SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) September 9, 1994 Summit Securities, Inc. Washington 33-36775 82-0438135 (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification incorporation) Number) W. 929 Sprague Avenue, Spokane, WA 99204 (Address of principal executive offices) Registrant's telephone number, including area code (509) 838-3111 Item 1. Changes in Control of Registrant On September 9, 1994, the controlling interest in Summit Securities, Inc. (Summit) was acquired by National Summit Corp., a Delaware corporation which is wholly owned by C. Paul Sandifur, Jr. The change in control was made pursuant to a negotiated reorganization wherein Summit redeemed all the common shares held by its former parent company, Metropolitan Mortgage & Securities Co., Inc. (Metropolitan) which consisted of 100% of the outstanding common stock of Summit. Contemporaneously with this redemption, Summit issued 10,000 shares of common stock to National Summit Corp., a Delaware Corporation, for $100,000. In addition, various investors in Metropolitan's common and preferred stock, including members of Mr. Sandifur's immediate family acquired 30,224 shares of Summit's Preferred Stock Series S-1 for $100 per share in exchange for preferred and common shares of Metropolitan with a value of approximately $3 million dollars. Metropolitan Mortgage & Securities Co., Inc. the former parent company is effectively controlled by C. Paul Sandifur, Jr., through stock ownership and voting control. National Summit Corp. is wholly owned by C. Paul Sandifur, Jr. through ownership of 100% of the voting stock. The source of funds used by Summit to redeem Metropolitan's common shares was $3,600,000 paid in cash by Summit to Metropolitan. The source of funds used by National Summit Corp. to acquire the 10,000 shares of Summit common stock was $100,000 in cash. As part of the negotiated reorganization, the officers and directors of Summit resigned and new officers and directors were elected as follows: Name Title Age Tom Turner President/Treasurer/Director 44 John Trimble Vice President/Secretary/Director 64 Tom Turner was elected President/Treasurer of the Company on September 9, 1994. He has been an employee of Metropolitan since 1985, as a financial analyst. From 1983-1985 Mr. Turner was employed by Olsten Temporary Services. Prior to 1983, Mr. Turner was self-employed, principally doing business in the real estate industry. John Trimble was elected Vice President/Secretary on September 9, 1994. He has been an employee of Metropolitan since 1980. From 1980-1985 he served as a loan officer for Metropolitan. From 1985- 1994 he was an officer of Metropolitan. From 1985 to the present he has been a member of the Receivable Evaluation Committee. SUMMIT SECURITIES, INC. PRO FORMA FINANCIAL INFORMATION PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED) June 30, 1994 The following unaudited pro forma condensed balance sheet gives effect to the redemption of the Company's common shares and the purchase of newly issued common and preferred shares by National Summit Corp. and other investors as if the transactions occurred as of June 30, 1994. This unaudited pro forma condensed balance sheet should be read in conjunction with the Company's audited financial statements and related notes thereto. Redemption Sale of Common of and Common Shares Preferred Shares Pro Historical Dr. (Cr.) Dr. (Cr.) Forma (Unaudited) ASSETS Cash and Cash Equivalents $ 1,475,086 $ (411,413) (a) $ 100,000 $ 1,163,673 Real Estate Contracts and Mortgage Notes, Net of Unrealized Discounts and Allowance For Losses 25,808,491 25,808,491 Real Estate Held For Sale 386,100 386,100 Investment in Metropolitan Common and Preferred Shares 3,022,425 (b) 3,022,425 Deferred Costs 664,976 664,976 Advances to Parent and Affiliated Companies 3,143,587 (3,143,587) (a) - Other Assets 24,446 24,446 ---------- ---------- ----------- ---------- TOTAL ASSETS $ 31,502,686 $(3,555,000) $ 3,122,425 $ 31,070,111 =========== =========== =========== =========== LIABILITIES AND STOCKHOLDER'S EQUITY LIABILITIES: Investment Certificates and Accrued Interest $ 27,590,109 $ 27,590,109 Debt Payable 80,989 80,989 Accounts Payable and Accrued Expenses 76,132 76,132 Accrued Income Taxes Due Parent 317,075 317,075 ---------- ----------- ----------- ----------- TOTAL LIABILITIES 28,064,305 28,064,305 ---------- ----------- ----------- ----------- STOCKHOLDER'S EQUITY: Common Stock 200,000 200,000 (a) (100,000) (c) 100,000 Preferred Stock 7,052 (302,243) (b) 309,295 Additional Paid-In Capital 1,859,773 3,355,000 (a) (2,720,182) (b)(c) 1,224,955 Retained Earnings 1,371,556 1,371,556 ---------- ---------- ----------- ---------- TOTAL STOCKHOLDER'S EQUITY 3,438,381 3,555,000 (3,122,425) 3,005,806 ---------- ---------- ----------- ---------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 31,502,686 $ 3,555,000 $(3,122,425) $ 31,070,111 =========== =========== =========== =========== <FN> The accompanying notes are an integral part of these pro forma financial statements. SUMMIT SECURITIES, INC. PRO FORMA CONDENSED STATEMENTS OF INCOME (UNAUDITED) The following unaudited pro forma condensed statements of income give effect to the redemption of the Company's common shares and the purchase of newly issued common and preferred shares by National Summit Corp. and other investors as if the transaction occurred at the beginning of the periods presented. These unaudited condensed statements of operations should be read in conjunction with the Company's audited financial statements and related notes thereto. SUMMIT SECURITIES, INC. PRO FORMA CONDENSED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 1994 (UNAUDITED) Pro Forma Adjustments Historical Dr. (Cr.) Pro Forma REVENUES: Interest and Earned Discounts $ 2,312,155 $ 2,312,155 Realized Net Gains on Sales of Investment Securities 4,252 4,252 Realized Net Gains on Sales of Receivables 36,494 36,494 Real Estate Sales 88,000 88,000 Dividend Income from Metropolitan $ (147,400) (d) 147,400 Other Income 43,854 43,854 --------- ------------ --------- TOTAL REVENUES 2,484,755 (147,400) 2,632,155 --------- ------------ --------- EXPENSES: Interest 1,837,474 1,837,474 Cost of Real Estate Sold 76,273 76,273 Provision for Losses on Real Estate Contracts and Real Estate Held 99,643 99,643 Operating Expenses 188,469 188,469 --------- --------- --------- TOTAL EXPENSES 2,201,859 2,201,859 --------- --------- --------- Income Before Income Taxes 282,896 (147,400) 430,296 Provision for Income Taxes (98,832) 15,035 (d) (113,867) --------- --------- --------- NET INCOME 184,064 (132,365) 316,429 Preferred Stock Dividends (732) 182,365 (e) (183,097) --------- --------- --------- Income to Common Shareholders $ 183,332 $ 50,000 $ 133,332 ========= ========= ========= <FN> The accompanying notes are an integral part of these pro forma financial statements. SUMMIT SECURITIES, INC. PRO FORMA CONDENSED STATEMENTS OF INCOME FOR THE YEAR ENDED SEPTEMBER 30, 1993 (UNAUDITED) Pro Forma Adjustments Historical Dr. (Cr.) Pro Forma REVENUES: Interest and Earned Discounts from Metropolitan $ 2,487,686 $ 2,487,686 Realized Net Gains on Sales of Investment Securities 4,724 4,724 Real Estate Sales 280,500 280,500 Dividends from Metropolitan $ (204,462) (d) 204,462 Other Income 42,714 42,714 ------------ ---------- ---------- TOTAL REVENUES 2,815,624 (204,462) 3,020,086 ------------ ---------- ---------- EXPENSES: Interest Expense 1,792,059 1,792,059 Cost of Real Estate Sold 298,900 298,900 Provisions for Losses on Real Estate Assets 51,012 51,012 Operating Expenses 244,595 244,595 ---------- ---------- ---------- TOTAL EXPENSES 2,386,566 2,386,566 ---------- ---------- ---------- Income Before Income Taxes 429,058 (204,462) 633,520 Income Tax (Provision) (145,951) 20,855 (d) (166,806) ---------- ---------- ---------- NET INCOME 283,107 (183,607) 466,714 Preferred Stock Dividends - 251,411 (e) (251,411) ---------- ---------- ---------- Income to Common Shareholders $ 283,107 $ 67,804 $ 215,303 ========== ========== ========== <FN> The accompanying notes are an integral part of these pro forma financial statements. SUMMIT SECURITIES, INC. NOTES TO UNAUDITED PRO FORMA CONDENSED BALANCE SHEET AND STATEMENTS OF INCOME ------------ NOTE 1: The pro forma condensed balance sheet assumes the redemption of all of the Company's outstanding common stock as of June 30, 1994 through the payment of cash and the reduction of an outstanding receivable due from Metropolitan aggregating $3,555,000. Additionally, National Summit Corp., a Delaware corporation wholly owned by C. Paul Sandifur, Jr. will acquire 100% of the newly issued common shares of the Company for $100,000. Contemporaneously, various investors in Metropolitan common and preferred stock, including members of Mr. Sandifur's immediate family, will acquire 30,224 of the Company's preferred stock for $100 per share in exchange for preferred and common shares of Metropolitan with a value of $3,022,425. NOTE 2: The pro forma condensed statements of income reflect the above described transactions assuming they occurred at the beginning of the periods presented. The statements have been adjusted to reflect dividend income that would have been received from the Metropolitan preferred stock and dividends that would have been paid to the Company's preferred shareholders at dividend rates that were in effect during the periods. The income tax provisions have been adjusted assuming that dividend income received by the Company from Metropolitan will be taxable and subject to the 70% dividends received deduction. At various times, Metropolitan's preferred stock dividends have been, for tax purposes, a return of capital, which would have a different tax treatment from that presented in these statements. The pro forma condensed statements of operations have no adjustments to eliminate intercompany transactions previously charged by Metropolitan for services provided to the Company. In future periods, Metropolitan may charge an additional fee for real estate contract acquisition services provided for the Company's benefit that has not been previously charged. Earnings per common share data has not been presented as all of the outstanding common shares will be wholly-owned by National Summit Corp. NOTE 3: The adjustments to the pro forma condensed financial statements are as follows: (a) Adjustments to reflect the redemption of all Company outstanding common shares through the payment of $411,413 and the reduction of an outstanding receivable from Metropolitan for $3,143,587. (b) Adjustments to reflect the issuance of 30,224 shares of Company preferred stock in exchange for preferred and common stock of Metropolitan valued at $2,606,252 and $416,173, respectively. (c) Adjustments to reflect the sale of 10,000 newly issued common shares purchased by National Summit Corp. for $100,000. (d) Adjustments to reflect dividend income from Metropolitan preferred stock and the related income tax effect. (e) Adjustments to reflect preferred stock dividends on the Company's newly issued preferred stock. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: September 15, 1994 SUMMIT SECURITIES, INC. /S/ TOM TURNER BY: TOM TURNER, President/Treasurer