-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JeHqC+nvanj6Vc0uTEi/4XcaM09IPRXsTLIZsIsT/Ig9XuOCQ0dBdeBCTr7j7K2a iVzRGw1JbU8tGuQiD2boOg== 0000950144-99-005980.txt : 19990517 0000950144-99-005980.hdr.sgml : 19990517 ACCESSION NUMBER: 0000950144-99-005980 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORIOLE HOMES CORP CENTRAL INDEX KEY: 0000074928 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 591228702 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06963 FILM NUMBER: 99622103 BUSINESS ADDRESS: STREET 1: 1690 S CONGRESS AVE STE 200 CITY: DELRAY BEACH STATE: FL ZIP: 33445 BUSINESS PHONE: 4072742000 FORMER COMPANY: FORMER CONFORMED NAME: ORIOLE LAND & DEVELOPMENT CORP DATE OF NAME CHANGE: 19720615 10-Q 1 ORIOLE HOMES CORP. 10-Q 3/31/99 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended: March 31, 1999 Commission File No. 1-6963 ORIOLE HOMES CORP. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Florida 59-1228702 - ----------------------------------------- ------------------------------------ (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 1690 S. Congress Ave., Suite 200 Delray Beach, FL 33445 - -------------------------------------------------- --------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (561) 274-2000 - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the close of the period covered by this report. Class Outstanding at May 5, 1999 - ------------------------------------- ------------------------------------- Common Stock, Class A, par value $.10 1,864,149 Common Stock, Class B, par value $.10 2,761,375 2 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ORIOLE HOMES CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
March 31, December 31, 1999 1998 ------------ ------------ (Unaudited) (Audited) Cash and cash equivalents $ 14,263,261 $ 10,557,772 ------------ ------------ Receivables Mortgage notes 264,281 953,284 Inventories Land 57,117,734 59,059,535 Homes completed or under construction 39,286,974 42,763,798 Model houses and condominiums 4,476,929 4,360,514 ------------ ------------ 100,881,637 106,183,847 Less estimated costs of completion included in inventories 9,789,574 9,080,857 ------------ ------------ 91,092,063 97,102,990 ------------ ------------ Property and equipment, at cost Land 156,506 517,554 Buildings 3,285,188 3,505,343 Furniture, fixtures and equipment 3,544,584 3,445,563 ------------ ------------ 6,986,278 7,468,460 Less accumulated depreciation 3,992,369 4,070,613 ------------ ------------ 2,993,909 3,397,847 ------------ ------------ Property and equipment held for sale, at cost 11,775,061 11,956,165 Investments in and advances to joint ventures 3,288,596 3,288,596 Land held for investment, at cost -- 2,127,009 Other Prepaid expenses 1,208,224 1,719,517 Unamortized debt issuance costs 1,000,672 1,111,696 Other assets 3,206,976 3,011,589 ------------ ------------ 5,415,872 5,842,802 ------------ ------------ Total assets $129,093,043 $135,226,465 ============ ============
See notes to the consolidated financial statements -1- 3 ORIOLE HOMES CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, December 31, 1999 1998 ------------ ------------ (Unaudited) (Audited) Liabilities Line of credit $ 10,000 $ 10,000 Mortgage notes payable 15,224,997 15,970,385 Accounts payable and accrued liabilities 9,009,345 11,664,858 Customer deposits 3,906,933 5,095,182 Senior notes 52,883,583 55,507,312 ------------ ------------ Total liabilities 81,034,858 88,247,737 Shareholders' equity Class A common stock, $.10 par value Authorized - 10,000,000 shares, issued and outstanding - 1,864,149 in 1999 and in 1998 186,415 186,415 Class B common stock, $.10 par value Authorized - 10,000,000 shares, issued and outstanding - 2,761,375 in 1999 and in 1998 276,138 276,138 Additional paid-in capital 19,267,327 19,267,327 Retained earnings 28,328,305 27,248,848 ------------ ------------ Total shareholders' equity 48,058,185 46,978,728 ------------ ------------ Total liabilities and shareholders' equity $129,093,043 $135,226,465 ============ ============
See notes to the consolidated financial statements -2- 4 ORIOLE HOMES CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended March 31, ------------------------------- 1999 1998 ------------ ------------ Revenues Sales of homes $ 24,616,408 $ 25,332,278 Other operating revenues 934,056 970,923 Gain on sales of property and land held for investment, net 1,867,391 190,913 Interest, rentals and other income 1,043,657 931,519 ------------ ------------ 28,461,512 27,425,633 ------------ ------------ Costs and expenses Cost of homes sold 22,435,393 22,014,200 Costs relating to other operating revenues 803,015 854,962 Selling, general and administrative expenses 3,996,647 4,216,111 Interest costs incurred 2,049,027 2,318,145 Interest capitalized (deduct) (1,902,027) (2,004,112) ------------ ------------ 27,382,055 27,399,306 ------------ ------------ Income before provision for income taxes 1,079,457 26,327 Provision for income taxes -- -- ------------ ------------ Net income $ 1,079,457 $ 26,327 ============ ============ Net income per Class A and B common share available for common stockholders - Basic $ .23 $ .01 ============ ============ Weighted average number of common stock outstanding - Basic 4,625,524 4,625,524 ============ ============ Net income per Class A and B common share available for common stockholders - Diluted $ .23 $ .01 ============ ============ Weighted average number of common stock outstanding - Diluted 4,625,524 4,714,224 ============ ============
See notes to consolidated financial statements -3- 5 ORIOLE HOMES CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, ------------------------------- 1999 1998 ------------ ------------ Cash flows from operating activities Net income $ 1,079,457 $ 26,327 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 312,902 306,277 Amortization 187,295 261,281 Gain on sale of property and land held for investment, net (1,867,391) (190,913) (Increase) decrease in operating assets Receivables 689,003 553 Inventories 6,047,638 8,123,759 Other assets 315,906 532,262 Increase (decrease) in operating liabilities Accounts payable and accrued liabilities (2,655,513) (4,156,714) Customer deposits (1,188,249) (201,305) ------------ ------------ Total adjustments 1,841,591 4,675,200 ------------ ------------ Net cash provided by operating activities 2,921,048 4,701,527 ------------ ------------ Cash flows from investing activities Return on investment in joint ventures -- 578,687 Capital expenditures (233,890) (285,850) Proceeds from the sale of property and equipment 4,463,719 421,836 ------------ ------------ Net cash provided by investing activities 4,229,829 714,673 ------------ ------------ Cash flows (used in) financing activities Payment of mortgage notes (745,388) (53,067) Repurchase of senior notes (2,700,000) (3,850,000) ------------ ------------ Net cash (used in) financing activities (3,445,388) (3,903,067) ------------ ------------ Net increase in cash and cash equivalents 3,705,489 1,513,133 Cash and cash equivalents at beginning of period 10,557,772 19,830,523 ------------ ------------ Cash and cash equivalents at end of period $ 14,263,261 $ 21,343,656 ============ ============ Supplemental disclosures of cash flow information Cash paid during the period for: Interest (net of amount capitalized) $ 1,894,242 $ 2,471,271 Income taxes $ -- $ 2,627
See notes to consolidated financial statements -4- 6 ORIOLE HOMES CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated balance sheet as of March 31, 1999 and the related statements of operations and cash flows for the three months ended March 31, 1999 and 1998 of Oriole Homes Corp. (together with its consolidated subsidiaries, the "Company") have been prepared by the Company without audit. In the opinion of management of the Company, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the unaudited interim periods have been reflected herein. Certain footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 1998 annual report on Form 10K. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain reclassifications have been made to conform to the current year presentation. 2. The results of operations for the three months ended March 31, 1999 are not necessarily indicative of the results for the entire year. 3. Backlog of contracts for sales of homes:
March 31, 1999 December 31, 1998 ---------------------------- ---------------------------- Units Amounts Units Amounts ----------- ----------- ----------- ----------- Single-family 100 $17,369,228 129 $22,256,303 Multi-family 90 12,492,456 83 11,297,006 ----------- ----------- ----------- ----------- Total 190 $29,861,684 212 $33,553,309 =========== =========== =========== ===========
4. Senior notes On January 13, 1993, the Company issued 12 1/2% senior notes ("Senior Notes"), due January 15, 2003. The Senior Notes have a face value of $70,000,000 and were issued at a discount of $1,930,600. The Senior Notes are senior unsecured obligations of the Company subject to redemption at the Company's option on or after January 15, 1998 at 105% of the principal amount and thereafter at prices declining annually to 100% of the principal amount on or after January 15, 2001. Under the terms of the indenture ("Indenture"), the Company must make Senior Notes sinking fund payments of $17,500,000 by January 15, 2001 and January 15, 2002. The Indenture also contains provisions restricting the amount and type of indebtedness the Company may incur, the purchase by the Company of its stock and the payment of cash dividends. At March 31, 1999, the payment of cash dividends is prohibited and will be restricted until the Company posts cumulative net income in excess of $62,100,000. During the three months ended March 31, 1999, the Company repurchased $2,700,000 of Senior Notes to be used as part of the sinking fund and has accumulated $16,408,000 toward the $17,500,000 payment due January 15, 2001. -5- 7 ORIOLE HOMES CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Line of credit The Company may borrow up to $10,000,000 at an interest rate of prime plus 1.5% under a revolving loan agreement (line of credit) with a bank, secured by a mortgage on certain real property. At March 31, 1999, $9,990,000 was available under this line of credit. The loan agreement expires June 30, 2000. The line of credit can be used to finance ongoing development and construction of residential real estate and short-term capital needs and only requires monthly interest payments. The loan agreement contains typical restrictions and covenants, the most restrictive of which are: a. the Company shall maintain, at all times through the life of the loan, a consolidated tangible net worth of not less than $42,000,000, and; b. the Company's ability to incur additional debt is restricted. 6. Income taxes At March 31, 1999, the Company has no deferred tax benefit related to its net operating loss as the Company's ability to realized these benefits is not "more likely than not" as defined by SFAS Statement No. 109 "Accounting for Income Taxes". 7. Segment information The Company has the following two reportable segments: home building and rental operations. The homebuilding segment develops and sells residential properties and planned communities. The rental operations segment consists of 529 units in two separate properties. Selected segment information is set forth below (in thousands):
HOME RENTAL BUILDING OPERATIONS OTHER TOTAL -------- ---------- -------- -------- MARCH 31, 1999: Revenues $ 27,347 $ 934 $ 181 $ 28,462 Segment net income (loss) 844 131 104 1,079 MARCH 31, 1998: Revenues 26,311 971 144 27,426 Segment net income (loss) (148) 116 58 26
8. Commitments and contingencies The Company is involved, from time to time, in litigation arising in the ordinary course of business, none of which is expected to have a material adverse effect on the Company's consolidated financial position or results of operations. The Company is also subject to the normal obligations associated with entering into contracts for the purchase, development and sale of real estate in the routine conduct of its business. -6- 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998 The Company's revenues from home sales decreased $0.7 million (2.8%) to $24.6 million during the first quarter of 1999 as compared to the comparable quarter of 1998. Oriole delivered 164 homes in the 1999 first quarter compared to 151 in the same period in 1998. The average selling price of homes delivered decreased from $167.8 to $150.1. The number of contracts signed at 142 and the aggregate dollar value of those contracts at $20.9 million decreased in the 1999 first quarter from 164 and $25.8 million, respectively, from the same period in 1998. Non-homebuilding revenues increased $1.7 million during the quarter ended March 31, 1999 compared to the same period in 1998, primarily due to the sale of certain properties which had been held for investment. Interest, rentals and other income increased $0.4 million during the first quarter of 1999 compared to the same period in 1998 as the result of a one time gain recognized on the repurchase of senior notes. Cost of home sales increased to $22.4 million (1.9%) in 1999 from $22.0 million in 1998. As a percentage of home sales, cost of sales increased to 91.1% from 86.9% in the first quarter of 1998. This increase was primarily the result of the write-off of certain deferred costs of approximately $0.3 million associated with the redesign of product. Selling, general and administrative expenses reflected a decrease of $0.2 million in the 1999 period as compared to the 1998 first quarter. These expenses decreased as a percentage of revenues to 14.0% from 15.4% for the same period in 1998. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased $1.4 million (55.7%) to $3.9 million in the first quarter of 1999 as compared to the same period in 1998 primarily due to the increase in non-homebuilding revenues during this period. LIQUIDITY AND CAPITAL RESOURCES The Company's cash requirements vary from period to period depending upon changes in inventory, land acquisition and development requirements, construction in progress and, to a lesser extent, the Company's current net income. The Company obtains funds for its cash requirements from operations, the sale of investment property and borrowings. In connection with land acquisitions and development, the Company may borrow money secured by land and improvements. During the first quarter of 1999, the Company used a portion of available cash provided by operations to purchase $2.7 million of senior notes. At March 31, 1999, the Company had approximately $14.2 million in cash and cash equivalents and the availability of substantially all of it's $10.0 million revolving line of credit. The Company believes that these resources are sufficient to provide for its cash requirements through March 31, 2000. FORWARD LOOKING STATEMENTS Certain statements made in this document, including certain statements made in Management's Discussion and Analysis, contain "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the expectations of management with respect to revenues, profitability, marketplace conditions, adequacy of funds from operations and regulatory conditions applicable to the Company, among other things. -7- 9 Management cautions the these statements are qualified by their terms and/or important factors, many of which are outside the control of the Company, that could cause actual results and events to differ materially from the statements made herein, including, but not limited to the following: changes in consumer preferences, increases in interest rates, a reduction in labor availability, increases in the cost of labor and materials, changes in the regulatory environment particularly as relates to zoning and land use, competitive pricing pressures and the general state of the economy, both nationally and in the Company's market. YEAR 2000 The Company has assessed, and formulated a plan to resolve, its information technology ("IT") and non-IT system year 2000 issues. The Company is in the process of replacing its software systems and applications in their entirety. The Company had been advised that both the new replacement systems and applications, as well as the upgraded systems and applications will cause its IT system to be fully year 2000 compliant. The Company expects to test its systems and applications for year 2000 compliance in conjunction with its cost of its new or upgraded software systems and applications during July, 1999. The Company does not consider any other IT or any non-IT systems of the Company to be critical to Company operations and if non-capable for year 2000, the only effect would be inconvenience. There will be no incremental additional cost for acquiring a software and applications system that is year 2000 compliant and the Company does not anticipate that testing or any other measure relating to implementing its plan for year 2000 compliance will result in costs that would have a material impact on future earnings. The Company has and is consulting with its subcontractors and suppliers regarding their year 2000 readiness and has been advised that they will be year 2000 compliant in all material respects. In any event, the Company believes that it would not be difficult to find alternative subcontractors and suppliers in the event that one of its existing subcontractors and suppliers are unable to satisfactorily perform as the result of failure to be year 2000 compliant. -8- 10 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibits and Reports on Form 8K (a) Exhibits Exhibit 27-Financial Data Schedule (b) There were no reports on Form 8-K filed for the three months ended March 31, 1999. -8- 11 SIGNATURES Pursuant to the requirements of Section 13, of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ORIOLE HOMES CORP. ------------------ (Registrant) DATE: May 13, 1999 /s/ R.D. Levy - -------------------- --------------------------------------- R.D. Levy, Chairman of the Board, Chief Executive Officer, Director DATE: May 13, 1999 /s/ J. Pivinski - -------------------- --------------------------------------- J. Pivinski, Vice President - Finance, Treasurer, Chief Financial Officer -10- EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 14,263,261 0 264,281 0 91,092,063 0 25,783,253 11,014,283 129,093,043 0 68,108,580 0 0 462,553 47,595,632 129,093,043 24,616,408 28,461,512 22,435,393 23,238,408 3,996,647 0 147,000 1,079,457 0 1,079,457 0 0 0 1,079,457 .23 .23
-----END PRIVACY-ENHANCED MESSAGE-----