0961.j
RESOLUTION NO.
MEMORANDUM OF INTENT
This MEMORANDUM OF INTENT is between the City of West
Memphis, Arkansas, party of the first part (hereinafter re-
ferred to as the "City"), and Langston Companies, Inc., a
Tennessee corporation, party of the second party (hereinafter
~ referred to as the "Borrower").
IN CONSIDERATION of the undertakings of the parties set
forth herein and the benefits to be derived therefrom and of
other good and valuable consideration, receipt of which is
hereby acknowledged by the parties, the City and the Borrower
AGREE:
1. Preliminary Statement. (a) The City is a duly exist-
ing municipality under the laws of the State of Arkansas and
is authorized by the laws of the State of Arkansas, including
particularly Act Igo. 9 of the First Extraordinary Session of
the Sixty-Second General Assembly of the State of Arkansas,
approved January 21, 1960, as amended ("Act 9"), to issue
revenue bonds for financing the costs of acquiring, construc-
tion and equipping industrial facilities (as defined in and
authorized by Act 9) and to lease and/or sell the same for such
rentals and payments and upon such terms and conditions as the
City deeds advisable.
(b) The Borrower (or one of its affiliates) proposes to
acquire and install a printing press and other equipment, and
e construct and equip warehouse, manufacturing and office space,
thereby improving and expanding its present multiwall paper
bag manufacturing facility (the "Industrial Facilities") located
;~ in the City, and has requested a commitment from the City that
it issue industrial development bonds and make the proceeds
available for the financing of all or part of the costs and
expenses incurred in constructing and equipping the Industrial
Facilities.
(c) The City is willing to so commit and to proceed with
the issuance of such bonds as and when requested by the Borrower.
(d) the City considers that the improving, expanding and
equipping of the Industrial Facilities by the Borrower will
secure and develop industry and thereby promote the general
health and economic welfare of the inhabitants of the City and
adjacent areas.
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(e) The obligations set forth in this Memorandum of
Intent shall apply both to the Borrower and to any assignee
permitted hereby.
2. Undertakings on the Part of the City. Subject to
the conditions above stated, the City agrees as follows:
(a) That when requested by the Borrower, it will authorize
and take, or cause to be taken, the necessary steps to issue
bonds under Act 9, in the aggregate principal amount necessary
to furnish the financing of all or any part of the costs of
accomplishing the improvements, expansion and equipping of the
Industrial Facilities. In this regard, it is estimated at
this time that the cost of improving, expanding and equipping
the Industrial Facilities as proposed will not exceed $1,400,000.
Thus, Industrial Development Revenue Bonds will be issued under
Act 9 in such amounts as shall be requested by the Borrower
for accomplishing all or any part of the proposed changes to
the Industrial Facilities (the "Bonds").
(b) That it will, if requested by the Borrower, at the
proper time and subject in all respects to the recommendation
and approval of the Borrower, have the Bonds underwritten and
will adopt, or cause to be adopted, such proceedings and
authorize the execution of such documents as may be necessary
and advisable for the authorization, sale, and issuance of the
Bonds, and improving, expanding and equipping of the Industrial
Facilities, the loan of the proceeds of the Bonds to the Bor-
rower for that purpose or the leasing or sale of the Industrial
Facilities to the Borrower (it being understood that the form
of the transaction will be subsequently determined), all in
~; conformity with Act 9 and any other applicable federal and
{; state laws and upon terms and conditions mutually satisfactory
to the City and the Borrower.
(c) That the aggregate basic rents or payments (i.e., the
rents or payments to be used to pay the principal of, premium,
if any, and interest on the Bonds) payable under the lease,
loan agreement or sale agreement (whichever is applicable) be-
tween the City and the Borrower, shall be sufficient to pay
the principal of, premium, if any, and interest on the Bonds
when due. The lease, loan agreement, sale agreement or other
appropriate agreement (whichever is applicable) shall contain
such provisions as are necessary or desirable, consistent with
the authority conferred by Act 9.
(d) That it will take or cause to be taken such other
acts and adopt such further proceedings as may be required to
implement the aforesaid undertakings or as it may deem appro-
priate in pursuance thereof.
~~
-3-
3. Undertakings on the Part of the Borrower. Subject
to the conditions above stated, the Borrower agrees as follows:
(a) That it will cooperate with the City in the sale and
issuance of the Bonds to the end of achieving timely and favor-
able marketing thereof.
(b) That it will enter into such lease, loan agreement,
sale agreement or other appropriate agreements with the City,
as the Borrower and the City determine to use, under which
the Borrower will obligate itself to pay to the city rents or
payments sufficient to pay the principal of, premium, if any,
and interest on the Bonds when due and containing such other
provisions as are necessary or desirable consistent with the
authority conferred by Act 9.
(c) That it will take such further action and adopt such
further proceedings as may be required to implement its afore-
said undertakings or as it may deem appropriate in pursuance
thereof.
(d) That it will, if necessary, make payments in lieu of
ad valorem taxes for distribution to the ad valorem taxing
authorities on all facilities financed by the Bonds. In this
regard, an appropriate agreement or agreements covering the
detail of the payment will be entered into and delivered at
or before the closing of the Bond issue.
4. General Provisions. (a) This Memorandum of Intent
shall continue in full force and effect until. the improvements
to and expansion and equipping of the Industrial Facilities
and their financing by Bonds, as herein specified, is ac-
complished, and in this regard it is understood that there
may be separate issues of Bonds and separate series within
a particular issue, with different maturities, interest rates,
redemption provisions and other details. In the case of each
issue, and of each series, the City will take appropriate
action by ordinance or resolution to sell and authorize the
Bonds and to authorize and execute such agreements and docu-
ments as may be determined necessary or desirable by the City
and the Borrower.
",
R ,' ~
-4-
~.r
IN WITNESS WHEREOF, the parties hereto have entered into
this Memorandum of In~,e~i~/ by their off c~ thereunto d ly
authorized as of the -/ /~ day of 84.
CITY OF ST ME P S
ATTEST:
Ci y Cle
(Seal)
ATTEST:
By:
(Se
LANGSTON COMPANIE
By:
Its
~~
PAI~~NELL
KERR
FORSTER
Certified Public Accountants
5100 Poplar Avenue
Memphis, TN 38137
Telephone (901) 761-1840
Cable PANKERR MEMPHIS
The Board of Directors
Langston Companies, Inc.
Memphis, Tennessee
~'e have examined the consolidated balance sheets of Langston. Companies, Inc.
and Subsidiaries at November 26, 1982 and November 27, 1981 and the related
consolidated statements of income, stockholders' equity, and changes in
financial position for the fifty-two weeks then ended. Our examinations were
.:a de in accordance with generally accepted auditing standards and, accordingly,
included such tests of the accounting records and such other auditing procedures
as we considered necessa_y in the circumstances.
In our opinion, the consolidated financial s*_atements referred to above present
fairly the financial position of Langston Companies, Inc. and Subsidiaries at
":ove.:;ber 26, 1°82 and November 27, 1981, and the results of their operations
and the chan>;es i_n their financial position for the fifty-two weeks then ended
in conformity with generally accepted accounting principles applied on a
consistent basis.
~~ ~~
".ay 12, 1983
LA.~IGSTON COMPAIVyE
Consolida
7
Assets
Current asse*_s
Cash
Receivables
Notes and accounts receivable - trade
Notes and accounts receivable from
affiliates (note 2)
Less allowance for doubtful accounts
Inventories (note 1)
Finished goods
t"'ork in process
Ra:~ materials
Prepaid inco;r.e taxes
Prepaid expenses
Total current assets
Property, plant and equipment (note 1)
Land
Buildings
Leasehold improvements
Machinery and plant equipment
Machinery under capital lease (note 3)
Furniture and office equipment
Less accumulated depreciation and
amortization
,
Other assets and deferred charges
Investments (at cost)
Cash value of life insurance net of policy
loans of $17,600 in 1982 and
Ltnamortized debt expense $13'750 in 1981
Memberships (note 1)
Insurance and other deposits
Sundry
November 26
1982
$ 2,508,816
2,928,198
121, 505
3,049,703
2 7, 700
3,G22,003
305,6 79
76,772
1,644,764
2,027,215
3,387
20 , 34 9
7,581,770
177,625
633,027
14,309
2,978,836
175,450
3,979,247
2,637,349
1,341,898
84,547
206 , 2 73
25,336
7,694
19,595
12,176
35,6 2i
November 27
1981
$ 913, 726
2, 55'? , 530
735,118
3, 287,648
28,200
3,259,448
316 , 7 78
103,565
1,774,917
2,195,260
14,887
11,747
6,395,068
177,625
633,027
16,147
2,450,415
385, 335
174,379
3,836,928
2,302,618
1,534,310
84,547
179, 386
28,075
7,694
46,671
18,868
3b 5,241
See notes to consolidated f $ 9,279,289 $ 8,294,619
financial statements
~~ES , Eq,,ity
~UggIB and StOGkholdets
Sheets Liabilities met 26
~°~ 99x2
Cnote 3~
term debt
ttent lia ~t rii les t a oe
Cu Cuxtent savable ns3tion
Acc k overdra llitios d other co~^P 9es
Ban sued liab wades an and other
Acc p9o~e ty~~ paY~°ll on Cnote 5~
pthet st conttibuti
Zntete .shax ing s
toy it Glai9
Y n s`l~ anc e s
Z s 4ay'able comae tare
~i de al and State nt liab illties
Ee Total cutre
rent ~tu~ities
~tetm debt less cu
Long
25 app 9
$ 1~5a,439
~ove~e~c 2l
19g1
6p,p29
$ 1 345,563
1a5,~42
4a .6a1
1 ,56a
4 ,4p1
35 +ppp
/p~,~i 9
3~ 0
39,pa1
2 ,41~ '99p
246,62
31 ~3~ 5
3 5+ 935
3p ,ppp
34a ,lip
x2,921
X6,629
l,a~
gll ,ppp
Cn°te 3~
Cnote 4)
Co~it~ents
it9 value ; issued
to°kY'olde st°~ 0.u $ pp , pp Sha ses ses
p 5 ~,a
S p°~ hot `Z ta~d~g ~ ~ a cap 1ta1
d °~ as ont=ibu
Add ate ~ea~ cgs
Re
2g2,ppp
219, g9
0
2~ 9 , g94 5 ~g60 ,6p
140,9
6,29'9 g9 6~
6, ~ 6,29`',
S 9'2,9 ~2ag
4
LANGSTOh' COMP~~NIES, INC. A,ti'D SUBSIDIARIES
Consolidated Statements of Income
Fifty-two weeks ended
November 26 November 27
1982 1981
Net sales
$ 21,821,587 $ 25,393,967
Costs and expenses
Cost of goods sold
Opera*_ing expenses 19,6 53,206 22,926,181
1,668,854 1,928
362
21,322,060 ,
24,854,543
Operating income
Other income (deductions) net 499,527 539,424
280,64 195,142
Income before income taxes
Income taxes (note 6) 780,391 734,566
341,048 308,485
Net income
$ 439,343 S 426,081
See notes to con solidated financial statements
6
LANGSTON C0:1.-ANIES, INC. AID SliBSIDIARIES
Consolidated Statements of Changes in Financial Position
Fifty-Two weeks ended
November 26 _
Novembez 27
1982 1981
Sources of working capital
Operations
Net income $ 439,343 $ 426,081
Add items not affecting working capital
Depreciation and amortization
property slant and equipment 432,259 463,546
Amortization of debt expense 2 739 2 739
Funds provided from operations 874,341 892,366
Disposal of property, plant and equipment 11,711 14,695
Decrease in other assets 6,881 -
Total sources of working capital 892,933 907,061
Applications of working capital
Current maturities and repayments
of long-term debt 25,000 59,946
additions to property, plant and equipment 251,558 219,933
Dividends paid 11,040 _
Increase in other assets - 75,454
Total applications of working capital 287,598 355,333
Net increase in working capital 605 335 551
728
Forking capital, beginning of year 4,558,445 ,
4,006,717
horking capital, end of year $ 5,163,7$0 $ 4,558,445
Increase (decrease) in working capital by
coLponents
Cash $ 1,595,090 $ 78
489
Receivables (237,445) ,
886,851
Inventories (168,045) (400
554)
Refundable income taxes - ,
( 70,800)
Prepaid income taxes ( 11,500) ( 94,537}
Prepaid expenses 8,602 5,536
Current maturities of long-term debt 35 029 8,267
Accounts payable - trade (152,748) 183,142
Eank overdraft (544,439) _
Accrued liabilities 47,991 11,334
Dividends payable ( 11,040) _
Federal and state income taxes 43,840 (56,000)
Net increase in working capital $ 605,335 $ 551.728
See notes to consolidated financial statements
7
LA.NGSTOr CO?•~A2~IES, IrC. AND SL~SIDIARIES
tiotes to Consolidated Financial Statements
tiovember 26, 1982 and November 27, 1981
?rote 1 - Su:..ary of sibr.ificant accounting policies
Frinciples of consolidation
The consolidated financial statements include the parent company and all wholly-
owned subsidiaries. All *naterial intercompany accounts and transactions have
been eliminated.
Inventories
Appro~:imateiy 64~ and 61°'- of the 1982 and 1981 inventories, respectively, are
valued at cost on the first-in, first-out (FIFO) method or market, whichever
is lower. The remain-i.ng inventories, $730,057 and $852,858 at November 26, 1982
and '~ovember 27, 1981, respectively, are valued at cost on the last-in, first-
out (LIFO) method, which cost is lower than current replacement market.
Frcpert}•, plan*_ and equipment
Frooer*_v, plant and equipment is stated at cost. Additions, renewals and better-
~ents that a~~ materially to productive capacity or extend the life of an asset
are capitalized. E~:perditures for maintena^.ce and repairs which do not extend
the life of the applicable assets are charged to expense as incurred. L'pon retire-
ment or disposal of an asset, the asset and accumulated depreciation accounts -
are adusted accordingl~•. Any resulting gain or loss is included in income.
Depreciation is provided for in amounts sufficient to relate the cost of depre-
ciable assets to operations using the straight-line and declining balance methods
of depreciation over their estimated useful lives as follows:
Buildings 10-25 years
*iachinery and equipment 3-10 years
Office furniture and equipment 3-10 years
Leasehold iWarovements are amortized over the life of the lease.
Allowance for doubtful accounts
The company provides for uncollectible receivables by applying established percent-
ages to the balance of customers' accounts aged according to the degree of
delinquency:.
Debt expense
The cost of debt financing is capitalized and amortized to operations over the
life of the debt using the straight-line method.
8.
LA_'~GSTON COMPANIES, INC. AIv~ SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
November 26, 1982 and November 27, 1981
- Note 2 - Related party transactions
"' Two stockholders own controlling interests in other organizations which are
- customers of the co^pany. All sales to such organizations were made in the
ordi_*~ary ccurse of the coTpany's business at its regularly established prices.
Amounts due from affiliates at the balance sheet dates are as follows:
November 26 November 27
198 2 1981
Hi-Te}: Fagging Co. $ 121,043 $ 734,194
r Langston Enterprises, Inc. 452 924
S J_21,~05 S 73`,118
Note 3 - Long-term debt
P.s of Nove:,~~er 26, 1982 and November 27, 1981, long-tern debt consisted of the
following:
w 1982 1981
-- Note payable bank-trustee $ 317,000 $ 340,000
Capitalized lease obligation - 37,029
~` 317,000 377,029
,, Less, current maturities 25,000 60,029
Long-term debt ~ 292,000 S 317,000
The company entered into a refinancing loan agreement in March, 1972, with the
First Tennessee Bank N.A. Memphis as Trustee for the City of West Memphis, Arkansas.
y The proceeds were used to retire existing debt and for the construction of a
plant in West Memphis, Arkansas, along with the purchase of related machinery.
.• The plant and equipment Have been capitalized by the company and are pledged
as collateral on this note. The company leases the plant and equipment at an
average annual amount of $41,707 which is sufficient to pay the principal and
interest expense on the debt. Interest is payable semi-annually at rates ranging
from 4-1/4% to 6%. The initial term of the lease is twenty years with options
to renew for an additional thirty years at a nominal charge.
Under the covenants of the refinancing agreement Langston Companies, Inc. may
not pay dividends in excess of $25,000 for any fiscal year, nor will the company
be permitted *_o redeem any shares of stock outstanding that are owned by the
.. Langston family, their successors or assigns.
~'
_._,
L.4.`~GSTON CO'~A.h'IES, INC. AND SLBSIDIA.RIES
J
Notes to Consolidated Fin ancial Statements (continued)
November 26, 1982 and November 27, 1981
J
__, In 1982 the company purchased certain machinery from First Tennessee Leasing
Corporation. This machinery had been leased from the lessor under an agreement
which expired in 1982.
', In 1981, the equipment was classified as equipment under capital lease. In 1982,
,r the equipment is classified as machinery and equipment at the original amount
capitalized.
Note 4 - Commitments
-- The company leases executive and administrative offices and warehouse space under
noncancellable operating leases expiring at various dates through 1984. The
~ leases provida for payment of tax increases and certain other expenses by the
lessee.
The mi;:imum rental commitments wader these operating leases are as follows:
1983 $ 61,532
1984 9,008
-~ Total S 70_s540
9
Total rent expense for the periods ended November 26, 1982 and November 27, 1981 _
was $506,905 and $601,697, respectively, including truck rental on a month-to-
month basis of $410,798 in 1982 and $499,071 in 1981.
,. Note 5 - Profit sharing and thrift plans
The company has a qualified profit-sharing plan for the benefit of salaried
employees. The plan provides for a minimum annual contribution based on company
earnings in excess of $25,000, but the board of directors has authority to increase
,r this to any amount not in excess of that allowable as a deduction for federal
income tax purposes. The contributions to the plan were $35,000 and $30,000
for the periods ended November 26, 1982 and November 27, 1981, respectively.
The company makes annual contributions to the plan equal to the amount accrued
r as profit sharing contribution.
The company also has a thrift savings plan for full-time hourly employees. The
employee may contribute one to ten percent of his annual compensation and the
company will contribute an amount equal to 50% of the contribution made by the
employee. The company's contributions to the plan were $3,133 and $6,509 for
the periods ended November 26, 1982 and November 27, 1981, respectively.
10
LAtiGSTON CO~L°A'~IES, INC. AND SLBSIDIAFIES
Notes to Consolidated Financial Statements (continued)
November 26, 1982 and November 27, 1981
Note 6 - Federal and state income taxes
The reasons for the difference between the total tax e}:p en se and the amount com-
puted by applying the statutory federal income tax rate to pre-tax income for
the periods ended tiover~er 26, 1982 and November 27, 1981 are as follows:
1982 1981
Federal income tax computed at the
statutory rate on pre-tax income $ 339,230 $ 318,650
State income tax, net of federal tax
benef it 24 ,694 20,644
Investment tax credit - net of recapture (21,070) (18,582)
Jobs tax credit - net ( 4,790) (13,104}
Other 2,984 877
Total federal a^d state income taxes S 341,048 S 308,485
In~~estment tax credits are accounted for by the flow-through method which
recognizes the credits as reductions of income tax expense in the year utilized.
~ } a ~'
1f
CERTIFICATE
~r
I ~ Dan Craft
West Memphis, Arkansas
resolution was adopted
municipality by a vote
and held on FPhruarv
was at all times prese
City Clerk of the City of
do hereby certify that the following
and approved by the City Council of said
of 7 to p at a meeting duly called
~6~ 1984, at which a quorum
nt.
"RESOLVED, that the execution, delivery and performance
of a Memorandum of Intent in the form presented to this
meeting, providing, among other things, for the issuance
by this City of revenue bonds for financing the cost of,
acquisition and installation of a printing press and
other equipment, and construction and equipping of ware-
house, manufacturing and office space, thereby improving
and expanding a multiwall paper bag manufacturing facility
in or near this City which facility will be operated by
Langston Companies, Inc., a Tennessee corporation, or any
of its affiliates, is hereby authorized, ratified, con-
firmed and approved."
r ~ .
~ I3or+~d
h~iujc~ns
P.O. Box 3783
Memphis. Tn. 38173
Third Floor
67 Madison Avenue
Memphis, Tn. 38103
901-526-7000
Of Counsel:
W.B. Rosenfield
Marx J. Borod
Stephen L. Anderson
Martin H. Aussenberg
Ronald S. Borod
Lynn B. Buhler
H. Phillip Carnes
David J. Cocke
'James T. Cox
Jeffrey C. Gerrish
Steve R. Graber
A. Neal Graham
Daniel B. Hatzenbuehler
Stanley M. Huggins
Bruce S. Kramer
Richard H. Kremer
Ann W. Langston
Brad S. Lerner
David H. Lillard. Jr.
Judith W. Lineback
' ' G. Thomas Love, III
B. Percy Magness
P. Thomas Parrish
J. Richard Rossie
John S. Seabold
David C. Shelton
Ann Watson
'licensed in Arkansas only
"licensed in Kentucky only
Washington Office:
503 Twenty-First St., N.W.
Washington. D.C. 20036
202-785-3108
Candace Ingals
licensed in District of Columbia
only
James Pickman
licensed in District of Columbia
and New York only
February 13, 1984
Vice Mayor Doug Morris
P.O. Box 25
West Memphis, Arkansas 72301
' ~- ~ ,
Re: West Memphis Act 9 Bond Committee -
Proposed Bond Issue for Langston
Companies, Inc.
Dear Vice Mayor Morris:
As per our discussion, I am enclosing
Langston Companies, Inc. describing ti
ject, a proposed Memorandum of Intent
requests the City Council to adopt at
1984 meeting and a copy of the latest
financial statement for the company.
a letter from
ze proposed pro-
which Langston
its February 16,
available audited
I trust that this information will be sufficient for
the Act 9 Bond Committee to grant Langston Companies,
Inc. an inducement resolution. Representatives of the
company as well as a representative from Borod & Huggins
will be present at the meeting on February 16 to answer
any questions about the propsed project. If you need
any further information or documentation prior to this
meeting, please contact me at your earliest convenience.
Thank you for all your help and consideration in this
matter.
With kindest regards,
Sincerely,
~~ ~ .
Brad S. Lerner
BSL:dr
Enclosures
cc: Mayor Leo Chitman
~ ~ , . ~ V
r ~ ~ ,
LANGSTON COMPANIES, INC.
2714 Union Avenue Extended
Memphis, Tennessee 38112
February 13, 1984
Vice Mayor Doug Morris
P.0. Box 25
West Memphis, Arkansas 72301
Re: West Memphis Act 9 Bond Committee -
Proposed Bond Issue for Langston Companies, Inc.
Dear Vice Mayor Morris:
Langston Companies, Inc., who presently has a manufacturing
facility in West Memphis, Arkansas, plans to expand its present
manufacturing facility and is requesting the City of West Memphis,
Arkansas to issue its revenue bonds (under Act 9) to assist in
financing the project.
Langston Companies, Inc. ("Langston") proposes to construct
approximately 16,000 to 20,000 square feet of additional ware-
house and manufacturing space, and 1,250 square feet of additional
office space to its present manufacturing facility located at
1100 North Seventh in West Memphis. In addition, Langston pro-
poses to acquire and install a printing press and other equipment
in that facility. This expansion of the Company's multi-wall
paper bag manufacturing facility will result in the creation of
approximately 15 to 20 new jobs.
Langston is requesting the City of West Memphis, Arkansas
to issue approximately $1,200,000 to $1,400,000 of its revenue
bonds to assist in financing these expanded facilities and
equipment acquisitions. Enclosed is a copy of a proposed Memo-
randum of Intent which Langston requests the City Council to
adopt at its February 16, 1984 meeting. Also enclosed is a copy
of the latest available audited financial statement for Langston.
An audited financial statement for this past year will be avail-
able within the next few weeks if the City Council so requires.
Please let us know if we can provide you with any furtYler
information concerning Langston Companies, Inc. or its proposed
West Memphis expansion.
Sincerely,
Langston Com~anies , '~nc .
av k' ~ ~
~~*
I ~ s ~~:s
cc: Mayor Leo Chitman