth continues in two primary areas: equity and balanced portfolios,
using a quality growth strategy for individuals, foundations, endowments and
401(k) plans; and fixed-income management provided by the fixed-income
management team, primarily for the benefit of healthcare and municipal
clients. ZAMI is becoming a steady and profitable company, following its
early period of rapid growth.
WRR Environmental Services Co., Inc.: ZCO's only non-financial related
business operates a recycling and chemical waste treatment facility in Eau
Claire, Wisconsin. At WRR, waste chemicals and spent solvents are converted
into recycled products which may again be used by industrial concerns. In
addition to hazardous waste management, WRR also offers parts washer service
through its AIS Division, emergency response spill cleanup service, laboratory
services, and off-site remediation cleanup services. Net income increased
from $529,000 in 1994 to $918,000 in 1995.
Ziegler Financing Corporation: The subsidiary's policy of limited interim
lending activities continued in 1995. Total revenues were $327,000 in 1995,
compared to $364,000 in 1994.
<PAGE>
<TABLE>
Consolidated Balance Sheets
<CAPTION>
As of December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash $ 4,231,808 $ 5,185,343
Short-term investments 12,430,129 19,027,837
Bonds due and called as of January 1, 1996
and 1995, respectively 3,472,297 1,285,301
Total cash and cash equivalents 20,134,234 25,498,481
Securities inventory 28,151,740 22,803,084
Accounts receivable -
Securities sales 3,434,916 5,253,705
Other 4,612,320 3,293,159
Investment in and receivables from affiliates 2,638,456 2,578,926
Investment in leases 51,090,834 56,062,738
Notes receivable 26,564,818 21,029,012
Land, buildings and equipment, at cost, net
of accumulated depreciation of $14,425,733
and $13,519,851, respectively 7,090,543 6,813,086
Other assets 12,127,533 9,108,016
Total assets $155,845,394 $152,440,207
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term notes payable $ 18,394,420 $ 19,728,501
Payable to customers 2,567,092 5,876,231
Payable to broker-dealers 409,425 1,217,984
Accounts payable 3,910,191 2,738,966
Dividends payable 1,167,207 804,026
Accrued income taxes payable 1,138,008 -
Deferred income taxes 5,358,583 5,322,679
Notes payable to banks 24,559,972 26,900,354
Bonds payable 37,403,990 31,605,241
Other liabilities and deferred items 8,694,508 7,866,203
Total liabilities 103,603,396 102,060,185
Commitments
Stockholders' equity -
Common stock, $1 par, 7,500,000 shares
authorized, 3,544,030 shares issued 3,544,030 3,544,030
Additional paid-in capital 5,968,737 6,030,565
Retained earnings 60,659,742 58,734,576
Treasury stock, at cost, 1,112,348 and
1,107,587 shares, respectively (17,229,903) (17,196,800)
Unearned compensation (700,608) (732,349)
Total stockholders' equity 52,241,998 50,380,022
Total liabilities and stockholders'
equity $155,845,394 $152,440,207
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
<PAGE>
<TABLE>
Consolidated Statements of Income
<CAPTION>
For the Years Ended
December 31,
1995 1994 1993
<S> <C> <C> <C>
Revenues:
Investment banking and commission
income $ 30,642,641 $ 23,702,142 $ 29,819,544
Interest and dividends 4,327,412 4,210,107 2,228,984
Lease income 9,656,436 10,253,033 10,390,587
Gross profit on chemical products
(28%, 29% and 28% of net sales,
respectively) 3,762,466 3,086,816 2,660,305
Insurance agency 951,085 985,320 830,075
Other 5,869,128 4,844,073 4,411,760
55,209,168 47,081,491 50,341,255
Expenses:
Employee compensation and benefits 22,329,471 18,651,203 19,532,839
Commissions and clearing fees 820,472 728,472 775,743
Communications 2,660,151 2,510,738 2,461,531
Occupancy and equipment 8,773,624 8,573,225 7,974,217
Promotional 2,115,780 2,234,606 2,274,578
Professional and regulatory 901,396 1,121,473 953,826
Interest 5,568,541 5,261,397 4,419,711
Other operating expenses 5,703,212 4,878,021 4,524,586
48,872,647 43,959,135 42,917,031
Income before income taxes 6,336,521 3,122,356 7,424,224
Provision for income taxes 2,292,200 1,117,300 2,893,200
Net income $ 4,044,321 $ 2,005,056 $ 4,531,024
Net income per share of common stock $1.69 $ .84 $1.90
Weighted average number of common
shares outstanding 2,391,968 2,388,586 2,382,957
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
For the Years Ended
December 31,
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,044,321 $ 2,005,056 $ 4,531,024
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 6,349,924 6,647,086 6,078,718
Provision for losses 367,609 269,550 164,696
Loss (gain) on sale of equipment 31,419 (18,397) (62,641)
Gain on sale of leased equipment (665,196) (841,819) (869,990)
Unrealized loss (gain) on
securities inventory (437,351) 206,643 152,000
Compensation expense related to
restricted stock grants 200,728 115,964 -
Deferred income taxes 35,904 444,056 498,333
Change in assets and liabilities:
Decrease (Increase) in -
Accounts receivable -
security sales 1,818,789 1,886,096 (1,422,693)
Accounts receivable - other (1,697,059) (840,451) (1,619,156)
Securities inventory (4,911,305) (5,129,866) (2,447,151)
Other assets (1,568,021) 2,385,153 (2,222,277)
Increase (Decrease) in -
Payable to customers and
broker-dealers (4,117,698) 4,178,849 66,079
Accounts payable net of
leased equipment purchases 588,037 383,695 1,232,337
Income taxes payable 1,138,008 (807,436) 276,756
Other liabilities 766,623 5,287,303 3,337,206
Net cash provided by
operating activities 1,944,732 16,171,482 7,693,241
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from -
Decrease in investment in
affiliates - 505,000 -
Proceeds received on sale of
equipment 32,553 21,376 90,328
Principal payments received under
leases 15,770,970 14,591,072 14,064,246
Proceeds from sale of leased
equipment 4,574,626 4,009,902 3,999,554
Payments received on notes
receivable 13,743,482 7,541,691 10,147,894
Payments for -
Investment in and loans to
affiliates - (890,379) (25,025)
Purchase of assets to be leased (8,716,323) (15,510,850) (16,730,744)
Issuance of new notes receivable (28,634,614) (21,015,487) (25,667,177)
Capital expenditures (898,787) (1,977,440) (2,873,316)
Acquisition of business assets (1,868,058) - -
Net cash used in
investing activities (5,996,151) (12,725,115) (16,994,240)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from -
Issuance of short-term notes
payable 94,452,000 103,861,000 92,974,000
Issuance of notes payable to
banks 2,023,057 851,910 610,014
Issuance of nonrecourse debt 1,340,458 4,421,988 515,941
Exercise of employee stock
options 110,557 64,093 100,169
Issuance of bonds payable 11,074,080 9,152,760 11,426,000
Other - 30,000 -
Payments for -
Principal payments of
short-term notes payable (95,778,000) (103,363,000) (91,348,000)
Principal payments of notes
payable to banks (4,485,439) (3,552,142) (1,421,185)
Principal payments of
nonrecourse debt (2,292,092) (1,342,958) (1,666,847)
Repayments of bonds payable (5,627,000) (4,982,000) (1,929,000)
Purchase of treasury stock (374,475) (3,400) (20,000)
Cash dividends paid (1,755,974) (2,570,237) (2,308,566)
Net cash provided by
(used in) financing
activities (1,312,828) 2,568,014 6,932,526
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (5,364,247) 6,014,381 (2,368,473)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 25,498,481 19,484,100 21,852,573
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 20,134,234 $ 25,498,481 $ 19,484,100
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid during the year $ 5,423,442 $ 5,040,525 $ 4,417,000
Income taxes paid during the year $ 975,268 $ 1,410,439 $ 2,097,000
SUPPLEMENTAL SCHEDULE OF
NONCASH INVESTING ACTIVITIES:
Conversion of notes receivable
to leased equipment $ 9,222,523 $ 8,202,635 $ 4,916,710
Granting of restricted stock
from treasury stock $ 168,987 $ 848,313 $ -
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
<TABLE>
Consolidated Statements of Stockholders' Equity
<CAPTION>
For the Years Ended Additional Unearned
December 31, 1995, Common Paid-In Retained Treasury Compensa-
1994 and 1993 Stock Capital Earnings Stock tion Total
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1992 $3,544,030 $5,866,663 $56,502,210 $(18,022,073) $ - $47,890,830
Net income - - 4,531,024 - - 4,531,024
Dividends declared
($1.07 per share) - - (2,550,168) - - (2,550,168)
Proceeds from exercise
of stock options - 15,727 - 84,442 - 100,169
Cost of treasury stock
purchased
(1,200 shares) - - - (20,000) - (20,000)
BALANCE, December 31, 1993 3,544,030 5,882,390 58,483,066 (17,957,631) - 49,951,855
Net income - - 2,005,056 - - 2,005,056
Dividends declared
($.72 per share) - - (1,753,546) - - (1,753,546)
Proceeds from exercise
of stock options - (6,335) - 70,428 - 64,093
Cost of treasury stock
purchased (200 shares) - - - (3,400) - (3,400)
Restricted stock grants - 154,510 - 693,803 (848,313) -
Amortization of unearned
compensation - - - - 115,964 115,964
BALANCE, December 31, 1994 3,544,030 6,030,565 58,734,576 (17,196,800) (732,349) 50,380,022
Net income - - 4,044,321 - - 4,044,321
Dividends declared
($.87 per share) - - (2,119,155) - - (2,119,155)
Proceeds from exercise
of stock options - (32,613) - 143,170 - 110,557
Cost of treasury stock
purchased (24,241 shares) - - - (374,475) - (374,475)
Restricted stock grants - (29,215) - 198,202 (168,987) -
Amortization of unearned
compensation - - - - 200,728 200,728
BALANCE, December 31, 1995 $3,544,030 $5,968,737 $60,659,742 $(17,229,903) $(700,608) $52,241,998
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies -
Principles of consolidation -
The consolidated financial statements of The Ziegler Companies, Inc. and
subsidiaries (the "Company") include the accounts of The Ziegler
Companies, Inc. and its wholly-owned subsidiaries, B. C. Ziegler and
Company ("BCZ"), Ziegler Thrift Trading, Inc. ("ZTT"), Ziegler Financing
Corporation ("ZFC"), Ziegler Leasing Corporation ("ZLC"), Ziegler Asset
Management, Inc. ("ZAMI"), Ziegler Collateralized Securities, Inc.
("ZCSI"), WRR Environmental Services Co., Inc. ("WRR") and First Church
Financing Corporation ("FCFC"). All significant intercompany balances
and transactions have been eliminated in consolidation.
The Company, through its financial services subsidiaries, provides a
wide range of financial services for businesses, institutions and
individuals. WRR recycles, reclaims and disposes of industrial
chemicals and solvents and provides pollution abatement services.
The Company has a 50% interest in Ziegler Mortgage Securities, Inc. II
("ZMSI II"), an unconsolidated entity accounted for by the equity
method.
The Company acquired a 33% interest in Heartland Capital Company, LLC
("HCC"), a start-up company organized to provide construction loans to
low income housing developments. HCC did not have a significant impact
on the consolidated financial statements in 1995 or 1994. HCC is an
unconsolidated entity accounted for by the equity method.
Securities -
Security transactions are recorded on a settlement date basis which is
not materially different from a trade date basis. Investment banking
revenue is recorded net of directly related expenses.
Short-term investments consist of commercial paper, variable rate demand
notes, money market investments, equities and U.S. Government and U.S.
Government agency securities purchased under agreements to resell.
Securities purchased under agreements to resell, and securities sold
under agreements to repurchase, are treated as financing transactions
and are carried at the amounts at which the securities will be
subsequently resold or repurchased as specified in the respective
agreements. Other short-term investments are carried at approximate
market. The reported value of the securities inventory is carried at
approximate market.
At December 31, 1995, there were unrealized gains totaling approximately
$388,000 on short-term investments and securities inventory. At
December 31, 1994, the market value of the short-term investments and
the securities inventory was not materially different from cost.
Lease contracts -
ZLC leases various types of equipment to hospitals and other
organizations. The terms of these contracts generally range from one to
seven years. Depending on the lease terms, they are classified as
operating, financing or leveraged leases in accordance with Statement of
Financial Accounting Standards No. 13. Generally, third parties finance
approximately 75% to 90% of the leveraged leases in the form of
long-term debt that provides no recourse against ZLC and is secured by a
first lien on the property.
Initial direct costs -
Initial direct costs are those costs incurred by the Company that are
directly associated with negotiating and consummating completed leasing
transactions. For operating and financing leases, the Company defers
and amortizes initial direct costs over the lease term as an adjustment
to the yield. The unamortized initial direct costs are reported as part
of the investment in leases on the balance sheets.
Depreciation -
Depreciation is computed on buildings and equipment on a straight-line
basis. The buildings are depreciated over 20 to 40 years and equipment
over 3 to 10 years. Equipment under operating leases is depreciated
over the terms of the respective leases.
Income taxes-
The provision for income taxes is the estimated amount of income taxes
payable, both currently and in the future, on consolidated pretax
earnings for the year at current Federal and state tax rates. Deferred
income taxes have been provided for those transactions, primarily
investment in lease transactions, which are accounted for in different
periods for financial reporting purposes than for income tax purposes.
Net Income Per Share of Common Stock -
Net income per share of common stock is calculated based on the weighted
average number of common shares outstanding, including restricted common
stock, using the treasury stock method.
Cash Equivalents -
Cash equivalents are defined as short-term investments maturing within
three months of the date of purchase.
Use of Estimates -
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 dates of the
financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
Accounting Changes -
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of". The Company is required to adopt this
Statement no later than its 1996 fiscal year.
In October 1995, SFAS No. 123, "Accounting for Stock Based
Compensation", was issued and also requires adoption by the Company no
later than its 1996 fiscal year. The standard requires expanded
disclosures, and permits, but does not require, changes in the
accounting for stock based compensation.
The implementation of SFAS No. 121 and SFAS No. 123 is not expected to
have a material impact on the financial statements.
Effective January 1, 1995, the Company adopted SFAS No. 114, "Accounting
by Creditors for Impairment of a Loan", and SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan-Income Recognition and Disclosures",
(collectively "SFAS 114"). SFAS 114 requires that certain impaired
loans and leases be measured based on the present value of expected
future cash flows discounted at the loans' or leases' effective interest
rates. As a result of these new standards, no additional allowance for
losses was required as of January 1, 1995. At December 31, 1995, the
Company had no material impaired loans or leases requiring evaluation
under SFAS 114.
Reclassification-
Certain prior year amounts have been reclassified to conform with
current year presentation.
(2) Securities Inventory -
Securities inventory at December 31, 1995 and 1994, consisted of the
following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Municipal bond issues $20,351,886 $11,344,996
Corporate bond issues 2,230,918 189,345
Institutional bond issues 2,589,739 4,826,932
U.S. Government securities - 4,157,527
Preferred stock 1,263,826 519,001
Other 1,715,371 1,765,283
$28,151,740 $22,803,084
</TABLE>
Municipal bond issues consist primarily of revenue bonds issued by state
and local governmental authorities related to healthcare facilities.
Corporate bond issues consist primarily of bonds issued by for-profit
corporations. Institutional bond issues consist primarily of bonds
issued by not-for-profit hospitals, geriatric care facilities and
churches.
Included in municipal bond issues at December 31, 1995, are
approximately $12,580,000 of bonds from one issuer in Texas. These
bonds were substantially sold subsequent to year-end.
(3) Investment in Leases -
Approximately 76% of the Company's investment in leases is concentrated
in the healthcare industry. Investment in leases consisted of the
following:
<TABLE>
<CAPTION>
December 31,
1995 1994
<S> <C> <C>
Financing leases -
Lease contracts receivable $37,214,062 $38,632,162
Estimated residual value 3,669,562 4,104,599
Deferred initial direct costs 512,114 634,902
Less -
Unearned income (6,357,433) (6,620,784)
Allowance for losses (476,126) (587,132)
Investment in financing leases 34,562,179 36,163,747
Leveraged leases -
Lease contracts receivable (net of
principal and interest on the
nonrecourse debt) 766,072 1,073,586
Estimated residual value 2,099,954 1,970,941
Less -
Unearned income (485,624) (566,042)
Investment in leveraged leases 2,380,402 2,478,485
Operating leases -
Equipment on rental, at cost 25,468,242 28,383,149
Less accumulated depreciation (11,458,824) (11,164,178)
Deferred initial direct costs 138,835 201,535
Investment in operating leases 14,148,253 17,420,506
Total investment in leases $51,090,834 $56,062,738
</TABLE>
Deferred income taxes arising from leveraged leases were $2,073,745 and
$1,804,727 as of December 31, 1995 and 1994, respectively, resulting in
a net investment in leveraged leases of $306,657 and $673,758,
respectively.
The following is a summary of scheduled payments to be received on
financing, leveraged, and noncancellable operating lease contracts:
<TABLE>
<CAPTION>
Financing Leveraged Operating
<C> <C> <C> <C>
1996 $13,676,503 $ 270,623 $ 4,903,147
1997 10,313,867 196,843 3,173,497
1998 7,182,383 291,932 2,014,828
1999 4,181,704 6,674 1,045,378
2000 1,679,568 - 363,125
Thereafter 180,037 - -
$37,214,062 $ 766,072 $11,499,975
</TABLE>
(4) Investment in ZMSI II -
Condensed financial information of ZMSI II as of December 31, 1995 and
1994, and for the three year period ended December 31, 1995 is as
follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Mortgage Certificates, net of
unamortized discount of $3,425,237
and $3,453,038, respectively $116,345,952 $113,401,638
Deferred bond issuance costs 3,378,116 3,409,878
Cash and cash equivalents, primarily
held by trustee 4,632,392 4,736,534
Accrued interest receivable 855,783 844,075
Total assets $125,212,243 $122,392,125
Mortgage Certificate-Backed Bonds payable $119,908,000 $117,018,000
Accrued interest payable 3,716,958 3,613,928
Due to BCZ 67,285 240,197
Total liabilities 123,692,243 120,872,125
Stockholders' equity ($1,510,000 held by
the Company) 1,520,000 1,520,000
Total liabilities and
stockholders' equity $125,212,243 $122,392,125
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Income, primarily interest $10,623,778 $11,144,634 $17,010,650
Expenses -
Interest expense 9,764,637 9,654,473 14,443,586
Amortization of bond issuance
costs 359,513 1,111,631 2,138,311
Management fee earned by BCZ 349,925 158,801 179,930
General and administrative
expense 149,703 219,729 248,823
Total expenses 10,623,778 11,144,634 17,010,650
Net income $ - $ - $ -
</TABLE>
The Mortgage Certificate-Backed Bonds are collateralized by the Mortgage
Certificates, which consist of Government National Mortgage Association
certificates and Federal National Mortgage Association certificates.
(5) Ziegler Collateralized Securities, Inc. -
ZCSI was organized to facilitate the financing of equipment purchases
and leases by securitizing such purchases and leases for offerings to
the public. Summarized financial information of ZCSI as of December 31,
1995 and 1994 and for the years ended December 31, 1995, 1994 and 1993
is as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Investment in leases $ 8,818,566 $10,509,676
Notes receivable 6,865,720 3,487,364
Other assets 2,614,081 1,815,606
Total assets $18,298,367 $15,812,646
Bonds payable $15,070,000 $12,522,000
Other liabilities, primarily a
subordinated note to Company 3,218,367 3,280,646
Total liabilities 18,288,367 15,802,646
Stockholder's equity 10,000 10,000
Total liabilities and
stockholder's equity $18,298,367 $15,812,646
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Lease income $ 877,242 $ 993,566 $ 908,886
Other income, primarily interest 519,381 248,845 24,452
Total income 1,396,623 1,242,411 933,338
Interest expense 988,358 763,019 539,650
Management fees to ZLC 61,423 153,024 147,095
Other expenses 346,842 326,368 246,593
Total expenses 1,396,623 1,242,411 933,338
Net income $ - $ - $ -
</TABLE>
In accordance with a written agreement with ZLC, which provides
management and administrative services to ZCSI, management fees paid to
ZLC were limited to the amount which prevented ZCSI from incurring a
loss.
An analysis of each outstanding bond series as of December 31, 1995 and
for the year then ended is as follows:
<TABLE>
<CAPTION>
Collateral Lease/ Bond Other Excess
Bonds Value Note Interest Related of
Series # Outstanding at Cost Income Expense Expenses Income
<C> <C> <C> <C> <C> <C> <C>
1 $ 217,000 $ 340,813 $ 83,350 $ 47,815 $ 11,386 $24,149
2 $ 902,000 $1,036,372 $119,825 $ 87,609 $ 22,617 $ 9,599
3 $ 850,000 $ 960,364 $155,304 $ 86,325 $ 39,793 $29,186
4 $1,701,000 $1,909,933 $226,030 $126,775 $ 39,563 $59,692
5 $4,200,000 $5,452,573 $473,958 $329,000 $123,220 $21,738
6 $7,200,000 $8,145,934 $171,851 $132,016 $ 32,622 $ 7,213
</TABLE>
(6) Short-Term Notes Payable, Lines of Credit,
Notes Payable to Banks and Bonds Payable -
The Company finances the operations of certain subsidiaries by issuing
commercial paper (short-term notes payable). During 1995, 1994 and
1993, it had average outstanding balances of approximately $19,882,000,
$20,856,000 and $18,889,000, respectively. Maximum borrowings based on
month-end outstanding balances for those same years were approximately
$21,590,000, $21,707,000 and $19,434,000, respectively. During 1995,
1994 and 1993, the weighted average interest rates incurred were 6.8%,
4.8%, and 3.8%, respectively, based on month-end outstanding balances.
The average discount rates on short-term notes payable outstanding as of
December 31, 1995 and 1994, were 6.75% and 4.83%, respectively.
The Company had lines of credit as of December 31, 1995 and 1994,
totaling $26,000,000. In accordance with normal banking practice, these
lines may be withdrawn at the discretion of the lenders. In connection
with certain of these bank lines, the Company is required to maintain,
as compensating balances, average collected funds, which at December 31,
1995 and 1994, approximated $380,000. There are no legal restrictions
on the withdrawal of these funds. Interest expense incurred in
connection with borrowings against its lines of credit was not material
in 1995, 1994 or 1993. One of the bank lines for $3,000,000 is shared
with the family of mutual funds sponsored by BCZ. All borrowings under
this line of credit by the funds are guaranteed by BCZ. The family of
mutual funds had no borrowings outstanding at December 31, 1995, and
$75,000 outstanding at December 31, 1994.
BCZ periodically obtains short-term borrowings for specific
underwritings under broker loan facilities at the market rate of
interest to broker- dealers, payable on demand and fully collateralized
by the securities held in inventory. Such amounts are generally
outstanding for periods of less than two weeks and total interest
expense in connection with such borrowings was not material in 1995,
1994 or 1993.
BCZ serves as the remarketing agent on certain variable-rate municipal
bonds that can be tendered back to the respective issuers, generally
upon seven days advance notice, by the holders. To assist it in
carrying out its remarketing duties, BCZ has obtained $75,000,000 of
borrowing capacity to allow it to finance the purchase of tendered bonds
it elects to purchase into its own inventory. These loan facilities are
restricted to financing only variable-rate, municipal bonds and each
financing must be approved by the lenders, in advance. The financings
are done at the lenders' prime rates, are payable on demand and are
fully collateralized by the variable-rate, municipal bonds. Such
amounts are generally outstanding for periods of less than two weeks and
total interest expense in connection with such borrowings was not
material in either 1995 or 1994. There were no such borrowings
outstanding at December 31, 1995 or 1994.
Notes payable to banks consisted of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Unsecured promissory note, 10.02%
interest, principal due May, 1996 $ 6,000,000 $ 8,000,000
Unsecured term note, 8.0% interest,
principal due - $1,000,000 in
December, 1996 with any remaining
due in December, 1997 4,000,000 5,000,000
Secured note, prime plus .5% - 40,503
Secured promissory note; bearing
interest at 8%; interest-only
payments due monthly; principal
payable in six equal monthly
payments of $116,624 commencing
May, 1996; collateralized by
inventory 699,746 -
Secured promissory note; bearing
interest at 8%; due in monthly
principal and interest installments
of approximately $2,900 through
September, 2002 with a final
payment of approximately $286,000
due October, 2002; collateralized
by land and buildings 348,205 -
Borrowings under unsecured lines
of credit 11,402,000 11,280,000
Other - nonrecourse notes,
collateralized by leased equipment,
interest ranging from 7.00%-10.55%,
payable in monthly installments
through November, 1997 2,110,021 2,579,851
$24,559,972 $26,900,354
</TABLE>
Among other restrictions of the debt agreements, ZLC is required to
maintain tangible net worth, as defined, of $10,600,000. At December
31, 1995, tangible net worth was $11,237,000.
Bonds payable at December 31, 1995 and 1994, consisted of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
First Church Financing Corporation
Mortgage-Backed Bonds:
Series 1 - due March, 2008;
interest at 8.25% $ 3,479,000 $ 4,158,000
Series 2 - due August, 2009;
interest at 8.75% 4,195,000 4,456,000
Series 3 - due December, 2010;
interest at 8.00% 4,223,000 -
Waste Research and Reclamation Co.,
Inc., Small Business Pollution
Control Revenue Bonds, due in
monthly principal and interest
installments of approximately
$6,000, through December 1, 2004,
bearing interest at 7.5% 436,990 469,241
Ziegler Collateralized Securities,
Inc., Collateralized Bonds;
collateralized by equipment leases
and other financing agreements;
guaranteed by The Ziegler Companies,
Inc.:
Series 1 - due serially through
June, 1996; interest
ranging from 6.00% to 7.75% 217,000 900,000
Series 2 - due serially through
July, 1997; interest
ranging from 5.00% to 7.00% 902,000 2,400,000
Series 3 - due serially through
June, 1998; interest
ranging from 5.00% to 6.75% 850,000 1,770,000
Series 4 - due serially through
December, 1998; interest
ranging from 4.75% to 6.5% 1,701,000 2,452,000
Series 5 - due serially through
October, 2001; interest
ranging from 6.25% to 7.75% 4,200,000 5,000,000
Series 6 - due serially through
March, 2001; interest
ranging from 6.00% to 7.00% 7,200,000 -
Ziegler Leasing Corporation Five-Year
Extendable/Redeemable Notes, Series
1991, 8.75% interest, unsecured;
principal redeemable by holders
December, 1996 and December, 2001;
principal redeemable by ZLC after
November, 1993, any remaining due
in December, 2006 10,000,000 10,000,000
$37,403,990 $31,605,241
</TABLE>
Annual amounts due on notes payable to banks and bonds payable for the
next five years are:
<TABLE>
<S> <C>
1996 $33,795,603
1997 5,449,402
1998 6,564,603
1999 2,462,945
2000 1,097,857
Thereafter 12,593,552
$61,963,962
</TABLE>
(7) Related Party Transactions -
BCZ sponsors the Principal Preservation Portfolios, Inc. family of
mutual funds. Certain BCZ officers and directors also serve as officers
or directors of the funds. BCZ performs investment advisory services,
transfer agency services, depository services and administrative
services for the funds. ZAMI also provides investment advisory services
to the funds. Fees for services earned from the funds approximated
$2,253,000, $2,009,000 and $2,073,000 in 1995, 1994 and 1993,
respectively.
BCZ serves as Manager of ZMSI II pursuant to a written agreement. BCZ
also advances funds to ZMSI II and owns $1,500,000 of $9 non-cumulative,
non-voting preferred stock in ZMSI II. See Note 4 for the ZMSI II
intercompany balances with The Ziegler Companies, Inc. and BCZ for the
years ended December 31, 1995 and 1994.
(8) Retirement Plans -
The Company has contributory profit sharing plans for substantially all
full-time employees. BCZ and ZTT have plans which provide for a
guaranteed company match equal to 50% of employee contributions and a
discretionary annual company contribution up to 6% of defined
compensation for each year. The annual company contributions are at the
discretion of the boards of directors. WRR has a plan that provides a
company match equal to 100% of employee contributions up to a maximum
match of 1.43% of defined compensation. WRR also provides a company
contribution equal to 3.88% of defined compensation. Retirement plan
expense of the Company and subsidiaries was $1,159,000, $820,000 and
$1,065,000 in 1995, 1994 and 1993, respectively.
(9) Provision for Income Taxes -
The provision for income taxes for the years ended December 31, 1995,
1994 and 1993, consisted of the following:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Current Federal $1,632,800 $ 535,400 $1,920,100
Current state 623,500 137,800 474,800
Deferred provision 35,900 444,100 498,300
Total $2,292,200 $1,117,300 $2,893,200
</TABLE>
The following are reconciliations of the statutory Federal income tax
rates for 1995, 1994 and 1993 to the effective income tax rates:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Statutory Federal income tax rate 34.0% 34.0% 34.0%
State taxes on income, net of related
Federal income tax benefit 5.0% 4.5% 4.8%
Federal tax-exempt interest income (2.4%) (5.0%) (1.5%)
Other, net (.4%) 2.3% 1.6%
Effective income tax rate 36.2% 35.8% 38.9%
</TABLE>
The tax effects of temporary differences that give rise to significant
elements of the deferred tax assets and deferred tax liabilities at
December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Deferred tax assets:
Allowance for uncollectible accounts $ (807,277) $ (794,142)
Alternative minimum tax carryforward - (754,595)
Other (878,932) (865,392)
Total deferred tax assets (1,686,209) (2,414,129)
Deferred tax liabilities:
Fixed assets (primarily due to
depreciation) 84,748 105,944
Investment in leases 6,691,515 7,239,691
Other 268,529 391,173
Total deferred tax liabilities 7,044,792 7,736,808
Net deferred tax liabilities $5,358,583 $5,322,679
</TABLE>
(10) Other Assets -
In 1993, the Company entered into a loan for $4,610,000 with an
organization which was experiencing difficulties making required debt
service payments on an outstanding bond issue underwritten by BCZ. The
loan is due on demand, is interest free and requires weekly principal
payments totaling $7,000. The loan proceeds were used to redeem the
organization's outstanding bond issue in full. The amount due the
Company at December 31, 1995 was approximately $3,827,000.
The bonds were, and the loan is, secured by first mortgages on the
underlying real estate. The bonds and the loan are recorded at cost,
net of an allowance for possible losses, totaling approximately
$2,991,000 and $3,578,000 at December 31, 1995 and 1994, respectively.
While it had no obligation to do so, the Company elected to repurchase
the bonds and make the loan to maintain its business reputation and the
confidence of the purchasers of securities BCZ underwrites.
(11) Preferred Stock -
The Company is authorized to issue 500,000 shares of preferred stock, $1
par value, which is undesignated as to series.
(12) Stock Option Plans -
In 1993, the Company established the 1993 Employees' Stock Incentive
Plan (the "1993 Plan") for certain officers and key employees. On
December 29, 1993, the Board of Directors granted options to purchase
54,500 shares of Company stock under this Plan. The options are
exercisable through December 28, 2003 at a price of $16.625 per share.
Options forfeited totaled 2,000 in 1995; none were forfeited in 1994 or
1993. No options were exercised during 1995, 1994 or 1993. A total of
200,000 shares are issuable under the Plan. Options granted under the
1993 Plan that expire, terminate or are cancelled are again available
for the granting of future options.
On January 26, 1994, the Company issued an aggregate of 49,000 shares of
restricted common stock of the Company to certain key employees pursuant
to the 1993 Plan. Each employee's ownership of shares is subject to
full or partial forfeiture in accordance with a vesting schedule in the
event that the employee's employment with the Company terminates for any
reason before January 26, 2003. The market value of the restricted
stock, when issued, was $17.3125 per share. The total value at issuance
is being amortized and recorded as compensation over the period of
vesting. The shares are considered as outstanding, but may not be
transferred by the recipients until vested.
On January 27, 1995, the Company issued an aggregate of 11,313 shares of
restricted common stock of the Company to certain key employees pursuant
to the 1993 Plan. Each employee's ownership of shares is subject to
full or partial forfeiture in accordance with a vesting schedule in the
event that the employee's employment with the Company terminates for any
reason before January 27, 2000. In 1995, 401 of these shares were
forfeited. The market value of the restricted stock, when issued, was
$14.9375 per share. The total value at issuance is being amortized and
recorded as compensation over the period of vesting. The shares are
considered as outstanding, but may not be transferred by the recipients
until vested.
The 1989 Employees' Stock Purchase Plan (the "1989 Plan") was
established for substantially all full-time employees. On May 1, 1993,
the Board of Directors granted options to purchase 80,960 shares under
the 1989 Plan. The May 1, 1993 options still outstanding expired on
April 30, 1995. On May 1, 1995, the Board of Directors granted options
to purchase 104,200 shares.
Activity relating to the common stock options under the 1989 Plan was:
<TABLE>
<CAPTION>
1995 1994
(Number of Shares)
<S> <C> <C>
Options outstanding, beginning of year 71,387 77,882
Options exercised (7,467) (3,535)
Options forfeited (7,270) (2,960)
Options expired (63,835) -
Additional options granted 104,200 -
Options outstanding, end of year 97,015 71,387
</TABLE>
All outstanding options are currently exercisable through April 30,
1997, at 85% of the market value on the date of exercise. Shares were
exercised at prices averaging $13.38 per share during 1995. Under the
1989 Plan, 24,065 shares are available for future granting at 85% of the
market value on the date of exercise. Options granted under the 1989
Plan that expire, terminate or are cancelled are again available for the
granting of future options.
The effect of outstanding stock options on net income per share is not
material.
(13) Net Capital Requirements and Customer Reserve Accounts -
As registered broker-dealers, BCZ and ZTT are subject to the
requirements of Rule 15c3-1 (the "net capital rule") under the
Securities Exchange Act of 1934. The basic concept of the rule is
liquidity, requiring a broker-dealer to have sufficient liquid assets at
all times to cover current indebtedness. Specifically, the rule
prohibits a broker-dealer from permitting "aggregate indebtedness" to
exceed 15 times "net capital" (15 to 1) as those terms are defined.
Approximate net capital data as of December 31, 1995, is as follows:
<TABLE>
<CAPTION>
BCZ ZTT
<S> <C> <C>
Aggregate indebtedness $15,809,000 $1,419,000
Net capital $14,541,000 $1,093,000
Ratio of aggregate indebtedness
to net capital 1.09 to 1 1.30 to 1
Required net capital $ 1,054,000 $ 250,000
</TABLE>
In accordance with Securities and Exchange Commission Rule 15c3-3, BCZ
and ZTT maintain separate bank accounts for the exclusive benefit of
customers. The amounts maintained in these accounts are determined by
periodic computations required under the rule, which allows the
companies to maintain the computed amounts in cash or qualified
securities. As of December 31, 1995 and 1994, there were approximately
$4,936,900 and $5,924,200, respectively, in the customer reserve
accounts.
(14) Segment Information -
Information about the Company's operations by major industry segment is
as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1995
Income
Before Total Depreciation
Revenues Taxes Assets Expense
<S> <C> <C> <C> <C>
Broker-dealer $37,679,955 $3,625,194 $ 53,681,199 $ 684,541
Lease financing 11,677,920 1,066,380 68,625,343 4,538,560
Real estate financing 197,488 122,420 4,280,944 -
Corporate and other 5,653,805 1,522,527 29,257,908 415,309
Consolidated $55,209,168 $6,336,521 $155,845,394 $5,638,410
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1994
Income
(Loss)
Before Total Depreciation
Revenues Taxes Assets Expense
<S> <C> <C> <C> <C>
Broker-dealer $30,324,225 $ 686,114 $ 56,636,013 $ 675,699
Lease financing 11,872,082 1,205,679 67,983,998 4,813,728
Real estate financing 328,164 (69,471) 5,044,727 -
Corporate and other 4,557,020 1,300,034 22,775,469 350,206
Consolidated $47,081,491 $3,122,356 $152,440,207 $5,839,633
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1993
Income
Before Total Depreciation
Revenues Taxes Assets Expense
<S> <C> <C> <C> <C>
Broker-dealer $35,237,620 $5,484,248 $ 47,195,182 $ 567,912
Lease financing 11,606,242 1,750,558 66,498,130 4,497,858
Real estate financing 350,957 64,509 7,923,869 -
Corporate and other 3,146,436 124,909 20,005,874 319,287
Consolidated $50,341,255 $7,424,224 $141,623,055 $5,385,057
</TABLE>
The industry segments above are each a separate company or group of
companies; therefore, all expenses and assets can be directly identified
with segment revenues. Intercompany revenues consist of interest income
earned by the Company on loans to subsidiaries and dividends from
subsidiaries. Substantially all other revenues are derived from
transactions with unaffiliated parties in the United States.
(15) Commitments and Contingent Liabilities -
In the normal course of business, BCZ enters into firm underwriting
commitments for the purchase of debt issues. These commitments require
BCZ to purchase debt issues at a specified price. To manage the
off-balance sheet credit and market risk exposure related to these
commitments, BCZ pre-sells the issues to its customers. BCZ had no such
commitments outstanding at December 31, 1995 or 1994.
As of December 31, 1995, ZLC had outstanding written agreements to
provide equipment lease financing for $5,214,174. To manage the
off-balance sheet credit and interest rate risk exposure related to
those commitments, ZLC retains the right to adjust or cancel the
commitments if adverse interest rate or credit conditions arise.
The Company leases office space under noncancellable lease agreements
which allow for annual adjustments to the minimum lease payments to
reflect increases in actual operating costs. BCZ leases computer
equipment under noncancellable agreements. WRR leases vehicles under
noncancellable lease agreements which allow for adjustments to the
minimum lease payments to reflect excess mileage above the agreed
mileage allowance. Minimum lease payments for office space, computer
equipment and vehicles, which extend through 2003, are:
<TABLE>
<C> <S>
1996 $1,567,000
1997 1,261,000
1998 647,000
1999 575,000
2000 507,000
2001 and after 1,006,000
</TABLE>
Rental expense for 1995, 1994 and 1993 was $2,293,000, $1,912,000 and
$1,853,000, respectively.
WRR is subject to a consent order of the Wisconsin Department of Natural
Resources for further testing and surface water control, and to remedial
1action under the federal Research, Conservation and Recovery Act
("RCRA"), of contaminants in ground water directly underneath the plant
site.
WRR has disposed of wastes at other recycling sites which may be added
to the National Priority List, and may be required to share in the cost
of the clean-up of these sites. As of December 31, 1995, WRR had been
identified as a potentially responsible party ("PRP") in connection with
three sites. For the first site, a reserve of $128,000 was established
based on WRR's review of documents, its knowledge of the site and its
experience with the clean-up of similar sites. No engineering studies
have yet been done to arrive at a more reliable cost estimate. Payments
on this site are expected to occur over the next five years. The
estimated cost of cleaning up a second site is between $10,000,000 and
$30,000,000 based on preliminary estimates from various consulting
firms. Based on the identification of other PRP's and the present
interim allocation schedule, WRR would be responsible for costs ranging
from $500,000 to $1,800,000. In accordance with Financial Accounting
Standards Board Interpretation No. 14, Reasonable Estimation of the
Amount of a Loss, WRR established a reserve of $589,000 to cover its
share of the clean-up costs of this second site. Payments on this site
are expected to occur over the next five years. In June 1994, WRR was
notified by the United States Environmental Protection Agency ("EPA")
that WRR is a PRP at a third site to which WRR delivered materials from
1982 to 1985. WRR's review of the remediation investigation and
feasibility study, and other materials prepared by EPA on account of
this site, indicates that WRR has valid defenses to any action by EPA to
collect remediation costs. The EPA's estimate of WRR's proportionate
share of anticipated remediation costs at this third site approximates
$200,000. No reserve has been established for this third site.
While WRR is jointly and severally liable on all three sites, management
is not aware of circumstances which could lead to non-performance by the
other PRP's when viewed as a group. No potential insurance recovery or
reimbursements from WRR's liability insurance carriers has been accrued
in the financial statements. The reserve for accrued loss contingencies
totaled $716,914 and $633,124 at December 31, 1995 and 1994,
respectively. It is reasonably possible that WRR's estimates of its
liability related to the clean-up of these sites may change materially
in the near term.
(16) Fair Value of Financial Instruments -
Financial Accounting Standard No. 107, "Disclosure about Fair Value of
Financial Instruments" requires that the Company disclose the fair value
of financial instruments for both assets and liabilities for which it is
practicable to estimate that value. Where readily available, quoted
market prices were utilized by the Company. If quoted market prices
were not available, fair values were based on estimates using present
value or other valuation techniques. These techniques were
significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. The calculated fair value
estimates, therefore, cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in
immediate settlement of the instrument. Statement No. 107 excludes
certain financial instruments and all nonfinancial instruments from its
disclosure requirements. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
The book values, estimated fair values and the methods and assumptions
used to estimate the fair value of the financial instruments of the
Company are reflected below as of December 31, 1995.
Cash and cash equivalents -
The carrying values of cash and cash equivalents approximate the fair
values for those amounts.
Securities inventory -
The carrying value of securities inventory approximates the fair value
based on quoted market prices. See Note 1 for additional information.
Notes receivable -
The carrying value of notes receivable approximates the fair value based
on a discounted cash flow analysis. The discount rates were based on
the Company's current loan rates. For purposes of this Standard No.
107, the loan disclosed in Note 10 is also considered a note receivable.
Short-term notes payable -
The carrying value of short-term notes payable approximates the fair
value which was determined based on current market rates offered on
notes with similar terms and maturities.
Notes payable to banks -
The carrying value of notes payable to banks approximates the fair value
which was determined based on current market rates offered on notes with
similar terms and maturities.
Bonds payable -
The carrying value of bonds payable approximates the fair value which
was determined based on current market rates offered on bonds with
similar terms and maturities.
<PAGE>
Report of Independent Public Accountants
To the Stockholders and the Board of Directors of
The Ziegler Companies, Inc.:
We have audited the accompanying consolidated balance sheets of THE ZIEGLER
COMPANIES, INC. (a Wisconsin corporation) and subsidiaries as of December 31,
1995 and 1994, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. 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 financial position of The Ziegler Companies, Inc.
and subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
February 2, 1996.
<PAGE>
Management's Discussion and Analysis of
Financial Conditions and Results of Operations
Results of Operations (Comparison of Years 1995, 1994 and 1993)
The predominant activity of The Ziegler Companies, Inc., (the "Company" or
"ZCO") has been and continues to be investment banking, primarily the
underwriting and marketing of debt securities for the healthcare industry and
for churches and private schools. The Company is also involved in other
financial service activities, specifically equipment leasing services to the
healthcare industry and commercial/industrial customers, securitization of
leases for offerings to the public, full-commission and reduced-commission
brokerage services, investment management and advisory services, and interim
lending to investment banking clients. The nonfinancial services of the
Company are pollution abatement, as well as the recycling, reclaiming and
disposing of chemical wastes.
Total revenues of the Company in 1995 were $55,209,000 compared to $47,081,000
in 1994, an increase of $8,128,000 or 17%. The revenues for 1994 reflected a
decrease of $3,260,000 or 6% over revenues of $50,341,000 in 1993. Expenses
of the Company in 1995 were $48,873,000 compared to $43,959,000 in 1994, an
increase of $4,914,000 or 11%. The expenses in 1994 reflected an increase of
$1,042,000 or 2% over expenses of $42,917,000 in 1993. The provisions for
income taxes were $2,292,000, $1,117,000, and $2,893,000 in 1995, 1994, and
1993, respectively. The statutory federal income tax rates applicable to the
Company were 34% in each of the three years. Net income of the Company in
1995 was $4,044,000 compared to $2,005,000 in 1994, an increase of $2,039,000
or 102%. The net income for 1994 reflected a decrease of $2,526,000 or 56%
from net income of $4,531,000 in 1993. Earnings per share were $1.69, $.84,
and $1.90 in 1995, 1994, and 1993, respectively. Weighted average shares
outstanding did not change significantly during the three-year period. The
changes in revenues, operating expenses and net income were primarily a
reflection of factors related to investment banking, broker-dealer and lease
financing activities, as well as changes in the Company's nonfinancial
services company, WRR Environmental Services Co., Inc. These factors, as well
as the impact of other factors, are explained more fully in the information
that follows.
Investment Banking and Broker-Dealer Activities
B. C. Ziegler and Company ("BCZCO"), the investment banking and broker-dealer
subsidiary of the Company, had total revenues of $32,039,000 in 1995 compared
to $25,787,000 in 1994, an increase of $6,252,000 or 24%. Revenues from tax-
exempt underwriting in 1995 increased approximately 30% over 1994 levels. The
increase in revenues from tax-exempt underwriting was offset by a reduction in
taxable underwriting revenues. In total, underwriting revenues increased
$4,058,000 in 1995. Commission income from non-underwritten securities,
primarily mutual funds, decreased $91,000. Trading profits increased
$900,000, primarily due to the fact that the preferred stock trading
department, established in December 1994, had completed its first full year of
business. Offsetting the aforementioned increases were decreases in interest
income of $220,000 due to lower interest rates. Fee-generated revenues
increased $384,000 primarily due to increased volumes and an increase in
investment advisory and management fees.
Total expenses of BCZCO were $29,592,000 in 1995 compared to $25,899,000 in
1994, an increase of $3,693,000 or 14%. Employee compensation and benefits
increased $3,183,000 as the result of an increase in incentive and commission-
based payments, as well as expenses associated with an increase in personnel.
Data processing expenses increased $229,000 because of increased sales
activity and because of equipment and software enhancements. All other
expenses remained approximately the same as last year or increased modestly in
line with inflation and increased sales activities. Net income for BCZCO was
$1,555,000 in 1995 compared to $3,000 in 1994, an increase of $1,552,000.
BCZCO had total revenues of $25,787,000 in 1994 compared to $30,352,000 in
1993, a decrease of $4,565,000 or 15%. Tax-exempt underwriting revenues in
1994 decreased to 63% of 1993 levels in response to an industry-wide downturn
in underwriting volume caused by sharply increased interest rates and the
threat of national healthcare reform. Taxable underwriting volumes also
decreased, primarily the result of higher interest rates and fewer refinancing
opportunities. In total, underwriting revenues decreased $6,327,000 in 1994.
Commission income from non-underwritten product, primarily mutual funds,
decreased $1,085,000. Trading profits increased $1,728,000 as suitable
products were obtained for sale to customers to replace the shortfall in
underwritten products. Further offsetting the aforementioned decreases were
increases in interest income of $693,000 due to favorable interest arbitrage
opportunities, an increase in insurance agency revenues of $155,000, and an
increase in fee revenues of $270,000.
Total expenses of BCZCO were $25,899,000 in 1994 compared to $26,076,000 in
1993, a decrease of $177,000 or 1%. Employee compensation and benefits
decreased $964,000 as the result of a decrease in incentive and commission-
based payments which was partially offset by the expense associated with an
increase in investment sales brokers and a 4% general wage increase. Interest
expense increased $340,000 due to the interest rate arbitrage activities that
also increased revenues. All other expenses remained approximately the same
as last year or increased modestly in line with inflation and expenses
associated with additional product sales efforts. Net income for BCZCO was
$3,000 in 1994 compared to $2,659,000 in 1993, a decrease of $2,656,000.
Ziegler Thrift Trading, Inc. ("ZTT"), the reduced-commission brokerage service
of the Company, had total revenues of $4,434,000 in 1995 compared to
$3,474,000 in 1994, an increase of $960,000 or 28%. Commission income, the
primary source of revenues, increased $775,000 or 24% as the result of an 18%
increase in trading volume compared to 1994 coupled with a 5% increase in the
average commission earned per trade. Approximately $134,000 of 1995
commission income came from the operations of a discount brokerage operation
in Illinois which was purchased by ZTT in September 1995. The purchase price
was approximately $507,000. The assets acquired included all customer
accounts serviced by two sales offices in Illinois. A $132,000 increase in
fees earned on ZTT's stock option financing program and increases in other fee
generating services also contributed to the increased revenues in 1995. Total
expenses of ZTT were $3,341,000 in 1995 compared to $2,850,000 in 1994, an
increase of $491,000 or 17%. Most of the increase was from increases in
volume-based commission expense, employee compensation and benefits, the
acquisition mentioned above and increased interest expense incurred on the
stock option financing program. Net income for ZTT was $677,000 in 1995
compared to $382,000 in 1994, an increase of $295,000 or 77%.
ZTT had total revenues of $3,474,000 in 1994 compared to $4,027,000 in 1993, a
decrease of $553,000 or 14%. Commission income, the primary source of
revenues, declined $539,000 or 14% as the result of a 14% decrease in trading
volume compared to 1993. Other components of revenue did not change
significantly. Total expenses of ZTT were $2,850,000 in 1994 compared to
$3,073,000 in 1993, a decrease of $223,000 or 7%. Most of the decrease was
from decreases in volume-based commission and clearing fee expense and
employee compensation and benefits. Net income for ZTT was $382,000 in 1994
compared to $554,000 in 1993, a decrease of $172,000 or 31%.
Ziegler Asset Management, Inc. ("ZAMI"), the money management services
subsidiary of the Company, had total revenues of $1,479,000 in 1995 compared
to $1,383,000 in 1994, an increase of $96,000 or 7%. An increase in assets
under management to $587,000,000 is the reason for the increased revenues.
Total expenses of ZAMI were $1,393,000 in 1995 compared to $1,209,000 in 1994,
an increase of $184,000 or 15%. The primary reasons for the increase in
expenses are the increase of $347,000 associated primarily with the adding of
a new office devoted to fixed-income management services in mid-1994, and
$155,000 of expenses associated with the reimbursement of management fees.
Offsetting these increases is a reduction in fees paid to sub-advisors
approximating $252,000 and a reduction in other salaries and wages. Net
income for ZAMI was $48,000 in 1995 compared to $97,000 in 1994, a decrease of
$49,000 or 51%.
ZAMI had total revenues of $1,383,000 in 1994 compared to $1,204,000 in 1993,
an increase of $179,000 or 15%. An increase in assets under management to
$523,000,000 is the reason for the increased revenues. Total expenses of ZAMI
were $1,209,000 in 1994 compared to $949,000 in 1993, an increase of $260,000
or 27%. The primary reasons for the increase in expenses are the increase of
$127,000 associated primarily with the added personnel expenses of a new
office devoted to fixed-income management services and $84,000 of expenses
associated with the reimbursement of management fees. All other expenses did
not change significantly. Net income for ZAMI was $97,000 in 1994 compared to
$156,000 in 1993, a decrease of $59,000 or 38%.
Lease Financing Activities
Ziegler Leasing Corporation ("ZLC") is the primary lease financing subsidiary
of the Company. ZLC leases equipment and provides other financing primarily
to the healthcare industry as well as to commercial and industrial customers.
ZLC had total revenues of $10,498,000 in 1995 compared to $10,842,000 in 1994,
a decrease of $344,000 or 3%. The primary components of revenue are equipment
leasing and financing, and gains on the sale of leased equipment sold at the
termination of the leases. Equipment leasing income was $8,793,000 in 1995
compared to $9,259,000 in 1994, a decrease of $466,000 or 5%. The recognition
of leasing income is affected by the different methods of accounting for the
different types of leases and the timing of lease activations and
terminations. Lease activations in 1995 were approximately $18,000,000 or 20%
of total equipment on lease as of the beginning of the year. This was less
than the total of terminations and sales to Ziegler Collateralized Securities,
Inc., a related company, which caused the investment in leased equipment on
hand at December 31, 1995 to be approximately $3,281,000 less than the
investment in leased equipment on hand at December 31, 1994. This decrease is
the primary reason for the 5% decrease in lease income compared to 1994.
Gains on the sale of leased equipment were $665,000 in 1995 compared to
$842,000 in 1994, a decrease of $177,000 or 21%, primarily reflecting a 17%
drop in the volume of equipment terminated. Interest income was $685,000 in
1995 compared to $470,000 in 1994, an increase of $215,000 or 46%. The
increase is primarily due to an increase in the levels of notes receivables
outstanding during 1995. Fee income decreased $56,000 between years from
$229,000 in 1994 to $173,000 in 1995. Of the total fees, $127,000 in 1995 and
$212,000 in 1994 were received from Ziegler Collateralized Securities, Inc.
Total expenses of ZLC were $9,467,000 in 1995 compared to $9,666,000 in 1994,
a decrease of $199,000 or 2%. The largest component of expenses is
depreciation expense on operating lease equipment. The expense was $4,543,000
in 1995 compared to $4,817,000 in 1994, a decrease of $274,000 or 6% and is
attributable to the lower level of operating equipment on lease during 1995.
Another large component of expense is interest expense which was similar
between years at $2,890,000 in 1995 compared to $2,866,000 in 1994. Interest
expense reflects the financing of the assets associated with leases and, on a
smaller scale, notes. The steady interest expense is due to the decrease in
the average overall portfolio of leases, offset by an increase in the average
notes outstanding during the year. Other changes in expenses were not
significant. Net income for ZLC was $716,000 in 1995 compared to $764,000 in
1994, a decrease of $48,000 or 6%. Investments in leases and notes at
December 31, 1995, were $42,272,000 and $8,275,000, respectively.
ZLC had total revenues of $10,842,000 in 1994 compared to $10,863,000 in 1993,
a decrease of $21,000. The primary components of revenue are from equipment
leasing and financing, and from gains on the sale of leased equipment sold at
the termination of the leases. Equipment leasing income was $9,259,000 in
1994 compared to $9,482,000 in 1993, a decrease of $223,000 or 2%. The
recognition of leasing income is affected by the different methods of
accounting for the different types of leases and the timing of lease
activations and terminations. Lease activations in 1994 were $23,000,000 or
26% of total equipment on lease as of the beginning of the year. Although
activations exceeded the total of terminations and sales to Ziegler
Collateralized Securities, Inc., a related company, the average equipment on
lease in 1994 decreased 4% as compared to 1993. The decrease in average
equipment on lease is due to the timing of activations and terminations and is
the primary reason for the 2% decrease in lease income compared to 1993.
Total equipment on lease actually increased 4% during the year despite the
lower average of equipment on lease noted above, with the largest net increase
occurring in the fourth quarter.
Gains on the sale of leased equipment were $842,000 in 1994 compared to
$870,000 in 1993, a decrease of $28,000 or 3%, reflecting similar
circumstances involving volume of equipment terminated and market conditions
in both years. Interest income was $470,000 in 1994 compared to $258,000 in
1993, an increase of $212,000 or 82%. The increase is due to an increase in
the levels of notes and an increase in the rate of return on short-term
investments. Fee income remained comparable between years at $229,000 in 1994
compared to $240,000 in 1993. Of the total fees, $212,000 in 1994 and
$190,000 in 1993 were received from Ziegler Collateralized Securities, Inc.
Total expenses of ZLC were $9,666,000 in 1994 compared to $9,113,000 in 1993,
an increase of $553,000 or 6%. The largest component of expenses is
depreciation expense on operating lease equipment. The expense was $4,817,000
in 1994 compared to $4,498,000 in 1993, an increase of $319,000 or 7%, and is
attributable to the higher average level of operating equipment on lease
during 1994. Another large component of expense is interest expense which was
$2,866,000 in 1994 compared to $2,979,000 in 1993, a decrease of $113,000 or
4%. Interest expense reflects the financing of the assets associated with
leases and, on a smaller scale, notes. The decrease in interest expense is
due to the decrease in the average overall portfolio of leases, partially
offset by an increase in interest rates and an increase in the average notes
outstanding during the year. Other changes in expenses were not significant.
Net income for ZLC was $764,000 in 1994 compared to $1,076,000 in 1993, a
decrease of $312,000 or 29%. Investments in leases and notes at December 31,
1994 were $45,553,000 and $1,778,000, respectively.
Ziegler Collateralized Securities, Inc. ("ZCSI") facilitates the financing of
equipment leases and sales by securitizing equipment leases or notes
supporting equipment leases or sales, and offering the resulting securities to
the public. ZCSI purchases the leases and notes from ZLC, which also acts as
manager and lease servicer since ZCSI has no employees. ZCSI had six series
of bonds outstanding totaling $15,070,000 as of December 31, 1995, one of
which was issued in September of 1995 for $7,200,000. ZCSI had revenues of
$1,397,000 in 1995 compared to $1,242,000 in 1994, an increase of $155,000 or
12%. ZCSI revenues consist almost entirely of leasing income and note
interest income. The increase in revenues is due to the net purchase of
leases and notes for bond issues in 1994 and 1995. Expenses of ZCSI consist
primarily of interest expense, amortized bond issue costs, management and
servicing fees, and initial direct cost expense. Management and servicing
fees are paid to ZLC and are limited to an amount that would prevent ZCSI from
incurring a loss. Such fees earned in 1995 were $127,000 compared to $212,000
in 1994. Expenses equaled revenues in both 1995 and 1994. Investment in
leases and notes were $8,815,000 and $6,866,000, respectively, as of December
31, 1995.
Total ZCSI revenues of $1,242,000 in 1994 increased $309,000 or 33% over
revenues of $933,000 in 1993. Income from the leases and notes purchased in
1993 and 1994 was the reason for the increased revenues in 1994. Expenses of
ZCSI equaled revenues in both 1994 and 1993. Management fees paid to ZLC were
$212,000 in 1994 compared to $190,000 in 1993. Investment in leases and notes
as of December 31, 1994 were $10,510,000 and $3,487,000, respectively.
Other Services and Activities
Ziegler Financing Corporation ("ZFC") provides construction financing and
interim lending primarily to investment banking clients. Total revenues were
$327,000 in 1995 compared to $364,000 in 1994, a decrease of $37,000 or 10%.
Revenues consist primarily of interest income on loans and short-term
investments. A fluctuating level of loans associated with the demand for
interim lending is the reason behind the revenue differences between years.
In recent years, ZFC has accumulated loans for church construction projects
and sold them to First Church Financing Corporation ("FCFC"), a related
company. A portfolio of loans was sold to FCFC in both 1995 and 1994. Total
expenses of ZFC were $204,000 in 1995 compared to $433,000 in 1994, a decrease
of $229,000 or 53%. The decrease in expenses is due to a $186,000 swing in
ZFC's provision for losses and decreasing interest on borrowed funds. A
$100,000 provision for losses was recorded in 1994, relating to an investment
in two residual ownership interests totaling $170,000, the values of which
have been impaired. In 1995, approximately $86,000 of a previously
established provision for losses was transferred out of expenses when the
corresponding loan was sold to the Company at book value. There was net
income of $74,000 in 1995 compared to a net loss of $42,000 in 1994, an
increase of $116,000.
Total ZFC revenues were $364,000 in 1994 compared to $375,000 in 1993, a
decrease of $11,000 or 3%. Revenues consist primarily of interest income on
loans and short-term investments. A portfolio of loans was sold to FCFC in
both 1994 and 1993. Total expenses of ZFC were $433,000 in 1994 compared to
$311,000 in 1993, an increase of $122,000 or 39%. The increase in expenses is
due to a provision for losses of $100,000 and increasing interest rates on
borrowed funds. The $100,000 provision for losses is related to an investment
in two residual ownership interests totaling $170,000, the values of which
have been impaired. There was a net loss of $42,000 in 1994 compared to net
income of $40,000 in 1993, a decrease of $82,000.
First Church Financing Corporation ("FCFC") is organized for the purpose of
issuing mortgage-backed bonds collateralized by first mortgages on church
buildings and properties. FCFC has three series of bonds outstanding. The
second series totaled $4,456,000 and was issued during the third quarter of
1994. The third series totaled $4,223,000 and was issued on December 22,
1995. Total revenues of FCFC were $852,000 in 1995 compared to $611,000 in
1994, an increase of $241,000. This increase is directly related to the
interest received on the church loans that are associated with the bond issues
and are purchased by FCFC at the time of issue of the bonds. Total expenses
of FCFC were $799,000 in 1995 compared to $578,000 in 1994, an increase of
$221,000. Expenses reflect primarily interest on the bonds outstanding and
the increase is a reflection of the amount of bonds outstanding during all or
part of each of the years. Included among the expenses is a servicing fee
paid to ZFC as servicer of the church loans of $29,000 in 1995 and $21,000 in
1994. Net income for FCFC was $32,000 in 1995 compared to $20,000 in 1994.
Total revenues of FCFC were $611,000 in 1994 compared to $347,000 in 1993, an
increase of $264,000. This increase is directly related to the interest
received on the church loans that are associated with the bond issues and are
purchased by FCFC at the time of issue of the bonds. Total expenses of FCFC
were $578,000 in 1994 compared to $324,000 in 1993, an increase of $254,000.
Expenses reflect primarily interest on the bonds outstanding and the increase
is a reflection of the amount of bonds outstanding during all or part of each
of the years. Included among the expenses are servicing fees paid to ZFC of
$21,000 in 1994 and $12,000 in 1993. Net income for FCFC was $20,000 in 1994
compared to $14,000 in 1993.
WRR Environmental Services Co., Inc. ("WRR") is in the business of providing
pollution abatement services and recycling, reclaiming, and disposing of
chemical wastes. In addition, effective October 1995, a wholly-owned
subsidiary of WRR purchased the land, buildings, equipment, and certain
inventories of a company located adjacent to WRR which is primarily engaged in
the sale, installation and servicing of truck equipment. Total gross revenues
were $13,502,000 in 1995 compared to $10,648,000 in 1994, an increase of
$2,854,000 or 27%. WRR has increased revenue due primarily to $799,000 of
sales generated by the acquired business, an increase of $1,391,000 in
revenues from waste remediation services, and an increase of $695,000 in
revenues generated by waste disposal services. The 1995 sales mix resulted in
a gross margin percentage of 28% in 1995 compared to 29% in 1994. Total
dollars of gross margin were $3,762,000 in 1995 compared to $3,087,000 in
1994, an increase of $675,000 or 22%. Total expenses of WRR other than cost
of sales were $2,346,000 in 1995 compared to $2,218,000 in 1994, an increase
of $128,000 or 6%. The increase in expenses is due to personnel and
promotional costs associated with the increased marketing and sales
activities, increased transportation costs associated with higher levels of
business activity, and increased expenses associated with tax compliance and
insurance audits. Net income for WRR was $918,000 in 1995 compared to
$529,000 in 1994, an increase of $389,000 or 74%.
Total WRR gross revenues were $10,648,000 in 1994 compared to $9,450,000 in
1993, an increase of $1,198,000 or 13%. WRR increased revenue through
aggressive marketing and sales of new services, specifically waste remediation
services. Included in gross revenues was a project with a customer completed
during 1994 that amounted to approximately 21% of gross revenues. The gross
margin percentage was 29% in 1994 compared to 28% in 1993. Total dollars of
gross margin were $3,087,000 in 1994 compared to $2,660,000 in 1993, an
increase of $427,000 or 16%. Total expenses of WRR other than cost of sales
were $2,218,000 in 1994 compared to $2,208,000 in 1993, an increase of
$10,000. The increase in expenses is due to personnel and promotional costs
associated with the increased marketing and sales activities, and increased
expenses associated with tax compliance and insurance audits offset by a
$531,000 reduction in contingency loss provisions. Net income for WRR was
$529,000 in 1994 compared to $234,000 in 1993, an increase of $295,000 or
126%.
The Ziegler Companies, Inc. is the parent company of the subsidiaries and also
engages in limited investing activities. Total revenues of the Company were
$991,000 in 1995 compared to $859,000 in 1994, an increase of $132,000.
Revenues totaling $225,000 from an equity investment in a company that
provides construction loans to low-income housing developments, combined with
trading gains on company investments, were the primary causes of the increased
revenues. Offsetting these increases was a $192,000 decrease in interest
income related to a credit facility established by the Company for a
corporation that generates automobile loans for retail customers. The balance
outstanding on this credit facility at December 31, 1995, was $3,828,000. ZCO
expenses were $930,000 in 1995 compared to $452,000 in 1994, an increase of
$478,000 or 106%. A $120,000 increase in interest expense to support a higher
level of funds advanced during the year, combined with the transfer to the
Company of $336,000 of provision for losses associated with the purchase, at
book value, of a loan from ZFC, were the primary reasons for the increase.
Net income for the Company was $33,000 in 1995 compared to $263,000 in 1994.
Total revenues of the Company were $859,000 in 1994 compared to $107,000 in
1993, an increase of $752,000. An increase in interest income related to a
credit facility established by the Company for a corporation that generates
automobile loans for retail customers is the primary reason for the increase.
The balance outstanding on this credit facility at December 31, 1994 was
$5,025,000. A loss of $200,000 recorded in 1993 on an abandoned new business
venture also had an impact on the comparison of revenues between 1994 and
1993. ZCO expenses were $452,000 in 1994 compared to $383,000 in 1993, an
increase of $69,000 or 18% An increase in interest expense to support a
higher level of funds advanced under the aforementioned credit facility is the
primary reason for the increase. Expenses incurred in 1993 associated with
the establishment of the credit facility did not recur in 1994 and also had an
impact on the comparison of expense between years. Net income for the Company
was $263,000 compared to a net loss of $191,000 in 1993.
Liquidity and Capital Resources
The Company's primary activities involve investment banking, retail and
institutional securities brokerage, equipment leasing and other financial
services. Capital expenditures for assets other than leased equipment were
relatively insignificant during the year ended December 31, 1995. Land,
buildings and equipment, net of related depreciation and amortization, was
4.6% of total Company assets and investment in leases was 32.8% of total
Company assets.
The Company, specifically its financial subsidiaries, has a continuing
requirement for cash to finance its activities. A primary source of cash has
been and continues to be the issuance of short-term notes of the Company.
These notes vary in maturities up to 270 days. In 1995, a total of
$94,452,000 of notes was issued and $95,778,000 was repaid. In 1994, a total
of $103,861,000 of notes was issued and $103,363,000 was repaid. In 1993, a
total of $92,974,000 of notes was issued and $91,348,000 was repaid. The
total balance of short-term notes outstanding, without regard to interest
discounts, was $18,553,000 as of December 31, 1995, compared to $19,879,000 as
of December 31, 1994, and $20,442,000 as of December 31, 1993. This source of
additional cash was used primarily to finance leasing and lending activity and
remains an important source of cash for the Company.
ZLC also uses intermediate term, fixed-rate bank borrowings and five-year
extendable/redeemable, fixed-rate bonds issued to the public. The bank
borrowings are structured to mature in a pattern approximating the lease
agreements they support. Total indebtedness to the banks under these
borrowings was $10,000,000 at the end of 1995, $13,000,000 at the end of 1994,
and $15,000,000 at the end of 1993. The $10,000,000 five-year
extendable/redeemable bonds previously issued by ZLC mature December 1, 2006.
The holders of the extendable/redeemable bonds have the option of tendering
the bonds for repayment in whole or in part on December 1, 1996, and December
1, 2001. ZLC was also involved in nonrecourse debt issuance and repayments in
conjunction with leveraged leasing activities.
In 1993, ZFC entered into a loan for $4,610,000 with an organization which was
experiencing difficulties making required debt service payments on an
outstanding bond issue underwritten by BCZCO. The loan is due on demand, is
interest free and requires weekly principal payments totaling $7,000. The
loan proceeds were used to redeem the organization's outstanding bond issue in
full. This loan was transferred to ZCO at book value in 1995. The amount due
ZCO at December 31, 1995 is approximately $3,827,000. The loan is secured by
a first mortgage on the underlying real estate. The loan is recorded at cost,
net of allowances for possible losses previously provided, totaling
approximately $2,991,000 at December 31, 1995, and is included in Other Assets
on the balance sheets.
ZCSI issues bonds to the public as a source of cash. During 1995, ZCSI issued
$7,200,000 of bonds to the public and redeemed $4,335,000 of bonds which
matured, and $317,000 of bonds which were called. During 1994, ZCSI issued
$5,000,000 of bonds to the public, and redeemed $4,354,000 of bonds which
matured, and $264,000 of bonds which were called. During 1993, ZCSI issued
$6,840,000 of bonds and redeemed $1,800,000 of bonds which matured. Total
bonds outstanding at December 31, 1995, 1994, and 1993 were $15,070,000,
$12,522,000, and $12,140,000, respectively. The bonds are due serially from
January 1996 to October 2001. The bonds were used to finance the purchase of
lease obligations and lease financing notes and will mature in a pattern
approximating the maturities of the lease obligations and lease financing
notes that serve as collateral.
FCFC issues bonds to the public as a source of cash. Mandatory redemption on
the bonds is made from principal payments received on the mortgage loans which
serve as collateral for the bonds. Principal payments on the mortgage loans
are received in regular installments over 15-year amortization schedules
through 2010. During 1995, FCFC issued $4,223,000 of bonds to the public and
redeemed $940,000 of bonds which were called. During 1994, FCFC issued
$4,456,000 of bonds to the public and redeemed $329,000 of bonds which were
called. During 1993, FCFC issued $4,586,000 of bonds to the public and
redeemed $99,000 of bonds which were called. Total bonds outstanding at
December 31, 1995, 1994 and 1993, were $11,897,000, $8,614,000, and
$4,487,000, respectively.
WRR has bonds outstanding at a face value of $450,000. The bonds mature
serially each December through the year 2004. The bonds were issued in 1980
to finance continuing operations.
BCZCO finances most activities from its own resources and also relies upon
unsecured lines of credit available through banking relationships, if
necessary. Any utilization of these lines of credit is generally repaid in
less than 30 days. BCZCO also has broker loan and other collateralized
arrangements available through banking relationships.
The Company's cash and cash equivalent position allows a certain flexibility
in its financial activities. In order to maximize income, available cash is
invested in short-term investments such as commercial paper, money market
funds and reverse repurchase agreements at very short maturities in accordance
with the Company's liquidity requirements.
<PAGE>
<TABLE>
Five-Year Summary of Financial Data
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Operating
Revenues $ 55,209,168 $ 47,081,491 $ 50,341,255 $ 48,306,068 $ 41,342,278
Net Income
from
Continuing
Operations $ 4,044,321 $ 2,005,056 $ 4,531,024 $ 5,086,534 $ 3,811,858
Net Income
from
Continuing
Operations
Per
Common
Share $1.69 $ .82 $1.90 $2.01 $1.45
Cash Divi-
dends
Declared
Per Share
of Common
Stock $ .87 $ .72 $1.07 $ .97 $ .87
Total
Assets $155,845,394 $152,440,207 $141,623,055 $124,822,939 $117,182,297
Long-Term
Obliga-
tions $ 38,358,173 $ 38,331,881 $ 37,490,196 $ 33,588,703 $ 32,916,233
Short-Term
Notes
Payable $ 18,394,420 $ 19,728,501 $ 19,322,467 $ 17,708,751 $ 11,688,766
End of Year
Share-
holders'
Equity $ 52,241,998 $ 50,380,022 $ 49,951,855 $ 47,890,830 $ 49,121,674
Book Value
Per Share $21.48 $20.68 $20.96 $20.14 $18.65
</TABLE>
<PAGE>
<TABLE>
Quarterly Consolidated Results of Operations for 1995 and 1994
<CAPTION>
1995 Quarter Ended March 31 June 30 September 30 December 31
<S> <C> <C> <C> <C>
Revenues $11,331,000 $12,971,000 $12,564,000 $18,343,000
Expenses 11,328,000 11,753,000 11,370,000 14,421,000
Net Income 19,000 772,000 776,000 2,477,000
Net Income Per Share $ .01 $ .32 $ .32 $1.04
</TABLE>
<TABLE>
<CAPTION>
1994 Quarter Ended March 31 June 30 September 30 December 31
<S> <C> <C> <C> <C>
Revenues $11,133,000 $12,835,000 $12,187,000 $10,926,000
Expenses 10,988,000 11,049,000 11,130,000 10,792,000
Net Income 95,000 1,071,000 665,000 174,000
Net Income Per Share $ .04 $ .44 $ .27 $ .09
</TABLE>
<PAGE>
Directors and Executive Officers
DIRECTORS
J. C. Frueh
President, Aegis Group, Inc., Pittsburgh, Pennsylvania; Acquisition and
Management of Manufacturing and Distribution Companies
J. R. Green
Partner, Green, Manning & Bunch, Denver, Colorado; Merchant Banking Firm
W. R. Holmquist
Retired Senior Vice President of the Company
P. R. Kellogg
Chief Executive Officer and Senior Partner, Spear, Leeds & Kellogg; Specialist
Firm on the New York Stock Exchange
P. D. J. Kenny
Director of University Facilities - Mercer University, Macon, Georgia
F. J. Wenzel
Advisor to the President, Marshfield Clinic, Marshfield, Wisconsin; Executive
Vice President/Chief Executive Officer, Medical Group Management Association,
Englewood, Colorado
B. C. Ziegler III
President, Ziegler/Limbach, Inc., West Bend, Wisconsin; Business Development,
Management and Consulting
P. D. Ziegler
President and Chief Executive Officer
R. D. Ziegler
Chairman of the Board
B. C. Ziegler
Director Emeritus
EXECUTIVE OFFICERS
R. D. Ziegler
Chairman of the Board
P. D. Ziegler
President and Chief Executive Officer
S. C. O'Meara
Senior Vice President and General Counsel
L. R. Van Horn
Senior Vice President - Finance
V. C. Van Vooren
Senior Vice President, Treasurer and Assistant Secretary
J. R. Schmidt
Corporate Secretary
J. C. Vredenbregt
Assistant Treasurer and Controller
OFFICERS AND
SUBSIDIARIES
B. C. Ziegler
and Company
R. D. Ziegler
Chairman
P. D. Ziegler
President and Chief
Executive Officer
S. C. O'Meara
Senior Vice President
and General Counsel
D. A. Carlson, Jr.
Senior Vice President
M. P. Doyle
Senior Vice President-
Retail Operations
N. L. Fuerbringer
Senior Vice President-
Administration
E. H. Rudnicki
Senior Vice President
R. N. Spears
Senior Vice President
L. R. Van Horn
Senior Vice President-
Finance
V. C. Van Vooren
Senior Vice President
and Treasurer
J. C. Wagner
Senior Vice President-
Retail Sales
J. R. Wyatt
Senior Vice President
G. Aman
Vice President -
Insurance
M. A. Baumgartner
Vice President
J. L. Brendemuehl
Vice President -
Mutual Funds/UITs
J. M. Bushman
Vice President -
Recruiting and
Training Coordinator
M. S. Donahoe
Vice President
J. H. Downer
Vice President-
MIS Director
D. P. Frank
Vice President -
Director of Strategic
Planning and Change
S. K. Hittman
Vice President-
Personnel
R. J. Johnson
Vice President-
Compliance
D. J. Meizen
Vice President
L. C. Rosenheimer
Vice President - Bond
Sales Control
T. S. Ross
Vice President
D. A. Schlosser
Vice President
C. G. Stevens
Vice President -
Marketing Director
R. J. Tuszynski
Vice President -
Director of Mutual
Funds
J. C. Vredenbregt
Vice President,
Assistant Treasurer
and Controller
B. J. Bronson
Assistant Vice
President
H. C. Delcore
Assistant Vice
President
J. Ferrara, Jr.
Assistant Vice
President - Mutual
Funds
D. J. Hauser
Assistant Vice
President
S. A. Hron
Assistant Vice
President
B. A. Rahlf
Assistant Vice
President
S. D. Rolfs
Assistant Vice
President
R. C. Strzok
Assistant Vice
President -
Administration
J. R. Schmidt
Corporate Secretary
K. A. Lochen
Assistant Secretary
Vice Presidents-Sales:
S. C. Bass
D. S. Bast
W. L. Bruss
R. T. Bunn
R. A. Conn
J. O. Conwell
T. J. Doyle
R. W. Eggebrecht
A. G. Frey
S. A. Isaacson
G. R. Knutson
J. A. Kramer
S. S. Kurer
W. G. Morse
J. V. Noordyk
P. D. O'Brien
R. D. Ping
R. R. Poggenburg
T. P. Sancomb
D. J. Schoenwetter
C. D. Schrader
M. W. Severson
S. D. Steinke
W. R. Uebele
M. B. Walsh
G. M. Wilson
Assistant Vice
Presidents-Sales:
J. F. Cape
F. H. Ellenberger
W. T. Epping
T. J. Fitzgerald
W. F. Gould
N. E. Harris
J. D. Klanderman
P. J. Krause
W. J. Langley
L. D. Martin
D. L. Peterson
R. J. Ratterman
M. B. Seiser
R. R. Sims
A. A. Struebing
T. M. Turner
P. D. Voss
Ziegler Securities
Division
P. D. Ziegler
Chairman
D. A. Carlson, Jr.
President, Chief
Executive Officer and
Treasurer
J. M. Annett
Senior Vice President
and National Director
of Long-Term Care
Finance
J. B. Sterns
Senior Vice President
and National Director
of Healthcare Finance
M. A. Baumgartner
Senior Vice President
M. P. McDaniel
Senior Vice President
D. M. Rognerud
Senior Vice President
J. R. Wyatt
Senior Vice President
D. M. Kolzow
Vice President -
Operations
<PAGE>
S. D. Smith
Vice President and
Co-Manager of Special
Products Group
T. J. Sheehan
Vice President and
Co-Manager of Special
Products Group
T. L. Brod
Vice President
D. J. Hermann
Vice President
T. S. Howard
Vice President
M. J. Kane
Vice President
J. LeBuhn
Vice President
R. K. Price
Vice President
R. J. Scanlon
Vice President
E. K. Eng
Assistant Vice
President
J. M. Garza
Assistant Vice
President -
Information Systems
and Services
V. C. Van Vooren
Assistant Treasurer
Ziegler Financing
Corporation
E. H. Rudnicki
President
S. C. O'Meara
Senior Vice President
and General Counsel
J. M. Annett
Vice President
P. O. Faragasso
Vice President
R. K. Price
Vice President
L. R. Van Horn
Vice President and
Treasurer
J. R. Wyatt
Vice President
P. D. Ziegler
Vice President
V. C. Van Vooren
Secretary
J. C. Vredenbregt
Assistant Treasurer
Ziegler Leasing
Corporation
M. E. Sedlmeier
President and Chief
Executive Officer
S. C. O'Meara
Senior Vice President
and General Counsel
L. E. Johnson
Vice President -
Marketing
R. F. Jones
Vice President - Sales
T. A. Norman
Vice President -
Asset Management
P. D. Ziegler
Vice President
D. M. Pieper
Assistant Vice
President - Operations
J. R. Schmidt
Corporate Secretary
V. C. Van Vooren
Assistant Secretary
L. R. Van Horn
Treasurer
J. C. Vredenbregt
Assistant Treasurer
K. A. Kalnins
Controller
Ziegler Medical
Equipment Group, Inc.
T. A. Norman
President
M. E. Sedlmeier
Executive Vice
President
L. E. Johnson
Vice President -
Marketing
J. R. Schmidt
Corporate Secretary
K. A. Kalnins
Controller and
Treasurer
Ziegler Thrift
Trading, Inc.
R. D. Ziegler
Chairman
V. C. Van Vooren
President and Chief
Executive Officer
R. L. Kangrga
Vice President and
Assistant Secretary
M. W. Stefano
Vice President and
Treasurer
L. R. Van Horn
Vice President
J. R. Schmidt
Corporate Secretary
J. C. Vredenbregt
Assistant Treasurer
WRR Environmental
Services Co., Inc.
J. L. Hager
President and Chief
Executive Officer
J. D. Bisek
Vice President - Sales
and Marketing
J. Y. Lee
Vice President -
Quality Control
B. I. Heath
Vice President - Plant
Operations
First Church Financing
Corporation
E. H. Rudnicki
President
L. R. Van Horn
Secretary and
Treasurer
J. R. Schmidt
Assistant Secretary
Ziegler Asset
Management, Inc.
R. D. Ziegler
Chairman
G. G. Maclay, Jr.
President and Chief
Executive Officer
P. D. Ziegler
Senior Vice President
M. J. Dion
Vice President -
Portfolio Manager and
Chief Investment
Officer
R. F. Patek
Vice President -
Portfolio Manager
D. R. Wyatt
Vice President -
Retirement Plan
Services
D. L. Lauterbach
Vice President
R. J. Tuszynski
Vice President
J. R. Schmidt
Corporate Secretary
L. R. Van Horn
Treasurer
Ziegler Collateralized
Securities, Inc.
L. R. Van Horn
President
P. D. Ziegler
Vice President
J. R. Schmidt
Corporate Secretary
M. E. Sedlmeier
Treasurer
DIVISION AND SUBSIDIARY OFFICES
B. C. Ziegler and Company
Corporate Headquarters
215 North Main Street
West Bend, Wisconsin 53095-3348
(414) 334-5521
Investment Offices
Denver, Colorado
Fort Myers, Florida
Orlando, Florida
Arlington Heights, Illinois
Rockford, Illinois
Springfield, Illinois
Indianapolis, Indiana
West Des Moines, Iowa
Minneapolis, Minnesota
St. Louis, Missouri
Portland, Oregon
Appleton, Wisconsin
Fond du Lac, Wisconsin
Fort Atkinson, Wisconsin
Green Bay, Wisconsin
Kenosha, Wisconsin
LaCrosse, Wisconsin
Madison, Wisconsin
Milwaukee, Wisconsin
Mequon, Wisconsin
Sheboygan, Wisconsin
Wausau, Wisconsin
West Bend, Wisconsin
Preferred Stock Division
1001 West Glen Oaks Lane, Suite 101
Mequon, Wisconsin 53092-3365
(414) 241-7200
Ziegler Securities Division
Division Headquarters
One South Wacker Drive
Suite 3080
Chicago, Illinois 60606-4617
(312) 263-0110
Division Offices
Walnut Creek, California
St. Petersburg, Florida
Indianapolis, Indiana
Washington, D.C.
West Bend, Wisconsin
Ziegler Healthcare Affiliates
One South Wacker Drive
Suite 3080
Chicago, Illinois 60606-4617
(312) 263-0110
Ziegler Leasing Corporation
Corporate Headquarters
215 North Main Street
West Bend, Wisconsin 53095-3348
(414) 334-5521
Regional Offices
Roseville, California
Parker, Colorado
Roswell, Georgia
Ziegler Medical Equipment
Group, Inc.
9305 H Court
Omaha, Nebraska 68127-1247
(402) 593-0333
Ziegler Thrift Trading, Inc.
Corporate Headquarters
733 Marquette Avenue
Suite 106
Minneapolis, Minnesota 55402-2340
(612) 333-4206
Investment Offices
Minneapolis, Minnesota
St. Paul, Minnesota
Naperville, Illinois
Westchester, Illinois
Ziegler Investment Services
670 McKnight Road, North
Eastern Heights Bank Building
St. Paul, Minnesota 55119-4140
(612) 736-7974
Ziegler Asset Management, Inc.
215 North Main Street
West Bend, Wisconsin 53095-3348
(414) 334-5521
Fixed Income Division
100 East Wisconsin Avenue
Suite 1850
Milwaukee, Wisconsin 53202-4107
(414) 271-0464
WRR Environmental Services Co., Inc.
5200 State Road 93
Eau Claire, WI 54701-9808
(715) 834-9624
WRR Northwest Enterprises, Inc.
5100 State Road 93
Eau Claire, Wisconsin 54701-9808
(715) 834-8426
<PAGE>
Investor Information
Corporate Offices
215 North Main Street
West Bend, Wisconsin 53095-3348
Annual Meeting
The annual meeting of shareholders will be held at 10:00 a.m., April 15, 1996
at the West Bend Inn, 2520 West Washington Street, West Bend, Wisconsin.
Copies of the Form 10-K covering the fiscal year 1995 are available upon
request. Form 10-K is the Company's annual report filed with the Securities
and Exchange Commission, Washington, D.C. Shareholders wishing to receive a
copy, please write to:
The Ziegler Companies, Inc.
Attention: Janine R. Schmidt
215 North Main Street
West Bend, Wisconsin 53095-3348
Market
The Ziegler Companies, Inc. common stock trades on the American Stock
Exchange. The range of bid and asked quotations during 1995 and 1994 was as
follows:
<TABLE>
<CAPTION>
1995 Bid Asked 1994 Bid Asked
<S> <C> <C> <S> <C> <C>
1st Quarter High 15-1/4 15-1/2 1st Quarter High 19 19-1/8
Low 14-3/4 15 Low 16-1/4 16-5/8
2nd Quarter High 15 15-3/4 2nd Quarter High 18 18-3/8
Low 14-5/8 15 Low 16-1/8 16-3/8
3rd Quarter High 16-3/8 16-5/8 3rd Quarter High 17 17-3/8
Low 14-5/8 15 Low 16-1/8 16-1/2
4th Quarter High 16-7/8 17-1/8 4th Quarter High 17-1/4 17-5/8
Low 16-1/8 16-1/2 Low 14-7/8 15-1/8
</TABLE>
Cash Dividends
Cash Dividends during 1995 and 1994 were paid as follows:
<TABLE>
<CAPTION>
Per Share 1995 1994
<C> <C> <C>
January $ .13 $ .13
Extra cash dividend .20 .55
April .13 .13
July .13 .13
October .13 .13
Total $ .72 $1.07
</TABLE>
Holders of record on January 8, 1996, were paid a regular cash dividend of 13
cents per share plus an extra cash dividend of 35 cents per share on January
19, 1996.
Transfer Agent and Registrar
Firstar Trust Company
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Compensation Committee
John R. Green, Chairman
William R. Holmquist
Frederick J. Wenzel
Audit Committee
John C. Frueh, Chairman
Peter R. Kellogg
Patrick D. J. Kenny
Bernard C. Ziegler III
AMEX Symbol
ZCO
THE ZIEGLER COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Monday, April 15, 1996
TO THE SHAREHOLDERS OF THE ZIEGLER COMPANIES, INC.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of The Ziegler
Companies, Inc., will be held on Monday, April 15, 1996 at 10:00 A.M. (Central
Daylight Time) at the West Bend Inn, 2520 West Washington Street, West Bend,
Wisconsin, for the following purposes:
1. To elect three directors for a term of three years.
2. To vote on a proposal to ratify the retention of Arthur
Andersen LLP as auditors for 1996.
3. To transact any other business which may properly come
before the meeting, or any adjournments thereof.
Shareholders of record at the close of business on February 23, 1996 will be
entitled to vote at the meeting and any adjournments thereof.
A PROXY AND PROXY STATEMENT ARE ENCLOSED HEREWITH.
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION
AT THIS MEETING, PLEASE FILL IN THE ENCLOSED PROXY,
WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, SIGN
EXACTLY AS YOUR NAME APPEARS AND RETURN IMMEDIATELY.
SHAREHOLDERS WHO EXECUTE PROXIES RETAIN THE RIGHT TO
REVOKE THEM AT ANY TIME BEFORE THEY ARE VOTED.
By Order of the Board of Directors,
/s/ Janine R. Schmidt
Janine R. Schmidt
Corporate Secretary
March 8, 1996
215 North Main Street
West Bend, Wisconsin 53095
<PAGE>
THE ZIEGLER COMPANIES, INC.
215 North Main Street
West Bend, Wisconsin 53095
March 8, 1996
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, MONDAY, APRIL 15, 1996
This proxy statement is being mailed to the shareholders of The Ziegler
Companies, Inc. (the "Company") on March 8, 1996, in connection with the
solicitation by the Board of Directors of the Company of proxies for use at
the annual meeting of the shareholders to be held at the West Bend Inn, 2520
West Washington Street, West Bend, Wisconsin, at 10:00 A.M., (Central Daylight
Time) on Monday, April 15, 1996, and at any adjournments of such meeting.
Execution of a proxy given in response to this solicitation will not affect a
shareholder's right to attend the meeting and to vote in person. Presence at
the meeting by a shareholder who has signed a proxy does not in itself revoke
a proxy. Any shareholder giving a proxy may revoke it at any time before it
is exercised by giving notice thereof to the Company in writing or in open
meeting. Unless so revoked, the shares represented by proxies will be voted
at the meeting and at any adjournments thereof. Where a shareholder specifies
a choice by means of a ballot provided in the proxy, the shares will be voted
in accordance with such specification.
Only shareholders of record on February 23, 1996 are entitled to vote at the
meeting. As of that date, the Company's issued and outstanding voting
securities consisted of 2,431,727 shares of Common Stock, each having one vote
per share.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is a tabulation indicating those persons who, as of February
23, 1996, were known by the Company to be the beneficial owners of more than
5% of any class of the Company's voting securities. The following information
is based on reports on Schedule 13D filed with the Securities and Exchange
Commission or other reliable information. To the best of the Company's
knowledge, all shareholdings represent shares actually owned and do not
include shares which the designated person has the right to acquire.
<TABLE>
<CAPTION>
Name and Address Amount and Nature
Title of of Beneficial of Beneficial Percent
Class Owner Ownership of Class
<S> <C> <C> <C>
Common Stock Peter R. Kellogg (1) 400,000 16.44%
$1.00 Par Value 120 Broadway
New York, New York
Bernard C. Ziegler (2) 129,480 5.32%
5402 Highway Z
West Bend, Wisconsin
New West Investors, 123,700 5.08%
L.P. (3)
800 West State Street
Doylestown, Pennsylvania
</TABLE>
(1) Mr. Peter R. Kellogg, Chief Executive Officer and Senior Partner, Spear,
Leeds & Kellogg, 120 Broadway, New York, New York, beneficially owns an
aggregate of 400,000 shares of the Company's common stock. Of those
shares, 100,000 shares were owned by Mr. Kellogg personally, and 150,000
shares were owned by I.A.T. Reinsurance Syndicate, Ltd. ("IAT"), a
Bermuda corporation of which Mr. Kellogg is the sole holder of voting
stock. In addition, Mr. Kellogg may be deemed to be the indirect
beneficial owner of 100,000 shares of common stock held by his wife, and
50,000 shares of common stock held by the Peter R. and Cynthia K.
Kellogg Foundation, by virtue of his shared disposition and voting
power. The aggregate number of shares of common stock, with respect to
which Mr. Kellogg may be deemed to be the beneficial owner is 400,000
shares.
(2) Shares include an aggregate of 36,676 shares beneficially owned by Mr.
Ziegler's spouse. Mr. Ziegler disclaims beneficial ownership of such
shares.
(3) New West Investors, L.P. ("New West"), 800 West State Street,
Doylestown, Pennsylvania, filed Schedule 13D dated February 7, 1996 with
the Securities and Exchange Commission. Mr. Gerald J. Gagner is the
sole general partner of New West with voting and dispositive control
over the securities held in New West's investment portfolio. Mr. Gagner
may be considered to beneficially own the shares of Common Stock of the
Company that are owned of record by New West. None of the limited
partners of New West has any voting or dispositive control over such
securities. According to Schedule 13D filed by New West, the shares
were purchased for investment purposes only.
Set forth below is a tabulation indicating as of February 23, 1996, the shares
of equity securities of the Company beneficially owned by (i) each of the
executive officers of the Company, (ii) each director of the Company and each
nominee for director of the Company and (iii) by all directors and executive
officers of the Company as a group. Except as indicated below, no such person
owns in excess of 1% of the outstanding shares of any class of the Company's
equity securities. Except as indicated in the footnotes, each person has sole
voting and dispositive power with respect to the number of shares indicated.
<TABLE>
<CAPTION>
Amount and Nature
Title of Name of of Beneficial Percent
Class Beneficial Owner Ownership (3)(4) of Class
<S> <C> <C> <C>
Common Stock Peter R. Kellogg (1) 400,000 16.44%
$1.00 Par Value R. Douglas Ziegler (1)(3) 104,604 4.30%
William R. Holmquist (1) 58,635 2.41%
Bernard C. Ziegler III (2) 29,852 1.22%
Peter D. Ziegler (2)(3) 19,400
Patrick D. J. Kenny (1)(2) 18,948
S. Charles O'Meara (3) 13,936
Vernon C. Van Vooren (1)(3) 4,500
Lynn R. Van Horn (3) 9,827
Jeffrey C. Vredenbregt 2,100
John R. Green 1,100
John C. Frueh 500
Frederick J. Wenzel 300
All directors and executive officers
as a group TOTAL 663,702
TOTAL PERCENT OF CLASS 27.29%
</TABLE>
(1) Shares shown include an aggregate of 310,593 shares of common stock to
which all such nominees and directors disclaim beneficial ownership.
Such shares are beneficially owned in the amounts indicated: Mr.
Kellogg (300,000); Mr. R. Douglas Ziegler (2,528); Mr. Holmquist
(6,735); Mr. Kenny (1,230); and Mr. Van Vooren (100).
(2) Shares shown include an aggregate of 24,064 shares of common stock which
are held in trusts of which nominees and directors are trustees or in
custodian accounts for minors as to which directors serve as custodians,
in the amount indicated: Mr. Kenny (12,214) (co-trustee, shared voting
and investment power); Mr. Peter D. Ziegler (6,400) (custodian, sole
voting and investment power) and (3,000) (co-trustee, shared voting and
investment power); and Mr. B. C. Ziegler III (2,450) (co-trustee, shared
voting and investment power). These nominees and directors disclaim
beneficial ownership of these shares other than sole or shared voting
and investment power as indicated.
(3) Includes shares of Common Stock which, as of February 23, 1996, were
subject to outstanding stock options exercisable within 60 days as
follows: Mr. P. D. Ziegler, 7,453 shares; Mr. Van Vooren, 1,020 shares;
Mr. Van Horn, 5,210 shares; Mr. R. D. Ziegler, 500 shares; Mr. O'Meara,
13,837 shares; and stock options for all directors and executive
officers as a group, 29,630 shares.
(4) Except as otherwise indicated in the previous footnotes, all stock
ownership is direct.
ELECTION OF DIRECTORS
The Board of Directors consists of nine members of whom an equal number are
elected each year to serve for terms of three years or until their successors
are elected. It is intended that the enclosed proxy will be voted for the
election of Messrs. P. D. J. Kenny, B. C. Ziegler III, and S. A. Roell for
terms expiring in 1999. Messrs. Kenny and Ziegler are presently directors and
were elected by a vote of the shareholders. Mr. Roell is being nominated to
fill the position being vacated by Mr. W. R. Holmquist, who will retire from
the Board of Directors on April 15, 1996 under the Company's policy regarding
mandatory retirement from the Board of Directors upon attaining a specified
age.
Directors are elected by a plurality of the votes cast by the Company's
shareholders at a meeting at which a quorum is present. "Plurality" means
that the individuals who receive the greatest number of votes cast are elected
as directors up to the maximum number of directors to be chosen at the
meeting. Consequently, any shares not voted (whether by abstention, broker
non-vote or otherwise) have no impact on the election of directors except to
the extent the failure to vote for an individual results in another individual
receiving a larger proportion of votes actually cast. Under Wisconsin law,
cumulative voting for directors is permitted, but is not presently provided
for in the Company's Articles of Incorporation.
Information with respect to such nominees and other directors is set forth as
follows:
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director of Company or a Subsidiary
and Public Directorships (1) Thereof Continuously Since
<S> <C>
Class of 1996 (Nominees)
(Term will expire in 1999)
Patrick D. J. Kenny, Age 55 (1) 1973
Director of University Facilities,
Mercer University, Macon, Georgia
Stephen A. Roell, Age 46 -
Vice President and Chief Financial
Officer, Johnson Controls, Inc.,
Milwaukee, Wisconsin
Bernard C. Ziegler III, Age 46 1993
President, Ziegler/Limbach, Inc.,
West Bend, Wisconsin, a business and
real estate development firm
Class of 1997
(Term will expire in 1997)
R. Douglas Ziegler, Age 69 1952
Chairman of the Board of the Company;
Director, Johnson Controls, Inc.,
Milwaukee, Wisconsin; Principal
Preservation Portfolios, Inc.
John C. Frueh, Age 61 1976
President, Aegis Group, Inc., Pittsburgh,
Pennsylvania, a firm specializing in
acquisition and management of manufacturing
and distributing companies
John R. Green, age 51 1994
Partner, Green Manning & Bunch, Denver,
Colorado, a private investment banking firm
Class of 1998
(Term will expire in 1998)
Peter D. Ziegler, Age 46 1986
President and Chief Executive Officer
of the Company; Director, West Bend
Mutual Insurance Company, West Bend,
Wisconsin; Director, Trustmark Insurance
Company, Lake Forest, Illinois
Frederick J. Wenzel, Age 65 (1) 1993
Advisor to the President, Marshfield
Clinic, Marshfield, Wisconsin, a
multi-specialty medical clinic;
Executive Vice President/Chief Executive
Officer, Medical Group Management
Association, Englewood, Colorado
Peter R. Kellogg, Age 53 1995
Chief Executive Officer and Senior
Partner, Spear, Leeds & Kellogg,
a specialist firm on the New York
Stock Exchange; Director, Interstate/
Johnson Lane, Inc.
</TABLE>
(1) Each of the nominees and directors has been in his principal occupation
for the past five years or longer with the following exceptions:
Mr. Wenzel was Executive Director of the Marshfield Clinic from
August 1976 to June 1993.
Mr. Kenny was a colonel in the United States Army until October 5,
1992, when he retired. He served as Senior Vice President,
Columbus, Georgia Chamber of Commerce from October 5, 1992 until
October 1, 1993 when he joined Mercer University.
Messrs. R. D. Ziegler, P. D. Ziegler (son of Mr. R. D. Ziegler), B. C. Ziegler
III (nephew of Mr. R. D. Ziegler) and trusts or custodian accounts as to which
either Mr. P. D. Ziegler or Mr. B. C. Ziegler III serve as co-trustee or
custodian own beneficially 6.32% of the outstanding common stock of the
Company.
EXECUTIVE COMPENSATION
The Summary Compensation Table on page 9 shows the compensation for the past
three years of the Company's Chief Executive Officer and of each of the
Company's other executive officers who were serving as such during 1995, and
whose compensation exceeded $100,000.
Certain stock options were granted by the Company on May 1, 1995. The table
on page 10 shows information concerning stock option grants during 1995.
The table on page 11 shows information concerning the exercise of stock
options during 1995 by each of the executive officers named in the Summary
Compensation Table and the fiscal year-end value of unexercised options held
by each such executive officer.
* * * * * * * *
Ziegler Growth Retirement Plan. All regular employees, including executive
officers, of B. C. Ziegler and Company and designated subsidiaries, who have
met certain length of service requirements are eligible to participate in the
Ziegler Growth Retirement Plan ("Growth Plan"). The Growth Plan consists of
two components, the 401(k) component and the profit sharing component. Under
the 401(k) component, participants may elect to contribute from 1% to 6% of
their monthly compensation (the "Participant's Contribution"). Each
Participant Contribution constitutes a salary reduction which has the effect
of reducing the participant's compensation for Federal income tax purposes.
B. C. Ziegler and Company contributes, on behalf of each participant, an
amount equal to 50% of each Participant's Contribution. Under the profit
sharing component, B. C. Ziegler and Company makes an annual determination,
based on its profitability, of the amount it will contribute to the Growth
Plan as a profit sharing contribution. Funds contributed by the Company will
be allocated ratably to each participant's account in amounts up to 6% of the
participant's annual compensation. For 1995, the Company's profit sharing
contribution was 6% of eligible compensation.
Amounts contributed, accrued or vested for the fiscal year 1995, under the
Growth Plan were $59,942 for all executive officers as a group and $1,005,248
for all employees as a group.
* * * * * * * *
Incentive Stock Option Plan. On April 19, 1993, the shareholders of the
Company approved the adoption of The Ziegler Company, Inc. 1993 Employees'
Stock Incentive Plan ("1993 Plan"). Pursuant to the 1993 Plan, the Company
granted qualified statutory stock options for an aggregate of 54,500 shares of
the Common Stock of the Company to certain officers of the Company on December
29, 1993. The option price for each share under the options granted on
December 29, 1993 is $16.625. The options expire on December 28, 2003, unless
earlier terminated in connection with an employee's retirement, death,
disability, or separation from the Company. The right of an employee to
exercise an option is subject to a vesting schedule which provides that one-
third of the shares subject to the option vest on each of the first three
anniversaries of the grant.
Pursuant to the 1993 Employees' Stock Incentive Plan, on January 26, 1994, the
Company issued an aggregate of 49,000 shares of restricted Common Stock of the
Company to certain key employees in the Ziegler Securities Division of B. C.
Ziegler and Company. Also pursuant to the 1993 Employees' Stock Incentive
Plan, the Company issued an aggregate of 11,313 shares of restricted Common
Stock to certain key employees in the Ziegler Securities Division on January
27, 1995. Under the restricted stock grants, an employee's title to the
shares of restricted Common Stock is subject to full or partial forfeiture in
accordance with a vesting schedule in the event that the employee's employment
with the Company terminates for any reason before the restricted Common Stock
is fully vested. The vesting schedule for the restricted Common Stock issued
in 1994 extends to 2003, and the vesting schedule for the restricted Common
Stock issued in 1995 extends to 2000. Pending vesting of the restricted
shares of Common Stock, an employee is entitled to vote the restricted shares
and receive dividends on the restricted shares. Employees may not transfer
restricted shares until they are vested.
On January 22, 1993, a nonstatutory option was granted to an executive officer
of the Company for 10,000 shares at a per share option price of $15.125. The
option has a duration of ten years from the date of its grant.
On January 26, 1996, a nonstatutory option was granted to an executive officer
of a subsidiary of the Company for 10,000 shares at a per share option price
of $18.570. The option has a duration of ten years from the date of its
grant.
* * * * * * * *
Employee Stock Purchase Plan. On February 10, 1989, the Board of Directors
adopted The Ziegler Company, Inc. 1989 Employees' Stock Purchase Plan (the
"1989 Plan"). The purpose of the 1989 Plan is to provide employees of the
Company and certain of its subsidiaries with the opportunity to purchase
shares of Common Stock and thereby share in the ownership of the Company.
150,000 shares of Common Stock, $1.00 par value may be issued under the 1989
Plan.
All full-time employees of the Company and any of its designated subsidiaries
who have been employed at least two years are eligible to participate in the
1989 Plan. No employee may participate if he would own, directly or
indirectly, 5% or more of the total combined voting power or value of all
classes of Company stock.
On such dates as may be determined by the Company's Compensation Committee,
options to purchase 10 shares of Common Stock for each $1,000 or fraction
thereof of compensation earned in the calendar year immediately prior to the
grant of the option will be granted to eligible employees. The purchase price
per share shall not be less than 85% of the fair market value of the Common
Stock on the date of exercise. The Compensation Committee may specify the
maximum number of shares which may be purchased by an employee. The term of
any option shall be determined by the Compensation Committee, but shall not
exceed five years following the date of grant.
On March 20, 1995, the Board of Directors granted options effective May 1,
1995 to 251 eligible employees to purchase a total of 104,200 shares of the
Company's common stock at a purchase price equal to 85% of the fair market
value of the common stock on the date the options are exercised. On the
effective date of the grant of the options, the market price of the Company's
common stock was $14.88 per share. The options have a term of two years after
which the unexercised options will expire and the balance of the unexercised
shares will become available to be re-issued pursuant to subsequent option
grants. For 1995, P. D. Ziegler, S. C. O'Meara, L. R. Van Horn and V. C. Van
Vooren were each granted options to purchase shares of common stock in the
following amounts respectively: 2,120, 1,170, 1,210 and 1,020. For 1995, all
present executive officers as a group were granted options to purchase 6,630
shares of common stock and all employees including executive officers as a
group were granted options to purchase 104,200 shares of common stock. The
table on page 10 shows the option grants made to the officers included in the
Summary Compensation Table during fiscal year 1995.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Securities
Underlying
Options/ Long-
Stock Term
Other Apprecia- Incen- All
Name Annual Restricted tion tive Other
and Compensa- Stock Rights Plan Compensa-
Principal Salary Bonus tion Award (SAR's) Payouts tion
Position Year ($) ($) ($)(1) ($) (#) ($) ($)(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P. D. Ziegler 1995 171,600 50,000 None None 10,120 None 15,206
President 1994 171,600 None 2,948 None 8,400 None 10,926
and CEO 1993 165,000 80,000 None None 9,500 None 18,667
S. C. O'Meara 1995 104,000 22,500 None None 15,170 None 10,472
Sr. Vice Pres. 1994 104,000 7,500 None None 14,000 None 7,252
and Gen. Cnsl. 1993 96,218 25,000 None None 14,000 None 768
L. R. Van Horn 1995 93,600 27,500 1,794 None 7,210 None 9,825
Sr. Vice Pres.- 1994 93,600 15,000 None None 6,780 None 8,851
Finance 1993 90,000 55,000 None None 6,780 None 11,685
V. C. Van Vooren 1995 88,853 15,000 None None 1,020 None 8,999
Sr. Vice Pres. 1994 88,853 6,600 None None 820 None 6,846
and Treasurer 1993 85,436 27,000 None None 820 None 9,893
</TABLE>
(1) Value realized upon exercise of stock options.
(2) Payments by B. C. Ziegler and Company under the Growth Plan (Mr. Ziegler,
$13,500; Mr. O'Meara, $9,698; Mr. Van Horn, $9,099; and Mr. Van Vooren,
$8,294) and premiums paid by the Company for term life insurance and
long-term disability insurance (Mr. Ziegler, $1,007; Mr. O'Meara, $774;
Mr. Van Horn, $726; and Mr. Van Vooren, $705) and taxable fringe
benefits (Mr. Ziegler, $699).
<PAGE>
<TABLE>
OPTIONS / SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
% of
Total
Options/SARs
Granted Market
to Exercise Price Potential Realizable Value
Options/ Employees or on at Assumed Annual Rates of
SARs in Base Date Stock Price Appreciation
Granted Fiscal Price of Expiration for Option Term
Name (#) Year ($/Sh) Grant Date 0% 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P. D. Ziegler 2,120 2.0% $12.65(1) $14.88 04-30-97 $4,728 $5,217 $5,726
S. C. O'Meara 1,170 1.1% $12.65(1) $14.88 04-30-97 $2,609 $2,879 $3,160
L. R. Van Horn 1,210 1.2% $12.65(1) $14.88 04-30-97 $2,698 $2,978 $3,268
V. C. Van Vooren 1,020 1.0% $12.65(1) $14.88 04-30-97 $2,275 $2,510 $2,755
</TABLE>
(1) The exercise price is 85% of the market price on the date of exercise.
For purposes of this table, the exercise price is estimated, based on
the market price on the date of grant.
<PAGE>
<TABLE>
AGGREGATED OPTION/STOCK APPRECIATION RIGHT (SAR)
EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
Value of
Number of Unexercised
Securities In-the-Money
Underlying Options/SARs
Unexercised at
Options/SARs at December 31, 1995
December 31, 1995 ($)
Number of Value
Shares Acquired Realized
Name on Exercise ($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
P. D. Ziegler - $ - 7,453 / 2,667 $ 7,406 / $1,000
S. C. O'Meara - $ - 13,837 / 1,333 $22,734 / $ 500
L. R. Van Horn 780 $1,794 5,210 / 2,000 $ 4,586 / $ 750
V. C. Van Vooren - $ - 1,020 / - $ 2,601 / $ -
</TABLE>
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
William R. Holmquist, a member of the Compensation Committee, was formerly the
Senior Vice President - Marketing of the Company. Mr. Holmquist retired from
that position in 1989.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is responsible for establishing compensation of the
Company's executive officers. In making its determinations, the Compensation
Committee considered a variety of factors. Among the factors considered are
the following: (1) the financial performance of the Company as a whole on
both a long-term and short-term basis (including net income and return on
average shareholders' equity); (2) with respect to each individual executive
officer, the financial performance of that area of the Company, if any, for
which such executive is responsible, (3) the compensation levels of executive
officers in similar positions in similar companies; (4) the Company's
evaluation of the executive's overall job performance; and (5) any other
material information which the Compensation Committee deems appropriate in the
case of any particular individual. With regard to any individual executive
officer, the Compensation Committee may weigh one or more of the above factors
more heavily than the other factors.
The Committee annually considers discretionary bonuses for executive officers
as a short-term incentive. In response to the improvement in many of the
indicators of the Company's financial performance, the amount of discretionary
bonuses to executive officers and to other employee groups within the Company
were increased from the preceding year. In addition, the Company's profit
sharing contribution, which had been 3% of employees' eligible compensation
for 1994, was increased to 6% for 1995.
Mr. Peter D. Ziegler has been President of the Company since 1986 and Chief
Executive Officer of the Company since 1990. Mr. Ziegler's total compensation
for 1995 was adjusted upward from 1994's level in a manner consistent with the
Compensation Committee's decisions with respect to other executive officers,
as well as compensation in other comparable investment and financial services
organizations. The Committee believes that the relationship between the
Company's improvement in performance in 1995 and the compensation of its chief
executive officer to be appropriate and in the interest of shareholders. In
1995, Mr. Ziegler was granted stock options under an employee stock purchase
plan that is available to all employees of the Company.
COMPENSATION COMMITTEE
John R. Green, Chairman
William R. Holmquist
Frederick J. Wenzel
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Stock, based on the market price of the Common
Stock and assuming reinvestment of dividends, with the cumulative total return
of companies on the Standard & Poor's 500 Stock Index and on an index compiled
by the Company of publicly held regional brokerage firms. The firms contained
within the index of publicly held regional brokerage firms are:
Advest Group Inc. McDonald & Company Investments
Alex Brown Inc. Morgan Keegan Inc.
First Albany Companies Inc. Piper Jaffray Companies Inc.
Inter-Regional Financial Group Raymond James Financial Corporation
Interstate/Johnson Lane Inc. Rodman & Renshaw Capital Group
Jefferies Group Inc. Scott & Stringfellow Financial
Kinnard Investments Inc. Stifel Financial Corporation
Legg Mason Inc.
<TABLE>
<CAPTION>
12-31-91 12-31-92 12-31-93 12-31-94 12-31-95
<S> <C> <C> <C> <C> <C>
Ziegler $254 $162 $178 $166 $198
S&P 500 $130 $141 $155 $157 $216
Regionals $241 $284 $375 $286 $408
</TABLE>
Assumes $100 invested on December 31, 1990.
<PAGE>
COMPENSATION OF DIRECTORS
Directors not employed by the Company received the following compensation in
1995 for their services: (a) $11,000 annual retainer, (b) $500 for each board
meeting attended and (c) $500 for each committee meeting attended. Directors
may elect to defer all or part of compensation earned following the date of
such election. Deferred amounts, plus interest, are paid in annual
installments over a three year period beginning no later than the year after
retirement from the Board of Directors. In 1995, in addition to the
compensation described above, the Company transferred to each non-employee
director 100 shares of its Common Stock as part of such director's
compensation. The Board of Directors, by a resolution adopted on November 20,
1995, adopted a policy under which one-half of each Director's annual retainer
will be paid in the form of shares of the Company's Common Stock.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met five times in 1995. All directors attended all
meetings of the Board of Directors, and all of the meetings of the Committees
(Audit and Compensation) of which they are members.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors during 1995 was composed of John
C. Frueh (Chairman), Peter R. Kellogg, Patrick D. J. Kenny and Bernard C.
Ziegler III, Directors who are not officers or employees of the Company. The
Committee met twice in 1995. The Audit Committee meets with the independent
auditors to review the plan for and results of the annual audit, to review the
range of audit fees, and to discuss financial reporting policies and practices
and the system of internal control. Non-audit services and fees are also
reviewed. The Committee meets with the internal auditor to review its
activities during the year and the planned activities for the ensuing year.
The Committee recommends the engagement of the independent auditors to the
Board of Directors.
The Compensation Committee of the Board of Directors during 1995 was composed
of John R. Green (Chairman), William R. Holmquist and Frederick J. Wenzel,
Directors of the Company who are not officers or employees of the Company.
During 1995 the Compensation Committee met once and in doing so, the Committee
reviewed the overall compensation policy, approved the Company's annual
compensation program, and determined compensation for the chief executive
officer of the Company. At its meeting on March 18, 1996, the Board of
Directors will elect a Director to succeed William R. Holmquist on the
Compensation Committee.
The Board of Directors does not have a Nominating Committee.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors will propose the adoption of a resolution approving the
Directors' decision to continue the employment of Arthur Andersen LLP as
auditors. If the shareholders fail to ratify such selection, the Board will
reconsider it. Representatives of Arthur Andersen LLP will be present at the
shareholders' meeting with the opportunity to make a statement if they desire
to do so, and to respond to appropriate questions. Arthur Andersen LLP
performed the following audit services for the Company during 1995: audits of
the annual consolidated financial statements of the Company and its
subsidiaries.
SHAREHOLDERS PROPOSALS
Proposals of shareholders intended to be presented at next year's annual
meeting must be received by the Company no later than November 7, 1996 for
inclusion in the Company's proxy materials.
OTHER MATTERS
Based solely on a review of statements of beneficial ownership and of changes
therein furnished to the Company during and with respect to the 1995 calendar
year and written representations made to the Company, the management of the
Company reports that during 1995, no director or officer or beneficial owner
of more than 10% of the Company's common stock failed to file with the
Securities and Exchange Commission on a timely basis reports of beneficial
ownership of the Company's securities required by Section 16(a) of the
Securities and Exchange Act of 1934, as amended.
Mr. B. C. Ziegler III, current Director, is also a shareholder, director and
officer of Z/L Media Corporation, which is the general managing partner of
KXRM Partnership, Colorado Springs, Colorado. Before Mr. B. C. Ziegler III
became a director of the Company, KXRM entered into two leases with Ziegler
Leasing Corporation, a subsidiary of the Company. Monthly lease payments
total $3,675.87.
The matters referred to in the notice of meeting and in the proxy statement
are, as far as the Board of Directors now knows, the only matters which will
be presented for consideration at the meeting. If any other matters properly
come before the meeting, the persons named in the accompanying form of proxy
will vote on them in accordance with their best judgment.
The cost of soliciting proxies will be borne by the Company. The Company
expects to solicit proxies primarily by mail. Proxies may also be solicited
personally and by telephone by certain officers of the Company. It is not
anticipated that anyone will be specifically engaged to solicit proxies or
that special compensation will be paid for that purpose. The Company may
reimburse brokers or other nominees for their expenses in communicating with
the persons for whom they held stock of the Company.
The Company's 1995 Annual Report, although not a part of this proxy statement,
is enclosed.
By Order of the Board of Directors,
/s/ Janine R. Schmidt
Janine R. Schmidt
Corporate Secretary
<PAGE>
THE ZIEGLER COMPANIES, INC. - SHAREHOLDERS' PROXY
ANNUAL MEETING - APRIL 15, 1996 AND ADJOURNMENTS
The undersigned having received the Notice of Annual Meeting and Proxy
Statement dated March 8, 1996, and the Annual Report of 1995, hereby appoints
R. D. Ziegler and P. D. Ziegler, and each of them, as proxy with power of
substitution, hereby revoking any previous proxies, to vote for the
undersigned at the Annual Meeting of Shareholders of The Ziegler Companies,
Inc. (the "Company") on April 15, 1996, and any adjournments thereof, as
follows:
1. GRANTING WITHHOLDING ABSTAIN authority to vote
in the election of Patrick D. J. Kenny, B. C. Ziegler III, and
Stephen A. Roell.
2. FOR AGAINST ABSTAIN continued employment by the
Company of Arthur Andersen LLP, as auditors.
3. In their discretion, upon any other business which may come before
the meeting.
THE UNDERSIGNED MAY WITHHOLD AUTHORITY TO VOTE FOR ANY OF THE INDIVIDUAL
NOMINEES NAMED ABOVE BY DRAWING A LINE THROUGH THE NOMINEE'S NAME.
(Proxy continues on reverse side hereof where it is to be signed.)
PROXY NO. NO. OF SHARES
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED,
BUT IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR ALL NOMINEES
AND IN FAVOR OF PROPOSAL 2.
Signed:
Date: , 1996
Please sign exactly as name appears
hereon. If signed as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If shares are
held in two or more names, all persons so
named must sign. A proxy on behalf of a
corporation should be signed in its name
by a duly authorized officer.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
PLEASE SIGN AND RETURN THIS PROXY PROMPTLY.
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ZIEGLER
COMPANIES, INC. AND SUBSIDIARIES FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 4,231,808
<RECEIVABLES> 8,047,236
<SECURITIES-RESALE> 0<F1>
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 108,445,848<F2>
<PP&E> 7,090,543
<TOTAL-ASSETS> 155,845,394
<SHORT-TERM> 29,796,420<F3>
<PAYABLES> 8,053,915<F4>
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 0
<LONG-TERM> 50,561,962<F5>
0
0
<COMMON> 3,544,030
<OTHER-SE> 48,697,968
<TOTAL-LIABILITY-AND-EQUITY> 155,845,394
<TRADING-REVENUE> 0<F6>
<INTEREST-DIVIDENDS> 4,327,412
<COMMISSIONS> 0<F6>
<INVESTMENT-BANKING-REVENUES> 30,642,641<F6>
<FEE-REVENUE> 5,869,128
<INTEREST-EXPENSE> 5,568,541
<COMPENSATION> 22,329,471
<INCOME-PRETAX> 6,336,521
<INCOME-PRE-EXTRAORDINARY> 6,336,521
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,044,321
<EPS-PRIMARY> 1.69
<EPS-DILUTED> 1.69
<FN>
<F1>Short-term investments include some securities purchased under resale
agreements.
<F2>Financial instruments include securities inventory, investment in leases,
notes receivable, and investment in and receivables from affiliates.
<F3>Includes short-term notes payable and unsecured notes payable to banks under
line of credit arrangements.
<F4>Includes payable to customers, payable to broker-dealers, accounts payable, and
dividends payable.
<F5>Includes bonds payable and notes payable to banks other than line of credit
borrowings.
<F6>Revenue from investment banking activities includes revenue from trading
activities and commissions.
</FN>
</TABLE>
