SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, C.D. 20542
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
X TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 for the
transition period from --- to ---
Commission file Number 1-12043
A. Full title of the plan and address of the plan, if different from
that of the issuer named below:
FAHNESTOCK & CO., INC. 401(k) PLAN
125 Broad Street
New York, New York 10004
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
FAHNESTOCK VINER HOLDINGS INC.
Suite 1110, P.O. Box 2015
20 Eglinton Avenue West
Toronto, Ontario, Canada M4R 1K8
REQUIRED INFORMATION
ITEM 1. Not applicable
ITEM 2. Not applicable
ITEM 3. Not applicable
ITEM 4. Financial Statements and Supplemental Information
FAHNESTOCK & CO.,INC. 401(k) PLAN
FINANCIAL STATEMENTS AND SCHEDULES
INDEX
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 1998 and 1997, with Fund Information as of
December 31, 1998
Statement of Changes in Net Assets Available for Benefits,
with Fund Information for the Year Ended December 31, 1998
Notes to Financial Statements
Supplemental Schedules:
Schedule I - Item 27a - Schedule of Assets Held for
Investment as of December 31, 1998
Schedule II - Item 27d - Schedule of Reportable
Transactions as of December 31, 1998
REPORT OF INDEPENDENT ACCOUNTANTS
June 22, 1999
To the Trustees of the Fahnestock & Co., Inc. 401(k) Plan:
In our opinion, the accompanying statements of net assets available for
benefits and the related statement of changes in net assets available for
benefits present fairly, in all material respects, the net assets available
for benefits of the Fahnestock & Co., Inc. 401(k) Plan (the "Plan") as of
December 31, 1998 and 1997 and the changes in its net assets available for
benefits for the year ended December 31, 1998, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements basedon 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 principles used and significant estimates made by
the Plan's 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 performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules
as listed on the accompanying index 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 Fund Information in the statement of net assets available for benefits
and the statement of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the
net assets available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and the Fund
Information 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.
/s/ PricewaterhouseCoopers LLP
New York, New York
FAHNESTOCK & CO., INC. 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR
BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998 AND 1997
Page 1 of 3
Fund Information
Hudson Capital Money Vanguard
Appreciation Bond Market Index
Fund Fund Fund Trust Fund
ASSETS:
Investments,
at fair value $4,216,083 $2,208,743 $4,939,571 $10,032,650
Contributions
receivable from
Fahnestock & Co.Inc.
Loans receivable
from participants - - - -
Accrued income
receivable - 34,518 - -
Net assets available
for benefits $4,216,083 $2,243,261 $4,939,571 $10,032,650
The accompanying notes are an integral part of these financial
statements.
FAHNESTOCK & CO., INC. 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR
BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998 AND 1997
Page 2 of 3
Fund Information
Fahnestock
Viner
Holdings Inc.
AIM Value MFS Emerging Templeton Common
Fund Growth Fund World Fund Stock Fund
ASSETS:
Investments,
at fair value $8,765,048 $6,656,084 $3,218,629 $11,210,500
Contributions
receivable from
Fahnestock & Co.Inc - - - -
Loans receivable
from participants - - - -
Accrued income
receivable - - - -
Net assets available
for benefits $8,765,048 $6,656,084 $3,218,629 $11,210,500
The accompanying notes are an integral part of these financial
statements.
FAHNESTOCK & CO., INC. 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR
BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998 AND 1997
Page 3 of 3
Fund Information
Certificate Loans to
of Deposit Partici- Employer Total Total
Fund pants Contribution 1998 1997
ASSETS:
Investments,
at fair value $1,213,395 - - $52,460,703 $45,537,357
Contributions
receivable from
Fahnestock & Co. Inc. - - 1,811,294 1,811,294 169,782
Loans receivable
from participants - $1,023,100 - 1,023,100 948,481
Accrued income
receivable 9,040 - - 43,558 25,073
Net assets available
for benefits $1,222,435 $1,023,100 $1,811,294 $55,338,655 $46,680,693
The accompanying notes are an integral part of these financial
statements.
FAHNESTOCK & CO., INC 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
Page 1 of 3
Fund Information
Hudson Capital Money Vanguard
Appreciation Bond Market Index
Fund Fund Fund Trust Fund
Additions to net assets
attributed to:
Investment income:
Net realized and
unrealized gains
(losses) on
investments $(564,560) $ 22,763 - $ 1,998,844
Interest - 110,878 $227,656 -
Dividends - - - 112,070
Net investment income (564,560) 133,641 227,656 2,110,914
Contributions:
Participants 580,732 143,880 371,475 725,129
Employer - - - -
Total contributions 580,732 143,880 371,475 725,129
Total additions 16,172 277,521 599,131 2,836,043
Deductions from net
assets attributed to:
Benefits paid to
participants (244,823) (30,954) (877,099) (271,120)
Net increase (decrease)
prior to interfund
transfers (228,651) 246,567 (277,968) 2,564,923
Interfund transfers 210,532 443,226 (917,866) 784,011
Net increase
(decrease) (18,119) 689,793 (1,195,834) 3,348,934
Net assets available
for benefits:
Beginning of year 4,234,202 1,553,468 6,135,405 6,683,716
End of year $4,216,083 $2,243,261 $4,939,571 $10,032,650
The accompanying notes are an integral part of these financial
statements.
FAHNESTOCK & CO., INC 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
Page 2 of 3
Fund Information
Fahnestock
Viner
Holdings Inc.
AIM Value MFS Emerging Templeton Common
Fund Growth Fund World Fund Stock Fund
Additions to net assets
attributed to:
Investment income:
Net realized and
unrealized gains
(losses) on
investments $1,988,296 $1,221,016 $117,901 $29,538
Interest - - - -
Dividends 17,664 - 71,258 179,368
Net investment income 2,005,960 1,221,016 189,159 208,906
Contributions:
Participants 570,772 566,341 368,985 -
Employer - - - -
Total contributions 570,772 566,341 368,985 -
Total additions 2,576,732 1,787,357 558,144 208,906
Deductions from net
assets attributed to:
Benefits paid to
participants (179,946) (294,914) (171,866) -
Net increase (decrease)
prior to interfund
transfers 2,396,786 1,492,443 386,278 208,906
Interfund transfers 670,949 (376,781) (1,300,841) 393,725
Net increase (decrease) 3,067,735 1,115,662 (914,563) 602,631
Net assets available for
benefits:
Beginning of year 5,697,313 5,540,422 4,133,192 10,607,869
End of year $8,765,048 $6,656,084 $3,218,629 $11,210,500
The accompanying notes are an integral part of these financial
statements.
FAHNESTOCK & CO., INC 401(k) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
Page 3 of 3
Fund Information
Certificate Loans to
of Deposit Partici- Employer Total
Fund pants Contribution 1998
Additions to net assets
attributed to:
Investment income:
Net realized and
unrealized gains
(losses) on
investments - - - $4,813,798
Interest $75,810 $74,321 - 488,665
Dividends - - - 380,360
Net investment income 75,810 74,321 - 5,682,823
Contributions:
Participants - - - 3,327,314
Employer - - 1,811,294 1,811,294
Total contributions - - 1,811,294 5,138,608
Total additions 75,810 74,321 1,811,294 10,821,431
Deductions from net
assets attributed to:
Benefits paid to
participants - (92,747) - (2,163,469)
Net increase (decrease)
prior to interfund
transfers 75,810 (18,426) 1,811,294 8,657,962
Interfund transfers - 93,045 - -
Net increase (decrease) 75,810 74,619 1,811,294 8,657,962
Net assets available for
benefits:
Beginning of year 1,146,625 948,481 - 46,680,693
End of year $1,222,435 $1,023,100 $1,811,294 $55,338,655
The accompanying notes are an integral part of these financial
statements.
FAHNESTOCK & CO., INC. 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
1. Description of the Plan:
The following description of the Fahnestock & Co., Inc. 401(k) Plan
(the "Plan") provides only general information. Participants should
refer to the plan agreement for a more complete description of the
Plan's provisions.
General:
The Plan was established on January 1, 1987 and was amended and
restated to add a profit-sharing provision effective January 1, 1991.
The Plan was subsequently amended effective January 1, 1998 to
change the rates used in computing the discretionary profit sharing
contribution from Fahnestock & Co. Inc. (the "Company").
Employees of the Company who are 21 and have completed one
year of service shall be eligible to receive an allocation of the
discretionary profit sharing contribution. Employees of the Company who
are 21 and have completed six months of service shall be eligible to make
elective deferrals into the Plan.
Allocation provisions:
Under the terms of the Plan, the individual makes all investment
decisions with respect to his/her account balance, subject to
available investment alternatives. Participants should refer to the
respective fund prospectus for a more complete description of the
investment objectives. These include:
Bond Fund - Funds are invested in U.S. government and high
quality U.S. corporate securities.
Money Market Fund - Funds are invested in the Fahnestock Prime
Cash Series Fund.
Vanguard Index Trust Fund - Funds are invested in shares of a
registered investment company that invests in large capitalization
stocks that is designed to replicate the performance of the Standard
and Poors 500 Index.
AIM Value Fund - Funds are invested in shares of a registered
investment company that seeks long term growth by investing in
under valued securities.
MFS Emerging Growth Fund - Funds are invested in shares of a
registered investment company that seeks long term growth by
primarily investing in stocks of small and emerging companies.
Templeton World Fund - Funds are invested in shares of a
registered investment company that seeks long term growth by
investing in companies throughout the world.
Certificate of Deposit Fund - Funds are invested in certificates of
deposits and the Fahnestock Prime Cash Series Fund.
Fahnestock Viner Holdings Inc. Common Stock Fund - Funds are
invested in common stock of the Company's parent, Fahnestock
Viner Holdings Inc.
Hudson Capital Appreciation Fund - Funds are invested in shares of a
registered investment company that seeks long term growth through
capital appreciation by investing primarily in equity securities.
Company Contributions:
As discussed above, the Company may contribute to the Plan a
discretionary profit-sharing amount (the "Employer Regular
Contribution"). The Employer Regular Contribution is determined
by its Board of Directors and is subject to guidelines set forth in the
Plan description.
Employer Regular Contributions for the year ending December 31,
1998 were determined as follows:
2.0% of the first $30,000 of a participant's compensation;
4.8% of the next $10,000 of a participant's compensation;
6.0% of the next $25,000 of a participant's compensation;
6.1% of the next $35,000 of a participant's compensation;
1.1% of the next $50,000 of a participant's compensation; and
0% above $150,000 of a participant's compensation.
Should participants elect to receive their Employer Regular
Contribution in the form of common stock of Fahnestock Viner
Holdings Inc. ("Holdings"), the Company may make an additional
contribution of Holdings common stock up to or equal to 15 percent
of the purchase price of the common stock (the "Employer Stock
Contribution") at the discretion of the Directors of the Board. For
the year ended December 31, 1998 approximately $142,000 was
contributed by the Company under this provision and is included in
the Company contribution of $1,811,294.
Employees may make salary deferral contributions of up to 14% of
compensation. Current law limits participant deferrals to $10,000 for
the plan year ended December 31, 1998.
Vesting:
All participants are immediately and fully vested in all Employee
Elective Deferrals and the income derived from the investment of
such contributions.
Participants will be vested in the Employer Regular Contributions
plus the income derived thereon upon the completion of service
with the Company or an affiliate at the following rate:
Less than 3 years of service 0%
After 3 years of service 20%
After 4 years of service 40%
After 5 years of service 60%
After 6 years of service 80%
After 7 years of service 100%
All years of service with the Company or an affiliate are counted to
determine a participant's nonforfeitable percentage except years of
service before the Plan was restated in 1991. Participants will be
100 percent vested in the discounted portion of the Employer Stock
Contributions only upon completion of 5 years service.
At December 31, 1998, forfeited nonvested accounts totaled
approximately $81,000. These accounts will be used to reduce
future employer contributions. The 1998 employer contributions
included approximately $50,000 from forfeited nonvested
accounts.
Company Qualified Matching and Qualified Non-Elective
Contributions as defined in the Plan document, if required, are fully
vested when made. No payment was required during the year ended
December 31, 1998.
Notwithstanding the vesting schedules specified above, with respect
to retirement, a participant's right to his or her accounts will be
nonforfeitable upon the attainment of: the later of age 65 or the fifth
anniversary of the participation commencement date; death; or
disability, as defined.
Payment of Benefits:
Payment of vested benefits under the Plan will be made in the event
of a participant's termination of employment, death, retirement, or
financial hardship and may be paid in either a lump-sum distribution
or over a certain period of time as determined by IRS rules or by
participant election.
Loans to Participants:
Loans are made available to all participants. Loans must be
adequately collateralized using not more than fifty percent of the
participant's vested account balance and bear a fixed interest rate of
8%. Loan and interest payments are applied to fund balances from
which proceeds were drawn unless otherwise specified by the
participant.
Income Tax Status:
The Plan received a determination letter on August 2, 1994, from
the Internal Revenue Service (IRS) qualifying the Plan under the
IRS code as exempt from Federal income taxes. The Plan has been
amended since receiving the determination letter. However, the
Plan administrator believes that the Plan continues to be designed
and operated in compliance with the applicable requirements of the
Internal Revenue Code.
2. Significant Accounting Policies:
Securities transactions are recorded on a trade date basis with gains
and losses reflected in income. Interest and dividend income are
recorded on the accrual basis.
Investments are stated at fair value, based on quoted market prices
for valuation of common stock, debt obligations, and mutual funds.
Assets held in money market accounts are valued at cost which
approximates fair value.
Benefits are recorded when paid.
Interfund transfers include loan originations and repayments as well
as dividends from Fahnestock Viner Holdings Inc. common stock
which are invested in the Money Market Fund.
The Plan presents in the statement of changes in net assets available
for benefits 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.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Plan provides for various investment options in any
combination of stocks, bonds, fixed income securities, mutual
funds, and other investment securities. Investment securities are
subject to interest rate, market and credit risks.
Due to the risk associated with certain investment securities and the
level of uncertainty related to changes in the value of investment
securities, it is at least reasonable possible that changes in the near
term would materially affect participants' account balances and the
amounts reported in the statement of net assets available for
benefits and the statement of changes in net assets available for
benefits.
3. Related Parties:
The Company acts as investment advisor, administrator and
custodian of the Plan assets in the Bond Fund, the Money Market
Fund, the Certificate of Deposit Fund, and the Fahnestock Viner
Holdings Inc. Common Stock Fund, executes the Plan's
transactions, and provides accounting and other administrative
services for which no charge is made to the Plan.
An affiliate of the Company acts as investment advisor for the Hudson
Capital Appreciation Fund. The Trustees of the Plan are also officers and
directors of the Company.
4. Concentration of Investments:
The following investments represent 5% or more of net assets
available for plan benefits as of December 31, 1998:
Percent of Net
Assets Available
Investment Market Value for Plan Benefits
Fahnestock Prime Cash Series
Held by: Money Market Fund $4,939,571
Bond Fund 112,224
Certificate of
Deposit Fund 113,395
Total Fahnestock Prime Cash Series 5,165,190 9.33%
Fahnestock Viner Holdings Inc.
Common Stock Fund 11,210,500 20.26%
Vanguard Index Trust Fund 10,032,650 18.13%
AIM Value Fund 8,765,048 15.84%
MFS Emerging Growth Fund 6,656,084 12.03%
Templeton World Fund 3,218,629 5.82%
Hudson Capital Appreciation Fund 4,216,083 7.62%
5. Plan Termination:
Although it has not expressed any intent to do so, the Company has
the right under the Plan to discontinue its contributions at any time
and to terminate the Plan subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"). In the event
of the Plan termination, participants will become 100 percent vested
in their contributions.
6. Subsequent Events:
Effective January 1, 1999, employees of the First of Michigan division of
the Company, became eligible to participate in the Plan.
In addition, the Plan added the Putnam Fund for Growth and Income as another
investment option beginning January 1, 1999. The Putnam Fund for Growth and
Income is a registered investment company that seeks capital growth and
current income.
In January 1999, the Plan received the employer contribution which was
invested in accordance with the participants' elections.
SCHEDULE I
FAHNESTOCK & CO., INC. 401(k) PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES
December 31, 1998
Shares, Units Fair or
Description or Face Value Cost Stated Value
Bond Fund:
Fahnestock Prime Cash Series Fund 112,224 $112,224 $112,224
Notes:
U.S. Treasury Notes, 5.00%,
due January 31, 1999 300,000 293,069 300,000
U.S. Treasury Notes, 6.75%,
due May 31, 1999 125,000 125,038 126,016
U.S. Treasury Notes, 6.875%,
due July 31, 1999 300,000 299,997 303,750
U.S. Treasury Notes, 5.50%,
due April 15, 2000 150,000 150,520 151,547
U.S. Treasury Notes, 6.25%,
due May 31, 2000 100,000 100,369 102,125
U.S. Treasury Notes, 6.125%,
due July 31, 2000 100,000 100,374 102,188
U.S. Treasury Notes, 6.125%
due September 30, 2000 250,000 249,116 256,172
U.S. Treasury Notes, 6.00%,
due July 31, 2002 100,000 102,373 104,219
U.S. Treasury Notes, 5.75%,
due August 15, 2003 100,000 102,082 104,375
U.S. Treasury Notes, 7.25%,
due May 15, 2004 100,000 103,408 112,063
U.S. Treasury Notes, 5.875%,
due November 15, 2005 100,000 103,307 106,688
U.S. Treasury Notes, 6.50%,
due October 15, 2006 100,000 110,090 111,000
U.S. Treasury Notes, 6.25%,
due February 15, 2007 100,000 105,924 109,688
U.S. Treasury Notes, 5.625%,
due May 15, 2008 100,000 105,540 106,688
Total Notes 2,051,207 2,096,519
Total Bond Fund 2,163,431 2,208,743
Fahnestock Viner Holdings Inc.
Common Stock Fund 640,600 5,637,595 11,210,500
Vanguard Index Trust Fund 88,044 5,541,254 10,032,650
Money Market Fund:
Fahnestock Prime Cash Series Fund 4,939,571 4,939,571 4,939,571
Certificate of Deposit Fund:
Fahnestock Prime Cash Series Fund 113,395 113,395 113,395
Advanta National Bank C.D. 6.25%
due May 14, 1999 1,100,000 1,092,850 1,100,000
Total C.D. Fund 1,206,245 1,213,395
Hudson Capital Appreciation Fund 298,378 5,108,629 4,216,083
AIM Value Fund 218,090 6,580,169 8,765,048
MFS Emerging Growth Fund 149,240 4,488,705 6,656,084
Templeton World Fund 202,048 3,365,379 3,218,629
Total investments 39,030,978 52,460,703
Loans to Participants
Number Interest Maturity
Description of loans rate Dates
Participant loans 130 8% January 1998-
December 2007 - 1,023,100
Total assets held for investment $39,030,978 $53,483,803
SCHEDULE II
FAHNESTOCK & CO., INC. 401(k) PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
Single Transactions Including an Amount in Excess of 5% of Plan Assets
For the year ended December 31, 1998
Sales Purchase Net Gain
Description Date Price Price (Loss)
None
SCHEDULE II
FAHNESTOCK & CO., INC. 401(k) PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
Series of Transactions Including an Amount in Excess of 5% of Plan Assets
For the year ended December 31, 1998
Number
of Sales Number of Purchase Net Gain
Description Sales Price Purchases Price (Loss)
Fahnestock Prime Cash
Series Fund 10 $2,077,571 19 $881,738 -
Hudson Capital
Appreciation Fund 3 1,217,505 4 1,909,740 (176,641)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Trustees for the Fahnestock & Co., Inc. 401(k) Plan have duly
caused this annual report to be signed on their behalf by the
undersigned thereunto duly authorized.
FAHNESTOCK & CO., INC. 401(k) PLAN
/s/ A.G. Lowenthal
Albert G. Lowenthal, as Trustee of the
Fahnestock & Co., Inc. 401(k) Plan
Date: June 22, 1999
EXHIBIT INDEX
Exhibit No. Description
23 Consent of Independent Accountants
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Annual Report on Form 11-K of our report
dated June 22, 1999, on our audit of the financial statements of the
Fahnestock & Co., Inc. 401(k) Plan for the Plan year ended December 31, 1998.
PRICEWATERHOUSECOOPERS LLP
New York, New York
June 29, 1999
