<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended September 29, 1995 Commission file number 014140
F I R S T A L B A N Y C O M P A N I E S I N C .
(Exact name of registrant as specified in its charter)
New York 22-2655804
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
41 State Street, Albany, New York 12207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (518) 447-8500
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
none none
Securities registered pursuant to Section 12(g) of the Act:
Common stock par value $.01 per share
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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]
As of December 14, 1995, 4,530,378 shares, par value $.01 per share, were
outstanding. The aggregate market value of the shares of common stock of the
Registrant held by non-affiliates (based upon the closing price of
Registrant's shares as reported on the NASDAQ system on December 14, 1995,
which was $10.25) was approximately $28,434,848.
DOCUMENTS INCORPORATED BY REFERENCE
The Exhibit index is included on pages 37 through 39.
Portions of the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission are incorporated by reference into Part
III. Total number of pages in this document - 41.
<PAGE>
Part I
Item 1. Business
First Albany Companies Inc. (the Company), through its wholly owned subsidiary
First Albany Corporation (First Albany), conducts an investment banking
business with brokerage activity centered in New York and New England. The
primary business includes securities brokerage for individual and
institutional
customers, and market-making and trading of corporate, government, and
municipal securities. In addition, First Albany underwrites and distributes
municipal and corporate securities, provides securities clearance activities
for other brokerage firms, and offers financial advisory services to its
customers. Another of the Company's subsidiaries is First Albany Asset
Management Corporation ("Asset Management"). Under management agreements,
Asset Management serves as investment manager to individual and institutional
customers. Asset Management also serves as a sub-advisor under contract to
the Victory Fund for Income, a mutual fund registered under the Investment
Company Act of 1940. Asset Management directs the investment of the customer
and mutual fund assets by making investment decisions, placing purchase and
sales orders, and providing research, statistical analysis, and continuous
supervision of the portfolios.
Brokerage services to retail and institutional customers are provided through
First Albany's salesforce of Investment Executives and Institutional
Salespeople. First Albany believes that Investment Executives and
Institutional Salespeople are a key factor to the success of its business.
Over the last five years, the number of full-time Investment Executives and
Institutional Salespeople has grown from approximately 221 to 291, many of
whom joined First Albany after previous associations with national brokerage
firms.
First Albany has organized its business to focus on and serve the needs and
financial/capital requirements of institutions, individuals, corporations, and
municipalities. As investment bankers, First Albany is positioned to advise,
manage, and conduct a variety of activities as requested including
underwritings, initial and secondary offerings, advisory services, mergers and
acquisitions, and private placements. As a brokerage firm, First Albany
offers customers a full array of investment opportunities.
First Albany operates a total of 29 Retail, Institutional, and Investment
Banking offices in 9 states. First Albany's executive office and largest
sales office are both located in Albany, New York.
First Albany is a member of the New York Stock Exchange, Inc. ("NYSE"), the
American Stock Exchange, Inc. ("ASE"), and the Boston Stock Exchange, Inc.
("BSE") and is registered as a broker-dealer with the Securities and Exchange
Commission ("SEC"). First Albany is also a member of the National Association
of Securities Dealers, Inc. ("NASD") and the Securities Investor Protection
Corporation ("SIPC"), which insures customer funds and securities deposited
with a broker-dealer up to $500,000 per customer, with a limitation of
$100,000 on claims for cash balances. First Albany has obtained additional
coverage of $24,500,000 per account from National Union, a wholly owned
subsidiary of American International Group (AIG), America's largest commercial
insurer. Both companies are rated A+15 (highest rating) by A.M. Best.
<PAGE>
Sources of Revenues
A breakdown of the amount and percentage of revenues from each principal
source for the periods indicated follows:
<TABLE>
Years Ended
- --------------------------------------------------------------------------------
September 29, 1995 September 30, 1994 September 24, 1993
- --------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent
- --------------------------------------------------------------------------------
(In thousands of dollars)
<S> <C> <C> <C> <C> <C> <C>
Securities commissions:
Listed $ 17,852 14.5% $ 14,201 13.2% $ 14,219 13.9%
Over-the-counter 4,395 3.6 3,588 3.3 3,290 3.2
Options 1,240 1.0 911 0.8 851 0.8
Mutual funds 8,228 6.7 10,586 9.8 10,334 10.1
Other 174 0.1 267 0.3 190 0.2
- --------------------------------------------------------------------------------
Sub-total 31,889 25.9 29,553 27.4 28,884 28.2
Principal transactions 43,198 35.1 36,167 33.6 34,857 34.0
Investment banking 14,625 11.9 19,164 17.8 23,265 22.7
Clearing revenues 1,059 0.8 1,151 1.1 1,102 1.1
Fees and other 6,155 5.0 5,427 5.0 4,799 4.7
- --------------------------------------------------------------------------------
Total operating
revenues 96,926 78.7 91,462 84.9 92,907 90.7
- --------------------------------------------------------------------------------
Interest income 26,173 21.3 16,222 15.1 9,483 9.3
- --------------------------------------------------------------------------------
Total revenues $123,099 100.0% $107,684 100.0% 102,390 100.0%
================================================================================
</TABLE>
Securities Commissions
In executing customers' orders to buy or sell listed securities and securities
in which it does not make a market, First Albany generally acts as an agent
and charges a commission.
Principal Transactions
First Albany buys and maintains inventories of municipal debt, corporate debt,
and equity securities as a "market maker" for sale of those securities to
other dealers and to customers. A staff of 46 traders, underwriters, and
assistants manages First Albany's inventory of securities. First Albany
Investment Executives work directly with these traders. As of September 29,
1995, First Albany made a market in 291 common stocks quoted on National
Association of Securities Dealers Automated Quotation ("NASDAQ") and other
less actively traded securities. First Albany also trades municipal bonds and
taxable debt obligations, including U.S. Treasury bills, notes, and bonds,
U.S. Government agency notes and bonds, bank certificates of deposit, mortgage-
backed securities, and corporate obligations. Principal transactions have
been a significant source of revenue and should continue to be so in the
future. Continuation of these activities depends on the availability of
sufficient capital and the services of highly skilled traders, Investment
Executives, and Institutional Salespeople.
The majority of revenues derived from principal transactions are on a
"riskless" basis. In fiscal 1995, First Albany added an institutional
municipal risk trading operation in which inventory positions are hedged by
highly liquid future contracts. Most of the inventory positions are carried
for the purpose of generating sales by the retail and institutional
salesforce.
<PAGE>
First Albany's trading activities require the commitment of capital and may
place First Albany's capital at risk. Profits and losses are dependent upon
the skill of traders, price movement, trading activity, and the size of
inventories.
In executing customers' orders to buy or sell in the over-the-counter market
in a security in which it makes a market, First Albany may sell to or purchase
from its customers at a price which is substantially equal to the current
interdealer market price, plus or minus a markup or markdown. Alternatively,
First Albany may act as an agent, executing a customer's purchase or sale
order with another broker-dealer, who acts as a market maker, at the best
inter-dealer market price available and charging a commission.
The following table sets forth the highest, lowest, and average month-end
inventories (including the net of securities owned and securities sold, but
not yet purchased) for fiscal 1995 by securities category where First Albany
acted as principal.
Highest Lowest Average
Inventory Inventory Inventory
- --------------------------------------------------------------------------------
(In thousands of dollars)
State and municipal bonds $ 44,314 $ 7,945 $ 26,349
Corporate obligations 12,873 1,677 4,490
Corporate stocks 3,511 (2,421) 1,903
U.S. Government and federal
agencies obligations 6,119 693 3,384
Underwriting and Investment Banking
First Albany manages, co-manages, and participates in tax-exempt and corporate
securities distributions. For the periods indicated, the table below
highlights the number and dollar amount of corporate and tax-exempt securities
offerings managed or co-managed by First Albany and the number and amount of
First Albany's underwriting participations in syndicates, including those
managed or co-managed by First Albany:
Corporate Stock and Bond Offerings
----------------------------------
Managed or Co-Managed Syndicate Participations
--------------------- ------------------------
Fiscal Number of Amount of Number of Amount of
Year Issues Offering Participations Participation
------ --------- --------- -------------- -------------
(In thousands of dollars)
1995 13 $ 514,583 203 $ 227,170
1994 13 483,814 334 349,723
1993 3 158,300 344 366,314
1992 4 212,451 322 130,938
1991 1 7,650 159 51,677
Tax-Exempt Bond Offerings
-------------------------
Managed or Co-Managed Syndicate Participations
Fiscal Number of Dollar Number of Dollar
Year Issues Amount Participations Amount
------ --------- ------ -------------- ------
(In thousands of dollars)
1995 113 $ 12,235,469 222 $ 1,362,845
1994 123 14,744,502 332 1,598,182
1993 171 18,379,821 349 1,741,206
1992 179 14,482,448 328 1,137,423
1991 89 14,933,761 332 886,069
<PAGE>
Participation in an underwriting syndicate or selling group involves both
economic and regulatory risks. An underwriter or selling group member may
incur losses if it is forced to resell the securities it is committed to
purchase at less than the agreed-upon purchase price. In addition, under the
federal securities laws, other statutes, and court decisions with respect to
underwriters' liabilities and limitations on indemnification of underwriters
by issuers, an underwriter is subject to substantial potential liability for
material misstatements or omissions in prospectuses and other communications
with respect to underwritten offerings. Further, underwriting or selling
commitments constitute a charge against net capital and First Albany's
underwriting or selling commitments may be limited by the requirements that it
must at all times be in compliance with the net capital rule. See "Net
Capital Requirements."
Interest
First Albany derives interest income primarily from the financing of customer
margin loans, securities lending activities, and securities owned.
Customers' securities transactions are effected on either a cash or margin
basis. In margin transactions, First Albany extends credit, which is
collateralized by securities and cash in the customer's account, to the
customer. In accordance with Federal Reserve Bank regulations, NYSE
regulations, and internal policy, First Albany earns interest income as a
result of charging customers at a rate of up to 2% over the brokers' call
rate.
During the past several years, cash balances in customers' accounts have been
a source of funds to finance customers' margin account debit balances. SEC
regulations restrict the use of customers' funds by broker-dealers by
providing generally that free credit balances and funds derived from pledging
and lending customers' securities are to be used only to finance customers'
margin account debit balances, and, to the extent not so used, the funds must
be deposited in a special reserve bank account for the exclusive benefit of
customers. The regulations also require broker-dealers, within designated
periods of time, to obtain physical possession or control of and to segregate
customers' fully paid and excess margin securities.
In connection with both its trading and brokerage activities, First Albany
borrows securities to cover short sales and to complete transactions in which
customers or other brokers have failed to deliver securities by the required
settlement date. First Albany also lends securities to other brokers and
dealers for similar purposes. This is a common occurrence for broker-dealers.
When borrowing securities, First Albany is required to deposit cash or other
collateral, or to post a letter of credit with the lender and receive a rebate
(based on the amount of cash deposited) calculated to yield a negotiated rate
of return. When lending securities, First Albany receives cash and generally
pays a rebate (based on the amount of cash received) to the other party to the
transaction. Securities borrow and loan transactions are executed pursuant to
written agreements with counter-parties which provide that the securities
borrowed or loaned be marked to market on a daily basis and that excess
collateral be refunded or that additional collateral be furnished in the event
of changes in the market value of the securities. Collateral adjustments are
usually made on a daily basis through the facilities of various
clearinghouses.
Operations, Clearing, and Systems
First Albany's operations include: execution of orders; processing of
transactions; receipt, identification, and delivery of funds and securities;
custody of customers' securities; internal financial control; and compliance
with regulatory and legal requirements.
<PAGE>
The volume of transactions handled by the operations staff fluctuates
substantially. The monthly number of purchase and sale transactions processed
for the periods indicated were as follows:
Number of Monthly
Transactions
-----------------
Fiscal Year High Low Average
- ----------- ---- --- -------
1995 71,407 44,409 54,254
1994 58,245 40,537 47,257
1993 51,745 37,276 43,409
1992 43,068 30,907 36,346
1991 38,744 20,800 31,434
First Albany has established internal controls and safeguards against
securities theft, including use of depositories and periodic securities
counts. As required by the NYSE and certain other authorities, First Albany
carries fidelity bonds covering loss or theft of securities as well as
embezzlement and forgery.
First Albany clears its own securities transactions and posts its books and
records daily. Periodic reviews of controls are conducted, and
administrative and operations personnel meet frequently with management to
review operating conditions. Operations personnel monitor compliance with
applicable laws, rules, and regulations.
In addition to processing its own customer transactions, First Albany
processes, for a fee, the transactions of other brokerage firms whose customer
accounts are carried on a fully disclosed basis with all security positions,
margin accounts receivable, and credit balances reflected on the books and
records of First Albany.
Financial Services
Customized financial services are available to customers at First Albany.
The Financial Planning Department advises customers on a variety of
interrelated financial matters, including investment portfolio review, tax
management, insurance analysis, education and retirement planning, and estate
analysis. For a fee, financial planners will prepare a detailed analysis with
specific recommendations aimed at accumulating wealth and attaining financial
goals.
First Albany also offers a range of retirement plans, including IRAs, SEP
Plans, profit sharing, 401K, and pension programs. Fixed and variable
annuities are available as well as life, disability, and nursing home
insurance programs, limited partnership interests in real estate, oil and gas
drilling, and similar ventures.
Research
First Albany maintains a professional staff of equity analysts. Research is
focused on six industry sectors: technology, health care, financial services,
energy, utilities, and basic industry. First Albany employs 16 analysts
and 12 research assistants who support First Albany's institutional and retail
brokerage and corporate finance activities.
In fiscal 1995, First Albany enlarged the scope ofits research in the technology
sector by entering into a strategic alliance with the META Group, Inc. (META).
META, an independent market assessment company, provides research and analysis
of developments and trends in information technology (IT) including computer
hardware, software, communications and related information technology industries
to both IT users and IT vendors. The alliance with META enables First Albany to
provide its investors with insights drawn from META's analysis of technology
trends, user experience, and vendor pricing and negotiating tactics.
<PAGE>
Research services include review and analysis of the economy; general market
conditions; technology trends, industries and specific companies via both
fundamental and technical analyses; recommendations of specific action with
regard to industries and specific companies; review of customer portfolios;
preparation of research reports which are provided to retail and institutional
customers; and responses to inquiries from customers and Investment Executives.
In addition, First Albany purchases outside research services including economic
reports, charts, data bases, company analyses, and technical analyses.
Retail Business
Revenues from First Albany's retail brokerage activities are a substantial
portion of First Albany's business and are generated through customer
purchases and sales of stocks, bonds, mutual funds, and other investment
products. For the fiscal years 1995, 1994, and 1993, these revenues accounted
for approximately 53%, 54%, and 49% of net revenues, respectively.
Institutional Business
Revenues generated from securities transactions with major institutions in
fiscal 1995, 1994, and 1993 accounted for approximately 31%, 29%, and 30% of
net revenues, respectively. Institutional revenues are derived from sales of
taxexempt securities, taxable debt obligations, and equities, and are serviced
by 83 Institutional Salespeople. First Albany Retail Investment Executives
cover most of the regional institutions.
Municipal Bond Business
First Albany considers its expertise in municipal bonds to be one of its major
strengths. The tax-exempt department consists of 49 professionals and offers
a broad range of services, including primary market underwriting, secondary
market trading, institutional sales, sales liaison with branches, portfolio
analysis, credit analysis, investment banking services, and financial advisory
services.
Sales revenues from all secondary market tax-exempt products were $12.9
million in fiscal 1995, $8.95 million in fiscal 1994, and $7.5 million in fiscal
1993.
Employees
At September 29, 1995, the Company had 669 full-time employees, of which 193
were Retail Investment Executives, 98 were Institutional Salespeople and
Institutional Traders, 129 were in branch sales support, 27 were in home
office sales support, 60 were in other revenue producing positions, 60 were
in operations, and 102 were in other support and administrative functions.
New Investment Executives are required to take examinations given by the NASD
and approved by the NYSE and all principal exchanges as well as state
securities authorities in order to be registered. There is intense
competition among securities firms for Investment Executives with proven sales
production records.
The Company considers its employee relations to be good and believes that its
compensation and employee benefits are competitive with those offered by other
securities firms. None of the Company's employees are covered by a collective
bargaining agreement.
Competition
First Albany is engaged in a highly competitive business. Its competition
includes, with respect to one or more aspects of its business, all of the
member organizations of the NYSE and other registered securities exchanges,
all members of the NASD, members of the various commodity exchanges, and
commercial banks and thrift institutions. Many of these organizations are
national firms and have substantially greater financial and human resources
than First Albany. Discount brokerage firms seeking to expand their share of
the retail market, including firms affiliated with commercial banks and thrift
institutions, are devoting substantial funds to advertising and direct
solicitation of customers. In many instances, First Albany is competing
directly with such organizations. In addition, there is competition for
investment funds from the real estate, insurance, banking, and savings and loan
industries. The Company believes that the principal factors affecting
competition for the securities industry are the quality and ability of
professional personnel and relative prices of services and products offered.
<PAGE>
Regulation
The securities industry in the United States is subject to extensive regulation
under federal and state laws. The SEC is the federal agency charged with
administration of the federal securities laws. Much of the regulation of
brokerdealers, however, has been delegated to self-regulatory organizations,
principally the NASD and the national securities exchanges. These self
regulatory organizations adopt rules (subject to approval by the SEC) which
govern the industry and conduct periodic examinations of member broker-dealers.
Securities firms are also subject to regulation by state securities commissions
in the states in which they are registered. First Albany is currently
registered as a broker-dealer in 49 states and the District of Columbia.
The regulations to which broker-dealers are subject cover all aspects of the
securities business, including sales methods, trade practices among broker
dealers, capital structure of securities firms, recordkeeping, and conduct of
directors, officers, and employees. Additional legislation, changes in rules
promulgated by the SEC and by self-regulatory organizations, or changes in the
interpretation or enforcement of existing laws and rules often directly affect
the method of operation and profitability of broker-dealers. The SEC, self
regulatory organizations, and state security regulators may conduct
administrative proceedings which can result in censure, fine, suspension, or
expulsion of a broker-dealer, its officers, or employees. The principal
purpose of regulation and discipline of broker-dealers is the protection of
customers and the securities markets rather than protection of creditors and
stockholders of broker-dealers.
Net Capital Requirements
As a broker-dealer and member of the NYSE, First Albany is subject to the
Uniform Net Capital Rule promulgated by the SEC. The rule is designed to
measure the general financial condition and liquidity of a broker-dealer;
therefore, it imposes a minimum net capital requirement deemed necessary to
meet the broker-dealer's continuing commitments to its customers.
A broker-dealer may be required to reduce its business and to restrict
withdrawal of subordinated capital if its net capital is less than 4% of
aggregate debit balances; it may be prohibited from expanding its business and
declaring cash dividends if its net capital is less than 5% of aggregate debit
balances; and it will be subject to closer supervision by the NYSE if its net
capital is less than 6% of aggregate debit balances. Compliance with the Net
Capital Rule may limit those operations of a firm such as First Albany which
require the use of its capital for purposes such as maintaining the inventory
required for a firm trading in securities, underwriting securities, and
financing customer margin account balances. Net capital and aggregate debit
balances change from day to day and, at September 29, 1995, First Albany's net
capital was $17,178,000 which was 18% of its aggregate debit balances (2%
minimum requirement) and $15,303,000 in excess of required minimum net
capital.
<PAGE>
Item 2. Properties
The Company has a total of 29 Retail, Institutional, and Investment Banking
offices in 9 states, all of which are leased or rented. The Company's
executive offices are currently located at 41 State Street, Albany, New York.
The order entry, trading, investment banking, research, data processing,
operations, and accounting activities are centralized in the Albany office.
During 1996, these offices will be relocated to 30 South Pearl Street, Albany,
New York. The offices at 30 South Pearl Street will be operated under a lease
which currently expires in the year 2002. All other offices are subject to
lease or rental agreements which, in the opinion of management, are sufficient
to meet the needs of the Company.
Item 3. Legal Proceedings
In the normal course of business, the Company has been named a defendant, or
otherwise has possible exposure, in several claims. Certain of these are
class actions which seek unspecified damages that could be substantial.
Although there can be no assurance as to the eventual outcome of litigation in
which the Company has been named as a defendant or otherwise has possible
exposure, the Company has provided for those actions most likely to result in
adverse dispositions. Although further losses are possible, the opinion of
management, based upon the advice of its attorneys and general counsel, is
that such litigation will not, in the aggregate, have a material adverse
effect on the Company's liquidity or financial position, although it could
have a material effect on quarterly or annual operating results in the period
in which it is resolved.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company's common stock has traded on the Nasdaq Stock Market under the
symbol "FACT." As of December 14, 1995, there were approximately 875 holders
of record of the Company's common stock. The following table sets forth the
high and low bid quotations for the common stock as adjusted for subsequent
stock dividends, along with cash dividends during each quarter for the fiscal
years ended:
September 29, 1995 Quarters Ended
- ------------------ --------------
Stock Price Range Dec. 31 Mar. 31 June 30 Sept. 29
- ----------------- ------- ------- ------- --------
High $7 1/4 $7 5/8 $8 $8 3/4
Low $6 1/4 $6 1/2 $7 1/8 $7 1/8
Cash Dividend
per Share $ .05 $ .05 $ .05 $ .05
September 30, 1994 Quarters Ended
- ------------------ --------------
Stock Price Range Dec. 31 Mar. 25 June 24 Sept. 30
- ----------------- ------- ------- ------- --------
High $7 1/2 $7 1/2 $7 1/2 $6 7/8
Low $6 1/4 $6 3/4 $6 3/8 $5 3/4
Cash Dividend
per Share $ .05 $ .05 $ .05 $ .05
The Board of Directors has from time to time authorized the Company to
repurchase shares of its common stock either in the open market or otherwise.
After the 5% common stock dividend declared on October 26, 1995, the total
number of treasury shares was 365,739. When appropriate, the Company will
consider making additional purchases.
<PAGE>
During fiscal 1995, the Company declared and paid four quarterly cash
dividends totaling $.20 per share of common stock, along with declaring and
issuing two 5% common stock dividends. During fiscal 1994, the Company also
declared and paid four quarterly cash dividends totaling $.20 per share of
common stock, along with declaring and issuing two 5% common stock dividends.
On October 26, 1995, subsequent to the period reflected in this report, the
Board of Directors declared the regular quarterly cash dividend of $0.05 per
share along with a 5% common stock dividend, both payable on November 8,
1995, to shareholders of record on November 22, 1995.
<PAGE>
Item 6. Selected Financial Data
The following selected financial data have been derived from the Consolidated
Financial Statements of the Company.
First Albany Companies Inc.
FIVE YEAR FINANCIAL SUMMARY
---------------------------
(In thousands of dollars except per share amounts)
Sept. 29, Sept. 30, Sept. 24, Sept. 25, Sept. 27,
For the years ended 1995 1994 1993 1992 1991
- ------------------- -------- -------- -------- -------- --------
Operating Results
Revenues:
Commissions $ 31,889 $ 29,553 $ 28,884 $ 24,569 $ 19,445
Principal transactions 43,198 36,167 34,857 31,405 28,443
Investment banking 14,625 19,164 23,265 16,065 8,051
Fees and other 7,214 6,578 5,901 4,782 4,593
- --------------------------------------------------------------------------------
Operating revenues 96,926 91,462 92,907 76,821 60,532
Interest income 26,173 16,222 9,483 8,999 12,047
- --------------------------------------------------------------------------------
Total revenues 123,099 107,684 102,390 85,820 72,579
Interest expense 19,904 10,467 5,257 5,078 8,697
- --------------------------------------------------------------------------------
Net revenues 103,195 97,217 97,133 80,742 63,882
- --------------------------------------------------------------------------------
Expenses Excluding Interest:
Compensation
and benefits 71,064 65,513 64,388 51,558 40,881
Clearing, settlement
and brokerage costs 2,258 1,894 1,981 1,978 2,120
Communications and data
processing 7,794 7,198 6,209 5,213 4,770
Occupancy and
depreciation 6,660 5,710 5,395 5,130 5,130
Selling 4,817 4,779 4,152 3,410 2,565
Other 5,382 4,755 6,242 4,534 4,831
- --------------------------------------------------------------------------------
Total expenses excluding
interest 97,975 89,849 88,367 71,823 60,297
- --------------------------------------------------------------------------------
Income before
income taxes 5,220 7,368 8,766 8,919 3,585
Income tax expense 1,870 2,876 3,375 3,352 1,302
- --------------------------------------------------------------------------------
Net income $ 3,350 $ 4,492 $ 5,391 $ 5,567 $ 2,283
================================================================================
Per Common Share: *
Earnings-primary $ 0.71 $ .96 $ 1.14 $ 1.22 $ .52
Cash dividend 0.20 0.20 0.20 0.20
Book value 8.00 7.48 6.69 5.65 4.56
- --------------------------------------------------------------------------------
Financial Condition:
Total assets $543,255 $482,749 $514,794 $203,877 $164,679
Long-term note payable 1,791 94 456 1,334 1,900
Subordinated debt 2,250 2,750 3,250
Stockholders' equity 36,192 33,230 30,088 25,272 19,989
- --------------------------------------------------------------------------------
* All per share figures have been restated for common stock dividends declared
through October 26, 1995.
<PAGE>
<TABLE>
First Albany Companies Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS COMPARISON 1995
VS. 1994 AND 1994 VS. 1993
(In thousands of dollars)
<CAPTION>
1995 1994
Fiscal Years Ended vs. 1994 vs. 1993
Sept. 29, Sept. 30, Sept. 24, Increase Increase
1995 1994 1993 (Decrease) (Decrease)
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results
Revenues:
Commissions $ 31,889 $ 29,553 $ 28,884 $ 2,336 8% $ 669 2%
Principal
transactions 43,198 36,167 34,857 7,031 19% 1,310 4%
Investment banking 14,625 19,164 23,265 (4,539) (24%) (4,101) (18%)
Fees and other 7,214 6,578 5,901 636 10% 677 11%
Operating revenues 96,926 91,462 92,907 5,464 6% (1,445) (2%)
Interest income 26,173 16,222 9,483 9,951 61% 6,739 71%
Total revenues 123,099 107,684 102,390 15,415 14% 5,294 5%
Interest expense 19,904 10,467 5,257 9,437 90% 5,210 99%
Net revenues 103,195 97,217 97,133 5,978 6% 84 0%
Expenses Excluding Interest:
Compensation
and benefits 71,064 65,513 64,388 5,551 8% 1,125 2%
Clearing, settlement
and brokerage costs 2,258 1,894 1,981 364 19% (87) (4%)
Communications and
data processing 7,794 7,198 6,209 596 8% 989 16%
Occupancy and
depreciation 6,660 5,710 5,395 950 17% 315 6%
Selling 4,817 4,779 4,152 38 1% 627 15%
Other 5,382 4,755 6,242 627 13% (1,487) (24%)
Total expenses
excluding interest 97,975 89,849 88,367 8,126 9% 1,482 2%
Income before
income taxes 5,220 7,368 8,766 (2,148) (29%) (1,398) (16%)
Income tax expense 1,870 2,876 3,375 (1,006) (35%) (499) (15%)
Net income $ 3,350 $ 4,492 $ 5,391 $(1,142) (25%) $ (899) (17%)
Net interest income:
Interest income $ 26,173 $ 16,222 $ 9,483 $ 9,951 61% $ 6,739 71%
Interest expense 19,904 10,467 5,257 9,437 90% 5,210 99%
Net interest income $ 6,269 $ 5,755 $ 4,226 $ 514 9% $ 1,529 36%
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
BUSINESS ENVIRONMENT
First Albany Corporation (First Albany), a wholly owned subsidiary of First
Albany Companies Inc. (the Company), is a full service investment banking and
brokerage firm. Its primary business includes the underwriting, distribution,
and trading of fixed income and equity securities. The investment banking and
brokerage business earns revenues in direct correlation with the general level
of trading activity in the stock and bond markets. This level of activity
cannot be controlled by the Company; however, many of the Company's costs are
fixed. Therefore, the Company's earnings, like those of others in the industry,
reflect the activity in the markets and can fluctuate accordingly.
This is a highly competitive business. The competition includes not only
full service national firms and discount houses, but also mutual funds that sell
directly to the customer as well as banks that offer a variety of investment
products.
1995 was an unusually good year for the financial markets in general and many
securities firms in particular. Long term interest rates declined sharply and
the economy and profits expanded. As a result, both bond prices and stock
prices rose registering returns of 17.5% and 34.8% from December 31, 1994,
through November 30, 1995 for the Lehman Brothers Government/Corporate Index
and the S&P 500 Index respectively. These returns are unusual in the
financial markets. The compound annual returns with all dividends and interest
reinvested between 1926 and 1994 for corporate bonds was 5.5%, for government
bonds 4.9%, and the return for equities 10.2%. Although First Albany remains
optimistic about the outlook for equity prices in 1996, a pullback in prices
could occur. If such a pullback was to occur, it would have a damaging effect
on the secondary markets. Revenues from security trading, commission revenues,
and underwriting fees and profits of First Albany Corporation would most
likely suffer. In such an environment, it would be difficult for all
securities firms to maintain growth and earnings comparable to the levels
achieved in 1995.
RESULTS OF OPERATIONS
Fiscal Year 1995 Compared with Fiscal Year 1994
Net Income
Net income for the 1995 fiscal year was $3.4 million or $0.71 per share
compared to $4.5 million or $.96 per share earned in fiscal 1994. During
fiscal 1995, both the Company's municipal and equity institutional businesses
showed substantial growth, along with an ongoing solid contribution by the
retail division. The Company continued to make investments in people and
technology. These investments are critical for the firm's long-term success,
but have negatively impacted short-term operating results. These investments
will strengthen the Company's revenues and profitability in the future.
Commissions
Commission revenues increased $2.3 million or 8% in fiscal 1995, reflecting
active trading in institutional equities. Revenues from listed and over-the
counter stock commissions increased $4.6 or 25%, while mutual fund commission
revenues decreased $2.3 million or 22%.
<PAGE>
Principal Transactions
Principal transactions increased $7.0 million or 19% in fiscal 1995. This
increase was comprised of an increase in equities of $2.1 million, an increase
in municipal bonds of $7.8 million (primarily due to the addition in fiscal
1995 of an institutional municipal risk trading operation), a decrease in
taxable fixed income securities of $2.1 million, and a decrease in investment
income of $0.8 million. A primary reason for the decrease in investment
income was the result of an unrealized gain of $1.4 million recorded in fiscal
1994 due to the Company's investment in a firm which completed an initial
public offering in February 1994.
Investment Banking
Investment banking revenues decreased $4.5 million or 24% in fiscal 1995.
Revenues from selling concessions decreased $3.4 million (equities decreased
$2.4 million, while municipal bonds decreased $1.2 million and taxable fixed
income increased $0.2 million), underwriting fees decreased $0.2 million, and
investment banking fees decreased $0.9 million (corporate finance fees
decreased $0.1 million, while municipal finance fees decreased $0.8 million).
The result in investment banking revenues was largely dependent upon an
industry-wide decline in underwriting activity.
Compensation and Benefits
Compensation and benefits increased $5.6 million or 8% in fiscal 1995.
Salesrelated compensation was $0.9 million higher and salaries increased $3.8
million which impacted benefits (up $0.9 million).
Occupancy and Depreciation
Occupancy and depreciation expense increased $1 million or 17% in fiscal
1995 primarily as a result of our increased investment in new automated
systems.
Income Taxes
Income taxes decreased $1.0 million or 35% in fiscal 1995 due to a decrease
in pre-tax earnings. The Company's effective tax rate decreased to 36% from
39% as a result of an increased proportion of tax-exempt interest income to
income before taxes.
Fiscal Year 1994 Compared with Fiscal Year 1993
Net Income
Net income for the 1994 fiscal year was $4.5 million or $.96 per share
compared to $5.4 million or $1.14 per share earned in fiscal 1993. Revenues
increased due to a solid contribution made by our retail brokerage business
along with significant contributions by our institutional equity and corporate
finance areas. However, net income decreased due to the effect of falling
bond prices on fixed income sales, trading and underwritings, and because
municipal bond refinancings declined significantly from last year.
Principal Transactions
Principal transactions increased $1.3 million or 4% in fiscal 1994. This
increase was comprised of an increase in equities of $3.2 million, a decrease
in taxable fixed income securities of $4.1 million, an increase in municipal
bonds of $0.8 million and an unrealized gain of $1.4 million due to the
Company's investment in a firm which completed an initial public offering in
February 1994.
<PAGE>
Investment Banking
Investment banking revenues decreased $4.1 million or 18% in fiscal 1994.
Revenues from selling concessions decreased $0.2 million (equities increased
$1.7 million, while municipal bonds decreased $1.8 million and taxable fixed
income decreased $0.1 million), underwriting fees decreased $1.1 million
(primarily municipal bonds), and investment banking fees decreased $2.8
million (corporate finance fees increased $1.6 million, while municipal
finance fees decreased $4.4 million). The result in investment banking
revenues was largely dependent upon declining municipal bond activity due to
increasing interest rates and a significant decrease in municipal bond
refinancings; however, these were partially offset by increasing revenues in
equity corporate finance activities.
Net Interest Income
Net interest income increased $1.5 million or 36% in fiscal 1994 due
primarily to increased revenues from customer margin balances, and increased
stock borrowed and stock loaned activities.
Compensation and Benefits
Compensation and benefits increased $1.1 million or 2% in fiscal 1994.
Salesrelated compensation decreased $1.3 million, salaries increased $1.8
million which impacted benefits (up $0.6 million).
Communications and Data Processing
Communications and data processing expense increased $1 million or 16% in
fiscal 1994. Communication expense increased $0.8 million mainly
as a result of the expansion of the institutional and research divisions. Data
processing expense increased $0.2 million due primarily to an increased number
of transactions.
Other Expenses
Other expenses decreased $1.5 million or 24% in fiscal 1994 due primarily to
a decrease in litigation and to consulting costs.
LIQUIDITY AND CAPITAL RESOURCES
A substantial portion of the Company's assets, similar to other brokerage and
investment banking firms, is liquid, consisting of cash and assets readily
convertible into cash. These assets are financed primarily by the Company's
interest-bearing and non-interest-bearing payables to customers, payables to
brokers and dealers collateralized by loaned securities and bank lines-of
credit. Securities borrowed and securities loaned will fluctuate due
primarily to the current level of business activity in this area. Receivables
from others decreased due primarily to a decrease in the adjustment to record
securities owned on a trade date basis. Securities owned increased primarily
due to the addition in fiscal 1995 of an institutional municipal risk trading
operation. Net receivables from customers increased due to a decrease in
customer free credits. Short-term bank loans increased due primarily to an
increase in securities owned and an increase in net receivables from customers.
At fiscal year-end 1995, both First Albany Corporation and Northeast
Brokerage Services Corporation, subsidiaries of First Albany Companies Inc.,
were in compliance with the net capital requirements of the Securities and
Exchange Commission and had capital in excess of the minimum required.
Management believes that funds provided by operations and a variety of
committed and uncommitted bank lines-of-credit_totaling $120,000,000 of which
approximately $66,712,000 were unused as of September 29, 1995_will provide
sufficient resources to meet present and reasonably foreseeable short-term
financial needs.
<PAGE>
During fiscal 1995, the Company declared and paid four quarterly cash
dividends totaling $ 0.20 per share of common stock, along with declaring and
issuing two 5% common stock dividends.
On October 26, 1995, subsequent to the period reflected in this report, the
Board of Directors declared the regular quarterly cash dividend of $ 0.05 per
share along with a 5% common stock dividend, both payable on November 8, 1995,
to stockholders of record on November 22, 1995.
The Company believes that funds provided by operations will be sufficient to
fund the acquisition of office equipment and leasehold improvements, and other
long-term requirements.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
Index to Financial Statements and Supplementary Data
Page
REPORT OF INDEPENDENT ACCOUNTANTS 18
FINANCIAL STATEMENTS:
Consolidated Statements of Income, For the Years
Ended September 29, 1995, September 30, 1994,
and September 24, 1993 19
Consolidated Statements of Financial Condition,
as of September 29, 1995, and September 30, 1994 20
Consolidated Statements of Changes in
Stockholders' Equity, For the Years Ended September 29,
1995, September 30, 1994, and September 24, 1993 21
Consolidated Statements of Cash Flows,
For the Years Ended September 29, 1995,
September 30, 1994, and September 24, 1993 22
Notes to Consolidated Financial Statements 23-34
SUPPLEMENTARY DATA:
Selected Quarterly Financial Data (Unaudited) 35
<PAGE>
Report of Independent Accountants
Board of Directors and Stockholders
First Albany Companies Inc.
We have audited the consolidated financial statements and the
financial statement schedule of First Albany Companies Inc. listed in Item
14(a) of this Form 10-K. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of First
Albany Companies Inc. as of September 29, 1995, and September 30, 1994,
and the consolidated results of their operations and their cash flows for
each of the three years in the period ended September 29, 1995, in
conformity with generally accepted accounting principles. In addition, in
our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Albany, New York
November 10, 1995
<PAGE>
First Albany Companies Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars)
---------------------------------
September 29, September 30, September 24,
For the years ended 1995 1994 1993
- ------------------- ------------- ------------- -------------
Revenues
Commissions $ 31,889 $ 29,553 $ 28,884
Principal transactions 43,198 36,167 34,857
Investment banking 14,625 19,164 23,265
Interest 26,173 16,222 9,483
Fees and other 7,214 6,578 5,901
Total revenues 123,099 107,684 102,390
Interest expense 19,904 10,467 5,257
Net revenues 103,195 97,217 97,133
Expenses excluding interest
Compensation and benefits 71,064 65,513 64,388
Clearing, settlement and
brokerage costs 2,258 1,894 1,981
Communications and data
processing 7,794 7,198 6,209
Occupancy and depreciation 6,660 5,710 5,395
Selling 4,817 4,779 4,152
Other 5,382 4,755 6,242
Total expenses excluding interest 97,975 89,849 88,367
Income before income taxes 5,220 7,368 8,766
Income tax expense 1,870 2,876 3,375
Net income $ 3,350 $ 4,492 $ 5,391
Net income per common and
common equivalent share
Primary $ 0.71 $ .96 $ 1.14
Fully diluted $ 0.71 $ .96 $ 1.14
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
<TABLE>
First Albany Companies Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands of dollars)
<CAPTION>
September 29, September 30,
1995 1994
------------- -------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 3,253 $ 3,165
Securities borrowed 376,919 331,209
Receivables from
Brokers, dealers and clearing agencies 1,889 1,511
Customers 88,610 96,830
Others 4,965 18,358
Securities owned 56,025 20,988
Office equipment and leasehold
improvements, net 6,062 5,151
Other assets 5,532 5,537
Total Assets $543,255 $482,749
Liabilities and Stockholders' Equity
Liabilities
Short-term bank loans $ 53,288 $ 38,921
Securities loaned 388,523 329,478
Payables to
Brokers, dealers and clearing agencies 3,104 5,077
Customers 38,335 56,949
Others 4,135 1,663
Securities sold but not yet purchased 3,892 3,724
Accounts payable 1,696 1,411
Accrued compensation 8,108 9,149
Accrued expenses 4,191 3,053
Notes payable 1,791 94
Total Liabilities 507,063 449,519
Commitments and Contingencies
Stockholders' Equity
Preferred stock; $1.00 par value; authorized
500,000 shares; none issued
Common stock; $.01 par value; authorized
10,000,000 shares; issued 4,889,747
shares 1995 and 4,435,454 shares 1994 49 44
Additional paid-in capital 20,257 16,489
Retained earnings 17,822 19,099
Less treasury stock at cost (1,936) (2,402)
Total Stockholders' Equity 36,192 33,230
Total Liabilities and Stockholders' Equity $543,255 $482,749
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
<TABLE>
First Albany Companies Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended September 29, 1995, September 30, 1994,
and September 24, 1993
(In thousands of dollars except for number of shares)
<CAPTION>
Common Stock Additional
Issued Paid-In Retained Treasury Stock
Shares Amount Capital Earnings Shares Amount
------ ------ ---------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance,
September 25, 1992 3,475,915 $35 $ 8,554 $18,610 (294,545) $(1,927)
Issuance of
restricted stock 14 (13) 2,050 13
Stock dividends
declared 547,506 5 4,574 (4,580) (44,448)
Cash dividends
paid (671)
Options exercised (18) 16,157 101
Net income 5,391
Balance
September 24, 1993 4,023,421 40 13,142 18,719 (320,786) (1,813)
Issuance of re-
stricted stock 132 (104) 16,028 104
Stock dividends
declared 412,033 4 3,215 (3,219) (37,973)
Cash dividends
paid (742)
Options exercised (47) 64,281 379
Treasury stock purchase (130,000) (1,072)
Net income 4,492
Balance
September 30, 1994 4,435,454 44 16,489 19,099 (408,450) (2,402)
Issuance of re-
stricted stock 186 (155) 19,635 130
Stock dividends
declared 454,293 5 3,582 (3,587) (35,175)
Cash dividends
paid (815)
Options exercised (70) 58,251 336
Net income 3,350
Balance
September 29, 1995 4,889,747 $49 $20,257 $17,822 (365,739) $(1,936)
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
<TABLE>
First Albany Companies Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
<CAPTION>
September 29, September 30, September 24,
For the years ended 1995 1994 1993
- ------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,350 $ 4,492 $ 5,391
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,302 1,511 1,326
Deferred income taxes (1,278) 658 (246)
(Increase) decrease in operating assets:
Cash and securities segregated under
federal regulations 250 36
Securities purchased under
agreement to resell 2,806 (2,806)
Securities borrowed, net (1,641) 883
Net receivable from customers (10,394) (12,364) (13,086)
Net receivable from others 15,865 (16,584) 3,013
Securities owned, net (33,031) 2,355 (569)
Other assets 1,283 (294) (991)
Increase (decrease) in operating liabilities:
Securities sold under agreement to
repurchase (2,825) 2,825
Securities loaned, net 13,335
Net payable to brokers and dealers (2,351) (1,997) 7,457
Accounts payable and accrued expenses 382 (2,158) 3,401
Net cash (used in) provided by operating
activities (10,537) (25,791) 6,634
Cash flows from investing activities:
Purchase of furniture, equipment, and
leaseholds (3,213) (3,043) (1,460)
Purchase of long-term investments (1,838)
Net cash used in investing activities (5,051) (3,043) (1,460)
Cash flows from financing activities:
Proceeds of short-term bank
loans, net 14,367 28,990 1,100
Payments of subordinated debt (2,250) (500)
Proceeds (payments) of notes payable, net 1,697 (362) (878)
Payments for purchases of common stock
for treasury (1,072)
Proceeds from issuance of common stock
from treasury 266 332 83
Proceeds from issuance of restricted stock 161 132 13
Dividends paid (815) (742) (671)
Net cash provided by (used in) financing
activities 15,676 25,028 (853)
Increase (decrease) in cash 88 (3,806) 4,321
Cash at beginning of the year 3,165 6,971 2,650
Cash at the end of the period $ 3,253 $ 3,165 $ 6,971
Supplemental cash flow disclosures:
Income tax payments $ 1,753 $ 2,660 $ 3,322
Interest payments $18,989 $ 10,108 $ 4,999
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1.
Significant Accounting Policies
Organization and Nature of Business
The consolidated financial statements include the accounts of First Albany
Companies Inc. and its wholly owned subsidiaries (the Company). First Albany
Corporation (the Corporation) is the Company's principal subsidiary and a
registered broker-dealer. All significant intercompany balances and
transactions have been eliminated. The Company's year-end is the last Friday
in September and, therefore, the Company's fiscal year will contain 52 or 53
week periods. The years ended September 29, 1995, September 30, 1994, and
September 24, 1993, contained 52 weeks, 53 weeks, and 52 weeks, respectively.
Securities Transactions
Proprietary securities transactions are recorded on trade date, as if they
had settled. Profit and loss arising from all securities transactions entered
for the account and risk of the Company are recorded on trade date.
Customers' securities transactions are reported on a settlement date basis
(normally the third business day following the transaction) with related
commission income and expenses reported on a trade date basis.
As a broker-dealer, the Corporation values marketable securities at market
value and securities not readily marketable at fair value as determined by
management. The resulting unrealized gains and losses are included as revenues
from principal transactions. First Albany Companies Inc. also purchases
securities not readily marketable for investments purposes and, as a
non-broker-dealer values them at cost.
Resale and Repurchase Agreements
Transactions involving purchases of securities under agreements to resell
or sales of securities under agreements to repurchase are treated as
collateralized financing transactions and are recorded at their contracted
resale or repurchase amounts plus accrued interest. It is the policy of the
Company to obtain possession of collateral with a market value equal to or in
excess of the principal amount loaned under resale agreements. Collateral is
valued daily and the Company may require counterparties to deposit additional
collateral or return collateral pledged when appropriate. At September 29,
1995, and September 30, 1994, the Company had not entered into any resale or
repurchase agreements with counterparties.
Securities-Lending Activities
Securities borrowed and securities loaned are recorded at the amount of
cash collateral advanced or received. Securities borrowed transactions
require the Company to deposit cash or other collateral with the lender. With
respect to securities loaned, the Company receives collateral in the form of
cash or other collateral in an amount generally in excess of the market value
of securities loaned. The Company monitors the market value of securities
borrowed and loaned on a daily basis, with additional collateral obtained or
refunded as necessary.
Investment Banking
Investment banking revenues include gains, losses, and fees, net of
syndicate expenses, arising from securities offerings in which the Company
acts as an underwriter or agent. Investment banking revenues also include
fees earned from providing merger-and-acquisition and financial restructuring
advisory services. Investment banking management fees are recorded on
offering date, sales concessions on trade
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
date, and underwriting fees at the time the underwriting is completed and the
income is reasonably determinable.
Income Taxes
The amount of current taxes payable is recognized as of the date of the
financial statements, utilizing currently enacted tax laws and rates.
Deferred income taxes are recognized for the future tax consequences
attributable to differences between financial statement and tax basis of
existing assets and liabilities.
Office Equipment and Leasehold Improvements
Office equipment and leasehold improvements are stated at cost less
accumulated depreciation of $9,834,000 in 1995, and $7,570,000 in 1994,
respectively. Depreciation is provided on a straight-line basis over the
estimated useful life of the asset or the remaining life of the lease.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers
amounts in demand deposit accounts at various financial institutions, other
than those segregated under federal regulations, to be cash equivalents.
Earnings per Common Share
Net income per common and common equivalent share have been computed based
upon the weighted average number of common shares and dilutive common
equivalent shares (stock options) outstanding. The weighted average number of
common shares and dilutive common equivalent shares were:
Fiscal Year 1995 Fiscal Year 1994 Fiscal Year 1993
---------------- ---------------- ----------------
Primary 4,705,306 4,677,757 4,726,030
Fully diluted 4,737,101 4,677,757 4,741,455
All per share figures, as well as the weighted average number of common and
dilutive common equivalent shares, have been restated for stock dividends
declared through October 26, 1995.
Reclassifications
Certain Amounts in the 1994 and 1993 financial statements have been
reclassified to conform with the 1995 presentation.
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 2.
Receivables From and Payables To Brokers, Dealers, and Clearing Agencies
Amounts receivable from and payable to brokers, dealers and clearing
agencies other than correspondents, as of:
(In thousands of dollars) September 29, September 30,
1995 1994
------------- -------------
Securities failed to deliver $ 1,882 $ 1,511
Receivable from clearing agencies 7
Total receivables $ 1,889 $ 1,511
Securities failed to receive $ 3,060 $ 2,453
Payable to clearing agencies 44 2,624
Total payables $ 3,104 $ 5,077
NOTE 3.
Receivables From and Payables To Customers
Receivables from and payables to customers include amounts due on cash and
margin transactions. Securities owned by customers are held as collateral for
receivables. Such collateral is not reflected in the financial statements.
Total unsecured and partly secured customer receivables are $125,000 and
$204,000 for the fiscal years ended 1995 and 1994, respectively. An allowance
for doubtful accounts, based upon an aging of accounts receivable and specific
identification, has been recorded for $125,000 and $106,000 for the fiscal
years ended 1995 and 1994, respectively.
NOTE 4.
Receivables From Others
Amounts receivable from others as of:
(In thousands of dollars) September 29, September 30,
1995 1994
------------- -------------
Adjustment to record securities
on a trade date basis, net $ $15,040
Others 4,965 3,318
Total $ 4,965 $18,358
For proprietary securities transactions, amounts receivable and payable for
securities transactions that have not reached their contractual settlement date
are recorded net on the statement of financial condition.
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 5.
Securities Owned And Sold, But Not Yet Purchased
Securities owned and sold, but not yet purchased consisted of the
following as of:
(In thousands of dollars) September 29, September 30,
1995 1994
------------- -------------
Sold, but Sold, but
not yet not yet
Owned Purchased Owned Purchased
----- --------- ----- ---------
Marketable
U.S. government and federal
agencies obligations $ 5,164 $ 1,045 $ 2,943 $ 1,220
State and municipal bonds 39,936 244 10,943 436
Corporate obligations 3,558 1,246 2,698 348
Corporate stocks 4,869 1,357 3,768 1,720
Options 100
Not readily marketable
securities, fair value 560 636
Not readily marketable
securities, cost 1,838
------- ------- ------- -------
$56,025 $ 3,892 $20,988 $ 3,724
Securities not readily marketable include investment securities (a) for
which there is no market on a securities exchange or no independent publicly
quoted market, (b) that cannot be publicly offered or sold unless
registration has been effected under the Securities Act of 1933, or (c) that
cannot be offered or sold because of other arrangements, restrictions, or
conditions applicable to the securities or to the Company.
NOTE 6.
Bank Loans
Short-term bank loans are made under a variety of committed and
uncommitted bank lines of credit which are limited to financing securities
eligible for collateralization under these arrangements. This includes
Company owned securities and certain customer owned securities purchased on
margin, subject to certain regulatory formulae. These loans bear interest at
fluctuating rates based primarily on the Federal Funds interest rate. The
weighted average interest rate on these loans were 7.54% and 5.82% at
September 29, 1995, and September 30, 1994, respectively.
Short-term bank loans and unused lines of credit were collateralized by
Company owned securities of $40,391,000 and customers' margin account
securities of $44,719,000 at September 29, 1995.
A note for $1,759,912, which is collateralized by fixed assets, is payable
in monthly payments of principal and interest of $65,005. Interest is at the
prime rate (8.75% at September 29, 1995) plus 1.5%. The note matures April 1,
1998.
Future annual principal loan repayment requirements are as follows:
(In thousands of dollars)
1996 $ 626
1997 693
1998 441
Total $1,760
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
An unsecured note for $31,250 is payable in quarterly installments of $15,625
plus interest at the prime rate (8.75% at September 29, 1995) plus 0.5%. The
note matures March 25, 1996.
NOTE 7.
Stockholders' Equity
During fiscal 1995, the Company declared and paid four quarterly cash
dividends totaling $0.20 per share of common stock, along with declaring and
issuing two 5% common stock dividends.
On October 26, 1995, subsequent to the period reflected in this report,
the Board of Directors declared the regular quarterly cash dividend of $0.05
per share along with a 5% common stock dividend, both payable on November 8,
1995, to shareholders of record on November 22, 1995. Stockholders' Equity
and all per share figures have been adjusted to reflect the common stock
dividend.
NOTE 8.
Income Taxes
Under the asset and liability method, deferred income taxes are recognized
for the tax consequences of "temporary differences" by applying enacted
statutory tax rates applicable for future years to differences between financial
statement and tax basis of existing assets and liabilities. The effect of tax
rate changes on deferred taxes is recognized in the income tax provision in the
period that includes the enactment date.
The components of income taxes are:
(In thousands of dollars) September 29, September 30, September 24,
1995 1994 1993
------------- ------------- -------------
Federal
Current $ 2,051 $ 1,463 $ 2,475
Deferred (904) 466 (165)
State and local
Current 1,097 755 1,146
Deferred (374) 192 (81)
Total income taxes $ 1,870 $ 2,876 $ 3,375
The reasons for the difference between the expected income tax expense
using the federal statutory rate and the income tax expense are as follows:
(In thousands of dollars) September 29, September 30, September 24,
1995 1994 1993
------------- ------------- -------------
Income taxes
at federal statutory rate $ 1,775 $ 2,505 $ 2,984
State income taxes, net of
federal income taxes 477 625 703
Tax-exempt interest income (514) (348) (357)
Non-deductible expenses 132 94 45
Total income taxes $ 1,870 $ 2,876 $ 3,375
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The temporary differences that give rise to significant portions of
deferred tax assets are as follows:
(In thousands of dollars) September 29, September 30,
1995 1994
------------- -------------
Receivables $ 80 $ 45
Securities held for investment (345) (606)
Fixed assets 267 340
Deferred compensation 2,057 824
Other 145 323
Total deferred tax asset $2,204 $ 926
The Company has not recorded a valuation allowance for deferred tax assets
as income in the carryback period is sufficient to realize the benefit of
future deductions.
NOTE 9.
Employee Benefit Plans
The Company maintains a deferred profit sharing plan (Internal Revenue
Code Section 401(k) Plan) which permits eligible employees to defer a
percentage of their compensation. Company contributions to eligible
participants may be made at the discretion of the Board of Directors. The
Company contributed $140,000 in 1995, $56,000 in 1994, and $46,000 in 1993.
The Company also participates in an Employee Stock Bonus Plan (Internal
Revenue Code Section 401(a)) which permits eligible employees to contribute up
to 8% of their compensation on an after-tax basis. The Company makes matching
contributions equal to a percentage of each employee's contributions. Company
contributions vest in accordance with the Plan and are tax-deferred until
withdrawal. Employee and Company contributions are invested solely in the
common stock of First Albany Companies Inc. The Company contributed $408,000
in 1995, $334,000 in 1994, and $244,000 in 1993.
NOTE 10.
Incentive Plans
In 1982, the Company established a Stock Incentive Plan (the "1982 Plan")
which, as amended by stockholders in 1987, authorized issuance of options to
officers and key employees to purchase up to 800,000 shares of common stock.
On February 27, 1989, stockholders approved adoption of the First Albany
Companies Inc. 1989 Stock Incentive Plan (the "1989 Plan"). Coincident with
the adoption of the 1989 Plan, the 1982 Plan was terminated. Options previously
granted under the 1982 Plan remain valid in accordance with the terms of the
grant of such options; however, the grant of new options under the 1982 Plan was
ended. Both the 1982 Plan and 1989 Plan provide for incentive stock options
(ISOs) which meet the requirements of Section 422A of the Internal Revenue Code
of 1954, as amended, and nonqualified stock options (NSOs) which may be granted.
ISOs are granted at prices not less than fair value at the date of the grant;
NSOs may be issued at prices less than fair market value.
In addition, under the 1989 Plan, stock appreciation rights (SARs) may be
granted in tandem with ISOs or NSOs. SARs may be exercised only if the
related options (or portions thereof) are surrendered and at such time as the
fair market value of the shares underlying the option exceeds the option price
for such shares. Upon exercise of SAR and surrender of the related option, an
employee will be entitled to receive an amount equal to the excess of the fair
market value of one share at the time of such surrender over the option price
per share specified in such option times the number of such shares called for
by the option,
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
or portion thereof, which is so surrendered. Payment may be made in cash,
shares of common stock, or a combination thereof. SARs may not be exercised
before six months from date of grant. Both ISOs and NSOs may not have a term
of more than ten years. Under certain conditions, the Company is required to
purchase shares issued under this Plan at prices ranging from the original
exercise or award a price to the greater of the then book or market value. If
NSOs are exercised, the difference between the option price and the selling
price will be recognized as an expense in the income statement.
Option transactions for the 3-year period ended September 29, 1995 under
the 1982 Plan were as follows: (all are ISOs unless otherwise noted)
Exercised Issued
Or And Options Total
Terminated Exercisable Issuable Authorized
---------- ----------- -------- ----------
September 25, 1992 797,000 3,000 0 800,000
Additional options authorized 3,950 3,950
Options expired adjustment (38,000) 38,000
Options exercised at $4.76 5,000 (5,000)
September 24, 1993 764,000 39,950 0 803,950
Additional options authorized 3,280 3,280
Options exercised at $4.31
to $5.96 7,220 (7,220)
Options forfeited (4,410) 4,410
Options terminated 4,410 (4,410)
September 30, 1994 775,630 31,600 0 807,230
Additional options authorized 2,908 2,908
Options exercised at $4.70
to $5.00 11,605 (11,605)
September 29, 1995 787,235 22,903 0 810,138
Issued and exercisable options are outstanding at $3.91 - $5.41 per share.
During fiscal year 1995, the Company declared two 5% common stock dividends.
These dividends resulted in an additional 2,908 options authorized.
<PAGE>
<TABLE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
<CAPTION>
Option transactions during the 3-year period ended September 29, 1995
under the 1989 Plan were as follows:
Issued Issued
And But Not Options Options Total
Exercisable Exercisable Issuable Exercised Authorized
----------- ----------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
September 25, 1992 332,375 138,375 195,000 34,250 700,000
Additional options authorized 51,891 11,257 4,519 67,667
Options issued and
exercisable: $6.12 - $7.50 340,000 (340,000)
Options exercisable:
$5.125 to $6.25 45,249 (45,249)
Options issued but
not exercisable: $6.12 15,000 (15,000)
Options exercised:
$4.93 - $5.22 (11,157) 11,157
Options terminated (376,733) (41,663) 418,396
September 24, 1993 381,625 77,720 262,915 45,407 767,667
Additional options authorized 43,914 6,057 283,687 333,658
Options issued and
exercisable: $4.48 - $9.43 126,891 (126,891)
Options exercisable:
$4.48 to $6.59 37,026 (37,026)
Options exercised:
$5.65 - $6.48 (57,061) 57,061
Options terminated (8,770) (2,893) 11,663
September 30, 1994 523,625 43,858 431,374 102,468 1,101,325
Additional options authorized 53,309 8,395 38,353 100,057
Options issued but
not exercisable:
$7.62 to $8.23 137,750 (137,750)
Options exercisable:
$4.23 to $5.98 27,633 (27,633)
Options exercised:
$4.06 to $5.98 (46,646) 46,646
Options terminated (479) 479
September 29, 1995 557,442 162,370 332,456 149,114 1,201,382
</TABLE>
Issued and exercisable options are outstanding at $4.23 - $8.23 per share
During fiscal year 1995, the Company declared two 5% common stock
dividends. These dividends resulted in an additional 100,057 options
authorized.
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In 1992, the Company established the First Albany Companies Inc. Restricted
Stock Plan which authorized the issuance of up to 331,509 shares of common
stock (adjusted for all stock dividends) to certain key employees of the
Company. Awards under this plan expire over a four-year period after the award
date and are subject to certain restrictions including continued employment.
As of September 29, 1995, 36,880 shares have been awarded under this plan.
The fair market value of the awards will be amortized over the period in which
the restrictions are outstanding.
The Company has various other incentive programs which are offered to
eligible employees. These programs consist of cash incentives and deferred
bonuses. Amounts awarded vest over periods ranging from three to five years.
Costs are amortized over the vesting period and aggregated $1,343,000 in 1995,
$1,828,000 in 1994, and $369,000 in 1993.
NOTE 11.
Commitments and Contingencies
The Company's main and sales offices, and certain office and communication
equipment are leased under noncancellable operating leases, which expire at
various times through 2003. Future minimum annual rentals payable are as
follows:
(In thousands of dollars)
1996 $ 2,963
1997 2,379
1998 2,110
1999 1,720
2000 1,014
Thereafter 1,331
Total $11,517
Annual rental expense including utilities for 1995, 1994, and 1993
approximated $3,630,000, $3,955,000, and $3,932,000, respectively.
In the normal course of business, the Company has been named a defendant, or
otherwise has possible exposure, in several claims. Certain of these are
class actions which seek unspecified damages which could be substantial.
Although there can be no assurance as to the eventual outcome of litigation in
which the Company has been named as a defendant or otherwise has possible
exposure, the Company has provided for those actions most likely to result in
adverse dispositions. Although further losses are possible, the opinion of
management, based upon the advice of its attorneys and general counsel, is
that such litigation will not, in the aggregate, have a material adverse
effect on the Company's liquidity or financial position, although it could
have a material effect on quarterly or annual operating results in the period
in which it is resolved.
The Company is contingently liable under bank stand-by letter of credit
agreements, executed in connection with security clearing activities, totaling
$3,710,000 at September 29, 1995.
NOTE 12.
Net Capital Requirements
The Corporation is subject to the SEC's Uniform Net Capital Rule (Rule
15c3-1), which requires the maintenance of minimum net capital. The
Corporation has elected to use the alternative method, permitted
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
by the Rule, which requires that the Corporation maintain a minimum net
capital equal to 2 percent of aggregate debit balances arising from customer
transactions, as defined. At September 29, 1995, the Corporation had net
capital of $17,178,000 which was 18% of aggregate debit balances and
$15,303,000 in excess of required minimum net capital.
NOTE 13.
Financial Instruments with Off-Balance-Sheet Risk
In the normal course of business, the Company's customer and correspondent
clearance activities involve the execution, settlement, and financing of
various customer securities transactions. These activities may expose the
Company to off-balance-sheet risk in the event the customer or other broker is
unable to fulfill its contracted obligations and the Company has to purchase
or sell the financial instrument underlying the contract at a loss.
The Company's customer securities activities are transacted on either a
cash or margin basis. In margin transactions, the Company extends credit to
its customers, subject to various regulatory and internal margin requirements,
collateralized by cash and securities in the customers' accounts. In
connection with these activities, the Company executes and clears customer
transactions involving the sale of securities not yet purchased, substantially
all of which are transacted on a margin basis subject to individual exchange
regulations. Such transactions may expose the Company to significant off-
balance-sheet risk in the event margin requirements are not sufficient to
fully cover losses that customers may incur. In the event the customer fails
to satisfy its obligations, the Company may be required to purchase or sell
financial instruments at prevailing market prices to fulfill the customer's
obligations.
The Company seeks to control the risks associated with its customer
activities by requiring customers to maintain margin collateral in compliance
with various regulatory and internal guidelines. The Company monitors
required margin levels daily and, pursuant to such guidelines, requires the
customer to deposit additional collateral, or to reduce positions, when
necessary.
The Company's customer financing and securities settlement activities
require the Company to pledge customer securities as collateral in support of
various secured financing sources such as bank loans and securities loaned.
In the event the counterparty is unable to meet its contractual obligation to
return customer securities pledged as collateral, the Company may be exposed
to the risk of acquiring the securities at prevailing market prices in order
to satisfy its customer obligations.
The Company controls this risk by monitoring the market value of securities
pledged on a daily basis and by requiring adjustments of collateral levels in
the event of excess market exposure. In addition, the Company establishes
credit limits for such activities and monitors compliance on a daily basis.
In addition, the Company has sold securities that it does not currently own
and therefore will be obligated to purchase such securities at a future date.
The Company has recorded these obligations in the financial statement at the
September 29, 1995 market values of the related securities and will incur a
loss if the market value of the securities increases subsequent to September
29, 1995.
The Company acts as a manager and co-manager in underwriting security
transactions. In this capacity, there is risk if the potential customer does
not fulfill the obligation to purchase the securities. The Company controls
this risk by dealing primarily with institutional investors. In most cases,
no one institutional customer subscribes to the majority of the securities
being sold, thereby spreading the risk for this type of loss among many
established customers. The Company also maintains credit limits for these
activities and monitors compliance with applicable limits and industry
regulations on a daily basis.
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 14.
Concentrations of Credit Risk
The Company is engaged in various trading and brokerage activities whose
counterparties primarily include broker-dealers, banks, and other financial
institutions. In the event counterparties do not fulfill their obligations,
the Company may be exposed to risk. The risk of default depends on the credit
worthiness of the counterparty or issuer of the instrument. The Company seeks
to control credit risk by following an established credit approval process,
monitoring credit limits, and by requiring collateral where appropriate.
The Company purchases debt securities and may have significant positions in
its inventory subject to market and credit risk. In order to control these
risks, security positions are monitored on at least a daily basis. Should the
Company find it necessary to sell such a security, it may not be able to
realize the full carrying value of the security due to the significance of the
position sold. The Company reduces its exposure to changes in securities
valuation with the use of municipal bond index futures contracts. (See Note 16.)
If a single security position held in inventory represents a significant portion
of net capital, referred to as "undue concentration" as defined by SEC Rule
15c3-1, the Company may not be able to realize the full carrying value of the
security if the entire position was required to be sold. The total value of
securities held in inventory at September 29, 1995, which met this criterion was
$8,659,000. At September 30, 1994, the Company had no securities in inventory
which met this criterion.
NOTE 15.
Market Value of Financial Instruments
The financial instruments of the Company are reported on the Statement of
Financial Condition at market or fair value or at carrying amounts that
approximate fair value with the exception of First Albany Companies Inc.'s
securities not readily marketable, which are recorded at cost.
In December 1995, the value of such securities, as a result of an initial public
offering was $5,400,000. The fair value of other financial assets and
liabilities (consisting primarily of receivable from and payable to brokers
dealers, clearing agencies, customers, securities borrowed and loaned, and bank
loans payable) are considered to approximate the carrying value due to the
short-term nature of the financial instruments.
The Company also enters into transactions in financial instruments that are
not recognized in the Statement of Financial Condition. The notional amounts
of the open transactions at September 29, 1995, are disclosed in Note 16.
NOTE 16.
Derivative Financial Instruments
The Company does not engage in the proprietary trading of derivative
securities with the exception of highly liquid index future contracts and
options. These index future contracts and options are used to hedge securities
positions in the Company's inventory. Gains and losses on these financial
instruments are included as revenues from principal transactions. Trading
profits and losses relating to these financial instruments were as follows:
(In thousands of dollars)
Trading Profits-State and Municipal Bonds $ 5,068
Index Futures Hedging Losses (1,350)
Trading Profits-Corporate Stocks 1,159
Options (206)
Net Trading Revenues $ 4,671
<PAGE>
First Albany Companies Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
As of September 29, 1995, the contractual or notional amounts related to
these financial instruments were as follows:
(In thousands of dollars) Average Notional or Year End Notional or
Contract Market Value Contract Market Value
--------------------- ---------------------
Index Futures Contracts $(5,819) $(20,773)
Options 121 100
The contractual or notional amounts related to these financial
instruments reflect the volume and activity and do not reflect the amounts at
risk. The amounts at risk are generally limited to the unrealized market
valuation gains on the instruments and will vary based on changes in market
value. Futures contracts are executed on an exchange and cash settlement is
made on a daily basis for market movements. The settlement of the
aforementioned transactions is not expected to have a material adverse effect
on the financial condition of the Company.
The market or fair value of the options are recorded in securities owned
while the open equity in the future contracts are recorded as receivables
from clearing organizations.
<PAGE>
<TABLE>
FIRST ALBANY COMPANIES INC.
SUPPLEMENTARY DATA
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands of dollars, except per share data)
<CAPTION>
Quarters Ended
1995 Dec. 31 Mar. 31 June 30 Sept. 29
- ---- ------- ------- ------- --------
<S> <C> <C> <C> <C>
Total revenues $ 28,825 $ 27,884 $ 32,760 $ 33,630
Interest expense (4,551) (4,173) (5,681) (5,499)
Net revenues 24,274 23,711 27,079 28,131
Total expenses excluding interest (22,995) (22,994) (25,494) (26,492)
Income before income taxes 1,279 717 1,585 1,639
Income tax expense (436) (205) (592) (637)
Net income $ 843 $ 512 $ 993 $ 1,002
Net income per common
and common equivalent share:
Primary $ .18 $ .11 $ .21 $ .21
Fully diluted $ .18 $ .11 $ .21 $ .21
Quarters Ended
1994 Dec. 31 Mar. 25 June 24 Sept. 30
- ---- ------- ------- ------- --------
Total revenues $ 29,749 $ 27,154 $ 24,590 $ 26,191
Interest expense (2,428) (2,133) (2,842) (3,064)
Net revenues 27,321 25,021 21,748 23,127
Total expenses excluding interest (24,343) (22,993) (20,912) (21,601)
Income before income taxes 2,978 2,028 836 1,526
Income tax expense (1,216) (820) (298) (542)
Net income $ 1,762 $ 1,208 $ 538 $ 984
Net income per common
and common equivalent share:
Primary $ .37 $ .26 $ .12 $ .21
Fully diluted $ .37 $ .26 $ .12 $ .21
</TABLE>
All per share figures have been restated for common stock dividends declared
through October 1995. The sum of the quarters' earnings per share amount does
not always equal the full fiscal year's amount due to the effect of averaging
the number of shares of common stock and common stock equivalents throughout
the year.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
There has been no Form 8-K filed within 24 months prior to the date of the
most recent consolidated financial statements reporting a change of
accountants and/or reporting disagreements on any matter of accounting
principle or financial statement disclosure.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Except as set forth below, the information required by this item will be
contained under the caption "Election of Directors" in the Company's
definitive proxy statement for the Annual Meeting of Stockholders to be held
on or about April 2, 1996. Such information is incorporated herein by
reference to the proxy statement.
Information (not included in the Company's definitive proxy statement for the
1995 Annual Meeting of Stockholders) regarding certain executive officers of
the Company is as follows:
Edwin T. Brondo, age 48, Senior Vice President and Chief Administrative
Officer, joined First Albany Corporation in 1993 and was elected Vice
President of First Albany Companies Inc. in 1994. He previously held senior
management positions at Bankers Trust, Goldman Sachs, and Morgan Stanley.
David J. Cunningham, age 49, Senior Vice President and Chief Financial
Officer, joined First Albany Corporation in 1975 and has served as Chief
Financial Officer of First Albany Corporation since 1980 and First Albany
Companies Inc. since fiscal 1986.
Michael R. Lindburg, age 46, Senior Vice President, Secretary, and General
Counsel, joined First Albany Corporation in 1986 and has served as Vice
President, Secretary, and General Counsel of First Albany Companies Inc.
since 1986. He previously served as Vice President and General Counsel of the
Boston Stock Exchange.
Item 11. Executive Compensation.
The information required by this item will be contained under the caption
"Compensation of Executive Officers and Directors" in the Company's definitive
proxy statement for the Annual Meeting of Stockholders to be held on or about
April 2, l996. Such information is incorporated herein by reference to the
proxy statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item will be contained under the caption
"Stock Ownership of Principal Owners and Management" in the Company's
definitive proxy statement for the Annual Meeting of Stockholders to be held
on or about April 2, 1996. Such information is incorporated herein by
reference to the proxy statement.
Item 13. Certain Relationships and Related Transactions.
The information required by this item will be contained under the caption
"Certain Transactions" in the Company's definitive proxy statement for the
Annual Meeting of Stockholders to be held on or about April 2, 1996. Such
information is incorporated herein by reference to the proxy statement.
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (1) The following financial statements are included in Part II, Item 8:
Report of Independent Accountants
Financial Statements:
Consolidated Statements of Income, For the Years
Ended September 29, 1995, September 30, 1994,
and September 24, 1993.
Consolidated Statements of Financial Condition,
as of September 29, 1995, and September 30,
1994.
Consolidated Statements of Changes in
Stockholders' Equity, For the Years Ended
September 29, 1995, September 30, 1994, and
September 24, 1993.
Consolidated Statements of Cash Flows,
For the Years Ended September 29, 1995,
September 30, 1994, and September 24, 1993.
Notes to Consolidated Financial Statements
(2) The following financial statement schedule for the years 1995, 1994, and
1993 are submitted herewith:
Schedule VII-Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
<PAGE>
(3) Exhibits included herein:
Exhibit
Number Description
3.1 Certificate of Incorporation of First Albany Companies Inc. (filed as
Exhibit No. 3.1 to Registration Statement No. 33-1353).
3.2 By-laws of First Albany Companies Inc. (filed as Exhibit No. 3.2 to
Registration Statement No.33-1353).
3.2a By-laws of First Albany Companies Inc., as amended (as filed as
Exhibit No. 3.2a to Form 10-K for the fiscal year ended
September 24, 1993).
4 Specimen Certificate of Common Stock, par value $.01 per share (filed as
Exhibit No. 4 to Registration Statement No. 33-1353).
10.2 Lease dated February 9, 1978, between MacFarland Construction Company
Inc. and First Albany Corporation for office facilities at 41 State
Street, Albany, New York (filed as Exhibit No. 10.2 to Registration
Statement No. 33-1353).
10.6 Deferred Profit Sharing Plan of First Albany Corporation effective
October 1, 1982, as amended by shareholder vote, dated January 19, 1987
(filed as Exhibit 10.6 to Form 10-K for the fiscal year ended
September 30, 1986).
10.7 Incentive Stock Option Plan of First Albany Corporation effective
October 1, 1982, as amended by shareholder vote, dated January 19, 1987
(filed as Exhibit 10.7 to Form 10-K for the fiscal year ended
September 30, 1987).
10.10 First Albany Companies Inc. Stock Bonus Plan effective July 8, 1987
(filed as Registration Statement No. 33-15220 (Form B) dated
July 8, 1987).
10.10a First Albany Companies Inc. Stock Bonus Plan, as amended, effective
June 25, 1990 (filed as Registration Statement No. 33-35166 (Form S-8)
dated June 25, 1990).
10.10b First Albany Companies Inc. Stock Bonus Plan, as amended, effective
February 4, 1994 (filed as Registration Statement 33-52153 (Form S-8)
dated February 4, 1994).
10.10c First Albany Companies Inc. Stock Bonus Plan, as amended, effective
June 2, 1995 (filed as Registration Statement 33-59855 (Form S-8) dated
June 2, 1995).
10.12 First Albany Companies Inc. 1989 Stock Incentive Plan effective
February 27, 1989, as approved by shareholder vote, dated February 27,
1989 (filed as Exhibit 10.12 to Form 10-K for the fiscal year ended
September 30, 1989).
10.15 Lease dated June 12, 1992, between First Albany Companies Inc. and
Olympia and York Limited Partnership for office space at 53 State
Street, Boston, Massachusetts (filed as Exhibit 10.15 to Form 10-K for
the fiscal year ended September 25, 1992).
10.16 The First Albany Companies Inc. Restricted Stock Plan as adopted by
the Company on April 27, 1992 (filed as Exhibit 10.16 to Form 10-K for
the fiscal year ended September 25, 1992).
10.17 Term Loan Agreement dated March 29, 1995 between First Albany
Companies Inc. and The Hudson City Savings Institution.
<PAGE>
(3) Exhibits included herein: (continued)
Exhibit
Number Description
10.18 Sublease dated October 13, 1995 between First Albany Companies Inc.
and Keycorp for office facilities at 30 South Pearl Street, Albany,
New York.
11 Computation of per share earnings
22 List of Subsidiaries of First Albany Companies Inc.
24 Consent of experts
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the Registrant during the
last quarter of the period covered by this report.
27 Financial Data Schedule BD
<PAGE>
<TABLE>
FIRST ALBANY COMPANIES INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 29, 1995,
SEPTEMBER 30, 1994, AND SEPTEMBER 24, 1993
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
Additions
Balance at Charged to Balance
Beginning Costs and at End of
Description of Period Expenses Deductions Period
Allowance for doubtful
accounts -- deducted
from receivables from
customers:
<S> <C> <C> <C> <C>
1995 $ 106,000 $ 120,000 $ 101,000 $ 125,000
1994 $ 125,000 $ 120,000 $ 139,000 $ 106,000
1993 $ 189,000 $ 120,000 $ 184,000 $ 125,000
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FIRST ALBANY COMPANIES INC.
By: /s/ George C. McNamee
-----------------------
George C. McNamee,
Chairman of the Board
Date: December 19, 1995.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
Signature Title Date
/s/ George C. McNamee Chairman of the Board December 19, 1995
- -------------------------
George C. McNamee
/s/ Alan P. Goldberg President and Director December 19, 1995
- -------------------------
Alan P. Goldberg
/s/ J. Anthony Boeckh Director December 19, 1995
- -------------------------
J. Anthony Boeckh
/s/ Hon. Hugh L. Carey Director December 19, 1995
- -------------------------
Hon. Hugh L. Carey
/s/ Edwin T. Brondo Vice President December 19, 1995
- -------------------------
Edwin T. Brondo
/s/ David J. Cunningham Vice President and December 19, 1995
- ------------------------- Chief Financial Officer
David J. Cunningham (Principal Accounting Officer)
/s/ Hugh A. Johnson, Jr. Senior Vice President December 19, 1995
- ------------------------- and Director
Hugh A. Johnson Jr.
/s/ Michael R. Lindburg Vice President December 19, 1995
- ------------------------- General Counsel
Michael R. Lindburg
/s/ Daniel V. McNamee Director December 19, 1995
- -------------------------
Daniel V. McNamee
/s/ Charles L. Schwager Director December 19, 1995
- -------------------------
Charles L. Schwager
Director December 19, 1995
- -------------------------
Benaree P. Wiley
EXHIBIT 10.17
NOTE
$2,000,000.00 Date: March 29, 1995
FIRST ALBANY COMPANIES, INC.
Borrower
41 State Street, Albany, New York 12201
Borrower's Address
1. BORROWER'S PROMISE TO PAY
FIRST ALBANY COMPANIES, INC. (the "Borrower" or the "Undersigned"), for
value received, promises to pay to the order of THE HUDSON CITY SAVINGS
INSTITUTION (the "Bank", "Lender" or "Note Holder") the sum of TWO MILLION AND
00/100 DOLLARS ($2,000,000.00) (the "Principal") at One Hudson City Centre,
Hudson, New York 12534, which shall be paid at such rate and in accordance with
such terms as indicated below.
2. RATE
The interest rate that the Borrower shall pay shall be:
A variable Interest Rate equal to one and one-half (1.50) percentage points
per annum above the prime rate announced by the Lender from time to time, at its
principal office, as its best lending rate. This interest rate will change as
and when the prime rate changes. Such change will become effective immediately
upon announcement by the Lender of the change in its prime rate. The Lender
shall not be required to deliver any notice to the Borrower of a change in the
Interest Rate. However, upon request, the Lender shall provide the Borrower with
information regarding the dates and amounts of the change in its best lending
rate. At the present time the prime rate is nine percent (9.00%) and the initial
Interest Rate of this Note is ten and one-half percent (10.50%). There is no
maximum limit on the amount the interest rate may change.
3. REPAYMENT TERMS
The Borrower will repay this Note by making successive monthly payments of
Principal and interest of $65,005.00 each commencing on May 1, 1995 and on the
same date of each successive month thereafter until April 1, 1998, the end of
the term, when the remaining unpaid Principal and interest shall be due and
payable in full. Additionally, an interest only payment on the outstanding
Principal balance on the amount loaned for the period of March 29, 1995 through
March 31, 1995 shall be due on May 1, 1995.
If the Interest Rate changes, the amount of the monthly payment will
automatically change to such amount as is required to pay a Two Million and
00/100 Dollar ($2,000,000.00) loan over a period of three (3) years based upon
the new interest rate.
4. BUSINESS LOAN
The Borrower represents and warrants that this Note evidences a loan for
business or commercial purposes and is not a consumer transaction.
<PAGE>
5. APPLICATION OF PAYMENTS
Each payment received on this Note shall be applied first to interest due
and then to the outstanding principal balance. However, if there are any
additional amounts due to the Bank hereunder, such as late charges, the Bank may
elect to apply any monies received for payment of such additional amounts due,
prior to applying same toward payment of the principal balance.
6. COLLECTION OR ENFORCEMENT COSTS
If it is necessary for the Bank to bring any action or proceeding in order
to collect any amounts due hereunder or as a result of a breach of any of the
terms or conditions herein, including an action or proceeding pursuant to
Article 9 of the Uniform Commercial Code, or if the Bank is made a party to a
lawsuit by virtue of this agreement, the Borrower shall be responsible for
paying all costs, expenses and reasonable attorneys' fees incurred by the Bank
in such lawsuit, action or proceeding, and also for all costs, expenses and
reasonable attorneys' fees incurred by the Bank incidental to the care,
preservation, processing and sale of the Collateral, or in any way relating to
the rights of the Bank hereunder.
7. BINDING AGREEMENT; GOVERNING LAW
The Note shall be binding upon the heirs, successors and assigns of the
Borrower and the Bank. It shall be interpreted and construed in accordance with
the laws of New York State.
8. MORE THAN ONE SIGNER
If more than one person or entity signs this Note as a Borrower, the
obligations contained herein shall be deemed joint and several and all
references to "Borrower" shall apply to all persons signing this agreement both
individually and jointly.
9. DEFAULT
The total unpaid balance of this Note shall become due and payable without
notice or demand upon the occurrence of any one of the following "Events of
Default"; (a) default in any payment of principal or interest when due under
this Note and the continuance thereof for twenty (20) days after the due date,
except that the twenty-day period shall not apply for any payment due at the end
of the term or upon demand, which shall be due immediately upon such date; (b)
default in any payment of late charges when due under this Note and the
continuance thereof for ten (10) days after the due date; (a) failure to fulfill
or perform any other term of this Note or to keep any promises made in this Note
or related Term Loan Agreement, mortgage, building loan agreement or security
agreement, if any, and such failure continues for a period of ten (10) days
after giving of notice except that no such notice shall be required upon a
default pursuant to paragraph 20 herein; (d) a false or incomplete statement in
any information submitted to the Bank in connection with this Note; (e) entry of
a judgment against the Borrower; (f) a significant decline in the value of any
real or personal property securing payment of this Note; (g) business failure or
dissolution of any Borrower; (h) commencement of any bankruptcy, receivership or
similar proceeding involving any Borrower as debtor; (i) transfer of any
interest in the Collateral pledged or granted to the Bank as a security
interest, or any other breach by the Borrower with regard to the terms and
conditions of the security instrument given by the Borrower to the Lender; (j)
transfer of any interest which the Borrower has in its wholly owned subsidiary,
First Albany Corporation, the transfer of any of the stock of First Albany
Corporation to any other party or entity or the sale or transfer of any of the
assets of First Albany Corporation to any other entity, other than in the
regular course of business of said corporation.
<PAGE>
10. WAIVER
The Borrower and all endorsers, sureties and guarantors hereof hereby
jointly and severally waive presentment for payment, demand, notice of non-
payment, notice of protest and/or notice of dishonor, and protest of this Note.
11. EXCESS INTEREST
At no time shall the Interest Rate exceed the highest rate allowed by law
for this type of loan. Should this occur or should the Lender ever erroneously
collect interest at a rate which exceeds the applicable legal limit, such excess
will be credited to principal. However, this shall not be grounds for voiding
the Borrower's obligations hereunder and in such event, the Borrower's
obligations shall be deemed to be automatically modified to conform with any
such applicable legal limit.
12. GIVING OF NOTICES OR DEMANDS
Any notice or demand by the Bank to the Borrower shall be deemed to have
been made and completed at such time as the Bank shall mail by first class mail
said notice or demand to the Borrower at the address indicated in the
introductory paragraph, or at a different address if written notice of a change
is given by the Borrower to the Bank and upon receipt or refusal of delivery.
Any notice that must be given to the Bank undo this Note shall be given by
mailing it by first class mail to the Bank at its address stated in the
introductory paragraph which shall be deemed to be made and completed upon
receipt or refusal of delivery. In the alternative any notice or demand given
either by the Borrower or by the Lender shall be deemed sufficiently given if
delivered by any one of the following methods: (i) personal delivery which, in
case of notice to the Lender, shall be to an officer or principal thereof; (ii)
certified or registered mail, return receipt requested, postage prepaid and
properly addressed as set forth in the introductory paragraph; or (iii) Federal
Express or other nationally recognized courier services providing written
evidence of delivery.
13. RIGHT TO TRANSFER
The Bank may transfer or assign this Note and deliver all or any of its
rights in the Collateral held as security therefore to another party or entity
which shall thereupon become vested of all of the powers and rights given to the
Bank herein, and the Bank shall thereafter be forever relieved and fully
discharged of any liability or responsibility to the Borrower.
14. RIGHT OF SETOFF
The Bank, in addition to any right available to it under applicable law,
shall have the right, immediately and without notice or further action by it, to
set off against this Note and/or other liabilities of the Borrower hereof, all
money owed by the Bank to the Borrower in any capacity, whether by savings
account, checking account, Certificate of Deposit or otherwise; and the Bank
shall be deemed to have exercised such right of set off and to have made charge
against any such money immediately upon the occurrence of default, even though
such charge is made or entered on the books of the Bank subsequent thereto.
15. LATE CHARGES
In addition to any other payment required herein, the Borrower shall also
be obligated to pay a late charge of five percent (5%) for any payment due
hereunder which is received by the Bank more than ten (10) days after such
payment is due. This payment shall automatically be payable by the Borrower to
the Bank, without demand, and the failure to pay same shall constitute a default
in accordance with paragraph "9" of this Note.
<PAGE>
16. ALL MODIFICATIONS IN WRITING
No modification or waiver of any of the provisions of this Note shall be
effective unless in writing, signed by an officer of the Bank and only to the
extent therein set forth, nor shall any such waiver be applicable, except in the
specific instance for which given.
17. WAIVER OF JURY TRIAL AND SETOFFS
The Borrower hereby waives trial by jury and the right to interpose any
setoffs of any kind in any litigation commenced by the Bank relating to this
Note or any Collateral security for this Note.
18. STRICT PERFORMANCE
The failure of the Bank to immediately act with respect to any of its
rights herein shall not be deemed to be a waiver on its part with respect to any
such rights, and the Bank shall have the right to so act with respect to any of
its rights herein at any time thereafter.
19. SECURED NOTE
In addition to the protections given to the Lender under this Note, the
Borrower has also given the Lender a Mortgage and/or Security Agreement covering
certain real and/or personal property (the "Security Instrument") dated the same
date as this Note, which provides the Lender with certain rights as set forth
herein and also sets forth certain obligations on the part of the Borrower. A
default in any of the provisions of the Security Instrument shall constitute a
default with respect to this Note.
20. SALE OR TRANSFER OF PROPERTY OR- INTEREST THEREIN IS
PROHIBITED
The Borrower may not sell or otherwise transfer all or any part of any
property pledged as collateral pursuant to any Security Instrument executed by
the Borrower in connection with this transaction except in the ordinary course
of business. In addition, if the Borrower is not a natural person, no beneficial
interest in the Borrower, corporation, partnership or other entity may be sold
or otherwise transferred to any other party without the express written consent
of the Lender. If all or any part of the property or any interest in the
property referred to herein is sold or otherwise transferred or if the
beneficial interest in the Borrower, corporation, partnership or other entity is
sold or otherwise transferred where the Borrower is not a natural person, the
entire indebtedness under the Note and underlying Security Instruments shall
become immediately due and payable. If the Borrower fails to pay these sums, the
Lender may bring a lawsuit for foreclosure and sale or invoke any remedies
permitted pursuant to this Note or any of the Security Instruments, without
further notice or demand on the Borrower.
21. BORROWER'S RIGHT TO PREPAY
The Borrower shall have the right to make a full prepayment or partial
prepayment of the principal due hereunder at any time, without penalty. When the
Borrower makes a prepayment, the Borrower will tell the Lender, in writing, that
it is doing so. If the Borrower makes a partial prepayment, there will be no
change in the due dates or in the amount of the monthly payments unless
otherwise agreed to in writing by the Lender.
<PAGE>
IN WITNESS WHEREOF, this Note has been signed by the Borrower at Albany,
New York on March 29, 1995.
FIRST ALBANY COMPANIES, INC., Borrower
By: /s/ David Cunningham
---------------------
David Cunningham
Chief Financial Officer
STATE OF NEW YORK:
ss.:
COUNTY OF ALBANY:
On this 29th day of March, 1995, before me personally came David J.
Cunningham, to me known, who, being by me duly sworn, did depose and say that he
resides in Albany, New York; that he is the Chief Financial Officer of First
Albany Companies, Inc., the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the Board
of Directors of said corporation.
/s/ Theodore Guterman II
-------------------------
Notary Public
THEODORE GUTERMAN II
Notary Public, State of New York
Qualified in Columbia County
Commission Expires 2/28/97
EXHIBIT 10.18
CONSENT
PS ASSOCIATES, a New York limited partnership, having an office at 54 State
Street, Albany, New York 12207 ("Landlord"), hereby consents to the subletting
by KEYCORP, an Ohio corporation, having an office at One KeyCorp Plaza, Albany,
New York 12207 ("Tenant"), to, FIRST ALBANY COMPANIES INC., a New York
corporation, having a place of business at 41 State Street, Albany, New York
12207 ("Subtenant"), pursuant to an agreement of sublease, dated October 13,
1995 (the "Sublease"), a copy of which is annexed hereto as Exhibit "A" for
certain space (the "Sublease Space"), as more particularly described in the
Sublease, which Sublease Space is a portion of the premises (the "Premises")
presently leased and demised by Landlord to Tenant under a lease, dated as of
January 31, 1986, as amended by First Lease Amendment dated as of December 28,
1992, a Second Lease Amendment dated as of March 31, 1993 and a Third Lease
Amendment dated as of September 14, 1993 (as amended, the "Lease"), such consent
is subject to, and in reliance upon, the representations, warranties, covenants,
terms and conditions contained herein. All capitalized terms contained herein
shall have the meaning ascribed to them in the Lease unless otherwise indicated
herein.
1. Sublease Subordinate to Lease. Except as otherwise specifically provided
herein, the Sublease shall be subject and subordinate at all times to the Lease
and to all of the provisions, covenants, agreements, terms and conditions of the
Lease and this Consent, and Subtenant shall not do or permit anything to be done
in connection with Subtenant's use and occupancy of the Sublease Space which
would violate any of said provisions, covenants, agreements, terms and
conditions. Any breach or violation of any provision of the Lease or this
Consent by Subtenant shall be deemed to be, and shall constitute a default by
Tenant in fulfilling such provision. During the term of the Sublease or any
extensions thereof, Subtenant shall duly observe and comply with all of the
terms, covenants, agreements, provisions, obligations and conditions on the part
of Subtenant to be performed or observed under the Sublease and under the Lease
(as modified by this Consent), provided, however, Subtenant shall be under no
obligation to name Landlord as an additional insured on any comprehensive
general liability policy carried by Subtenant.
2. Representations and Warranties. Tenant represents and warrants that no
rent or other consideration is being paid or is payable to Tenant by Subtenant
for the right to use or occupy the Sublease Space and no profit or gain is being
realized by Tenant from such subletting and Tenant and Subtenant represent and
warrant that the Sublease is the complete and true agreement between the
parties.
3. Amendment of Sublease. Waiver. Tenant and Subtenant agree that they
shall not change, modify or amend, the Sublease or enter into any additional
agreements relating to or affecting the use or occupancy of the Sublease Space
or any other portion of the Premises or the use, sale or rental of Tenant's
fixtures, leasehold improvements, equipment, furniture or other personal
property, without first obtaining Landlord's prior written consent thereto.
Neither this Consent, the Sublease, or the Lease, nor any acceptance of rent or
other consideration from the Subtenant by Landlord or Landlord's agent shall
operate to waive, modify, impair, release or in any manner affect Tenant's
liability under the Lease or Subtenant's liability under the Sublease, nor shall
the foregoing operate to waive any breach or violation of any provision of the
Lease or any rights of Landlord against any person, firm, association,
corporation or other entity liable or responsible for the performance of any of
the provisions, covenants, agreements, terms or conditions contained in the
Lease, nor shall the foregoing enlarge or increase Landlord's obligations or
Tenant's rights or diminish Landlord's rights or Tenant's obligations under the
Lease or otherwise; and all provisions, covenants, agreements, terms and
conditions of the Lease are hereby declared by Tenant to be in full force and
effect. Except as otherwise set forth herein, no assignment of the Lease or
Sublease or further sublease of all or any part of the Premises or the Sublease
Space shall be made by Tenant or Subtenant, except in accordance with the
provisions of the Lease and this Consent and any further consent to a sublease
or assignment shall not be nor shall it be deemed to be a waiver of any
provision of the Lease.
<PAGE>
4. Ratification of Sublease. Nothing contained herein shall be construed as
a consent to, or approval of, or ratification by Landlord of any of the
particular provisions of the Sublease (except as may be expressly provided
herein) or as a representation or warranty by Landlord to Tenant, Subtenant or
any other party or entity with respect to the subject matter thereto. Landlord
has not, and shall not, review or pass upon any of the provisions of the
Sublease and shall not be bound or estopped in any way by the provisions of the
Sublease.
5. Remedies for Default. In the event of any default by Tenant or Subtenant
in the full performance and observance of any of their respective obligations
hereunder or in the event any representation or warranty of Tenant or Subtenant
made herein shall prove to be false or misleading in any way, such event may, at
Landlord's option, be deemed a default under the Lease, and Landlord shall have
and may pursue all of the rights, powers and remedies provided for in the Lease
or at law or in equity or by statute or otherwise with respect to defaults
thereunder or hereunder.
6. Use. Subject to all of the provisions, covenants, agreements, terms and
conditions of the Lease, the Sublease Space and each part thereof shall be used
by Subtenant solely for general offices, including, but not limited to, the
operation of an investment banking and securities brokerage business (provided
the same shall not involve dealing with the general public on an off- the-street
retail basis) and for no other purpose.
7. Termination; Attornment. A. If for any reason at any time prior to the
expiration date of the Lease, the term of the Lease shall terminate or be
terminated by operation of law or by any provision of the Lease, the Sublease
and the term thereof shall terminate on the date of such termination, and
Subtenant, at Subtenant's sole cost and expense, shall (i) quit and surrender
the Sublease Space to Landlord, broom clean, in good order and condition,
ordinary wear and tear and damage, maintenance, and repair work for which
Subtenant is not responsible for under the terms of the Sublease excepted, (ii)
remove from the Sublease Space and the Building all of Subtenant's personal
property and all other property and effects of Subtenant and all persons
claiming through or under Subtenant, and (iii) repair all damage to the Sublease
Space and the Building occasioned by such removal to the Building standard
original condition. Landlord shall have the right to retain any property and
personal effects which shall remain in the Sublease Space or the Building, after
the date of termination of the Sublease, without any obligation or liability to
Tenant or Subtenant, and to retain any net proceeds realized from the sale
thereof, without waiving Landlord's rights under the foregoing provisions of
this paragraph and the provisions of the Lease. If Subtenant shall fail to
vacate and surrender the Sublease Space in accordance with the provisions of
this paragraph, Landlord shall be entitled to all of the rights and remedies
under the Lease which are available to a landlord against a tenant holding over
after the expiration of a term, and any such holding over shall be and be deemed
to be a default under the Lease.
B. The foregoing provisions of paragraph 7A notwithstanding, but
subject to Subtenant's rights to terminate the Sublease in the event of a
casualty or condemnation, and provided the term of the Lease shall not have been
terminated by Tenant as a result of Landlord's default under the Lease, Landlord
may, at its option, upon written notice to Tenant and Subtenant on or before the
date of termination of the term of the Lease and without any additional or
further agreement of any kind on the part of Tenant or Subtenant, elect to
require Subtenant to attorn to Landlord and to continue the Sublease with the
same force and effect as if Landlord, as lessor, and Subtenant, as lessee, had
entered into a lease as of such termination date, for a term equal to the then
unexpired term of the Sublease and containing the same provisions as those
contained in the Sublease. In the event of such election by Landlord, (i)
Subtenant agrees to so attorn to Landlord, and Landlord and Subtenant shall have
the same rights, obligations and remedies as were had by Tenant and Subtenant,
respectively, under the Sublease prior to such termination date, except that in
no event shall Landlord be (a) liable for any act or omission by Tenant, (b)
subject to any offsets or defenses which Subtenant had or might have against
Tenant, (c) bound by any rent or additional rent or other payment paid by
Subtenant to Tenant more than thirty (30) days in advance of the termination
date, (d) bound by any covenant to undertake or complete any work to the
Sublease Space or any part hereof, except for repair or replacement to the
Sublease Space which is damaged by casualty, taken by eminent domain or
otherwise required to be repaired or replaced by Landlord pursuant to the terms
of the Sublease, or (e) bound by any pre-existing obligation to make any payment
to Subtenant; (ii) Tenant shall deliver to Landlord any security deposit which
Tenant is then holding under the Sublease; and (iii) Subtenant shall reimburse
Landlord for any costs that may be incurred by Landlord in connection with such
attornment, including, without limitation, reasonable legal fees and
disbursements incurred in connection with any such attornment. The foregoing
provisions of this paragraph 7B shall apply notwithstanding that, as a matter of
law, the Sublease may terminate upon the expiration, termination or surrender of
the Lease and shall be self-operative upon any such election by Landlord to
require attornment; provided, however, that either party, upon demand of the
other party agrees to execute and deliver such instrument or instruments as the
requesting party may reasonably request to evidence and confirm the foregoing
provisions of this paragraph 7B. However, in the event that Subtenant has the
right to terminate the Sublease as a result of a casualty or condemnation
pursuant to the terms of the Sublease, Landlord shall not be entitled to require
that Subtenant attorn to Landlord hereunder.
<PAGE>
If Landlord elects to exercise its option under this paragraph 7B, then the
foregoing provisions of paragraph 7A shall be of no force or effect.
8. Indemnity. Tenant and Subtenant hereby indemnify and hold harmless
Landlord from and against all liabilities, claims, obligations, damages,
penalties, costs and expenses (including, without limitation, attorneys' fees
and disbursements) which Landlord may incur or suffer by reason of (i) any
breach or default by Subtenant, its agents, contractors, employees, invitees, or
licensees of any covenant, agreement, term, provision or condition of the Lease,
the Sublease or this Consent, (ii) any work done in or to the Sublease Space by
or on behalf of Subtenant, (iii) any act, omission or negligence of Subtenant,
its agents, contractors, employees, invitees or licensees, or (iv) the conduct
of Subtenant's business in, or Subtenant's use and occupancy of, the Sublease
Space. In case any action or proceeding is brought against Landlord by reason of
any such claim, Tenant or Subtenant, upon written notice from Landlord, shall,
at Tenant's or Subtenant's sole cost and expense, as the case may be, resist or
defend such action or proceeding using counsel approved by Landlord, which
approval shall not be unreasonably withheld or delayed. The provisions of this
paragraph shall survive the expiration or earlier termination of the term of the
Sublease. The indemnity and any rights granted to Landlord pursuant to this
paragraph shall be in addition to, and not in limitation of, any of Landlord's
rights under the Lease.
9. Conflict. If there shall be any conflict or inconsistency between the
terms, covenants and conditions of this Consent or the Lease and the terms,
covenants and condition of the Sublease, then the terms, covenants and
conditions of this Consent and Lease shall prevail. In the event that there
shall be any conflict or inconsistency between this Consent and the Lease, the
terms and conditions of this Consent shall control.
10. Notices. Any bills, statements, notices, demands, requests, consents or
other communications given or required to be given under this Consent shall be
effective only if rendered or given in writing and delivered personally or sent
by mail (registered or certified, return receipt requested), postage prepaid,
delivered to the respective party at the address hereinabove set forth or at
such other address for such purpose by notice in accordance with the provisions
hereof, or, if addressed to Tenant or Subtenant at the Building (if to
Subtenant, to the attention of Michael R. Lindburg); the same shall be deemed to
have been rendered or given on the date delivered, if delivered personally, or
after three (3) business days of the date mailed, if mailed.
11. Entire Agreement. This Consent contains the entire agreement of the
parties with respect to the matters contained herein and may not be modified,
amended or otherwise changed except by written instrument signed by the parties
sought to be bound. Furthermore, Tenant and Subtenant each acknowledge and
represent that, other than this Consent, the Lease and the Sublease, there are
no other agreements between Tenant and Subtenant oral or otherwise, or
representations or warranties of any kind or nature referring or related to, or
in connection with and the Sublease or the use and occupancy of the Premises,
the Sublease Space or any other portion of the Building.
<PAGE>
12. Governing Law. This Consent shall for all purposes be construed in
accordance with, and governed by, the laws of the State of New York.
13. Payments. Tenant and/or Subtenant has paid Landlord's attorneys' fees
incurred in connection with this transaction to reimburse Landlord for the time
expended in reviewing and processing the request for subletting the Sublease
Space.
14. Miscellaneous. A. Each right and remedy of Landlord provided for in
this Consent or in the Lease shall be cumulative and shall be in addition to
every other right and remedy provided for herein and therein or now or hereafter
existing at law or in equity or by statute or otherwise, and the exercise or
commencing of the exercise by Landlord of any one or more of the rights or
remedies so provided for or existing shall not preclude the simultaneous or
later exercise by Landlord of any or all other rights or remedies so provided
for or so existing.
B. The terms and provisions of this Consent shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns
except that no violation of the provisions of paragraph 3 shall operate to vest
any rights in any successor or assignee of Tenant or Subtenant.
C. If any one or more of the provisions contained in this Consent
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
D. The captions contained in this Consent are for convenience only and
shall in no way define, limit or extend the scope of intent of this Consent, nor
shall such captions affect the construction hereof.
E. This Consent may be executed in several counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement.
F. Landlord, Tenant and Subtenant each represents and warrants that
each has full right, power and authority to enter into this Consent and that the
person or persons executing this Consent on behalf of Landlord, Tenant or
Subtenant, as the case may be, are duly authorized to do so.
G. It is expressly understood and agreed that this Consent shall not
create or constitute, nor shall it be deemed to create or constitute, any
landlord-tenant relationship, or occupancy or license agreement between Landlord
and Subtenant.
H. Neither Landlord, nor the partners comprising Landlord, nor the
shareholders (nor any of the partners comprising same), partners, directors or
officers of any of the foregoing (collectively, the "Parties"), shall be
personally liable, in any manner, by reason of, or as a consequence of, the
execution or delivery of this Consent. Tenant and Subtenant shall look solely to
Landlord's estate and property in the building within which the Premises are
located and the rents, profits and proceeds derived therefrom and any right of
offset provided to Tenant under the Lease (if any) in enforcing any of the
rights which Tenant or Subtenant may have against Landlord hereunder or by
reason of any of the foregoing, and shall not seek any damages against any of
the Parties.
I. This Consent is offered for signature by Tenant and Subtenant and
it is understood that this Consent shall not be binding upon Landlord unless and
until Landlord shall have executed and delivered a copy of this Consent to both
Tenant and Subtenant.
<PAGE>
IN WITNESS WHEREOF, Landlord, Tenant and Subtenant have respectively executed
this consent as of the 3lst day of October, 1995.
TENANT:
KEYCORP
Attest:______________________________ By: /s/ Thomas C. Nachod
Name: Thomas C. Nachod
Title: Vice President
SUBTENANT:
FIRST ALBANY COMPANIES INC.
Attest:______________________________ By: /s/ Michael R. Lindburg
Name: Michael R. Lindburg
Title: Senior Vice President and
General Counsel
LANDLORD:
PS ASSOCIATES,
a New York limited partnership
By: PS Pearl Corporation, General
Partner
Attest:______________________________ By: /s/ I. David Swawite
Name: I. David Swawite
Title: Vice President
<PAGE>
Exhibit "A"
SUBLEASE AGREEMENT
The Parties (defined below) agree as follows:
Date of this Sublease: October 13, 1995
Parties to this Overtenant: KeyCorp
Sublease: Address for notices:
Undertenant: First Albany Companies Inc.
Address for notices:
Information from
Overlease: Landlord: PS Associates
Address for notices: 54 State Street,
Albany, New York 12207
Overtenant: KeyCorp
Address for notices:
Date of Overlease: January 31, 1986 as
amended by First lease Amendment dated
December 28, 1992, Second Lease Amendment
dated March 31, 1993 and Third Lease
Amendment dated September 14, 1993
(collectively, the "Overlease").
Overlease Term: as provided in the
Overlease.
Definitions: 1. Unless otherwise defined herein,
capitalized terms herein shall be defined as
set forth in the Overlease.
Sublease Term: 2. The Sublease Term shall commence on
execution (the "Commencement Date") and end
at 11:59 P.M. EST on the Expiration Date.
Premises Leased
Under this
Sublease: 3. A basement mailroom, 10,021 square feet
on Floor 6 (in the area shown on Exhibit "A"
annexed hereto), all of Floor 12 and all of Floors
Penthouse 1 and Penthouse 2 (the "Subpremises")
which Subpremises contain in the aggregate 48,876
square feet and are located in a building commonly
known as KeyCorp Tower which is located at 30
South Pearl Street, Albany, New York (the
"Building").
<PAGE>
Use of
Subpremises: 4. The Subpremises may be used for general
and executive offices with data processing
support facilities in connection with
Undertenant's business and that of its
subsidiaries provided however that the
Subpremises must be used for purposes
consistent with the provisions of Article 2
of the Overlease.
Allowances: 5. Overtenant shall pay to Undertenant an
amount equal to Seven Hundred Thirty Three
Thousand One Hundred Forty and no/100
($733,140.00) Dollars as an allowance (the
"Allowance") toward renovation, installation
and fit-up of the Subpremises ("Undertenant's
Work") to be undertaken in the Subpremises by
Undertenant. Overtenant shall pay
Undertenant an allowance of Nine Hundred
Thousand ($900,000.00) Dollars to defray
Undertenant's costs and expenses of
relocation (the "Relocation Allowance").
Said Allowance and Relocation Allowance shall
be paid to Undertenant in accordance with the
following schedule:
(a) During the period between January
15, 1996 and March 31, 1996, an amount
equal to the lesser of $244,380.00 or
the sum for which Undertenant has
received invoices for payment of the
Undertenant's Work.
(b) On and after April 1, 1996, at such
time as invoices for completed
Undertenant's Work are submitted, such
sums as are set forth in said invoices
with the understanding that the sums
advanced pursuant to subparagraph (a)
and this subparagraph (b) shall in no
event exceed the lesser of the Allowance
or the sums actually spent by
Undertenant to complete Undertenant's
Work.
(c) On January 15, 1996, an amount
equal to one-third (1/3) of the
Relocation Allowance and thereafter, at
Overtenant's election but in no event
later than April 15, 1996, the balance
of the Relocation Allowance.
<PAGE>
Nothing in this Section should be construed
as any undertaking on the part of the
Overtenant to perform or contract for any of
Undertenant's Work or to relieve the
Undertenant from the obligation to comply
with the Tenant's Changes provisions set
forth in Article 13 of the Overlease.
Rent: 6. The Rent reserved under this Sublease
shall be:
(a) Base rent in the amount of
$33,602.25 on June 15, 1996 and thereafter in
the amount of $67,204.50 per month payable in
advance commencing on July 1, 1996 and
continuing on the first day of each and every
calendar month during the Term; and
(b)
(1) For the purposes of this
subparagraph (b), the following terms shall
have the following definitions:
(i) "Base Year" shall mean the
period commencing on July 1, 1995
and ending on June 30, 1996.
(ii) "Base Year Operating
Expenses" shall mean the Operating
Expenses paid by Overtenant to
Landlord during the Base Year, as
adjusted pursuant to Section 5.03
(a) of the Overlease.
(iii) "Undertenant's Percentage"
shall mean Forty Seven and
47.4593%.
(2) Commencing on July 1, 1996,
and continuing on the 1st day of each month
thereafter, additional rent equal to Undertenant's
Percentage of the amount (if any) obtained by
subtracting the amount obtained by dividing the
sums paid by Overtenant pursuant to Section 5.03
(a) of the Overlease for the Base Year by twelve
(12) from the sum which Overtenant has been billed
by Landlord for Operating Expenses for the
corresponding month during each successive
year of the Sublease Term.
<PAGE>
For example, if Overtenant is billed by
Landlord pursuant to Section 5.03(a) of the
Overlease for the month of July, 1996 in the
amount of $1,000.00 and the amount determined by
dividing the sums paid for the Base Year pursuant
to said Section by 12 was $500.00, Undertenant's
liability for additional rent pursuant to this
subparagraph would be determined by multiplying
$500.00 by Undertenant's Percentage.
Undertenant shall receive Undertenant's
Percentage of any rebate or credit or pay
Undertenant' s Percentage of any additional sums
due as a result of Landlord's reconciliation of
the sums paid by Overtenant as Tenant's Projected
Share of Operating Expenses. Overtenant shall
submit to Undertenant documentation it receives
from Landlord in connection with sums billed by
Landlord to Overtenant, including copies of
invoices and expense statements showing monthly
payment calculations and recalculations.
(c) Undertenant shall also pay to Overtenant
one hundred (100%) percent of the amount payable
by Overtenant for Cleaning Services incurred
during the Sublease Term which are attributable to
the Subpremises to the extent said sums paid are
in excess of sums payable for Cleaning Services by
Overtenant under the Lease for calendar year 1993.
Said sums shall be payable as and when paid by
Overtenant.
(d) All sums due hereunder shall be payable
to Overtenant promptly as and when the same
become due and payable, without demand therefor
and without any abatement, deduction or setoff
whatsoever.
(e) There shall be no allowance to
Undertenant for diminution of rental value and no
liability on the part of Overtenant by reason of
inconvenience, annoyance or injury to business
arising from Landlord, Overtenant or others making
any changes, alterations, additions, improvements,
repairs or replacements in or to any portion of
the Building or the Subpremises, or in or to
fixtures, appurtenances or equipment thereof, and
no liability upon Overtenant for failure of
Landlord or others to make any changes,
alterations, additions, improvements, repairs or
replacements in or to any portion of the Building
or the Subpremises, or in or to the fixtures,
appurtenances or equipment thereof.
(f) Any failure by Undertenant to pay any
sums due hereunder shall render Undertenant
responsible to pay as a late charge a sum equal to
six (6%) percent of the amount of fixed rent or
additional rent which Undertenant may have failed
to pay hereunder.
<PAGE>
Agreement to
Lease and Pay
Rent: 7. Overtenant sublets the Subpremises to the
Undertenant, for the Sublease Term. Undertenant
agrees to pay the Rent as required in the Sublease and
Overtenant agrees to discharge the rental obligations
under the Overlease.
Sublease
Subject to: 8. The Sublease is subject to the OverLease. The
Undertenant states that it has received and examined
the Overlease.
Except as specifically modified herein, all applicable
terms and conditions of the Overlease are
incorporated into and made a part of this Sublease as
if Overtenant were Landlord thereunder and
Undertenant the Tenant thereunder and the
Subpremises the Demised Premises, but
incorporating such provisions herein shall not
obligate Overtenant or be construed as causing
Overtenant to assume or agree to perform any
obligations of the Landlord or to be responsible for
any representations or warranties of Landlord under
the Overlease.
Overtenant's
Warranty 9. Overtenant warrants and represents to Undertenant
that the Overlease has not been amended or modified
except as described herein, that it is in full force
and effect and that Overtenant has received no notice
of any claim by Landlord that Overtenant is in default
or breach of any of the provisions of the Overlease
and that, to the best of Overtenant's knowledge,
Landlord is not in default thereunder.
Undertenant's
Duties: 10. The Subpremises will be separately metered for
electricity and Undertenant shall be responsible for
all utility charges to the Subpremises.
Additional
Space: 11. Upon the scheduled expiration of an existing
sublease for the balance of Floor 6, Overtenant will
not further sublease said premises unless it gives
Undertenant sixty (60) days to enter into a sublease
for said premises on terms and conditions mutually
satisfactory to Overtenant and Undertenant.
<PAGE>
Parking: 12. Undertenant shall have the right to use five (5)
parking spaces in the basement of the Building and
Undertenant will reimburse Overtenant for said spaces
in an amount equal to the sum paid by Overtenant to
Landlord for said spaces. Undertenant's use of said
spaces shall be subject to the provisions of Sections
18.05 and 18.06 of the Overlease.
Insurance: 13. In addition to the general requirement that
Undertenant comply with the provisions of the
Overlease, Undertenant agrees that it will provide
Overtenant and Landlord with a certificate of
insurance or other evidence reasonably satisfactory to
Landlord and Overtenant indicating Undertenant's
compliance with the provisions of Section 11.06 of
the Overlease and Undertenant will provide from
time to time as required by either Landlord or
Overtenant, additional coverages as may be required
pursuant to said Section.
Landlord
Events of
Default: 14. Undertenant shall provide Overtenant with
written notice of any default by Landlord under the
Overlease.
Liability and
Indemnification: 15. Neither Overtenant nor any agent or employee of
Overtenant shall be liable to Undertenant for any
injury or damage to Undertenant or to any other
person or for any damage to, or loss (by theft or
otherwise) of, any property of Undertenant or any
other person, irrespective of the cause of such injury,
damage or loss, unless caused by or due to the
negligence of Overtenant, its agents or employees, it
being understood that no property, other than such as
might normally be brought upon or kept in the
Subpremises as an incident to the reasonable use of
the Subpremises for the purposes herein permitted,
will be brought upon or kept in the Subpremises.
Undertenant shall indemnify and save harmless
Overtenant and its agents against and from
(a) any and all claims for bodily injury or property
damage, (i) arising from (x) the conduct or
management of the Subpremises or of any business
therein, or(y) any work or thing whatsoever done, or
any condition created (other than by Overtenant for
Overtenant's or Undertenant's account) in or about
the Subpremises during the term of this Sublease or
during the period of time, if any, prior to the
Commencement Date that Undertenant may have been
given access to the Subpremises, or (ii) arising
from any negligent or otherwise wrongful act or
omission Undertenant or any of its employees, agents
or contractors, and (b) all costs, expenses and
liabilities incurred in or in connection with each such
claim or action or proceeding brought thereon. In case
any action or proceeding be brought against
Overtenant by reason of any such claim, Undertenant
upon notice from Overtenant, shall resist and defend
such action or proceeding.
<PAGE>
Access: 16. Overtenant or Overtenant's agent shall have the
right to enter and/or pass through the Subpremises or
any part thereof, at reasonable times during reasonable
hours upon reasonable notice.
Destruction or
Damage: 17. If the Building or the Subpremises shall be
partially or totally damaged or destroyed by fire or
other cause, Undertenant's obligations shall be the
same as those set forth for "Tenant" under the
Overlease provided however that Overtenant shall be
the only party with authority to exercise the right of
termination set forth in Section 22.03 of the
Overlease.
Condemnation: 18. If the Building or the Subpremises shall be
partially or-totally condemned, Undertenant'
obligations shall be the same as those set forth for
"Tenant" under the Overlease provided however that
Overtenant shall be the only party with authority to
exercise the right of termination set forth in Section
23.01 of the Overlease.
Default; Remedies: 19. This Sublease and the term and estate hereby
granted are subject to the limitation that whenever
Undertenant shall make an assignment of the
property of Undertenant for the benefit of creditors or
shall file a voluntary petition under any bankruptcy
or insolvency law or any involuntary petition alleging
an act of bankruptcy or insolvency shall be filed
against Undertenant under any bankruptcy or
insolvency law, or whenever a petition shall be filed
by or against Undertenant under the reorganization
provisions of the United States Bankruptcy Act or
under the provisions of any law of like import, or
whenever a petition shall be filed by Undertenant
under the arrangement provisions of the United States
Bankruptcy Act or under the provisions of any law of
like import, or whenever a permanent receiver of
Undertenant of or for the property of Undertenant
shall be appointed, then, Overtenant may (a) at any
time after receipt of notice of the occurrence of any
such event, or (b) if such event occurs without the
acquiescence of Undertenant, at any time after the
event continues for thirty (30) days, give Undertenant
a notice of intention to end the term of this Sublease
at the expiration of five (5) days of service of such
notice of intention and upon the expiration of said
five (5) day period, this Sublease and the term and
estate hereby granted, whether or not the term shall
theretofore have commenced, terminate with the
same effect as if that day were the Expiration Date
but Undertenant shall remain liable for damages as
provided herein.
<PAGE>
This Sublease and the term and estate
hereby granted are subject to further limitation as
follows:
(a) whenever Undertenant shall default in
the payment of any installment of base rent,
or in the payment of any additional rent or
any other charge payable by Undertenant to
Overtenant, on any day upon which the same
ought to be paid, and such default shall
continue for five (5) days after Overtenant
shall have given Undertenant a written
notice specifying such default; or
(b) whenever Undertenant shall do or permit
anything to be done, whether by action or
inaction, contrary to any of Undertenant's
obligations hereunder, and if such situation
shall continue and shall not be remedied by
Undertenant within fifteen (15) days after
Overtenant shall have given Undertenant a
notice specifying the same, or, in the case of
a happening or default which cannot with
due diligence be cured within a period of
fifteen (15) days if Undertenant shall not, (i)
within said fifteen (15) day period advise
Overtenant of Undertenant's intention to
duly institute all steps necessary to remedy
such situation, (ii) duly institute within said
fifteen (15) day period, and thereafter
diligently and continuously prosecute to
completion all steps necessary to remedy the
same and (iii) complete such remedy within
such time after the date of the giving of said
notice of Overtenant as shall reasonably be
necessary, or
(c) whenever any event shall occur or any
contingency shall arise whereby this
Sublease or the estate hereby granted or the
unexpired balance of the term hereof would, by
operation of law or otherwise, devolve upon
or pass to any person, firm or corporation other
than Undertenant; or
<PAGE>
(d) whenever Undertenant shall default in
due keeping, observing or performance of
any covenant, agreement, provision or
condition of Section 4 hereof on the part of
Undertenant to be kept, observed or
performed and if such default shall
continue and shall not be remedied by
Undertenant within 24 hours after
Overtenant shall have given to Undertenant
a notice specifying the same.
Overtenant may give to Undertenant a notice of
intention to end the term of this Sublease at the
expiration of three (3) days from the date of
service of such notice of intention and upon the
expiration of said three (3) days, this Sublease
and the term and estate hereby granted, whether or
not the term shall theretofore have commenced,
shall terminate with the same effect as if that
day were the Expiration Date, but Undertenant
shall remain liable for damages as provided
herein.
If an order for relief is entered in any case
which is commenced by or against Undertenant
under the present or any future federal bankruptcy
code, Overtenant shall be entitled to invoke any and
all rights and remedies available to it under such
bankruptcy code or this Sublease including, without
limitation, such rights and remedies as may be
necessary to protect adequately Overtenant's right,
title and interest in and to the Subpremises or any
part thereof. Adequate protection of Overtenant's
right, title and interest in and to the Subpremises
shall include, without limitation, invoking a
requirement that:
(a) Undertenant comply with all of its
obligations under this Sublease;
(b) Undertenant pay to Overtenant, on the
first day of each month occurring
subsequent to the entry of such order, a sum
equal to the amount by which the
Subpremises diminished in value during the
immediately preceding monthly period, but,
in no event, an amount which is less than the
aggregate rents reserved under this Sublease
for such monthly period;
(c) Undertenant continue to use the
Subpremises in the manner required by this
Sublease; and
(d) Overtenant be permitted to supervise the
performance of Undertenant's obligations
under this Sublease.
<PAGE>
Upon the occurrence of any of the foregoing
events, Overtenant shall, in addition to the right of
termination set forth herein, have the right to
re-enter the Subpremises and shall also have the
right to damages for the aggregate rental value set
forth herein including all fixed rent and additional
rent payable hereunder which would have been payable
by Undertenant had this Sublease not been so
terminated. A suit or suits for the recovery of such
damages or any installments thereof may be brought
by Overtenant from time to time at its election and
nothing contained herein shall be deemed to require
Overtenant to postpone suit until the date when the
term of this Sublease would have expired had it not
been so terminated under the provisions hereof or
any provision of law or had Overtenant not re-entered
the Subpremises. Nothing herein contained shall be
construed to limit or preclude recovery by Overtenant
against Undertenant for any sums or damages to
which, in addition to the damages particularly
provided above, Overtenant may be lawfully entitled
by reason of any default hereunder on the part of
Undertenant. If Overtenant shall relet the
Subpremises, Overtenant shall credit Undertenant
with the net rents received by Overtenant from such
reletting which shall be equal to the gross rents as
and when received by Overtenant from such reletting,
less the expenses incurred or paid by Overtenant and
terminating this Sublease or in re-entering the
Subpremises and in securing possession thereof, as
well as the expenses of reletting, including altering
and preparing the Subpremises for new tenants,
broker's commissions and all other expenses properly
chargeable against the Subpremises and the rental
thereof. Any such reletting may be for a period
shorter or longer than the remaining term of this
Sublease but in no event shall Undertenant be entitled
to receive any excess of such net rents over the sums
payable by Undertenant to Overtenant hereunder, or
shall Undertenant be entitled in any suit for the
collection of damages pursuant hereto to a credit in
respect of any net rents from a reletting, except to
the extent that such net rents are actually received by
Overtenant. If the Subpremises or any part thereof
should be relet in combination with other space, the
rent received from such reletting and the expenses of
reletting shall be apportioned on a square foot basis.
If the Subpremises or any part thereof be relet by
Overtenant for the unexpired portion of the term of
this Sublease or any part thereof, before presentation
of proof of damages to any court, commission or
tribunal, the amount of rent reserved upon such
reletting shall, prima facial, be the fair and
reasonable rental value of the Subpremises, or part
thereof, so relet during the term of the reletting.
<PAGE>
Waivers: 20. Overtenant and Undertenant hereby waive trial by
jury in any action, proceeding or counterclaim
brought by either against the other on any matter
whatsoever arising out of or in any way connected
with this Sublease, the relationship of landlord and
tenant, Undertenant's use or occupancy of the
Subpremises or other statutory remedy with respect
thereto. If Overtenant commences any summary
proceeding, Undertenant agrees that Undertenant will
not interpose any counterclaim of whatever nature or
description in any such proceeding.
Notices: 21. Except as otherwise provided in this Sublease,
notice or communication shall be deemed sufficiently
given or rendered if in writing, sent by registered or
certified mail or nationally recognized courier service
addressed to the addressee at the address set forth
herein and shall be effective upon receipt. Either
party hereto may change its mailing address by
giving notice to the other pursuant to the provisions
of this Section.
Overtenant's
Duties: 22. The Overlease describes the Landlord's duties.
The Overtenant is not obligated to perform the
Landlord's duties but agrees as an inducement to
Undertenant to enter into this Sublease to enforce the
compliance with the Overlease by Landlord.
Overtenant covenants and agrees that it will fully and
punctually pay all rent, additional rent and other
charges, costs and expenses due and payable under
the Overlease as and when the same shall be come
due and payable and uphold each and every promise,
covenant and obligation required of it under the
Overlease.
Adopting the
Overlease and
Exceptions: 23. The provisions of the Overlease are part of this
Sublease. All provisions of the Overlease applying to
the Overtenant are binding on the Undertenant, except
as may be specifically agreed otherwise by Overtenant
and Undertenant.
Brokers: 24. Overtenant and Undertenant warrant and represent
that they have had no dealings with any real estate
broker or agent in connection with the negotiation of
this Sublease except for Robert Cohn Associates, Inc.
(the "Named Broker") and that they know of no other
real estate broker or agent who is or might be entitled
to a commission in connection with this Sublease,
except that Overtenant has retained The Centrum Group
and will be solely responsible for paying such sums as
are due The Centrum Group in connection with this
Sublease which are independent of any compensation due
the Named Broker. Overtenant agrees that it shall be
responsible for a commission to the Named Broker
pursuant to a separate agreement between Overtenant and
the Named Broker. Overtenant and Undertenant each agree
to indemnify, defend and hold the other party harmless
from and against any and all liabilities for expenses,
including attorneys' fees and costs arising out of or
in connection with the breach of the representations
contained in this Section.
<PAGE>
Quiet Enjoyment: 25. Overtenant covenants and agrees that Undertenant,
so long as it shall not be in default hereunder beyond
any applicable grace period, shall and may at all times
during the Sublease Term, peaceably and quietly have,
hold, occupy and enjoy the Subpremises pursuant to the
terms of this Sublease provided however that Overtenant
shall not be in breach of this covenant if Overtenant's
rights to the Subpremises under the Lease are
interfered with by Landlord.
Defaults Under
Overlease: 26. Overtenant will give Undertenant notice of any
default under the Overlease and Undertenant shall
have the right to cure any such default provided that a
right to cure exists under the Overlease. Overtenant
agrees to request that Landlord provide Undertenant
with any notices of default delivered to Overtenant.
Subordination and
Non-Disturbance: 27. Overtenant agrees to request that Landlord obtain
a subordination and non-disturbance agreement from
any existing mortgagee of the Building.
Communication
Facilities: 28. To the extent that Overtenant has the right to
place communication facilities on the roof of the
Building pursuant to Section 18.07(b) of the
Overlease, Undertenant shall have the right to use
a portion of any area available to Overtenant
determined by multiplying the total area available
to tenant pursuant to said Section by Undertenant's
percentage.
Capitalized
Terms: 29. All capitalized terms herein shall have the
definitions set forth in the Overlease unless
otherwise defined herein.
<PAGE>
No Authority: 30. The Undertenant has no authority to contact or
make any agreement with the Landlord about the
Subpremises or the Overlease. The Undertenant may
not pay rent or other charges to the Landlord, but
only to the Overtenant.
Successors: 31. Unless otherwise stated, the Sublease is
binding on all parties who lawfully succeed to
the rights or take the place of the Overtenant or
the Undertenant.
Changes: 32. This Sublease can be changed only by an
agreement in writing signed by the parties to the
Sublease.
OVERTENANT:
KEYCORP
By: /s/ James M. Gustafson
Name: James M. Gustafson
Title: Designated Signer
UNDERTENANT
FIRST ALBANY COMPANIES INC.
By: /s/ Michael R. Lindburg
Name: Michael R. Lindburg
Title: General Counsel
<PAGE>
<TABLE>
EXHIBIT 11
FIRST ALBANY COMPANIES INC. AND SUBSIDIARIES
Computation of Per Share Earnings *
(In thousands, except per share amounts)
(unaudited)
<CAPTION>
September 29, September 30, September 24,
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Primary:
Net income $3,350 $4,492 $5,391
Weighted average number of shares
outstanding during the period 4,494 4,464 4,496
Incremental shares under stock options
computed under the treasury stock method
using the average market price of the issuer's
stock during the period 211 214 230
Weighted average shares and common
equivalent shares outstanding 4,705 4,678 4,726
Net income per share $ 0.71 $ 0.96 $ 1.14
Fully diluted:
Net income $3,350 $4,492 $5,391
Weighted average number of shares
outstanding during the period 4,494 4,464 4,496
Incremental shares under stock options
computed under the treasury stock method
using the higher of the average or ending
market price of the issuer's stock at the end
of the period 243 214 245
Weighted average shares and common
equivalent shares outstanding 4,737 4,678 4,741
Net income per share $ 0.71 $ 0.96 $ 1.14
- -----------------------------------------------------------------------------------------
* All per share figures have been restated for common stock dividends declared
through October 1995.
</TABLE>
EXHIBIT 22
SUBSIDIARIES OF FIRST ALBANY COMPANIES INC.
COMPANY NAME STATE OF INCORPORATION
- ------------ ----------------------
FIRST ALBANY CORPORATION NEW YORK
FIRST ALBANY ASSET MANAGEMENT CORPORATION NEW YORK
NORTHEAST BROKERAGE SERVICES CORPORATION NEW YORK
EXHIBIT 24
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statement of First Albany Companies Inc. on
Form S-8 related to the First Albany Companies Inc. Stock
Bonus Plan (Registration No. 33-15220, Registration No. 33-
35166, and Registration No. 33-52153) of our report dated
November 10, 1995, on our audits of the consolidated
financial statements and financial statement schedule of
First Albany Companies Inc. as of September 29, 1995 and
September 30, 1994, and for the years ended September 29,
1995, September 30, 1994 and September 24, 1993, which
report is included in this Annual Report on Form 10-K. We
also consent to the reference to our firm under the caption
"Experts."
COOPERS & LYBRAND L. L. P.
Albany, New York
December 22, 1995
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
EXHIBIT 27
Selected Financial Data Schedule BD -- Exhibit 27
(in thousands of dollars except per share amounts)
(unaudited)
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-29-1995
<PERIOD-END> SEP-29-1995
<CASH> 3,253
<RECEIVABLES> 95,464
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 376,919
<INSTRUMENTS-OWNED> 56,025
<PP&E> 6,062
<TOTAL-ASSETS> 543,255
<SHORT-TERM> 53,288
<PAYABLES> 45,574
<REPOS-SOLD> 0
<SECURITIES-LOANED> 388,523
<INSTRUMENTS-SOLD> 3,892
<LONG-TERM> 1,791
<COMMON> 49
0
0
<OTHER-SE> 36,143
<TOTAL-LIABILITY-AND-EQUITY> 543,255
<TRADING-REVENUE> 43,198
<INTEREST-DIVIDENDS> 26,173
<COMMISSIONS> 31,889
<INVESTMENT-BANKING-REVENUES> 14,625
<FEE-REVENUE> 7,214
<INTEREST-EXPENSE> 19,904
<COMPENSATION> 71,064
<INCOME-PRETAX> 5,220
<INCOME-PRE-EXTRAORDINARY> 3,350
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,350
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0.71
</TABLE>
