FIRST ALBANY COMPANIES INC.
Stock Bonus Plan
Form 11K
For Each of the Three Plan Years Ended
December 31, 1998
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Securities and Exchange Commission
Washington, DC 20549
FORM 11-K
[X] Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
or
[ ] Transition Report Pursuant to Section 15(d) of
the Securities Exchange Act of 1934
Commission file number 014140
First Albany Companies Inc. Stock Bonus Plan
(Title of Plan)
First Albany Companies Inc.
(Issuer of Securities)
30 South Pearl Street
Albany, New York 12201
(518) 447-8500
(Address of Principal Executive Office)
I.R.S. Employer I.D. No. 22-2655804
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ITEMS
Item 4. Financial Statements and Schedules
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1. Report of Independent Accountants
A. Statements of net assets available for plan benefits
as of December 31, 1998 and 1997
B. Statements of changes in net assets available for plan
benefits for the years ended December 31, 1998, 1997
and 1996
C. Notes to financial statements
D. Schedule of assets held for investment purposes as of December
31, 1998
E. Schedule of reportable transactions for the year ended December
31, 1998
24. Consent of Independent Accountants
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the plan) have duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
First Albany Companies Inc.
Stock Bonus Plan
DATE: 6/7/99 BY: /s/ Alan P. Goldberg
----------------------
Alan P. Goldberg
Member of the Administrative
Committee
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THE FIRST ALBANY COMPANIES INC.
STOCK BONUS PLAN
REPORT OF INDEPENDENT ACCOUNTANTS
For the Years Ended December 31, 1998, 1997, and 1996
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TABLE OF CONTENTS
Page
REPORT OF INDEPENDENT ACCOUNTANTS
1
FINANCIAL STATEMENTS
Statements of net assets available for plan benefits
2
Statements of changes in net assets available for plan benefits
3
Notes to financial statements
4-6
SUPPLEMENTAL SCHEDULES
Schedule of assets held for investment purposes as of
December 31, 1998 [27(a)]* 7
Schedule of reportable transactions for the year ended
December 31, 1998 [27(d)]* 8
* Refers to item number in Form 5500 (Annual Return/Report of Employee
Benefit Plan) for plan year ended December 31, 1998.
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Report of Independent Accountants
To the Administrative Committee
of First Albany Companies Inc. Stock Bonus Plan
In our opinion, the accompanying statements of net assets available for
plan benefits and the related statements of changes in net assets available
for plan benefits present fairly, in all material respects, the net assets
available for the plan benefits of First Albany Companies Inc. Stock Bonus
Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net
assets available for plan benefits for each of the three years in the
period ended December 31, 1998 in conformity with generally accepted
accounting principals. These financial statements are the responsibility
of the Plan's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards
which 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,
assessing the accounting principals used and significant estimates made by
management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion
expressed above.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes as of December 31, 1998 and reportable
transactions for the year ended December 31, 1998 are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. These
supplemental schedules are the responsibility of the Plan's management.
The supplemental schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
PricewaterhouseCoopers L.L.P.
Albany, New York
May 28, 1999
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FIRST ALBANY COMPANIES INC.
STOCK BONUS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
As of December 31, 1998 and 1997
<TABLE>
=============================================================================
1998 1997
<S> <C> <C>
- -----------------------------------------------------------------------------
ASSETS
Investments, at fair value (Note 3) $ 20,972,006 $ 24,130,475
Cash and cash equivalents 416,926 387,522
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Net assets available for plan benefits $ 21,388,932 $24,517,997
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</TABLE>
The accompanying notes are an integral
part of the financial statements.
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FIRST ALBANY COMPANIES INC.
STOCK BONUS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the years ended December 31, 1998, 1997, and 1996
<TABLE>
=============================================================================
For the years ended 1998 1997 1996
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Additions to net assets attributed to:
Contributions from:
Employees $ 1,807,578 $ 1,674,282 $1,298,852
Employer 881,283 796,123 631,003
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2,688,861 2,470,405 1,929,855
Net (Depreciation) Appreciation
in the fair value of investments (4,263,584) 8,490,835 1,303,060
Dividend/Interest income 378,163 314,784 249,405
----------- --------- ----------
Total additions (1,196,560) 11,276,024 3,482,320
----------- ---------- ---------
Deductions from net assets attributed to:
Benefits paid to:
Terminated participants 1,761,545 490,756 289,720
Active participants 170,960 230,588
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Total deductions 1,932,505 721,344 289,720
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Net (decrease) increase (3,129,065) 10,554,680 3,192,600
Net assets available for plan benefits:
Beginning of year 24,517,997 13,963,317 10,770,717
---------- ---------- ----------
End of year $ 21,388,932 $ 24,517,99 $ 13,963,317
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</TABLE>
The accompanying notes are an integral
part of the financial statements.
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FIRST ALBANY COMPANIES INC.
STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of the Plan
-----------------------
The following description of the First Albany Companies Inc. (the
"Company") Stock Bonus Plan (the "Plan") provides only general
information. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
a. General
-------
The Plan is a defined contribution plan covering substantially all
employees of the Company and its subsidiaries. Employees are eligible
to participate upon the first day of the calendar quarter following
completion of at least one thousand hours of service during any
consecutive twelve months of continuous recognized employment as
defined in the Plan. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended (ERISA).
All costs and fees incurred in administering the Plan are borne by the
Company, which is the Plan administrator and custodian.
b. Contributions
-------------
Participants elect to make after-tax contributions to the Plan up to 8%
of their gross pay up to a maximum of $12,800 for 1998. The
Company may, but is not required to, contribute to the Plan an amount
equal to a percentage of each participant's voluntary after-tax
contribution. For 1998, 1997 and 1996, the Company's contribution
percentage was 50%. Annually, the Board of Directors of the Company
may authorize an additional contribution to the Plan. Forfeitures are
maintained within the Plan and used to reduce the Company's matching
contribution.
c. Participants Accounts
---------------------
Each participant account is credited with the participant's and
Company's contributions and allocations of Plan earnings. Allocations
are based on participants account balances, as defined. The benefit to
which the participant is entitled is the benefit that can be provided
from the participant's vested account.
d. Vesting
-------
A participant is 100 percent vested in the employer's contribution
after seven years of credited service. Participants' contributions
and earnings thereon are fully vested at all times.
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FIRST ALBANY COMPANIES INC.
STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
e. Payment of Benefits
-------------------
On termination of service, participants will receive payment, in
cash or shares, of their vested benefits in a lump-sum distribution
equal to the value of their accounts as of the valuation date, as
defined in the Plan.
2. Significant Accounting Policies
-------------------------------
a. Basis of Accounting
-------------------
The financial statements of the Plan are prepared under the accrual
method of accounting.
b. Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
c. Investment Valuation and Income Recognition
-------------------------------------------
The Plan's investments are stated at fair value, which is based upon
quoted market prices in the over-the-counter market.
The Plan is limited to investing solely in the common stock of the
Company, except that interim short-term investments may be made pending
purchase of the Company's stock.
The Plan presents, in the statements of changes in net assets, the net
appreciation (depreciation) in the fair value of its investments which
consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
d. Payments of Benefits
--------------------
Benefits are recorded when paid.
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FIRST ALBANY COMPANIES INC.
STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
3. Investments
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The Plan's investment portfolio consists of the following as of
December 31, 1998 and 1997:
<TABLE>
1998 1997
At Quoted At Quoted
Cost Fair Value Cost Fair Value
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<S> <C> <C>
Common Stock:
First Albany
Companies Inc. $12,161,318 $20,972,006 $10,021,882 24,130,475
</TABLE>
The number of shares of First Albany Companies Inc. common stock as of
December 31, 1998, and 1997 was 1,906,546 and 1,649,947, respectively.
The realized net gain based on
average costs was $1,034,321, $378,797, and $122,993 for the years ended
December 31, 1998, 1997 and 1996, respectively. The unrealized net
(loss) or gain based on average costs was $(5,297,905), $8,112,038 and
$1,180,067 for the years ended December 31, 1998, 1997 and 1996,
respectively.
The Plan's investment portfolio is subject to daily market price
fluctuations. Since the entire investment portfolio consists of the
Company's common stock, the Plan's portfolio may be exposed to risk in
the event of a decline in the market value of the Company's stock.
5. Forfeitures
-----------
For the years ended December 31, 1998, 1997, and 1996 forfeited non-
vested accounts totaling $22,516, $41,029 and $18, 431, respectively,
were used to reduce employer contributions. There were no forfeited non-
vested accounts at December 31, 1998 available to reduce future employer
contributions.
6. Plan Termination
----------------
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contribution at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of
Plan termination, the account of each participant shall become fully
vested and be distributed.
7. Tax Status
----------
The Internal Revenue Service has determined and informed the Company by a
letter dated February 26, 1993, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (IRC). The Plan has been amended since receiving the
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FIRST ALBANY COMPANIES INC.
STOCK BONUS PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
determination letter. However, the Plan administrator believes that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC.
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FIRST ALBANY COMPANIES INC.
STOCK BONUS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES*
As of December 31, 1998
<TABLE>
Description Current
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Cost Value
---- -------
<S> <C> <C>
First Albany Companies Inc.:
Common stock ($0.01 - par value) $12,161,318 $20,972,006
</TABLE>
The supplemental schedule refers to item number 27(a) in Form 5500
(Annual Return/Report of Employee Benefit Plan).
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FIRST ALBANY COMPANIES INC.
STOCK BONUS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE
TRANSACTIONS*
For the year ended December 31, 1998
<TABLE>
(b) (c) (d) (g) (h) (i)
<S> <C> <C> <C> <C> <C>
Current value
of asset on
Description Purchase Selling Cost of transaction Net gain or
of asset price price asset date (loss)
- ------------------------------------------------------------------------------
First Albany $3,028,779 $1,923,663 $889,342 $7,087,698 $1,034,321
Companies
(Common Stock)
</TABLE>
* The supplemental schedule refers to item number 27(d) in Form 5500
(Annual Return/Report of Employee Benefit Plan).
</page>
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EXHIBIT 24
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in the
registration statement on Form S-8 (No. 014140) of First
Albany Companies Inc. of our report dated May 28, 1999
relating to the financial statements of First Albany
Companies Inc. Stock Bonus Plan which appears in this Form
11-K.
PricewaterhouseCoopers L.L.P.
Albany, New York
June 14, 1999
