STUART M. FRIED, CPA
LENED, INC.
-----------
REPORT TO STOCKHOLDERS
----------------------
FINANCIAL STATEMENTS
--------------------
YEARS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
REPORT TO STOCKHOLDERS
----------------------
FINANCIAL STATEMENTS
--------------------
TABLE OF CONTENTS
-----------------
YEARS ENDED SEPTEMBER 30, 2000 AND 1999
---------------------------------------
PAGE
----
INDEPENDENT AUDITOR'S REPORT 1
STATEMENTS OF ASSETS, LIABILITIES AND
CAPITAL SECURITIES 2
STATEMENTS OF OPERATIONS, UNDISTRIBUTED NET
INCOME (LOSS) 3
STATEMENTS OF CHANGES IN NET ASSETS 4
STATEMENTS OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6-14
<PAGE>
STUART M. FRIED
CERTIFIED PUBLIC ACCOUNTANT
11 TWIN BROOK ROAD
WEST CALDWELL, NEW JERSEY 07006
------
(973) 226 4006
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and
Stockholders of Lened, Inc.
c/o Joseph Flusfeder
15 West 53rd Street
New York, NY
We have audited the accompanying statements of assets, liabilities and capital
securities of Lened Inc. as of September 30, 2000 and 1999, and the related
statements of operations, undistributed net income (loss) and statements of
changes in net assets and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our 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. The investment
securities held in custody were confirmed to us by the custodian. 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 Lened Inc. as of September 30,
2000 and 1999, and the results of its operations and the changes in its net
assets for the years then ended in conformity with generally accepted accounting
principles.
STUART M. FRIED, CPA
West Caldwell, New Jersey
November 15, 2000
<PAGE>
STUART M.FRIED, CPA
LENED, INC.
-----------
STATEMENTS OF ASSETS, LIABILITIES
---------------------------------
AND CAPITAL SECURITIES
----------------------
<TABLE>
<CAPTION>
ASSETS
------
SEPTEMBER 30,
---------------------------
2000 1999
---- ----
<S> <C> <C>
INVESTMENT IN MUNICIPAL BONDS,
with accrued interest - at fair market
value (amortized cost $1,753,099 and
$1,785,392) (Note 1) $ 1,773,135 $ 1,808,294
Cash 807 9
Investment in Vista New York Tax-Free
Money Market Fund (3.52% avg. Interest rate) 34,974 6,074
Prepaid expenses 1,293 1,293
----------- -----------
$ 1,810,209 $ 1,815,670
=========== ===========
LIABILITIES AND CAPITAL SECURITIES
----------------------------------
LIABILITIES:
Dividends payable $ 66,900 $ 68,900
Other current liabilities 8,881 11,658
----------- -----------
75,781 80,558
----------- -----------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL SHARES:
CAPITAL SHARES
Common stock, no par value, 25,200 shares
authorized, 18,960 issued and outstanding $ 22,500 $ 22,500
Paid in capital 144,732 144,732
Retained earnings 1,571,078 1,570,581
Undistributed net income (loss) 639 497
Unrealized appreciation of investments (4,521) (3,198)
----------- -----------
Total stockholders' equity (equivalent to
$91.48 per share at 9/30/00 and $91.51
per share at 9/30/99) 1,734,428 1,735,112
----------- -----------
$ 1,810,209 $ 1,815,670
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
STATEMENTS OF OPERATIONS,
-------------------------
UNDISTRIBUTED NET INCOME (LOSS)
-------------------------------
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------
2000 1999
---- ----
<S> <C> <C>
INVESTMENT INCOME:
INCOME
Interest income on tax free municipals $ 83,204 $ 87,112
Dividend income - tax free 1,433 674
-------- --------
84,637 87,786
-------- --------
EXPENSES:
Custodial fees (Note 4) 1,838 1,819
Audit fees 2,500 2,400
Legal fees 2,472 2,825
Taxes other than income taxes 250 250
Office expense 9,475 9,665
Insurance 1,300 1,303
Filing fees 250 250
-------- --------
18,085 18,512
-------- --------
INVESTMENT INCOME 66,552 69,274
Net realized gain (loss) from investment transactions 1,000 317
-------- --------
INVESTMENT INCOME BEFORE FEDERAL
INCOME TAX 67,552 69,591
Less: Federal income taxes 13 194
-------- --------
NET INVESTMENT INCOME 67,539 69,397
Less: Dividends paid 66,900 68,900
-------- --------
UNDISTRIBUTED NET INCOME (LOSS) $ 639 $ 497
======== ========
UNREALIZED APPRECIATION (DEPRECIATION)
OF INVESTMENTS $ (4,521) $ 3,198
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
---------------------------
2000 1999
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Investment income - net $ 66,539 $ 69,080
Net realized gain (loss) on investments 1,000 317
Change in unrealized appreciation (depreciation) (1,323) (59,650)
----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 66,216 9,747
DISTRIBUTION TO SHAREHOLDERS FROM
NET INVESTMENT INCOME 66,900 68,900
----------- -----------
TOTAL INCREASE (DECREASE) (684) (59,153)
NET ASSETS BEGINNING OF PERIOD 1,735,112 1,794,265
----------- -----------
NET ASSETS END OF PERIOD (Including
Undistributed Net Income of $(639) and
$(497), respectively) $ 1,734,428 $ 1,735,112
=========== ===========
DIVIDENDS PER SHARE $ 3.53 $ 3.62
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
STATEMENT OF CASH FLOWS
-----------------------
INCREASE (DECREASE) IN CASH
---------------------------
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-------------------------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 67,539 $ 69,397
Adjustments to reconcile net income to net
cash provided by operating activities:
Changes in assets and liabilities:
(Increase) Decrease in municipal bonds with
accrued interest at fair market value 35,159 27,260
(Increase) Decrease in Vista New York
Tax Free Money Market Fund (28,900) 37,489
(Increase) Decrease in prepaid expenses 0 3
Increase (Decrease) in other current liabilities (2,777) 4,721
Realized (gain) loss from investment transactions
included in net income (1,000) (317)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 70,021 138,553
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase (Decrease) in unrealized appreciation
of investments (1,323) (59,650)
Realized gain (loss) from investment transactions 1,000 317
--------- ---------
NET CASH (USED) PROVIDED BY INVESTING
ACTIVITIES (323) (59,333)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (68,900) (79,211)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 798 9
CASH - BEGINNING OF YEAR 9 0
--------- ---------
CASH - END OF YEAR $ 807 $ 9
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 250 $ 250
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2000
------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------
Lened, Inc. was incorporated in New Jersey on January 31, 1957. Lened, Inc.
commenced operations as an investment company investing at least 50% of the
value of its total assets, determined at the close of each quarter of its
taxable year, in tax-exempt state and local obligations, may distribute, as a
tax-exempt dividend, to its shareholders an amount equal to the interest earned
on such tax-exempt obligations, provided it designates such dividends as
tax-exempt interest dividends. It is the Company's intention to invest
substantially all of its assets, except such amounts as it may carry in demand
deposits, in such tax-exempt obligations and to distribute all of its net
income, including any net short-term capital gains, to its shareholders.
The Company is registered under the Investment Company Act of 1940, as amended,
as a diversified, closed-end investment company.
The following is a summary of significant accounting policies followed by the
Company in the preparation of its financial statements:
(a) Investments are valued by the Custodian. These values may not
necessarily be bids or actual last sale prices, but are estimates
of the fair value of the investment securities, based upon
prevailing interest rates, applicable bond ratings and other
factors influencing the markets in which the investments are
purchased and sold.
(b) It is the policy of the Company to continue to qualify as a
regulated investment company if such qualifications are in the
best interests of its shareholders, by complying with the
provisions available under the Internal Revenue Code, and to make
distributions of taxable income sufficient to relieve it from
all, or substantially all, Federal income taxes. Therefore,
unless the Company has capital gains or interest on Treasury
Bills, no federal tax provision is required.
-6-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2000
------------------
(c) Realized gains and losses on investments are computed on the
basis of the identified cost of the specific securities sold.
(d) Securities transactions are recorded on the date the securities
are purchased or sold (the trade date). Interest income (net of
premium or discount amortization) is recorded as earned.
(e) Unrealized Appreciation (Depreciation) of Investments is stated
as the difference between amortized cost and fair market value.
At September 30, 2000
Unrealized Appreciation of Bonds totaled $ 9,689
Unrealized Depreciation of Bonds totaled 14,210
----------
Net Unrealized Depreciation of Investments $ (4,521)
==========
NOTE 2 - PURCHASES OF SALES AND REDEMPTIONS OF SECURITIES
---------------------------------------------------------
Securities exclusive of Vista New York Tax Free Money Market Fund purchased by
the Company amounted to $115,898 for the year ended September 30, 2000 and
$129,806 for the year ended September 30, 1999. Sales of securities exclusive of
Vista New York Tax Free Money Market Fund amounted to $146,000 for the year
ended September 30, 2000 and $95,402 for the year ended September 30, 1999.
NOTE 3 - DISTRIBUTIONS
----------------------
The Company distributed income of $66,900 ($3,53 per share) and $68,900 ($3.63
per share) for the years ended September 30, 2000 and 1999 in the form of
dividends.
NOTE 4 - CUSTODIAL FEES
-----------------------
Pursuant to an agreement with the custodian, the custodial fee is based on the
number of bond coupons redeemed based on an annual charge of $1.25 per $1,000 of
the first $500,000, $.75 per $1,000 of the next $500,000 face value of bonds and
$.50 per $1,000 face value above $1,000,000. A charge of $15 is made for each
security transaction.
During the years ended September 30, 2000 and 1999, the Company was charged an
aggregate of $1,838 and $1,819 respectively.
NOTE 5 - REMUNERATION
---------------------
The Company's policy is not to pay, and for the periods reported did not pay,
remuneration to either officers or directors.
-7-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2000
------------------
NOTE 6 - CAPITAL PER SHARE AND RELATED INFORMATION
--------------------------------------------------
Selected data for a share of capital stock outstanding throughout the period:
YEARS ENDED SEPTEMBER 30,
2000 1999
---- ----
Investment income $ 4.46 $ 4.63
Operating expenses .95 .98
----------- -----------
INVESTMENT INCOME BEFORE FEDERAL 3.51 3.65
INCOME TAX
FEDERAL INCOME TAX 0 .01
----------- -----------
INVESTMENT INCOME - NET 3.51 3.64
Dividends to shareholders 3.53 3.63
----------- -----------
(.02) .01
Realized and unrealized gain (loss)
on investments - net (.01) (3.13)
----------- -----------
CHANGE IN NET VALUE (.03) 3.12
NET ASSET VALUE:
Beginning of period 91.51 94.63
----------- -----------
End of period $ 91.48 $ 91.51
=========== ===========
Ratio of operating expenses to
average net assets .01 .010
Ratio of investment income net to
average net assets .048 .049%
Portfolio turnover 6.62% 5.29%
Number of shares outstanding at end
of period 18,960 18,960
-9-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2000
------------------
NOTE 8 - INVESTMENTS IN SECURITIES OF UNAFFILIATED ISSUERS
----------------------------------------------------------
<TABLE>
<CAPTION>
Principal Amortized Fair Market*
Name and Title of Issuer Amount Cost Value
------------------------ --------- --------- ------------
<S> <C> <C> <C>
Akron N Y Cent Sch Dist G/O
DD 09/01/95 5.4% Due 6/1/01 $ 50,000 $ 50,264 $ 51,271
Akron N Y Cent Sch Dist G/O
DD 09/01/95 5.4% Due 6/1/02 (FSA) 45,000 45,488 46,569
Chicago Cnty Minn Hsg & Redev Auth
DD 12/01/97 4.7% Due 02/01/08
Call MSF OID Lease Rev 80,000 80,396 78,349
Clayton Cnty GA Hsg
Auth, Multifa
DD 07/01/97 4.55% Due 07/01/02
Pointe Clear Apts Proj 50,000 50,000 50,404
Dade Cnty Fla Res Recovery FAC
DD 09/01/96 5.0% Due 10/01/03
REF (AMBAC) Rev 90,000 89,776 93,023
District Columbia G/O
DD 05/01/93 5.625% Due 6/1/02
Ref-A OID 50,000 50,058 51,708
District Columbia
DD 06/01/93 6.0% Due 06/01/09
Call Unrefunded Bal-E-Capmac-ITC 50,000 51,156 53,327
District Columbia G/O
DD 05/01/93 5.625% Due 6/1/02
Ref- Ser A (FSA- CR) 90,000 90,800 93,135
-10-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2000
------------------
Principal Amortized Fair Market*
Name and Title of Issuer Amount Cost Value
------------------------ -------- --------- ------------
Falcon Heights Minn G/O
DD 06/01/99 4.10% Due 02/01/05
Impt - SER A 25,000 25,000 24,264
Fenton Mo Pub Auth Leasehold Rev
DD 12/15/97 4.750% Due 01/01/07
OID 80,000 79,792 79,209
Grand Folks N D Health Care Sys
DD 06/01/97 5.5% Due 08/15/07
Altru Health Sys Oblig Group 80,000 82,914 83,602
Greater Richmond Convention Ctr
DD 02/01/00 5.50% due 06/15/07
Hotel Tax Rev Ctr Expansion PJ 65,000 65,923 68,584
Greenville Hosp Sys S C Hosp Fac
DD 03/01/96 4.9% Due 05/01/03
Ser B 95,000 95,001 97,233
Iowa Student Ln Liquidity Corp.
DD 02/15/91 6.6% Due 12/01/00
Student Ln Rev Ser C Ambac 90,000 90,170 92,267
Los Angeles Cnty Calif Pub Wksfi
DD 08/01/93 4.6% Due 03/01/02
Ref-Cap Construction 100,000 99,526 100,880
Manatee Cnty Fla Hsg Fin Auth Rev
DD 06/01/85 9.125% Due 06/01/16
Callable Sgl Fam Series A FGIC 5,000 5,041 5,158
-11-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2000
------------------
Principal Amortized Fair Market*
Name and Title of Issuer Amount Cost Value
------------------------ -------- ---------- ------------
Maryland St Cmnty Dev Admin Dept.
DD 06/01/97 4.6% Due 1/01/03
Hsg-Ser A 30,000 30,000 30,334
Mississippi Dev Bk Spl Oblig
DD 11/01/97 4.8% Due 11/01/08
Call Desoto Cnty Convention Ctr 30,000 30,000 30,559
Nebraska Invt Fin Auth Sing/Famil
DD 09/01/97 5.0% Due 9/01/07
Ser D 50,000 49,999 49,383
New Jersey Economic Dev Auth Rev
DD 06/01/94 5.4% Due 2/1/06
Call Peddie Sch Proj-Ser A 60,000 60,518 61,727
New Jersey Sr EDL Facs
Auth Rev. DD 06/15/93
5.375% Due 07/01/05
Call OID Ser A 30,000 30,404 30,821
New York City G/O
DD 06/11/98 4.5% Due 05/15/05
Series I 25,000 25,000 25,297
New York St Dorm Auth Revs
DD 07/01/98 4.375% Due 07/01/05
Ser 2 OID 60,000 60,000 59,780
Pennsylvania St Tpk Comm Rev
DD 08/01/92 5.7% Due 12/01/06
Call OID Ser (FGIC) 25,000 25,649 26,324
-12-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2000
------------------
Principal Amortized Fair Market*
Name and Title of Issuer Amount Cost Value
------------------------ -------- ---------- ------------
Philadelphia PA Auth For Indl
DD 01/01/98 4.750% Due 06/15/06
Call Franklin Institute PJ 80,000 80,000 78,366
Pierce County Wash Swr
DD 07/01/93 5.2% DUE 02/01/05
Call Ref & Impt OID 25,000 25,320 25,411
Port Houston Auth Tex
Harris DD 10/01/98 4.0%
Due 10/01/06 OID 6/0
Amt. SER-A 75,000 74,422 71,945
Puerto Rico Comwlth Rev
DD 05/15/00 5.25% Due 07/01/10
MBIA Hwy & Transn Series B 25,000 24,906 26,736
Sarasota Cnty Fla Util Sys Rev
DD 01/01/93 5.7% Due 10/01/05
Call Ref FGIC OID 15,000 15,423 15,999
Sedalia Mo Hosp Rev
DD 07/01/97 4.6% Due 03/01/03
Call Bothwell Regl Health Ctr 50,000 50,000 50,107
South Brunswick Twp NJ
DD 08/01/93 5.0% Due 08/01/06
Call Ref G/O OID 20,000 20,155 20,509
-13-
<PAGE>
STUART M. FRIED, CPA
LENED, INC.
-----------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
SEPTEMBER 30, 2000
------------------
Principal Amortized Fair Market*
Name and Title of Issuer Amount Cost Value
------------------------ -------- ---------- ------------
Trinity Riv Auth Tx Big Bear
DD 02/15/96 4.5% Due 02/01/03
Ref-Wastewtr Sys Contract MBIA 75,000 75,000 75,336
Wyoming County Dev. Auth Hsg Rev
DD 07/02/97 5.20% Due 06/01/07
Ser 4 25,000 24,998 25,518
----------- ----------- -----------
TOTAL INVESTMENT - 100.02% $1,745,000 $1,753,099 1,773,135
=========== ===========
OTHER ASSETS LESS LIABILITIES - (.02%) (38,707)
-----------
NET ASSETS - 100% $1,734,428
===========
NET ASSET VALUE PER SHARE $ 91.48
===========
OUTSTANDING SHARES AT SEPTEMBER 30, 2000 18,960
===========
</TABLE>
* Includes accrued interest
-14-
