===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 10-KSB
-----------
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal year ended December 31,
2006.
[_] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period
From ___________ to ___________
COMMISSION FILE NUMBER 001-12233
-------------------------
BEXIL CORPORATION
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
-------------------------
Maryland 13-3907058
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11 Hanover Square, New York, New York 10005
(Address of principal executive offices) (Zip Code)
ISSUER'S TELEPHONE NUMBER: 1-212-785-0400
----------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock American Stock Exchange
Rights to Purchase Series A
Participating Preferred Stock American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [_].
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]
The issuer's revenues for its most recent fiscal year: $5,000
The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as
of April 2, 2007: 608,112 shares at $32.76 per share or $19,921,749.
The number of shares outstanding of the issuer's classes of common equity, as of
April 2, 2007: Common Stock, par value $.01 per share - 883,592 shares.
===============================================================================
DOCUMENTS INCORPORATED BY REFERENCE:
===============================================================================
Portions of the Company's definitive proxy statement (the "2007 Proxy
Statement") for its annual stockholders' meeting to be held on May 11, 2007 are
incorporated by reference in Part III of this Report. Except as expressly
incorporated by reference, the Company's 2007 Proxy Statement shall not be
deemed to be part of this Form 10-KSB.
Transitional Small Business Disclosure format (check one): Yes [_] No [X]
===============================================================================
ITEM PAGE
---- ----
Part I
Item 1. Description of Business ..............................................................................1
Item 2. Description of Property.................................................................................3
Item 3. Legal Proceedings.......................................................................................3
Item 4. Submission of Matters to a Vote of Security Holders.....................................................3
Part II
Item 5. Market for the Company's Common Equity and Related Stockholder Matters..................................3
Item 6. Management's Discussion and Analysis or Plan of Operation...............................................5
Item 7. Consolidated Financial Statements.......................................................................8
Item 8. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure..............................................................................................23
Item 8A. Controls and Procedures.................................................................................23
Item 8B. Other Information.......................................................................................23
Part III
Items 9-12, Incorporated By Reference from the Registrant's definitive proxy statement, filed pursuant to
and 14 Regulation 14A, for the Annual Meeting of Stockholders of the Registrant to be held on May 11,
2007....................................................................................................24
Item 13. Exhibits................................................................................................24
PART I
------
ITEM 1. DESCRIPTION OF BUSINESS
All of our periodic report filings with the Securities and Exchange Commission
(the "SEC") pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended, are made available, free of charge, through our website,
www.bexil.com, including our Annual Report on Form 10-KSB, Quarterly Reports on
Form 10-QSB, Current Reports on Form 8-K and any amendments to those reports.
These reports and amendments are available through our website as soon as
reasonably practicable after we electronically file or furnish such material to
the SEC. All subsequent references to "Notes" refer to the Consolidated Notes to
Financial Statements located elsewhere in this Form 10-KSB.
FORWARD LOOKING INFORMATION
Information or statements provided by or on behalf of the Company from time to
time, including those within this Annual Report on Form 10-KSB may contain
certain "forward-looking information," including information relating to
anticipated growth in revenues or earnings per share. The Company cautions
readers that any forward-looking information provided by or on behalf of the
Company is not a guarantee of future performance and that actual results may
differ materially from those in forward-looking information as a result of
various factors, including, but not limited to, those discussed below. Further,
such forward-looking statements speak only as of the date on which such
statements are made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events.
Certain written and oral statements made or incorporated by reference from time
to time by the Company in this report, other reports, filings with the SEC,
press releases, conferences, or otherwise, contain "forward-looking information"
and are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements include,
without limitation, any statement that may predict, forecast, indicate or imply
future results, performance or achievements. Forward-looking statements may be
identified, without limitation, by the use of such words as "anticipates,"
"estimates," "expects," "intends," "plans," "predicts," "projects," "believes,"
or words or phrases of similar meaning. Forward-looking statements include risks
and uncertainties, which could cause actual results or outcomes to differ
materially from those expressed in the forward-looking statements.
Other sections of this report may include reference to specific factors, which
could adversely impact the Company's business and financial performance.
Moreover, the Company operates in a very competitive and rapidly changing
environment. New risk factors emerge from time to time, and it is not possible
for management to predict all such risk factors, nor can it assess the impact of
known risk factors on the Company business or the extent to which any factor or
combination of factors may cause actual results to differ materially from those
contained in any forward-looking statement. The Company undertakes no obligation
to revise or publicly release the results of any revisions to forward-looking
statements or to identify any new risk factors, which may arise. Given these
risks and uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual future results.
Investors should also be aware that while the Company does, from time to time,
communicate with securities analysts, it is against the Company's policy to
disclose to them any material, non-public information. Accordingly, investors
should not assume that the Company agrees with any statement or report issued by
any analyst irrespective of the content of the statement or report. Furthermore,
the Company has a policy against issuing or confirming financial forecasts or
projections issued by others. Thus, to the extent that the reports issued by
securities analysts contain any projections, forecasts, or opinions, such
reports are not the responsibility of the Company.
OVERVIEW
Bexil Corporation, a Maryland corporation (the "Company"), is a holding company.
The Company was incorporated in 1996 under the laws of the State of Maryland as
Bull & Bear U.S. Government Securities Fund, Inc., a non-diversified closed-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). In October 1996, the Company's predecessor, a
series of shares of Bull & Bear Funds II, Inc., an open-end management
investment company, transferred its net assets to the Company in exchange for
shares of the Company. The Company changed its name to Bexil Corporation in
1999. In 2002, the Company filed an application with the Securities and Exchange
Commission (the "SEC") to terminate its registration as an investment company
registered under the 1940 Act.
1
On January 6, 2004, the Company's application with the SEC to terminate its
registration as an investment company was granted. As a result, the Company is
subject to the reporting and other requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and is no longer subject to regulation
under the 1940 Act. The Company's shares are listed on the American Stock
Exchange.
From 2002 until April 28, 2006, Bexil's primary holding was its fifty percent
interest in privately held York Insurance Services Group, Inc. ("York"), an
insurance services company. The Company's fifty percent interest in York was
accounted for using the equity method and, therefore, York's financial results
were not consolidated with ours.
On April 28, 2006, the Company consummated the sale of its fifty percent
interest in York to a newly formed entity controlled by a private equity fund
and certain other investors for approximately $39 million in cash and realized a
gain of approximately $37.5 million before income taxes on such sale.
Since the sale of the York shares, the Company has been operating to acquire
and/or develop one or more businesses. There are no limits on the types of
businesses or fields in which the Company may devote its assets. The Company has
not agreed to acquire any business as of the date of this report. Our primary
source of revenue since the sale of York has been from interest and dividend
income earned from U.S. Treasury securities and money market funds. We have no
plans to dissolve and liquidate the Company. We are currently engaged in the
business of evaluating opportunities to develop and acquire long-term acute care
hospitals.
ACQUISITION PARAMETERS
The Company's acquisition parameters for a public company and private business
are
o A proven track record with demonstrated earning power.
o Sales between $10 million and $50 million.
o A seasoned business with solid customer relations.
o Good return (at least 15%) on equity, little or no debt.
o Solid management must remain. Audited financials required.
o Particularly interested in a "spin-off" from a larger company.
We generally are not interested in acquiring (but we may develop) start-ups,
turnarounds, or high tech. We will sign a confidentiality agreement and will
protect broker's sell agreements. If the seller quotes a price, we will respond
promptly.
LONG-TERM ACUTE CARE HOSPITALS
We are currently evaluating opportunities to develop and acquire long-term acute
care hospitals ("LTACHs"). In the fourth quarter we formed Specialty Hospital of
Northeast Mississippi, Inc., a Mississippi corporation, as a wholly owned
subsidiary of the Company to further our plans in this regard, although to date
it is inactive and has no assets, liabilities, shareholders equity, revenues, or
expenses. We are seeking other opportunities in the region. Patients in
long-term acute care hospitals typically suffer from serious and often complex
medical conditions that require a high degree of care. These patients have
specialized needs, and serious and often complex medical conditions such as
respiratory failure, neuromuscular disorders, traumatic brain and spinal cord
injuries, stroke, cardiac disorders, non-healing wounds, renal disorders and
cancer. These patients generally require a longer length of stay than patients
in a general acute care hospital and benefit from being treated in a specialty
hospital that is designed to meet their unique medical needs.
An LTACH business involves a number of risks, some of which are beyond our
control. The risk and uncertainties described below are not the only ones we
face. Additional risks and uncertainties that we do not currently know or that
we currently believe to be immaterial may also adversely affect the LTACH
business. Compliance with changes in federal regulations applicable to long-term
acute care hospitals operated as "hospitals within hospitals" or as "satellites"
will result in increased capital expenditures. Government implementation of
proposed changes to Medicare's method of reimbursing long-term acute care
hospitals may have an adverse effect on the industry's future net operating
revenues and profitability. If there are changes in the rates or methods of
government reimbursements for LTACH services, net operating revenues and
profitability could decline. LTACHs operate in a heavily regulated industry, and
changes in regulations or violations of regulations may result in increased
costs or sanctions that reduce net operating revenues and profitability. Future
acquisitions may use significant resources, may be unsuccessful and could expose
us to unforeseen liabilities. If we fail to establish relationships with the
physicians in key markets, net operating revenues may be adversely affected.
Shortages in qualified nurses or therapists could increase LTACH operating costs
significantly. Competition may limit our ability to acquire LTACHs and adversely
affect our growth. Our future LTACH operations, if any, could be significantly
disrupted if we lose key members of our management team. Significant legal
actions as well as the cost and possible lack of available insurance could
subject us to substantial uninsured liabilities.
2
EMPLOYEES
We have 11 employees, none of whom are full time. Certain officers of the
Company also serve as officers and/or directors of Winmill & Co. Incorporated
("Winco"), Tuxis Corporation ("Tuxis"), and their affiliates (collectively with
Bexil, the "Affiliates"). Winco's wholly owned subsidiary, Midas Management
Corporation ("MMC"), acts as "master" payer of compensation and benefits of
Affiliate employees.
Effective January 1, 2007, MMC entered into a Client Services Agreement with ADP
TotalSource, Inc., a professional employer organization. Pursuant to the Client
Services Agreement, ADP TotalSource, Inc. will assume many of the legal and
administrative responsibilities of human resources management, health benefits,
workers' compensation, payroll, payroll tax compliance, 401(k) plan
administration, and unemployment insurance.
ITEM 2. DESCRIPTION OF PROPERTY
The principal office of the Company is located at 11 Hanover Square, New York,
New York 10005. The Company shares this office space of 3,800 square feet and
various administrative and other support functions with Winco, Tuxis, and other
Affiliates and pays an allocated cost based on an estimated assessment of use
and other factors of the rent expense of jointly used office space and overhead
expense of various jointly used administrative and support functions incurred by
Winco. The Company incurred allocated rent and overhead costs of $172,182 and
$92,271 for the years ended December 31, 2006 and 2005, respectively.
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is threatened or named as a defendant in
litigation arising in the normal course of business. However, as of December 31,
2006, the Company was not involved in any litigation that, in the opinion of
management, was reasonably likely to have a material adverse impact on the
financial condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the 2006 fiscal year, the Annual Meeting of
Stockholders of the Company was held on November 8, 2006 to elect Douglas Wu as
a Class II Director to serve a three year term, and until his successor is duly
elected and qualifies. With regard to the proposal to elect to the Board of
Directors the nominee, Douglas Wu as a Class II Director, 784,575 shares were
voted in favor of and 14,970 shares were voted to withhold authority for the
nominee.
PART II
-------
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock trades on the American Stock Exchange under the
symbol BXL. There are approximately 190 holders of record of shares of Common
Stock as of December 31, 2006. In addition, there are an indeterminate number of
beneficial owners of shares of Common Stock that are held in "street name."
On December 29, 2005, the Company's Board of Directors authorized a special
dividend to stockholders of $1.00 per share of the common stock contingent upon
the closing of the sale of the Company's interest in York. The special dividend
of $883,592 was paid on May 31, 2006 to stockholders of record on May 15, 2006.
The Company does not expect to pay any further dividends in the foreseeable
future.
3
The high and low sales prices of the Common Stock during each quarterly period
over the last two years were as follows:
2006 2005
--------------------- --------------------
High Low High Low
---- --- ---- ---
First Quarter $34.70 $30.05 $16.00 $14.25
Second Quarter $31.90 $26.80 $19.73 $12.25
Third Quarter $29.00 $26.12 $25.00 $17.90
Fourth Quarter $33.40 $25.93 $35.75 $23.21
EQUITY COMPENSATION PLAN INFORMATION
Number of shares to be Weighted-average exercise Number of shares
issued upon exercise of price of outstanding remaining available for
outstanding options, options, warrants and future issuance under
warrants and rights rights equity compensation plans
-----------------------------------------------------------------------------------
Equity compensation plans
approved by security holders 142,000 $21.58 29,918
Equity compensation plans not
approved by security holders - - -
----------- --------- ----------
Total 142,000 $21.58 29,918
=========== ========= ==========
RECENT SALES OF UNREGISTERED SECURITIES
None.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER
None.
STOCKHOLDER RIGHTS PLAN
The Board of Directors has adopted a stockholder rights plan. To implement the
rights plan, the Board of Directors declared a dividend distribution of one
right for each outstanding share of Bexil common stock, par value $.01 per
share, to holders of record of the shares of common stock at the close of
business on November 21, 2005. Each right entitles the registered holder to
purchase from Bexil one one-thousandth of a share of preferred stock, par value
$.01 per share. The rights were distributed as a non-taxable dividend and will
expire on November 21, 2015. The rights are evidenced by the underlying Bexil
common stock, and no separate preferred stock purchase rights certificates were
distributed. The rights to acquire preferred stock will become exercisable only
if a person or group, other than certain exempt persons, acquires or commences a
tender offer for 10% or more of Bexil's common stock. If a person or group,
other than certain exempt persons, acquires or commences a tender offer for 10%
or more of Bexil's common stock, each holder of a right, except the acquirer,
will be entitled, subject to Bexil's right to redeem or exchange the right, to
exercise, at an exercise price of $67.50, the right for one one-thousandth of a
share of Bexil's newly-created Series A Participating Preferred Stock, or the
number of shares of Bexil common stock equal to the holder's number of rights
multiplied by the exercise price and divided by 50% of the market price of
Bexil's common stock on the date of the occurrence of such an event. Bexil's
Board of Directors may terminate the rights plan at any time or redeem the
rights, for $0.01 per right, at any time before a person acquires 10% or more of
Bexil's common stock.
4
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Since the sale of the York shares, the Company has been operating to acquire
and/or develop one or more businesses. Our primary source of revenue since the
sale of York has been from interest and dividend income earned from U.S.
Treasury securities and money market funds. We are currently engaged in the
business of evaluating opportunities to develop and acquire long-term acute care
hospitals.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's Discussion and Analysis of the Results of Operations is based upon
our financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosures. Management bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
A critical accounting policy is one that is both important to the portrayal of
the Company's financial condition or results of operations and requires
significant judgment or complex estimation process. The Company's significant
accounting policies are described in Note 1 to the audited financial statements
included in Item 7 of this report. The Company believes the following are
critical accounting policies:
INVESTMENT SECURITIES, AVAILABLE-FOR-SALE
Investment securities, available-for-sale are carried at fair value. Realized
gains and losses are included in investment income based on specific
identification. Unrealized gains and losses are recorded net of tax as part of
accumulated other comprehensive income until realized. We regularly review
investment securities for other-than-temporary impairment based on both
quantitative and qualitative criteria that include the extent to which cost
exceeds market value, the duration of that market decline, our intent and
ability to hold to maturity or until forecasted recovery, and the financial
health of and specific prospects for the issuer. Unrealized losses that are
other-than-temporary are recognized in earnings. At December 31, 2006,
substantially all of the value of the securities are invested in a US Treasury
Note.
STOCK-BASED COMPENSATION
The Company accounts for stock option grants in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 123R "Share-Based Payment." All
stock options granted have exercise prices equal to the market value of stock on
the date of grant. Accordingly, the Company records the fair value of these
options using a Black-Scholes option pricing model. The Black-Scholes option
pricing model takes into account variables such as volatility, dividend yield,
and the risk-free interest rate. Although the initial fair value of stock
options is not adjusted after the grant date, changes in the Company's
assumptions may change the value and therefore, the expense related to future
stock options. For example, increases or decreases in the assumed volatility
will cause the option to increase or decrease, respectively.
RESULTS OF OPERATIONS
REVENUE. Revenue decreased $167,000 for the year ended December 31, 2006,
compared to 2005 due to the decrease in consulting fees earned from York as a
result of the sale of our fifty percent interest in York.
EXPENSES. Total expenses increased approximately $1,100,000 for the year ended
December 31, 2006, compared to 2005. The increase is attributable to an increase
in compensation and benefits of approximately $1,200,000 offset by a decrease in
professional expenses of approximately $142,000 described as follows.
Compensation and benefits increased approximately $1,200,000 for the year ended
December 31, 2006, compared to 2005, due to bonus award payments and stock-based
compensation expense. In 2006, bonus awards of approximately $1,909,000 were
paid upon consumation of the sale of York to the Chief Executive Officer,
Executive Chairman, and other employees. In 2005, included in compensation and
benefits were bonus payments of approximately $816,000 paid to the Chief
Executive Officer and the Executive Chairman upon the signing of the agreement
to sell our fifty percent interest in York to a third party. In addition,
compensation expense for unvested stock options of approximately $135,000 was
recorded for the year ended December 31, 2006, as a result of the adoption of
SFAS 123R.
5
Professional expenses decreased approximately $142,000 for the year ended
December 31, 2006, compared to 2005. The decrease was due to lower audit and
legal fees of approximately $340,000 in 2006 compared to 2005, offset by bonus
payments to the non-employee directors of $60,000 in 2006, and approximately
$142,000 incurred related to LTACH development efforts in 2006. The decrease in
legal fees of approximately $175,000 was attributable to costs incurred in 2005
leading up to the signing of the agreement to sell York. Audit fees decreased
approximately $165,000 in 2006 compared to 2005.
Occupancy expenses increased primarily due to allocated rent and occupancy
expenses for jointly used office space and administrative support functions from
affiliate Winco. The amount of the increase in 2006 was approximately $80,000.
Communications expenses decreased approximately $77,000 for the year ended
December 31, 2006, compared to 2005. The decrease is attributable to expenses
incurred leading up to the signing of the agreement to sell York.
OTHER INCOME. Other income increased approximately $39,000,000 for the year
ended December 31, 2006, compared to 2005 due to the gain from the sale of our
fifty percent interest in York of approximately $37,500,000 and an increase in
interest and dividend income of approximately $1,500,000.
o YORK - We consummated the sale of our fifty percent interest in York
in April 2006 and realized a net after-tax gain of approximately
$24,500,000. The net after-tax gain consisted of proceeds of
approximately $39,000,000 less our carrying value in York of
approximately $1,100,000, closing costs of approximately $400,000, and
income taxes of approximately $13,000,000. In 2006, we recognized a
loss in the earnings of York of approximately $734,000. This was
attributable to expenses incurred by York leading up to the sale
transaction.
o INTEREST AND DIVIDEND INCOME - Our investments in securities including
U.S. Treasury obligations and cash and cash equivalents at December
31, 2006 increased approximately $23,000,000 compared to 2005 and
contributed to the increase in dividend and interest income earned. In
2006, the cash proceeds from the sale of York were invested primarily
in U.S. Treasury obligations.
Net income was $22,301,533 or $24.23 per share on a diluted basis in 2006
compared to net income of $1,400,222 or $1.59 per share on a diluted basis in
2005.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement 109" ("FIN
48") which clarifies the accounting for uncertainty in income taxes recognized
in a company's financial statements in accordance with SFAS 109. FIN 48 is
effective for fiscal years beginning after December 15, 2006, and prescribes a
recognition threshold and measurement attributes for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. The Company is currently evaluating the effect, if any, that this
pronouncement will have on its future financial results.
In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("SFAS 157") to address inconsistencies in
the definition and determination of fair value pursuant to generally accepted
accounting principals ("GAAP"). SFAS 157 provides a single definition of fair
value, establishes a framework for measuring fair value in GAAP and expands
disclosures about fair value measurements in an effort to increase comparability
related to the recognition of market-based assets and liabilities and their
impact on earnings. SFAS 157 is effective for interim financial statements
issued during the fiscal year beginning after November 15, 2007.
In September 2006, the SEC Office of the Chief Accountant and Divisions of
Corporation Finance and Investment Management released Staff Accounting Bulletin
Number 108 ("SAB No. 108"), "Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements," which
provides interpretive guidance on how effects of the carryover or reversal of
prior year misstatements should be considered in quantifying a current year
misstatement. The SEC staff believes that registrants should quantify errors
using both a balance sheet and an income statement approach and evaluate whether
either approach results in quantifying a misstatement that, when all relevant
quantitative and qualitative factors are considered, is material. This guidance
is effective for fiscal years ending after November 15, 2006. The adoption of
this guidance had no impact on the Company's financial position, results of
operations, or cash flows.
6
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have had adequate liquidity to fund our operations. In
management's opinion, we should be able to generate adequate amounts of cash to
meet our anticipated obligations. During the year ended December 31, 2006,
working capital increased $24,436,260 primarily due to the proceeds received
from the sale of York, adjusted for closing costs and taxes.
The following table reflects the Company's working capital, total assets,
long-term debt and shareholders' equity as of the dates indicated.
December 31,
--------------------------------
2006 2005
---- ----
Working Capital $37,739,552 $13,303,292
Total Assets $38,071,710 $17,066,843
Long-Term Debt $ - $ -
Shareholders' Equity $37,864,881 $16,270,966
Management knows of no contingencies that are reasonably likely to result in a
material decrease in the Company's liquidity or that are likely to materially
adversely affect the Company's capital resources.
7
ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements required by Item 310(a) of Regulation S-B.
PAGE
----
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS 9
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2006 11
CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2006 AND 12
2005
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY 13
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2006 14
AND 2005
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 15
8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Bexil Corporation
New York, New York
We have audited the accompanying consolidated balance sheet of Bexil Corporation
and subsidiaries (the "Company") as of December 31, 2006, and the related
consolidated statements of income, shareholders' equity, and cash flows for the
year ended December 31, 2006. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. The
financial statements of the Company for the year ended December 31, 2005 were
audited by other auditors whose report, dated March 30, 2006, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 2006,
and the results of its operations and its cash flows for the years ended
December 31, 2006 in conformity with accounting principles generally accepted in
the United States of America.
As discussed in Note 5 to the consolidated financial statements, the Company
changed its method of accounting for stock-based compensation in connection with
the adoption of Statement of Financial Accounting Standards No. 123
(revised 2004), Share-Based Payment, on January 1, 2006.
TAIT, WELLER & BAKER LLP
March 23, 2007
Philadelphia, Pennsylvania
9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Bexil Corporation
New York, NY
We have audited the statements of income, changes in shareholders' equity, and
cash flows of Bexil Corporation for the year ended December 31, 2005. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of the Company's operations and its cash flows for the
year ended December 31, 2005 in conformity with accounting principles generally
accepted in the United States of America.
/s/DELOITTE & TOUCHE LLP
March 30, 2006
New York, NY
10
BEXIL CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2006
-------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 458,032
Investment securities, available-for-sale 36,498,576
Receivables:
Interest receivable 599,679
Refundable income taxes 360,964
Other 29,130
-----------------
Total current assets 37,946,381
------------------
Deferred taxes 125,329
------------------
Total assets $ 38,071,710
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 206,829
------------------
Total current liabilities 206,829
------------------
Commitments and contingencies (Note 9) -
Shareholders' equity
Common stock, $0.01 par value, 9,900,000 shares authorized,
883,592 shares issued and outstanding 8,836
Series A participating preferred stock, $0.01 par value, 100,000
shares authorized, -0- shares issued and outstanding -
Additional paid-in capital 12,863,641
Accumulated other comprehensive loss (45,544)
Retained earnings 25,037,948
------------------
Total shareholders' equity 37,864,881
------------------
Total liabilities and shareholders' equity $ 38,071,710
===================
See notes to the consolidated financial statements.
11
BEXIL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2006 AND 2005
-------------------------------------------------------------------------------
2006 2005
------------------- --------------
Revenues
Consulting and other $ 5,000 $ 172,000
------------------- --------------
5,000 172,000
------------------- --------------
Expenses
Compensation and benefits 2,586,952 1,352,639
Professional 656,600 798,460
Occupancy 187,183 102,896
Communications 21,597 98,267
------------------- --------------
3,452,332 2,352,262
------------------- --------------
Other income
Dividends and interest 1,619,269 136,432
Realized gain (loss) on investments 682 (325,000)
Gain on sale of equity interest in York Insurance Services Group, Inc. 37,471,143 -
------------------- --------------
39,091,094 (188,568)
------------------- --------------
Income (loss) before income taxes and equity in earnings (loss)
of York Insurance Services Group, Inc. 35,643,762 (2,368,830)
Income tax expense (benefit) 12,608,481 (156,621)
Equity in earnings (loss) of York Insurance Services Group, Inc. (733,748) 3,612,431
------------------- --------------
Net income $ 22,301,533 $ 1,400,222
=================== ==============
Per share net income:
Basic $ 25.26 $ 1.59
Diluted $ 24.23 $ 1.59
Average shares outstanding:
Basic 882,803 879,592
Diluted 920,499 882,521
See notes to the consolidated financial statements.
12
BEXIL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2006 AND 2005
-------------------------------------------------------------------------------
ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON PAID IN RETAINED COMPREHENSIVE SHAREHOLDERS'
STOCK CAPITAL EARNINGS LOSS EQUITY
-----------------------------------------------------------------------------------------------
Balance, December 31, 2004
879,592 common shares $ 8,796 $ 12,642,163 $ 2,219,785 $ - $ 14,870,744
Net income - - 1,400,222 - 1,400,222
-----------------------------------------------------------------------------------------------
Balance, December 31, 2005,
879,592 common shares 8,796 12,642,163 3,620,007 - 16,270,966
Comprehensive income
Net income - - 22,301,533 - 22,301,533
Change in unrealized security
holding losses, net of taxes - - - (45,544) (45,544)
------------
Total comprehensive income 22,255,989
------------
4,000 common shares issued upon
option exercise under incentive
compensation plan 40 86,320 - - 86,360
Stock-based compensation expense - 135,158 - - 135,158
Dividend paid - - (883,592) - (883,592)
-----------------------------------------------------------------------------------------------
Balance, December 31, 2006,
883,592 common shares $ 8,836 $ 12,863,641 $25,037,948 $ (45,544) $ 37,864,881
===============================================================================================
See notes to the consolidated financial statements.
13
BEXIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2006 and 2005
-------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES 2006 2005
------------ ----------
Net income $ 22,301,533 $ 1,400,222
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Gain on sale of equity interest in York Insurance Services Group, Inc. (37,471,143) -
Equity in loss (earnings) of York Insurance Services Group, Inc. 733,748 (3,612,431)
Realized (gain) loss on sale of investments (682) 325,000
Decrease (increase) in deferred taxes 1,002,737 (884,455)
Stock-based compensation expense 135,158 -
Accretion of discount on investment in security (839,400) -
Dividend received from York Insurance Services Group, Inc. - 11,535,917
Increase in interest receivable (599,679) -
Increase in refundable income taxes (360,964) -
Decrease (increase) in other assets 11,710 (8,729)
(Decrease) increase in accounts payable and accrued expenses (381,330) 345,111
(Decrease) increase in income taxes payable (228,118) 252,115
---------------- -----------------
Net cash (used in) provided by operating activities (15,696,430) 9,352,750
---------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities (85,963,231) (5,000,000)
Proceeds from sale/maturity of investment securities 50,223,469 5,000,000
Proceeds from sale of equity interest in York Insurance Services Group, Inc. net
of transactions costs 38,602,621 -
Dividend return of investment from York Insurance Services Group, Inc. - 1,134,774
---------------- -----------------
Net cash provided by investing activities 2,862,859 1,134,774
---------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid (883,592) -
Proceeds from exercise of common stock options 86,360 -
---------------- -----------------
Net cash used in financing activities (797,232) -
---------------- -----------------
Net (decrease) increase in cash and cash equivalents (13,630,803) 10,487,524
CASH AND CASH EQUIVALENTS
Beginning of year 14,088,835 3,601,311
---------------- -----------------
End of year $ 458,032 $ 14,088,835
================ =================
SUPPLEMENTAL DISCLOSURE:
Income taxes paid $ 13,006,714 $ 475,719
See notes to the consolidated financial statements.
14
BEXIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2006 and 2005
-------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS AND ORGANIZATION
Bexil Corporation (the "Company"), a Maryland corporation, is a holding company.
From 2002 until April 28, 2006, the Company's primary holding was a fifty
percent interest in York Insurance Services Group, Inc. ("York"), an insurance
services company. On April 28, 2006, the Company consummated the sale of its
fifty percent interest in York to a newly formed entity controlled by a private
equity fund and certain other investors for approximately $39 million in cash.
The Company has 11 employees, none of whom are full-time.
The Company was incorporated in 1996 under the laws of the State of Maryland as
Bull & Bear U.S. Government Securities Fund, Inc., a non-diversified closed end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). In October 1996, the Company's predecessor, a
series of shares of Bull & Bear Funds II, Inc., an open end management
investment company, transferred its net assets to the Company in exchange for
shares of the Company. The Company changed its name to Bexil Corporation in
1999. In 2002, the Company filed an application with the Securities and Exchange
Commission (the "SEC") to terminate its registration as an investment company
registered under the 1940 Act.
On January 6, 2004, the Company's application with the SEC to terminate its
registration as an investment company was granted. As a result, the Company is
subject to the reporting and other requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and is no longer subject to regulation
under the 1940 Act. The Company's shares are listed on the American Stock
Exchange.
The information furnished in this report reflects all adjustments which are, in
the opinion of management, necessary to a fair statement of the results of the
period.
BASIS OF PRESENTATION
The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America. In 2006, the
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, Specialty Hospital of Northeast Mississippi, Inc.
("Specialty"). Specialty, from its inception on November 27, 2006 to December
31, 2006, was inactive and had no assets, liabilities, shareholders equity,
revenues, or expenses. In 2005 and prior to the consummation of the sale of
York, the Company accounted for its fifty percent interest in York using the
equity method and, therefore, our financial results were not consolidated with
York's. Certain comparative amounts for the prior year have been reclassified to
conform to the fiscal year 2006 consolidated financial statement presentation.
Such reclassifications did not affect income (loss) before income taxes and
equity in earnings (loss) of York or net income.
CASH AND CASH EQUIVALENTS
Investments in money market funds and short term investments and other
marketable securities maturing in 90 days or less are considered to be cash
equivalents. At December 31, 2006, the Company held approximately $400,000 in
money market fund investments.
EARNINGS PER SHARE
Basic earnings per share is computed using the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed by
applying the treasury stock method where the weighted average number of common
shares outstanding is adjusted for the incremental shares attributed to
potentially dilutive securities including outstanding exercisable options to
purchase common stock during the period. The following table sets forth the
computation of basic and diluted earnings per share for the years ended December
31, 2006 and 2005:
15
2006 2005
------------------- -------------------
Net income $ 22,301,533 $ 1,400,222
=================== ===================
Weighted-average shares outstanding - basic 882,803 879,592
Incremental shares from assumed conversions:
Stock options under incentive compensation plan 37,696 2,929
------------------- -------------------
Weighted-average shares outstanding - diluted 920,499 882,521
=================== ===================
Per share net income:
Basic $ 25.26 $ 1.59
Diluted $ 24.23 $ 1.59
Dilutive securities consisting of stock options were excluded if their effect
was anti-dilutive. There were no potentially anti-dilutive stock options for the
year ended December 31, 2006. There were options to purchase 121,000 shares of
common stock for the year ended December 31, 2005, that were excluded from
earnings per share because their effect was anti-dilutive.
INCOME TAXES
The Company's method of accounting for income taxes conforms to the Financial
Accounting Standards Board's ("FASB") Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). This method
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the financial reporting
basis and the tax basis of assets and liabilities.
INVESTMENT SECURITIES, AVAILABLE-FOR-SALE
Investment securities, available-for-sale are carried at fair value. Realized
gains and losses are included in investment income based on specific
identification. Unrealized gains and losses are recorded net of tax as part of
accumulated other comprehensive income until realized. We regularly review
investment securities for other-than-temporary impairment based on both
quantitative and qualitative criteria that include the extent to which cost
exceeds market value, the duration of that market decline, our intent and
ability to hold to maturity or until forecasted recovery, and the financial
health of and specific prospects for the issuer. Unrealized losses that are
other-than-temporary are recognized in earnings. At December 31, 2006,
substantially all of the value of the securities are invested in a US Treasury
Note.
REPORTING SEGMENT
The Company accounts for its operations in accordance with FASB No. 131,
"Disclosures about Segments of an Enterprise and Related Information." No
segment disclosures have been made as the Company considers its business
activities as a single segment.
STOCK-BASED COMPENSATION
Effective January 1, 2006, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 123R "Share-Based Payment" for stock options granted in
2006. All stock options granted have exercise prices equal to the market value
of stock on the date of grant. Accordingly, the Company records compensation
expense based on the fair value of the stock options using a Black-Scholes
option pricing model. The Black-Scholes option pricing model takes into account
variables such as volatility, dividend yield, and the risk-free interest rate.
Although the initial fair value of stock options is not adjusted after the grant
date, changes in the Company's assumptions may change the value and therefore,
the expense related to future stock options.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Estimates
are primarily used in the determination of equity method goodwill, investment
impairment, valuation of stock-based compensation, and expenses allocation.
Actual results may differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement 109" ("FIN
48") which clarifies the accounting for uncertainty in income taxes recognized
in a company's financial statements in accordance with SFAS 109. FIN 48 is
effective for fiscal years beginning after December 15, 2006, and prescribes a
recognition threshold and measurement attributes for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. The Company is currently evaluating the effect, if any, that this
pronouncement will have on its future financial results.
16
In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, "Fair Value Measurements" ("SFAS 157") to address inconsistencies in
the definition and determination of fair value pursuant to generally accepted
accounting principals ("GAAP"). SFAS 157 provides a single definition of fair
value, establishes a framework for measuring fair value in GAAP and expands
disclosures about fair value measurements in an effort to increase comparability
related to the recognition of market-based assets and liabilities and their
impact on earnings. SFAS 157 is effective for interim financial statements
issued during the fiscal year beginning after November 15, 2007.
In September 2006, the SEC Office of the Chief Accountant and Divisions of
Corporation Finance and Investment Management released Staff Accounting Bulletin
Number 108 ("SAB No. 108"), "Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements," which
provides interpretive guidance on how effects of the carryover or reversal of
prior year misstatements should be considered in quantifying a current year
misstatement. The SEC staff believes that registrants should quantify errors
using both a balance sheet and an income statement approach and evaluate whether
either approach results in quantifying a misstatement that, when all relevant
quantitative and qualitative factors are considered, is material. This guidance
is effective for fiscal years ending after November 15, 2006. The adoption of
this guidance had no impact on the Company's financial position, results of
operations, or cash flows.
2. SALE OF YORK INSURANCE SERVICES GROUP, INC.
On April 27, 2006, the Company's stockholders voted to approve the sale of its
fifty percent interest in York to a newly formed entity controlled by a private
equity fund and certain other investors; the sale was consummated on April 28,
2006. The Company recognized a gain from the sale of $37,471,143 before taxes
consisting of the cash proceeds paid by the buyer of $38,864,121 plus a
consulting fee and expense reimbursement received from York of $138,500 less the
Company's carrying value in York of $1,131,478 and closing costs of $400,000.
Included in compensation and benefits were bonus award payments of $1,909,228 in
2006 and $815,625 in 2005 paid to the Chief Executive Officer, Executive
Chairman, and other employees upon consumation of the sale of York in 2006 and
upon entering the agreement to sell York in 2005, respectively.
Prior to the sale, the Company's fifty percent interest in York was accounted
for using the equity method and, therefore, York's financial results were not
consolidated with ours. Summarized unaudited condensed financial information for
York for the period January 1, 2006 to April 28, 2006 and the year ended
December 31, 2005 are as follows:
YORK INSURANCE SERVICES GROUP, INC. FOR THE PERIOD
SUMMARIZED CONDENSED FINANCIAL INFORMATION JANUARY 1, 2006 TO YEAR ENDED
(UNUADITED) APRIL 28, 2006 DECEMBER 31, 2005
------------------------------------------------------ ----------------------- -----------------------
Revenues $ 30,345,914 $ 75,241,609
Expenses 25,131,225 63,186,888
Net income (loss) (1,467,496) 7,224,861
Working capital n/a 8,727,146
Total assets n/a 30,444,192
Total liabilities n/a 13,834,609
Shareholder's equity n/a 730,452
The Company earned fees of $5,000 and $172,000 from York for consulting services
and for service on York's board of directors for the years ended December 31,
2006 and 2005, respectively.
In December 2005, the Company entered into an expense sharing agreement among
York and the other fifty percent stockholder of York for interest and other
expenses related to a bank loan obtained by and for use by York. The expense
sharing agreement was limited in duration and ended in April 2006. The Company
incurred expenses of approximately $165,000 and $116,000 related to the expense
sharing agreement for the years ended December 31,2006 and 2005, respectively.
17
3. RELATED PARTIES
Certain officers of the Company also serve as officers and/or directors of
Winmill & Co. Incorporated ("Winco"), Tuxis Corporation ("Tuxis"), and their
affiliates (collectively with Bexil, the "Affiliates"). At December 31, 2006,
Winco's wholly owned subsidiary, Investor Service Center, Inc., owned 222,644
shares of the Company and 234,665 shares of Tuxis, or 25% and 24%, respectively,
of the outstanding common stock. Winco's wholly owned subsidiary, Midas
Management Corporation ("MMC"), acts as "master" payer of compensation and
benefits of Affiliate employees. At December 31, 2006, the Company had a
reimbursement receivable from MMC relating to compensation and benefit expenses
of $9,130.
Rent expense of jointly used office space and overhead expense for various
jointly used administrative and support functions incurred by Winco are
allocated to the Company and the Affiliates. The Company incurred allocated rent
and overhead costs of $172,182 and $92,271 for the years ended December 31, 2006
and 2005, respectively. At December 31, 2006, the Company had a payable to Winco
related to these costs of $23,253.
The Company participates in a 401(k) retirement plan for substantially all of
its qualified employees. The plan is sponsored by Winco. Company matching
expense is based upon a percentage of contributions to the plan by eligible
employees and are accrued and funded on a current basis. Matching expense for
the year ended December 31, 2006 and 2005 was $17,081 and $19,668, respectively.
At December 31, 2006, the Company had $101,222 invested in Midas Dollar
Reserves, Inc. ("MDR"), a money market fund advised by MMC and $1,496 invested
in Global Income Fund, Inc. ("GIF"), a closed end investment company advised by
CEF Advisers, Inc., a wholly owned subsidiary of Winco. The Company earned
dividends from MDR and GIF in aggregate of $1,347 and $109 for the years ended
December 31, 2006 and 2005, respectively. Certain officers and directors of the
Company are officers and/or directors of MDR and GIF.
In the fourth quarter of 2006, we formed Specialty, a Mississippi corporation,
as a wholly owned subsidiary of the Company. From its inception on November 27,
2006 to December 31, 2006, Specialty has been inactive and has no assets,
liabilities, shareholders equity, revenues, or expenses.
4. INVESTMENT IN SECURITIES
Investment securities at December 31, 2006, consisted of the following:
AMORTIZED GROSS UNREALIZED FAIR
----------------
COST GAINS LOSSES VALUE
--------------------------------------------------------
Investment securites, available-for-sale
U.S.Treasury Note due August 2008 $36,568,133 $ - $(71,053) $36,497,080
Global Income Fund, Inc. 1,605 - (109) 1,496
--------------------------------------------------------
Total $36,569,738 $ - $(71,162) $36,498,576
========================================================
The Company recognized an impairment loss of $325,000 related to an investment
in the common stock of a non-public entity for the year ended December 31, 2005.
A valuation committee established by the Company determined that the decrease in
fair value of the investment was other than temporary based upon the financial
condition and near term prospects of the underlying investee. The impairment
loss reduced the carrying value of the investment to zero and the security was
written-off in 2006.
5. INCENTIVE COMPENSATION PLAN
In 2004, the Company's shareholders approved the adoption of the 2004 Incentive
Compensation Plan (the "Plan"), which provides for the granting of a maximum of
175,918 options to purchase common stock to directors, officers and key
employees of the Company or its affiliates. The option price per share may not
be less than the fair value of such shares on the date the option is granted,
and the maximum term of an option may not exceed 5 years. The vesting period is
three years of service. Under certain conditions participants have 3 months
after the employment relationship ends to exercise all vested options.
Effective January 1, 2006, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 123R "Share-Based Payment" and began recognizing
compensation expense for its share-based payments based on the fair value of the
awards. Share-based payments include stock option grants under the Plan. SFAS
123R requires share-based compensation expense recognized since January 1, 2006,
to be based on the following: a) grant date fair value estimated in accordance
with the original provisions of SFAS 123 for unvested options granted prior to
the adoption date; and b) grant date fair value estimated in accordance with the
provisions of SFAS 123R for unvested options granted subsequent to the adoption
date. Prior to January 1, 2006, the Company accounted for share-based payments
18
using the intrinsic-value-based recognition method prescribed by Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees," and SFAS 123, "Accounting for Stock-Based Compensation." As options
were granted at an exercise price equal to the market value of the underlying
common stock on the date of grant, no stock-based employee compensation cost was
reflected in net income prior to adopting SFAS 123R. As the Company adopted SFAS
123R under the modified-prospective-transition, results from prior periods have
not been restated. The following table illustrates the effect on net income and
earnings per share for the year ended December 31, 2005 had compensation expense
been recognized based upon the estimated fair value on the grant date of the
awards, in accordance with SFAS 123.
YEAR ENDED
DECEMBER 31, 2005
-------------------------
Net income - as reported $ 1,400,222
Less total stock option expense determined under
fair value method, net of related tax effects (103,981)
-------------------------
Pro forma net income $ 1,296,241
=========================
Earnings per share - Basic:
As reported $ 1.59
Pro forma $ 1.47
Earnings per share - Diluted:
As reported $ 1.59
Pro forma $ 1.47
Under SFAS 123R forfeitures are estimated at the time of valuation and reduce
expense ratably over the vesting period. This estimate is adjusted periodically
based on the extent to which actual forfeitures differ, or are expected to
differ, from the previous estimate.
The adoption of SFAS 123R's fair value method has resulted in additional
share-based expense (affecting compensation expenses and taxes) in the amount of
$135,158 related to stock options for the year ended December 31, 2006, than if
the Company had continued to account for share-based compensation under APB 25.
For the year ended December 31, 2006, this additional share-based expense
lowered pre-tax earnings by $135,158, lowered net income by $86,501, and lowered
basic earnings per share by $0.10.
The following schedule shows all options granted, exercised, expired, and
exchanged under the Plan as of December 31, 2006.
SHARES UNDER WEIGHTED AVERAGE TOTAL
OPTION EXERCISE PRICE PRICE
----------------------- ----------------------- -----------------------
Balance, December 31, 2004 143,000 $ 21.47 $ 3,070,210
Granted 8,000 $ 21.19 $ 169,520
Forfeited (7,000) $ 21.59 $ (151,130)
----------------------
Balance, December 31, 2005 144,000 $ 21.45 $ 3,088,800
Granted 3,000 $ 27.90 $ 83,700
Exercised (4,000) $ 21.59 $ (86,360)
Forfeited (1,000) $ 21.59 $ (21,590)
----------------------
Balance, December 31, 2006 142,000 $ 21.58 $ 3,064,360
======================
The fair value of each option grant is separately estimated for each grant date.
The fair value of each option is amortized into compensation expense on a
straight-line basis between the grant date for the award and each vesting date.
The Company has estimated the fair value of all stock option awards as of the
date of the grant by applying the Black-Scholes option pricing valuation model.
The application of this valuation model involves assumptions that are judgmental
and highly sensitive in the determination of compensation expense. The Company
granted 3,000 options during the year ended December 31, 2006.
19
The key assumptions used in determining the fair value of options granted by
applying the Black-Scholes option pricing valuation model in 2006 and 2005 and a
summary of the methodology applied to develop each assumption are as follows:
YEARS ENDED DECEMBER 31,
2006 2005
--------------------------------------
Expected price volatility 36.46% 49 - 51%
Risk-free interest rate 4.61% 4.11 - 4.49%
Weighted average expected lives in years 4 5
Forfeiture rate 10% 0%
Dividend yield 0% 0%
EXPECTED PRICE VOLATILITY - The Company estimates the volatility of its common
stock at the date of grant based solely on the historical volatility of its
common stock. The volatility factor used in the Black-Scholes option valuation
model is based on the Company's historical stock prices over the most recent
period commensurate with the estimated expected life of the award.
RISK-FREE INTEREST RATE - This is the U.S Treasury yield in effect at the time
of the grant having a term equal to the expected life of the option. An increase
in the risk-free interest rate will increase compensation expense.
EXPECTED LIVES - This is the period of time over which the options granted are
expected to remain outstanding giving consideration to vesting schedules,
historical exercise and forfeiture patterns. The Company uses the simplified
method outlined in SEC Staff Accounting Bulletin No. 107 to estimate expected
lives for options granted during the period. Options granted have a maximum term
of 5 years. An increase in the expected life will increase compensation expense.
FORFEITURE RATE - This is the estimated percentage of options granted that are
expected to be forfeited or canceled before becoming fully vested. This estimate
is based on historical experience. An increase in the forfeiture rate will
decrease compensation expense.
EXPECTED DIVIDEND YIELD - Since the adoption of the Plan, the Company has paid
one special dividend although, at the time the options were granted, management
did not anticipate paying a dividend in the foreseeable future. Consequently,
the dividend yield assumption was zero. On December 29, 2005, the Board of
Directors authorized a special dividend of $1.00 per share contingent upon the
closing of the York sale. The sale closed on April 28, 2006 and the dividend was
paid to stockholders on May 31, 2006. The expected dividend yield is based on
the Company's current dividend yield and the best estimate of projected dividend
yields for future periods within the expected life of the option.
The following table summarizes information about stock options outstanding at
December 31, 2006:
WEIGHTED-AVERAGE
REMAINING WEIGHTED-AVERAGE
RANGE OF OPTIONS CONTRACTUAL LIFE WEIGHTED-AVERAGE OPTIONS EXERCISE PRICE OF
EXERCISE PRICE OUTSTANDING (IN YEARS) EXERCISE PRICE EXERCISABLE EXERCISABLE OPTIONS
-------------------------------------------------------------------------------------------------------------------
$ 16.30 - $ 19.50 28,000 2.98 $ 17.04 21,000 $ 16.37
$ 21.59 - $ 27.90 114,000 2.34 $ 22.70 85,476 $ 22.39
--------------- --------------
142,000 2.47 $ 21.58 106,476 $ 21.21
=============== ==============
At December 31, 2006, the aggregate intrinsic value of all outstanding options
was $2,437,953 with a weighted average remaining contractual term of 2.47 years.
The total compensation cost related to non-vested awards not yet recognized was
$89,285 with an expense recognition period of approximately 2 years.
On February 21, 2006, pursuant to a Post-Effective Amendment filing to a
registration statement filed on Form S-8 under the Securities Act of 1933, the
Plan was amended to correct a defect in the Plan regarding the circumstances in
which a participant may exercise an option after the date the employment of the
participant is terminated by the Company other than for cause.
20
6. INCOME TAXES
The income tax provision (benefit) is comprised of the following:
2006 2005
----------------- -----------
Current provision:
Federal $ 10,334,497 $ -
State and local 1,271,247 727,834
----------------- -----------
Total current provision 11,605,744 727,834
----------------- -----------
Deferred provision (benefit):
Net operating loss and capital losses 1,102,448 (234,729)
Expenses not currently deductible (99,711) -
Equity in earnings of York - (649,726)
----------------- -----------
Total deferred provision (benefit) 1,002,737 (884,455)
----------------- -----------
Total provision (benefit) for income taxes $ 12,608,481 $ (156,621)
================= ===========
At December 31, 2006, deferred tax assets were $125,329 comprised of unrealized
losses on available for sale investment securities and expenses not deductible
for income tax purposes such as compensation for stock options.
In 2006, the difference between the U.S. federal statutory income tax rate and
our effective rate is due to non-deductible compensation and state and local
income taxes. In 2005, the difference between the U.S. federal statutory income
tax rate and our effective tax rate was due to the dividends received exclusion
(80%) on the equity in the earnings of York, which was an unconsolidated
affiliate.
The Company utilized net operating loss carryforwards of $2,323,176 and a net
capital loss carryforward of $74,429 to offset tax expense for the year ended
December 31, 2006.
7. DIVIDEND
On December 29, 2005, the Company's Board of Directors authorized a special
dividend to stockholders of $1.00 per share of the common stock contingent upon
the closing of the sale of the Company's interest in York. The special dividend
of $883,592 was paid on May 31, 2006 to stockholders of record on May 15, 2006.
8. STOCKHOLDER RIGHTS PLAN
The Board of Directors has adopted a stockholder rights plan. To implement the
rights plan, the Board of Directors declared a dividend distribution of one
right for each outstanding share of Bexil common stock, par value $.01 per
share, to holders of record of the shares of common stock at the close of
business on November 21, 2005. Each right entitles the registered holder to
purchase from Bexil one one-thousandth of a share of preferred stock, par value
$.01 per share. The rights were distributed as a non-taxable dividend and will
expire on November 21, 2015. The rights are evidenced by the underlying Bexil
common stock, and no separate preferred stock purchase rights certificates were
distributed. The rights to acquire preferred stock will become exercisable only
if a person or group, other than certain exempt persons, acquires or commences a
tender offer for 10% or more of Bexil's common stock. If a person or group,
other than certain exempt persons, acquires or commences a tender offer for 10%
or more of Bexil's common stock, each holder of a right, except the acquirer,
will be entitled, subject to Bexil's right to redeem or exchange the right, to
exercise, at an exercise price of $67.50, the right for one one-thousandth of a
share of Bexil's newly-created Series A Participating Preferred Stock, or the
number of shares of Bexil common stock equal to the holder's number of rights
multiplied by the exercise price and divided by 50% of the market price of
Bexil's common stock on the date of the occurrence of such an event. Bexil's
Board of Directors may terminate the rights plan at any time or redeem the
rights, for $0.01 per right, at any time before a person acquires 10% or more of
Bexil's common stock.
21
9. COMMITMENTS AND CONTINGENCIES
At December 31, 2006, there were no contingent obligations or events occurring
that could reasonably be expected to have a material adverse impact on the
Company's consolidated financial statements.
On January 11, 2006, the staff of the Market Regulation Department of the
National Association of Securities Dealers ("NASD"), on behalf of the American
Stock Exchange ("AMEX"), commenced a review of trading in the Company's common
stock surrounding the December 27, 2005, announcement that the Company had
entered into an agreement to sell its fifty percent interest in York. In
connection with this review, the NASD requested that the Company provide certain
information regarding the events that preceded the corporate disclosure.
Pursuant to Section 132(e) of the AMEX Company Guide, a listed company is
required to furnish such information as the AMEX shall reasonably request.
Failure to comply may subject a listed company to suspend dealings in its
securities or removal from listing pursuant to AMEX Company Guide Section 1003.
This inquiry should not be construed as an indication that the NASD has
determined that any violations of AMEX rules or Federal Securities laws have
occurred or as a reflection upon the merits of the securities involved or upon
any person who effected transactions in such securities. The Company provided
the NASD with all of the information requested on March 29, 2006. The NASD has
not communicated any findings to the Company at this time.
22
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 8A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this report, our management carried out
an evaluation, under the supervision and with the participation of our principal
executive officer and principal financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation,
our principal executive officer and principal financial officer have concluded
that our disclosure controls and procedures are, as of the date covered by this
Annual Report, effective to ensure that the information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in the SEC
rules and forms.
CHANGES IN INTERNAL CONTROLS
In connection with the evaluation of our internal controls during our last
fiscal quarter, our principal executive officer and principal financial officer
have determined that there have been no changes to our internal controls over
financial reporting that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.
ITEM 8B. OTHER INFORMATION.
Not applicable.
23
PART III
--------
Information required by Items 9, 10, 11, 12, and 14 is incorporated by reference
from the Registrant's definitive proxy statement, filed pursuant to Regulation
14A, for the Annual Meeting of Stockholders of the Registrant to be held on May
11, 2007, which meeting will involve the election of directors.
ITEM 13. EXHIBITS
(a) The following exhibits are incorporated as part of this Annual Report on
Form 10-KSB:
3.1-1 Articles of Incorporation (the "Charter") of Bexil filed on 11/25/1996
as Exhibit A to Bexil's Registration Statement on Form N-2
(Registration No. 811-07833) ("Form N-2"), are hereby incorporated by
reference.
3.1-2 Articles of Amendment to the Charter filed on 11/25/1996 as Exhibit A
to Bexil's Post-Effective Amendment to Form N-2 are hereby incorporated
by reference.
3.1-3 Articles of Amendment to the Charter filed on 03/29/2004 as Exhibit
4-a-3 to Bexil's S-8 are hereby incorporated by reference.
3.1-4 Articles of Amendment to the Charter filed on 06/20/2005 as Exhibit
3.1-4 to Bexil's 10-KSB/A are hereby incorporated by reference.
3.1-5 Form of Articles Supplementary to the Charter of Series A Participating
Preferred Stock filed on 11/14/2005 as Exhibit 1 to Bexil's 8-A is
hereby incorporated by reference.
3.2 Bylaws as amended November 8, 2006. Filed herewith.
4-1 Specimen common stock certificate filed on 06/20/2005 as Exhibit 4.1-1
to Bexil's 10-KSB/A is hereby incorporated by reference.
4-2 Bexil's 2004 Incentive Compensation Plan effective as of March 24,
2004, included as Appendix A to Bexil's Proxy Statement for its 2004
Special Meeting of Stockholders, is hereby incorporated by reference.
4-3 Forms of Stock Option Agreements under Bexil's 2004 Incentive
Compensation Plan filed on 3/29/2004 as Exhibit 4-c-2 to Bexil's S-8
are hereby incorporated by reference.
10 Stock Purchase Agreement dated as of December 23, 2005 by and among
York Insurance Holdings, Inc., York Insurance Acquisition, Inc., and
Bexil Corporation, for the sale of Bexil Corporation's 50% interest in
privately held York Insurance Services Group, Inc. to York Insurance
Holdings, Inc. filed as Exhibit 2.1 to Bexil's Current Report on Form
8-K on 12/29/2005 is hereby incorporated by reference.
21 Subsidiaries of the small business. Filed herewith.
23 Consent of Independent Registered Public Accounting Firm.
Deloitte & Touche LLP. Filed herewith
24-1 Power of attorney -- Durable Power of Attorney of Charles A. Carroll
filed on 06/20/2005 as Exhibit 24-1 to Bexil's 10-KSB/A is hereby
incorporated by reference.
24-2 Power of attorney -- Durable Power of Attorney of Edward G. Webb, Jr.
filed on 06/20/2005 as Exhibit 24-2 to Bexil's 10-KSB/A is hereby
incorporated by reference.
24-3 Power of attorney -- Durable Power of Attorney of Bassett S. Winmill
filed on 06/20/2005 as Exhibit 24-3 to Bexil's 10-KSB/A is hereby
incorporated by reference.
24
24-4 Power of attorney -- Durable Power of Attorney of Douglas Wu filed on
06/20/2005 as Exhibit 24-4 to Bexil's 10-KSB/A is hereby incorporated
by reference.
31-1 Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. Filed herewith.
31-2 Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. Filed herewith.
32-1 Certification of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. Filed herewith.
32-2 Certification of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. Filed herewith.
99 ADP TotalSource, Inc. Client Services Agreement. Filed herewith.
25
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BEXIL CORPORATION
April 2, 2007 By: /s/Thomas O'Malley
------------------
Thomas O'Malley
Chief Financial Officer and Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Company and in the
capacities and on the dates indicated.
April 2, 2007 By: /s/Bassett S. Winmill
---------------------
Bassett S. Winmill, Chairman of the Board, Director
April 2, 2007 By: /s/Thomas B. Winmill
--------------------
Thomas B. Winmill, Esq., President
Chief Executive Officer, General Counsel, Director
April 2, 2007 By: /s/Edward G. Webb, Jr.
----------------------
Edward G. Webb, Jr., Director
April 2, 2007 By: /s/Charles A. Carroll
---------------------
Charles A. Carroll, Director
April 2, 2007 By: /s/Douglas Wu
-------------
Douglas Wu, Director
26
EXHIBIT 21.
SUBSIDIARIES OF THE COMPANY
Specialty Hospital of Northeast Mississippi, Inc., a Mississippi corporation
wholly owned by the Company.
27
EXHIBIT 23.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Bexil Corporation
New York, NY
We consent to the incorporation by reference in this Registration Statement on
Form S-8 (No. 001-12233) of our report dated March 30, 2006, relating to the
financial statements Bexil Corporation for the year ended December 31, 2005,
appearing in this Annual Report on Form 10-KSB of Bexil Corporation for the year
ended December 31, 2006.
DELOITTE & TOUCHE LLP
New York, New York
March 29, 2007
28
EXHIBIT 31.1
CERTIFICATION - EXCHANGE ACT RULES 13A-14 AND 15D-14
I, Thomas B. Winmill, certify that:
1. I have reviewed this annual report on Form 10-KSB of Bexil Corporation
("small business issuer");
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the periods covered by this report;
3. Based on my knowledge, the consolidated financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the small business issuer and have:
a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the small business issuer, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) [omitted in accordance with SEC Release Nos. 33-8238 and 34-47986];
c) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the small business issuer's internal
control over financial reporting that occurred during the small business
issuer's most recent fiscal quarter (the small business issuer's fourth fiscal
quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the small business issuer's internal
control over financial reporting; and
5. The small business issuer's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer's auditors and the audit committee of
the small business issuer's board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
/s/Thomas B. Winmill
-------------------------
Thomas B. Winmill
Chief Executive Officer
Date: April 2, 2007
29
EXHIBIT 31.2
CERTIFICATION - EXCHANGE ACT RULES 13A-14 AND 15D-14
I, Thomas O'Malley, certify that:
1. I have reviewed this annual report on Form 10-KSB of Bexil Corporation
("small business issuer");
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the periods covered by this report;
3. Based on my knowledge, the consolidated financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the small business issuer and have:
a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the small business issuer, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) [omitted in accordance with SEC Release Nos. 33-8238 and 34-47986];
c) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the small business issuers internal
control over financial reporting that occurred during the small business issuers
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the small business issuers' internal control over
financial reporting; and
5. The small business issuer's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the small business issuer's auditors and the audit committee of
small business issuer's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
/s/Thomas O'Malley
------------------------
Thomas O'Malley
Chief Financial Officer
Date: April 2, 2007
30
EXHIBIT 32.1
CEO CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Bexil Corporation (the "Company") on
Form 10-KSB for the period ended December 31, 2006 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Thomas B. Winmill,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002,
that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/Thomas B. Winmill
-------------------------
Thomas B. Winmill
Chief Executive Officer
April 2, 2007
31
EXHIBIT 32.2
CFO CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Bexil Corporation (the "Company") on
Form 10-KSB for the period ended December 31, 2006 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Thomas O'Malley,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002,
that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/s/Thomas O'Malley
-----------------------
Thomas O'Malley
Chief Financial Officer
April 2, 2007
32