<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
<TABLE>
<C> <S>
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
</TABLE>
COMMISSION FILE NO 001-12211
ECHELON INTERNATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<C> <C>
FLORIDA 59-2554218
(State of incorporation) (I.R.S. Employer
Identification Number)
One Progress Plaza, Suite 1500
St. Petersburg, Florida 33701 Telephone (813) 824-6767
(Address of principal executive offices) (Registrant's telephone number)
</TABLE>
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 (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 [ ]
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Common stock, par value $.01 per share, 6,784,794 shares, as of November 1,
1997.
================================================================================
<PAGE> 2
PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ECHELON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- -------------------
1997 1996 1997 1996
------ -------- ------ -------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
SALES AND REVENUES:
Real estate operations
Rental income................................. $3.5 $ 3.0 $ 9.6 $ 8.9
Sale of development properties................ .5 11.6 .8 18.2
Marina and other revenues..................... 2.4 1.5 7.0 5.5
Equity in losses of partnerships.............. (.2) -- (1.0) --
Lending and leasing operations
Interest income............................... 1.3 2.8 5.5 10.1
Earned income on finance leases............... 1.1 1.0 2.6 2.8
Other......................................... 1.1 1.1 4.0 3.1
---- ------ ----- ------
9.7 21.0 28.5 48.6
---- ------ ----- ------
OPERATING EXPENSES:
Real estate operations........................... 3.7 2.7 10.5 8.6
Cost of development properties sold.............. .5 11.6 .8 18.5
Depreciation..................................... 1.1 1.4 3.6 4.3
Provision for lease, loan and real estate
losses........................................ -- 2.8 (.7) 33.9
Interest expense:
Former parent advances........................ -- 4.3 -- 13.9
Long-term debt................................ 1.9 .5 7.1 1.7
Allocated administrative expenses of former
parent........................................ -- .9 -- 1.3
Marketing and other administrative............... 2.2 1.3 6.8 2.9
Other (income) expenses, net..................... (1.3) 1.0 (8.4) 2.2
---- ------ ----- ------
8.1 26.5 19.7 87.3
---- ------ ----- ------
INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY
ITEM............................................. 1.6 (5.5) 8.8 (38.7)
INCOME TAX EXPENSE (BENEFIT)....................... .2 (1.9) 1.3 (14.9)
---- ------ ----- ------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM............ 1.4 (3.6) 7.5 (23.8)
EXTRAORDINARY ITEM:
Gain (loss) on extinguishment of debt, net of
income tax effect............................. (.1) 2.1 (.9) 2.1
---- ------ ----- ------
NET INCOME (LOSS).................................. $1.3 $ (1.5) $ 6.6 $(21.7)
==== ====== ===== ======
Average shares of common stock outstanding......... 6.8 6.5 6.8 6.5
Per share data:
Income (loss) before extraordinary............... $.20 $ (.55) $1.10 $(3.66)
Extraordinary item............................... (.01) .32 (.13) .32
---- ------ ----- ------
Net income (loss) per common share....... $.19 $ (.23) $ .97 $(3.34)
==== ====== ===== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 3
ECHELON INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
ASSETS
LEASES, LOANS, PROPERTY & OTHER INVESTMENTS:
Leases and loans receivable, net.......................... $205.0 $190.6
Property, net............................................. 115.2 130.1
Investments in and advances to unconsolidated
affiliates............................................. 32.5 32.5
------ ------
352.7 353.2
------ ------
ASSETS HELD FOR SALE........................................ 2.5 29.4
------ ------
CURRENT ASSETS:
Cash and equivalents...................................... 19.7 63.3
Marketable securities..................................... 44.5 --
Accounts receivable, net.................................. 0.5 1.1
Current portion of leases and loans receivable............ 32.1 75.9
Income taxes receivable................................... .1 --
Inventories, at cost...................................... 1.4 3.1
Other..................................................... .3 .7
------ ------
98.6 144.1
------ ------
OTHER NON-CURRENT ASSETS.................................... 2.1 4.3
------ ------
Total assets...................................... $455.9 $531.0
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and other liabilities.................... $ 10.6 $ 15.7
Income taxes payable...................................... -- .1
Accounts and interest payable to former parent............ -- .8
Current portion of long-term debt and note payable to
former parent.......................................... 15.2 75.6
------ ------
Total current liabilities......................... 25.8 92.2
LONG-TERM DEBT.............................................. 61.7 73.8
DEFERRED INCOME TAXES....................................... 158.2 163.3
OTHER LIABILITIES........................................... .3 .3
COMMITMENTS AND CONTINGENCIES (See Note 6)
------ ------
Total liabilities................................. 246.0 329.6
------ ------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 10,000,000 shares
authorized, none issued................................ -- --
Common stock, $.01 par value, 25,000,000 shares
authorized, 6,783,183 outstanding in 1997 and 6,753,903
outstanding in 1996.................................... .1 .1
Additional paid in capital................................ 279.5 279.4
Retained deficit.......................................... (71.6) (78.1)
Unrealized gain (loss).................................... 1.9 --
------ ------
Total stockholders' equity........................ 209.9 201.4
------ ------
Total liabilities and stockholders' equity........ $455.9 $531.0
====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 4
ECHELON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
---------------
1997 1996
----- -------
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
OPERATING ACTIVITIES:
Income (loss) before extraordinary item................... $ 7.5 $ (23.8)
Adjustment for noncash items:
Depreciation and amortization.......................... 4.3 4.3
Deferred income taxes.................................. (6.2) (19.4)
Amortization of investment tax credits................. (.5) (.5)
Amortization of lease income........................... (.7) (.5)
Provision for lease, loan and real estate losses....... (.7) 33.9
(Gain) loss on sale of assets.......................... (4.2) .5
Equity in income of unconsolidated affiliates, net..... (2.0) (2.1)
Changes in working capital:
Accounts payable and other liabilities............... (4.7) .1
Income taxes receivable/payable...................... .4 (5.8)
Other working capital changes........................ 2.4 (.2)
Other operating activities............................. 5.1 (3.3)
----- -------
.7 (16.8)
----- -------
INVESTING ACTIVITIES:
Purchases of marketable securities........................ (57.1) --
Proceeds from sale of marketable securities............... 15.6 --
Proceeds from sale or collection of leases and loans...... 76.5 24.1
Real estate property additions............................ (7.8) (7.5)
Proceeds from sale of real estate properties.............. .4 17.6
Distributions from unconsolidated affiliates, net of
investments............................................ 2.3 2.8
----- -------
29.9 37.0
----- -------
FINANCING ACTIVITIES:
Repayment of long-term debt............................... (74.2) (11.5)
Decrease in due to former parent.......................... -- (148.9)
Equity contribution from former parent.................... -- 140.0
----- -------
(74.2) (20.4)
----- -------
Net decrease in cash and equivalents........................ (43.6) (.2)
Beginning cash and equivalents.............................. 63.3 .4
----- -------
ENDING CASH AND EQUIVALENTS................................. $19.7 $ .2
===== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.................................................. $ 6.7 $ 10.7
Income taxes (net of refunds)............................. 7.1 13.4
===== =======
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Distribution of note receivable by unconsolidated
affiliate................................................. 3.0 --
===== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 5
ECHELON INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
In the opinion of management, the accompanying financial statements include
all adjustments deemed necessary to summarize fairly and reflect the financial
position and results of operations of Echelon International Corporation (the
"Company") for the interim periods presented. Results for the third quarter are
not necessarily indicative of results for the full year. These financial
statements should be read in conjunction with the financial statements and notes
thereto in the Company's Annual Report on Form 10-K for the year ended December
31, 1996.
2. INVESTMENTS IN MARKETABLE SECURITIES
The Company's investments in marketable securities are classified as
available-for-sale, except for debt securities with a maturity of three months
or less, which are classified as cash equivalents. The available-for-sale
marketable securities are available to support current operations or to take
advantage of other investment opportunities. These securities are stated at fair
value based upon market quotes. Dividend and interest income is recognized when
earned. Realized gains and losses are included in earnings and are derived using
the specific identification method for determining the cost of securities sold.
Unrealized gains and losses, net of tax, are included as a separate component of
stockholders' equity.
Following is a summary of available-for-sale securities as of September 30,
1997:
<TABLE>
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
--------- ---------- ---------- -----
(IN MILLIONS)
<S> <C> <C> <C> <C>
Certificates of deposit.......................... $ 2.0 -- -- $ 2.0
U.S. government obligations...................... 8.8 0.1 -- 8.9
Municipal bonds.................................. 5.6 0.1 -- 5.7
Corporate debt securities........................ 9.3 -- (0.1) 9.2
----- ---- ----- -----
Subtotal............................... 25.7 0.2 (0.1) 25.8
Equity securities................................ 15.8 3.0 (0.1) 18.7
----- ---- ----- -----
Total.................................. $41.5 $3.2 ($0.2) $44.5
===== ==== ===== =====
</TABLE>
The amortized cost and estimated fair value of available-for-sale debt
securities as of September 30, 1997, by expected maturity, are as follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- -----
(IN MILLIONS)
<S> <C> <C>
Due in one year or less..................................... $12.2 $12.2
Due after one year through five years....................... 9.5 9.6
Due after five years........................................ 4.0 4.0
----- -----
Total............................................. $25.7 $25.8
===== =====
</TABLE>
3. IMPAIRMENT WRITE-DOWN
During the second quarter of 1997, the Company revised its strategy with
respect to its commercial real estate assets to include short and medium-term
exit strategies, as well as its original plan of long-term exit strategies.
Given the change in strategy, the Company updated its impairment analysis and
determined that certain assets were impaired. In June 1997, the Company
recognized an impairment of $19.0 million on certain income-producing property
in accordance with Financial Accounting Standard ("FAS") No. 121, "Accounting
for the Impairment of Long-lived Assets and Long-lived Assets to be Disposed
of." The
4
<PAGE> 6
ECHELON INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
impairment loss was measured using independent appraisals and is reflected in
the provision for lease, loan, and real estate losses.
4. ASSETS HELD FOR SALE
Assets held for sale consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
PREVIOUS BALANCE SHEET CLASSIFICATION 1997 1996
- ------------------------------------- ------------- ------------
(IN MILLIONS)
<S> <C> <C>
Leases and loans receivable................................. 0.4 $56.8
Property net of depreciation................................ 2.1 2.3
Investments in unconsolidated affiliates.................... -- 6.4
Valuation allowance......................................... -- (36.1)
---- -----
2.5 $29.4
==== =====
</TABLE>
In June 1997, the Company received $24.3 million on the disposal of two
aircraft loans receivable and an investment in unconsolidated affiliates that
were classified as assets held for sale with a $9.3 million net book value on
the date of disposition. As a result of this transaction, the Company reversed
$15.0 million of previously recorded provision for lease, loan, and real estate
losses related to these assets and used the proceeds to fully repay the
remaining $22.9 million of debt to the Company's former parent. (See Note 5)
Additionally, the retirement of debt to its former parent allowed the
Company to retain a lease receivable which it previously expected to sell in
order to retire the debt. Accordingly, the Company reclassified the lease
receivable from assets held for sale to leases and loans receivable and reversed
$4.7 million of previously recorded provision for lease, loan, and real estate
losses which had been established in contemplation of an accelerated sale of the
lease receivable.
5. LONG-TERM DEBT
Long-term debt outstanding is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
INTEREST RATE 1997 1996
------------- ------------- ------------
(IN MILLIONS)
<S> <C> <C> <C>
Salomon Brothers Realty Corporation.......... 8.61%(a) $58.3 $95.7
Former parent................................ -- 32.9
Delayed equity obligation on finance lease... 10.00% 18.0 20.2
Other........................................ 8.50%(a) 0.6 0.6
----- -----
76.9 149.4
Less: current portion of long-term debt...... 15.2 75.6
----- -----
$61.7 $73.8
===== =====
</TABLE>
- ---------------
(a) Interest rate at September 30, 1997
On January 9, 1997, the Company received an accelerated repayment of $35.5
million (including accrued interest) on a collateralized real estate loan
receivable and, as required by the loan agreement with Salomon Brothers Realty
Corporation ("Salomon Brothers"), used the proceeds to repay $31.0 million to
Salomon Brothers. The early payoff resulted in an approximate $1.3 million
pre-tax write-off of debt issuance costs and was classified as a $.8 million
after-tax extraordinary loss in the statement of operations. The excess proceeds
of approximately $4.5 million together with cash from other asset sales were
used to repay $10.0 million on January 13, 1997 to Echelon's former parent. As
discussed in Note 4, the Company received $24.3 million in
5
<PAGE> 7
ECHELON INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
settlement of two aircraft loans receivable and an investment in unconsolidated
affiliates. The proceeds were used to fully repay the remaining $22.9 million of
debt to the company's former parent. In August 1997, the Company received $10.6
million in full repayment of two loans receivable and used $6.0 million of the
proceeds to repay Salomon Brothers. The payoff resulted in an approximate $.2
million pre-tax write-off of debt issuance costs and was recorded as a $.1
million after-tax extraordinary loss in the statement of operations.
6. COMMITMENTS AND CONTINGENCIES
The Company is subject to regulation with respect to the environmental
effects of its operations. The Company's disposal of hazardous waste through
third party vendors may result in costs to clean up facilities found to be
contaminated. Federal and state statutes authorize governmental agencies to
compel responsible parties to clean up certain abandoned or uncontrolled
hazardous waste sites. The Company has been notified by the Environmental
Protection Agency that a former subsidiary is or could be a potentially
responsible party at one site. Liability for cleanup costs of this site is joint
and several. Based upon information currently available, the Company believes
that its liability for cleanup of this site will not be material and does not
believe that it will be required to pay a significantly disproportionate share
of the total cleanup costs. In addition, the Company may also be responsible for
additional environmental cleanup at other sites. Based on information currently
available to the Company, the Company estimates that its proportionate share of
liability for cleaning up all sites ranges from $0.1 million to $1.0 million,
and it has reserved $0.5 million for potential costs that management estimates
to be probable. Management currently believes that the ultimate outcome of these
matters will not have a material adverse effect upon the Company's results of
operations, financial condition or liquidity.
Through a former partnership, the Company remains contingently liable for
first mortgage bonds issued to residents of the life care communities owned by
the former partnership. The contingent liability reduces over time as the
residency of those who were residents at the time of the sale of the Company's
interest terminates. If the current owners fail to perform their obligations and
if the partnership assets, consisting primarily of land and buildings, were
worthless, the Company could be liable for an additional $30.0 million as of
December 31, 1996. The Company considers the incurrence of this liability to be
remote based on asset values and the indemnification agreement from the current
owners to the Company.
During 1996 and 1997, the Company signed commitments to provide capital
contributions of $25.7 million to affordable housing tax credit limited
partnerships. The Company has funded $9.6 million of this amount as of September
30, 1997 and expects to complete funding during 1999.
6
<PAGE> 8
ECHELON INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. CONDENSED STATEMENTS OF INCOME OF UNCONSOLIDATED ENTITY
The unaudited statements of income of Progress Potomac Capital Ventures, a
50/50 joint venture between the Company and Potomac Capital Corporation, for the
three and nine month periods ended September 30, 1997 and 1996 are presented
below. Amounts reflect 100% of the joint venture's results of operations. The
Company accounts for the joint venture by the equity method.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1997 1996 1997 1996
------- ------- ------- -------
(000'S)
<S> <C> <C> <C> <C>
REVENUES:
Finance lease revenue....................... $1,036 $1,189 $3,226 $3,674
Rental income............................... 198 199 596 597
Interest income............................. 485 164 767 226
------ ------ ------ ------
1,719 1,552 4,589 4,497
------ ------ ------ ------
EXPENSES:
Administration fee.......................... 15 15 45 45
Depreciation................................ 111 111 333 333
Miscellaneous............................... 3 3 3 3
------ ------ ------ ------
129 129 381 381
------ ------ ------ ------
NET INCOME.......................... $1,590 $1,423 $4,208 $4,116
====== ====== ====== ======
</TABLE>
8. EFFECTIVE INCOME TAX RATE
The Company's effective income tax rate differs from the statutory income
tax rate primarily due to tax credits related to the Company's investment in
housing tax credit limited partnerships, amortization of investment tax credits
related to the Company's leveraged lease portfolio, and differences in rates
between previous and currently deferred taxes.
7
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company is a real estate and financial services company with operations
in the development, ownership, and management of commercial and multi-family
residential real estate (the "Real Estate Business") and collateralized
financing of commercial real estate and aircraft, and leasing of aircraft and
other assets (the "Lending and Leasing Business").
Prior to December 18, 1996 ("Distribution Date"), the Company operated as a
wholly-owned subsidiary of Florida Progress Corporation ("Florida Progress").
Effective on the Distribution Date, Florida Progress distributed the Company's
stock to Florida Progress shareholders (one share of the Company for each
fifteen shares of Florida Progress) as a tax-free dividend (the "Distribution").
The Distribution established the Company as a publicly held corporation,
separate from Florida Progress. Prior to the Distribution, the Company recorded
approximately $31 million of provision for losses including $21.5 million to
allow for an accelerated disposal of certain non-strategic assets that the
Company identified as assets to be disposed of within two years.
The Company is continuing its strategy of growing the Real Estate Business
and accelerating the disposal of certain non-strategic assets. During the third
quarter of 1997, the Company received $10.6 million in full repayment of two
real estate loans receivable and used $6.0 million of the proceeds to pay down
debt to Salomon Brothers. As a result of the debt repayment, the Company wrote
off approximately $.2 million of debt issuance costs which is reflected as a $.1
million after-tax extraordinary loss. During the second quarter of 1997, the
Company received $24.3 million on the disposal of two aircraft loans receivable
and an investment in unconsolidated affiliates that were classified as assets
held for sale with a $9.3 million net book value on the date of disposition. As
a result of this transaction, the Company reversed $15.0 million of previously
recorded provision for lease, loan, and real estate losses related to these
assets. The proceeds were used to fully repay the remaining $22.9 million of
debt to the Company's former parent. Additionally, the retirement of debt to its
former parent allowed the Company to retain an aircraft lease receivable which
it previously expected to sell in order to retire the debt. Accordingly, the
Company reclassified the lease receivable from assets held for sale to leases
and loans receivable and reversed $4.7 million of previously recorded provision
for lease, loan and real estate losses which had been established in
contemplation of an accelerated sale of the lease receivable.
The Company is continuing to update its strategic plan, with a revised plan
expected by the end of December 1997. As part of this process, the Company
concluded that the original long-term hold strategy for certain real estate
assets limited the Company's flexibility to maximize the value of certain
assets. Therefore, the Company adopted short and medium-term exit strategies for
certain assets, as well as long-term exit strategies. As a result of the change
in strategy in the second quarter of 1997 and an updated impairment analysis,
the Company recorded a $19.0 million pre-tax provision for losses to write-down
certain real estate assets to fair value.
The timing and results of the sale, settlement, and repositioning of
non-strategic assets achieved in the nine month period ending September 30, 1997
are not necessarily indicative of future results.
RESULTS OF OPERATIONS
Net income for the three and nine month periods ended September 30, 1997
was $1.3 million or $.19 per share, and $6.6 million or $.97 per share,
respectively. This compares to a net loss of $(1.5) million or $(.23) per share,
and $(21.7) million or $(3.34) per share for the same periods in 1996.
REVENUES
Sales and revenues for the three and nine month periods ended September 30,
1997 were $9.7 million and $28.5 million, which were $11.3 million and $20.1
million lower than the same periods in 1996 primarily due to a decrease of $11.1
million and $17.4 million in the sale of development properties and a $1.5
million and $4.6 million decrease in interest income. The decrease in the sale
of development properties was mainly due to fewer sales of land in Carillon in
1997 compared to 1996. The decrease in interest income was due to loan
8
<PAGE> 10
receivable payoffs and sales. Marina and other revenue for the three and nine
month periods ended September 30, 1997 increased by $.9 million and $1.5 million
over the same periods in 1996, primarily due to higher boat sales in the first
and third quarters of 1997 compared to 1996.
Equity in losses of real estate partnerships reduced 1997 revenues by $.2
million and $1.0 million for the three and nine month periods compared to 1996
as a result of the Company recording its share of losses in housing tax credit
limited partnerships which did not exist in 1996. Tax credits of $.2 million and
$1.0 million for the three and nine month periods ended September 30, 1997
related to these partnerships are recorded as a reduction of income tax expense.
Other lending and leasing income increased by $.9 million for the nine months of
1997 compared to 1996, due to the gain recorded in the first quarter of 1997, on
the sale of an asset in a partnership in which Echelon had approximately a 26%
interest.
OPERATING EXPENSES
Operating expenses for the three and nine month periods ended September 30,
1997 were $8.1 million and $19.7 million, which decreased by $18.4 million and
$67.6 million compared to the same periods in 1996, primarily due to the
decrease of $34.6 million in the provision for lease, loan, and real estate
losses as discussed in the Overview, the decline in the sale of development
properties mentioned above and the increase of $2.3 million and $10.6 million in
other income discussed below.
Real estate operations expenses for the three and nine month periods ended
September 30, 1997 increased by $1.0 million and $1.9 million over the same
periods in 1996, primarily due to higher boat sales in the first and third
quarters of 1997 compared to 1996. Cost of development properties sold decreased
$11.1 million and $17.7 million for the three and nine month periods of 1997 due
to the decrease in sales discussed above. Interest expense decreased by $2.9
million and $8.5 million for the three and nine month periods of 1997 compared
to 1996 due to the reduction of debt resulting from loan receivable payoffs,
asset sales, and 1996 equity contributions from the Company's former parent in
connection with the Company's spin-off from its parent. Marketing and other
administrative expenses increased by $.9 million and $3.9 million for the three
and nine month periods of 1997 over 1996 due to increased expenses related to
the hiring of additional staff, increased expenses related to the Company being
a publicly-traded company, and the full year accrual of management incentive and
long-term incentive compensation as a result of the Company achieving in the
first quarter of 1997 its annual 1997 goals. This was largely offset by the
elimination of $.9 million and $1.3 million of allocated administrative expenses
of the former parent which were included in the three and nine month periods
ended September 30, 1996. The increase in other income of $2.3 million and $10.6
million for the three and nine month periods of 1997 compared to 1996 primarily
resulted from the following: investment income of $.7 million in the three month
period and $1.9 million in the nine month period, $4.1 million related to a
previously deferred gain on a loan receivable that was sold at par in January
1997, and $1.3 million related to the sale in March 1997 of the Company's
interest in a previously written-off oil rig lease.
LIQUIDITY AND CAPITAL RESOURCES
The Company's sources of liquidity are expected to come from the continued
maturity and collection of the Company's loan portfolio, proceeds from the sale
of certain non-strategic assets, operating cash flow, existing cash and
marketable securities, and with respect to real estate development, from
project-based financings. The Company is also considering a general credit
facility to fund its short-term construction needs.
Cash flow from investing activities was $29.9 million for the nine-month
period ended September 30, 1997. Proceeds from the sale or collection of leases
and loans were $76.5 million, including $35.2 million from the sale of a loan
receivable at par, $19.8 million from the payoff of two aircraft loans, and
$10.6 million from the payoff of two real estate loans receivable. Purchases of
marketable securities, including debt securities with maturities greater than
three months, were $57.1 million and proceeds from sales of marketable
securities were $15.6 million.
Capital expenditures, reported as real estate additions, were $7.8 million
for the nine-month period ended September 30, 1997 and were primarily for land
development and office tenant construction improvements. Distributions from
unconsolidated affiliates, including $4.2 million from a partnership that sold
substantially
9
<PAGE> 11
all of its assets, were $9.6 million and are reported net of investments in
housing tax credit limited partnerships of $7.3 million.
Repayment of long-term debt was $74.2 million, including $37.4 million on
the Salomon Brothers loan and a payoff of the $32.9 million debt to Echelon's
former parent.
In July 1997, the Company closed on a $16.5 million construction loan which
will be used to fund development of a 369-unit apartment project on land that
the Company owns in St. Petersburg, Florida. In November 1997, the Company
expects to close on a $17.5 million construction loan to fund development of a
314-unit apartment project on land that the company owns in Carillon in St.
Petersburg, Florida.
The Company is also in the process of reviewing proposals to refinance all
or a portion of its debt with Salomon Brothers.
OUTLOOK
The Company is continuing to divest its non-strategic assets and to use the
proceeds either to pay down debt, or to reinvest in its real estate operations.
The Company has obtained a building permit, hired the general contractor
and started physical construction of a 369 unit multi-family apartment project,
the first phase of its multi-family development on Company-owned land located on
9th Street in St. Petersburg, Florida. Site work has begun and physical
construction is slated to begin in December 1997 on the 314-unit first phase of
the Company's planned multi-family project in Carillon. In addition, the Company
is still pursuing sites in Orlando for future multi-family projects.
The Company is continuing to evaluate the feasibility for an additional
Company-owned commercial office building at Carillon. An architectural firm has
been hired and general contractors are being interviewed to assist in the
development of plans for this project. In addition, the Company is completing
development on one of its downtown St. Petersburg buildings.
On October 1, 1997, the Company hired W. Michael Doramus as executive vice
president. Mr. Doramus was the founder of Mission Development Company, a
Dallas-based multi-family housing developer. He had served as chairman of the
Company and will continue as a board member, but Darryl A. LeClair, the
Company's president and chief executive officer, has assumed the position of
chairman. With the employment of Mr. Doramus, the Company purchased for $365,000
certain assets of Mission Development Company and established a southwest
regional office in Dallas, Texas. The Company is pursuing sites in the southwest
to develop future multi-family apartment projects.
On November 12, 1997, the Company announced that it will purchase up to
$2.5 million worth of its stock from stockholders with ten (10) or fewer shares
of stock as of a record date of November 6, 1997. The program will run from
November 12, 1997 through December 15, 1997 (Program Period), unless extended by
the Company. Stockholders participating in the Program will be paid the average
of the closing market prices of the Company's stock as reported on the New York
Stock Exchange during the Program Period. If more than $2.5 million of stock is
submitted for sale, the excess shares will be sold on the open market through a
registered broker/dealer. Those stockholders will receive a market-based
weighted average price based upon the shares sold in the open market.
Participating stockholders will not incur any commissions, although a $3.00 per
share processing fee will be charged by the vendor administering the program to
help defray the cost of the program. This voluntary program will provide
participating stockholders an inexpensive and convenient method to sell odd-lot
shares through the mail at a small fee, while enabling the Company to save the
annual administrative costs associated with servicing odd-lot accounts.
As discussed in the Overview, the Company expects to complete an update of
its strategic plan by the end of December 1997, after which date, a general
overview will be provided.
10
<PAGE> 12
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained herein regarding matters that are not
historical facts are forward-looking statements, including certain statements
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations," including but not limited to statements concerning
Echelon's strategies, Echelon's expected sources of funds, and Echelon's
expected uses of funds, including its expected capital expenditures and
anticipated dates by which certain real estate development activities are
accomplished. Because such statements involve risks and uncertainties, actual
strategies and the timing and expected results thereof may differ materially
from those expressed or implied by such forward-looking statements. For a
discussion of certain factors which could affect such actual results, see
"Cautionary Statement Regarding Forward-Looking Statements" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
11
<PAGE> 13
PART II.
OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
Subsequent to the third quarter of 1997, Echelon International Corporation
issued the following:
1) News release dated November 12, 1997 regarding the announcement of an
odd-lot buy-back program for stockholders with 10 shares or less. A
copy of the news release is being filed as Exhibit 99.1.
2) News release dated November 14, 1997 regarding 1997 third quarter
financial results. A copy of the news release is being filed as Exhibit
99.2.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
<TABLE>
<CAPTION>
NUMBER EXHIBIT
- ------ -------
<C> <S> <C>
10 -- Employment agreement for W. Michael Doramus dated October 1,
1997.
27 -- Financial Data Schedule of Echelon International Corporation
99.1 -- Echelon International Corporation News Release dated
November 12, 1997 regarding odd-lot buy-back program for
stockholders with 10 shares or less.
99.2 -- Echelon International Corporation News Release dated
November 14, 1997 regarding 1997 third quarter financial
results.
</TABLE>
(b) Reports on Form 8-K:
In October 1997, Echelon International Corporation filed the following
report on Form 8-K:
Form 8-K dated October 1, 1997, reporting under Item 5 "Other Events" the
employment of W. Michael Doramus as executive vice president and the assumption
of chairman of the board of directors by Darryl A. LeClair.
12
<PAGE> 14
SIGNATURES
Pursuant to the requirements 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.
<TABLE>
<S> <C>
ECHELON INTERNATIONAL CORPORATION
Date: November 14, 1997 /s/ JAMES R. HOBBS, JR.
--------------------------------------------------------
James R. Hobbs, Jr.
Vice President and Controller
Date: November 14, 1997 /s/ LARRY J. NEWSOME
--------------------------------------------------------
Larry J. Newsome
Senior Vice President,
Chief Financial Officer
and Treasurer
</TABLE>
13
<PAGE> 1
EXHIBIT 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 1st day of
October, 1997, but is effective for all purposes as of the date specified below
in Section 2, by and between ECHELON INTERNATIONAL CORPORATION, a Florida
corporation (the "Company"), and W. MICHAEL DORAMUS, residing at 3301
Southwestern Blvd., Dallas, Texas 75225 (the "Executive").
W I T N E S S E T H:
1. EMPLOYMENT
The Company hereby employs the Executive, and the Executive hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. TERM
Subject to the provisions for termination as hereinafter provided, the
term of employment under this Agreement shall begin as of October 1, 1997, the
date of closing of the acquisition of all of the assets of Mission Development
Company by the Company (the "Acquisition"), and shall continue through December
31, 2000, provided, however, that this Employment Agreement shall automatically
be renewed for successive one year terms unless either party gives the other
written notice of termination at least ninety (90) days prior to the end of any
such term.
3. COMPENSATION
(a) Base Salary. The Company shall pay to the Executive as basic
compensation for all services rendered by the Executive during the term of this
Agreement a basic annualized salary of $225,000 per year, or such other sum in
excess of that amount as the parties may agree on from time to time or as
provided in the next sentence (as in effect from time to time, the "Base
Salary"), payable monthly or in other more frequent installments, as determined
by the Company. The Board of Directors shall have no authority to reduce the
Executive's Base Salary in effect from time to time. In addition, the Board of
Directors, in its discretion, may award a bonus or bonuses to the Executive in
addition to the bonuses provided for in Section 3(b).
(b) Bonuses. In addition to the Base Salary to be paid pursuant to
Section 3(a), for the three months ending December 31, 1997 and for each of the
Company's two fiscal years ending December 31, 1998 and December 31, 1999 during
the term of this Agreement, provided the Executive continues to be employed by
the Company under this Agreement, the Executive shall be eligible to earn as
incentive compensation the annual bonuses specified, to the extent earned, on
Exhibit A to this Agreement. For each fiscal year ending after December 31,
1999, so long as the Employee remains employed by the Company, the Executive
shall be eligible to participate in incentive compensation annual bonus plan(s)
adopted by the Board of Directors of the Company from time to time in accordance
with the terms of such plans, any such bonuses to be comparable to bonuses for
Employment Agreement -- 1
<PAGE> 2
other executive officers of the Company with comparable duties and
responsibilities to those of the Executive.
(c) Certain Plans and Initial Award. (i) The Company has adopted
certain incentive compensation plans including a long term incentive plan (the
"LTIP"), providing for annual or other periodic awards to key employees of,
among other things, restricted stock and a stock option plan (the "ISO/NSO
Plan"), providing for the annual or other periodic issuance of options to
purchase the Company's common stock. The LTIP and ISO/NSO are referred to
collectively in this Agreement as the "Plans." The Executive will be given an
opportunity to participate in the Plans, in accordance with and subject to the
terms of the Plans as they may be adopted, amended and administered from time to
time.
(ii) In addition to the incentive compensation referred to in
Section 3(c)(i), the Company hereby agrees to grant to the Executive under the
LTIP, effective upon the consummation of the Acquisition, options to purchase
one hundred twenty-five thousand (125,000) shares of the Company's common stock
(the "Initial Options"), which Initial Options shall be exercisable as to
one-fourth of the shares of common stock covered by the Initial Options one year
from the effective date of the grant as specified by the Company's Compensation
Committee, and as to an additional one-fourth of such shares each year
thereafter. All of such shares shall be registered on a Form S-8 registration
statement. The exercise price for 88,414 of the Initial Options (including the
options for 62,500 shares to become exercisable within the first two years
following the date of grant) shall be $20.00 and the exercise price for the
remaining 36,586 of the Initial Options shall be the closing price on the New
York Stock Exchange (or such other market on which the Company's stock trades if
it is not listed on the New York Stock Exchange) on the trading day which is the
effective date of the grants of the Initial Options as specified by the
Company's Compensation Committee (the "Option Pricing Date"), which shall be the
date of the Acquisition, or if the Option Pricing Date is not a trading day, the
first trading day thereafter.
(iii) The Initial Options shall be fully vested and shall be
exercisable as to all of the shares of common stock covered by the Initial
Options upon (a) the death of the Executive or termination of employment upon
the "Permanent Disability" (as that term is defined in Section 7(b)(ii) of this
Agreement) of the Executive, (b) the termination of employment of the Executive
by the Company "Without Good Cause" (as that term is defined in Section 8(b)(ii)
of this Agreement) (c) the exercise by the Executive of his rights to terminate
his employment under Section 8(d)(ii) following a "Change of Control" (as that
term is defined in Section 8(d)(i) of this Agreement), or (d) the exercise by
the Executive of his rights to terminate his employment under Section 8(e)
following a "CEO Termination Event" (as that term is defined in Section 8(e) of
this Agreement).
(d) Reimbursement. The Company shall reimburse the Executive, in
accordance with the Company's policies and practices for senior management, for
all reasonable expenses incurred by the Executive in the performance of the
Executive's duties under this Agreement, provided, however, that the Executive
must furnish to the Company an itemized account, reasonably satisfactory to the
Company, in substantiation of such expenditures.
(e) Certain Benefits. The Executive shall be entitled to such fringe
benefits including, but not limited to, medical and other insurance benefits as
may be provided from time to time by the
Employment Agreement -- 2
<PAGE> 3
Company to other senior officers of the Company. In addition, without
restricting the foregoing, the Company shall provide the Executive at the
Company's sole cost and expense with (i) a policy or policies of term life
insurance (the "Basic Life Insurance") providing, among other things, basic
death benefits of not less than two times the Base Salary in effect from time to
time, (ii) directors and officers liability insurance with coverage, terms and
limits suitable for an executive vice president of a New York Stock Exchange
listed company comparable in financial size and wherewithal to that of the
Company and (iii) a monthly allowance of $500 cash to reimburse the Executive
for the use and maintenance of his automobile in furtherance of the business and
affairs of the Company, provided that the Executive shall at all times insure
the Executive and the Company in such amounts as may be reasonably requested by
the Company against claims for bodily injury, death and property damages
occurring as a result of its use. The Company shall use its reasonable best
efforts to make available to the Executive in connection with providing and
paying for the Basic Life Insurance the opportunity to purchase at the
Executive's sole cost and expense additional life insurance with a basic death
benefit (the "Optional Life Insurance") equal to two times the Executive's Base
Salary in effect from time to time (affording the Executive the opportunity to
have basic death benefit life insurance coverage equal to four times such Base
Salary). The Company shall use its reasonable best efforts to effect the
transfer of the ownership to the Executive of the policy or policies for the
Basic Life Insurance and the Optional Life Insurance, if any, upon the
termination of the Executive's employment by the Company. After the Executive's
termination, payment of any premiums would be the obligation of the Executive.
(f) Other Incentive and Benefit Plans. The Executive shall be eligible
to participate, in accordance with the terms of such plans as they may be
adopted, amended and administered from time to time, in incentive, bonus,
benefit or similar plans, including without limitation, any stock option, bonus
or other equity ownership plan, any short, mid or long term incentive plan and
any other bonus, pension or profit sharing plans established by the Company from
time to time.
(g) Right to use certain Proprietary Information. Reference is made to
that certain Consulting Agreement between the Company and Mission Development
Company ("MDC"), a Texas corporation, which was effective as of July 30, 1996,
was subsequently amended and has been terminated October 1, 1997 (the "MDC
Consulting Agreement"). Upon the termination of the Executive's employment with
the Company for any reason other than for "Good Cause," and provided the
Executive is not then in breach or violation of any other agreement with or
other obligation to the Company, then, effective upon such termination, the
Company shall license to the Executive the non-exclusive, non-transferrable
royalty-free right to use the System and the Manual as such terms were defined
in the MDC Consulting Agreement. Such license shall be pursuant to a license
agreement in substantially the same form as is attached hereto as Exhibit B (the
"System and Manual License Agreement"). The Executive shall have no rights to
the System and the Manual upon the termination of his employment by the Company
for "Good Cause."
4. DUTIES
(a) General. The Executive is engaged as the Executive Vice President
of the Company. In addition, at the request of the Board of Directors, the
Executive shall serve in any other positions in any wholly owned subsidiary of
the Company, without any additional compensation. The Executive
Employment Agreement -- 3
<PAGE> 4
shall have such duties and hold such other offices as may from time to time be
reasonably assigned to him by the Board of Directors of the Company.
(b) Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless the Executive for all liabilities,
costs, expenses and damages arising out of or in connection with the Executive's
service to the Company under this Agreement. In furtherance of this indemnity,
the Company shall enter into an indemnification agreement, in form and substance
reasonably satisfactory to the Executive and the Company. In addition, the
indemnity provided hereunder shall extend to service by the Executive as an
officer or director, or service in a similar capacity, for any civic, community
or charitable organization, provided such service is undertaken at the request
of or with the knowledge and acquiescence of the Company. The foregoing
indemnification shall be in addition to any rights or benefits the Executive may
have under statute, the Bylaws or Articles of Incorporation of the Company,
under a policy of insurance, or otherwise.
5. EXTENT OF SERVICES; VACATIONS AND DAYS OFF
(a) Extent of Services. During the term of the Executive's employment
under this Agreement, except during customary vacation periods and periods of
illness, the Executive shall devote full-time energy and attention during
regular business hours to the benefit and business of the Company as may be
reasonably necessary in performing the Executive's duties pursuant to this
Agreement.
(b) Vacations. The Executive shall be entitled to vacations with pay
and to such personal and sick leave with pay in accordance with the policy of
the Company as may be established from time to time by the Company and applied
to other senior officers of the Company. In no event shall the Executive be
entitled to fewer than four weeks' annual vacation. Unused vacation days may be
carried over from one year to the next for a period of up to two years. Any
vacation days which remain unused on the second anniversary of the end of the
fiscal year to which they originally related shall expire and shall thereafter
no longer be useable by the Executive.
6. FACILITIES
The Company shall provide the Executive with a fully furnished office,
and the facilities of the Company shall be generally available to the Executive
in the performance of the Executive's duties pursuant to this Agreement, it
being understood and contemplated by the parties that all equipment, supplies
and office personnel required in the performance of the Executive's duties under
this Agreement shall be supplied by and at the sole expense of the Company.
7. ILLNESS OR INCAPACITY, TERMINATION ON DEATH, ETC.
(a) Death. If the Executive dies during the term of the Executive's
employment, the Company shall pay to the estate of the Executive within 30 days
after the date of death such Base Salary and any cash bonus compensation earned
pursuant to the provisions of any incentive
Employment Agreement -- 4
<PAGE> 5
compensation plan then in effect but not yet paid, as would otherwise have been
payable to the Executive up to the end of the month in which the Executive's
death occurs. After receiving the payments provided in this Section 7(a) the
Executive and the Executive's estate shall have no further rights under this
Agreement (other than those rights already accrued).
(b) Disability. (i) During any period of disability, illness or
incapacity during the term of this Agreement which renders the Executive at
least temporarily unable to perform the services required under this Agreement,
the Executive shall receive the Base Salary payable under Section 3(a) of this
Agreement plus any cash bonus compensation earned pursuant to the provisions of
any incentive compensation plan then in effect but not yet paid, less any cash
benefits received by him under any disability insurance carried by or provided
by the Company. Upon the Executive's "Permanent Disability" (as defined below),
which permanent disability continues during the payment periods specified
herein, the Company shall pay to the Executive for the period of time specified
below an amount (the "Disability Payment") equal to the (i) sum of (A) the Base
Salary, paid in the same monthly or other periodic installments as in effect at
the time of the Executive's Permanent Disability plus (B) an equal monthly pro
rata portion of an amount of cash equal to the target level of the annual cash
bonus payable to the Executive under the Company's Management Incentive
Compensation Plan as described on Exhibit A or any similar bonus or incentive
plans or programs then in effect (the "MICP Target Amount"), which MICP Target
Amount shall be paid in pro rata equal monthly installments over the period of
time specified below (ii) reduced by the amount of any monthly payments under
any policy of disability income insurance paid for by the Company which payments
are received during the time when any Disability Payment is being made to the
Executive following the Executive's Permanent Disability. For so long as the
Executive's Permanent Disability continues, the Disability Payment shall be paid
by the Company to the Executive at the same time or times as would have been the
case for payment of Base Salary over the unexpired term of this Agreement if the
Executive had not become permanently disabled and had remained employed by the
Company hereunder, but in no case shall such period exceed 24 months. The
Executive may be entitled to receive payments under any disability income
insurance which may be carried by or provided by the Company from time to time.
Upon "Permanent Disability" (as that term is defined in Section 7(b)(ii) below)
of the Executive, except as provided in this Section 7(b), all rights of the
Executive under this Agreement (other than rights already accrued) shall
terminate.
(ii) The term "Permanent Disability" as used in this Agreement
shall mean, in the event a disability insurance policy is maintained by the
Company covering the Executive at such time and is in full force and effect, the
definition of permanent disability set forth in such policy. In the event no
disability insurance policy is maintained with respect to the executive at such
time and in full force and effect, "Permanent Disability" shall mean the
inability of the Executive, as determined by the Board of Directors of the
Company, by reason of physical or mental disability to perform the duties
required of him under this Agreement for a period of one hundred and eighty
(180) days in any one-year period. Successive periods of disability, illness or
incapacity will be considered separate periods unless the later period of
disability, illness or incapacity is due to the same or related cause and
commences less than six months from the ending of the previous period of
disability. Upon such determination, the Board of Directors may terminate the
Executive's employment under this Agreement upon ten (10) days' prior written
notice. If any determination of the Board of Directors with respect to permanent
disability is disputed by the Executive, the parties hereto agree to abide by
the decision of a panel of three physicians. The Executive and Company shall
each appoint one
Employment Agreement -- 5
<PAGE> 6
member, and the third member of the panel shall be appointed by the other two
members. The Executive agrees to make himself available for and submit to
examinations by such physicians as may be directed by the Company. Failure to
submit to any such examination shall constitute a breach of a material part of
this Agreement.
8. OTHER TERMINATIONS
(a) By the Executive. (i) The Executive may terminate the Executive's
employment hereunder upon giving at least ninety (90) days' prior written
notice. In addition, the Executive shall have the right to terminate the
Executive's employment hereunder on the conditions and at the times provided for
in Section 8(d) of this Agreement and such termination shall be deemed pursuant
to Section 8(d) hereof.
(ii) If the Executive gives notice pursuant to Section 8(a)(i)
above, the Company shall have the right (but not the obligation) to relieve the
Executive, in whole or in part, of the Executive's duties under this Agreement,
or direct the Executive to no longer perform such duties, or direct that the
Executive should no longer report to work, or any combination of the foregoing.
In any such event, the Executive shall be entitled to receive only the Base
Salary not yet paid, as would otherwise have been payable to the Executive up to
the end of the month specified as the month of termination in the termination
notice. In the event the Executive gives notice pursuant to Section 8(a)(i)
above but specifies a termination date in excess of ninety (90) days from the
date of such notice, the Company shall have the right (but not the obligation)
to accelerate the termination date to any date prior to the date specified in
the notice that is in excess of ninety (90) days from the date of the notice,
and the Company shall have the right (but not the obligation) to relieve the
Executive, in whole or in part, of the Executive's duties under this Agreement,
or direct the Executive to no longer perform such duties, or direct that the
Executive should no longer report to work, or any combination of the foregoing;
provided, however, that in any such event the Executive shall be entitled to
receive the Base Salary, as would otherwise have been payable to the Executive
up to the end of the month of the termination date properly selected by the
Company. Upon receiving the payments provided for under this Section 8(a), all
rights of the Executive under this Agreement (other than rights already accrued)
shall terminate.
(b) Termination for "Good Cause". (i) Except as otherwise provided in
this Agreement, the Company may terminate the employment of the Executive
hereunder only for "good cause," which shall mean (a) the willful, substantial,
continued and unjustified refusal of the Executive substantially to perform his
duties with the Company to the extent of his ability to do so (other than any
failure due to physical or mental incapacity) or (b) willful misconduct
materially and demonstrably injurious to the Company, financially or otherwise,
in each case, as determined in the reasonable discretion of the Board of
Directors, but with respect to each of the foregoing bases for termination
specified in the preceding clause, only if (1) the Executive has been provided
with written notice of any assertion that there is a basis for termination for
good cause which notice shall specify in reasonable detail specific facts
regarding any such assertion and the Executive has been given a reasonable
period of time within which to remedy or cure the problem or complaint, (2) such
notice is provided to the Executive a reasonable time before the Board of
Directors meets to consider any possible termination for cause, (3) at or prior
to the meeting of the Board of Directors to consider the matters described
Employment Agreement -- 6
<PAGE> 7
in the written notice, an opportunity is provided to the Executive and his
counsel to be heard by the Board of Directors with respect to the matters
described in the written notice, before it acts with respect to such matter, (4)
any resolution or other action by the Board of Directors with respect to any
deliberation regarding or decision to terminate the Executive for good cause is
duly adopted by a vote of a majority of the entire Board of Directors of the
Company at a meeting of the Board duly called and held and (5) the Executive is
promptly provided with a copy of the resolution or other corporate action taken
with respect to such termination. No act or failure to act by the Executive
shall be considered willful unless done or omitted to be done by him not in good
faith and without reasonable belief that his action or omission was in the best
interests of the Company.
(ii) If the employment of the Executive is terminated for good
cause under Section 8(b)(i) of this Agreement, the Company shall pay to the
Executive any Base Salary earned prior to the effective date of termination but
not yet paid and any cash bonus compensation earned pursuant to the provisions
of any incentive compensation plan then in effect but not paid to the Executive
prior to the effective date of such termination. Under such circumstances, such
payments shall be in full and complete discharge of any and all liabilities or
obligations of the Company to the Executive hereunder, and the Executive shall
be entitled to no further benefits under this Agreement (other than rights
already accrued).
(iii) Termination of the employment of the Executive other
than as expressly specified above in this Section 8(b) for good cause shall be
deemed to be a termination of employment "Without Good Cause."
(c) Termination Without Good Cause. (i) Notwithstanding any other
provision of this Agreement, the Company shall have the right to terminate the
Executive's employment Without Good Cause pursuant to the provisions of this
Section 8(c). If the Company shall terminate the employment of the Executive
Without Good Cause effective on a date earlier than the termination date
provided for in Section 2 (with the effective date of termination as so
identified by the Company being referred to herein as the "Accelerated
Termination Date"), the Executive, until the end of the term of this Agreement
then in effect as provided for in Section 2 or until the date which is 12 months
after the Accelerated Termination Date, whichever is greater, shall continue to
receive (1) the Base Salary, paid in the same monthly or other periodic
installments as in effect prior to the Accelerated Termination Date; (2) an
equal monthly pro rata portion of an amount of cash equal to the MICP Target
Amount (as that term is defined in Section 7(b)(i)) in respect of the year
during which the Executive's employment terminates, or, if greater, the MICP
Target Amount multiplied times the number of years (or fractions thereof)
remaining in the then unexpired term of this Agreement plus; (3) an equal
monthly pro rata portion of an amount of cash equal to the cash value of any
bonus paid or to be paid to the Executive in the form of performance shares or
restricted stock under the LTIP as described on Exhibit A or any similar bonus
or incentive plans or programs then in effect (valued, if applicable under the
terms of such plans or programs, at the greater of the closing price on the New
York Stock Exchange, or other such market on which the Company's stock trades if
it is not listed on the New York Stock Exchange, on the first trading day of the
plan or program cycle or the Accelerated Termination Date, or if the Accelerated
Termination Date is not a trading day, on the first trading day thereafter) in
respect of the then-current three year cycle of such plans or programs or such
other cycle as is then in effect, calculated as if the then-current cycle were
completed and the target levels attained (the "LTIP Target Amount"), which cash
payment shall be in lieu and in full
Employment Agreement -- 7
<PAGE> 8
satisfaction of any rights under the LTIP in respect of such stock or shares as
described in Exhibit A or any similar bonus or incentive plans or programs in
effect at the time of such payment (all of which stock or shares shall be
cancelled upon such payment and receipt); and (4) any other cash or other bonus
compensation earned prior to the date of such termination pursuant to the terms
of all incentive compensation plans then in effect other than the Company's
Management Incentive Compensation Plan as described on Exhibit A or any similar
bonus on incentive plans or programs then in effect; provided that,
notwithstanding such termination of employment, the Executive's covenants set
forth in Section 10 and Section 11 are intended to and shall remain in full
force and effect; and provided further that, upon determination that such
termination shall occur, the Company shall have the right (but not the
obligation), pending such termination, to relieve the Executive, in whole or in
part, of the Executive's duties under this Agreement, or direct the Executive to
no longer perform such duties, or direct that the Executive no longer be
required to report to work, or any combination of the foregoing.
(ii) The parties agree that, because there can be no exact
measure of the damage that would occur to the Executive as a result of a
termination by the Company of the Executive's employment Without Good Cause, the
payments and benefits paid and provided pursuant to this Section 8(c) shall be
deemed to constitute liquidated damages and not a penalty for the Company's
termination of the Executive's employment Without Good Cause.
(d) Change of Control. (i) For purposes of this Agreement, a "Change
in Control" shall mean the first to occur of:
(1) a change in control of the Company of a nature that
is required, pursuant to the Securities Exchange Act
of 1934 (the "1934 Act"), to be reported in response
to Item 1(a) of a Current Report on Form 8-K or Item
6(e) of Schedule 14A under the 1934 Act (in each case
under this Agreement, references to provisions of the
1934 Act and the rules and regulations promulgated
thereunder being understood to refer to such law,
rules and regulations as the same are in effect on
November 1, 1996); or
(2) the acquisition of "Beneficial Ownership" (as defined
in Rule 13d-3 under the 1934 Act) of the Company's
securities comprising 35% or more of the combined
voting power of the Company's outstanding securities
by any "person" (as that term is used in Sections
13(d) and 14(d)(2) of the 1934 Act and the rules and
regulations promulgated thereunder, but not including
any trustee or fiduciary acting in that capacity for
an employee benefit plan sponsored by the Company)
and such person's "affiliates" and "associates" (as
those terms are defined under the 1934 Act), but
excluding any ownership by the Executive and his
affiliates and associates; or
(3) the failure of the "Incumbent Directors" (as defined
below) to constitute at least a majority of all
directors of the Company (for these purposes,
"Incumbent Directors" means individuals who were the
directors of the Company on November 1, 1996, and,
after his or her election, any individual becoming a
director subsequent to November 1, 1996, whose
election, or
Employment Agreement -- 8
<PAGE> 9
nomination for election by the Company's
stockholders, is approved by a vote of at least
two-thirds of the directors then comprising the
Incumbent Directors, except that no individual shall
be considered an Incumbent Director who is not
recommended by management and whose initial
assumption of office as a director is in connection
with an actual or threatened "election contest"
relating to the "election of directors" of the
Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the 1934 Act); or
(4) the closing of a sale of all or substantially all of
the assets of the Company;
(5) the Company's adoption of a plan of dissolution or
liquidation; or
(6) the closing of a merger or consolidation involving
the Company in which the Company is not the surviving
corporation or if, immediately following such merger
or consolidation, less than seventy-five percent
(75%) of the surviving corporation's outstanding
voting stock is held or is anticipated to be held by
persons who are stockholders of the Company
immediately prior to such merger or consolidation.
(ii) If a Change in Control of the Company occurs, the
Executive shall have the right, exercisable for a period of one year thereafter
by delivering a written statement to that effect to the Company, to immediately
terminate this Agreement and upon such a determination the Executive shall have
the right to receive and the Company shall be obligated to pay to Executive in
cash a lump sum payment in an amount equal to the sum of (1) three times the
annual Base Salary then in effect, (2) three times the MICP Target Amount (as
that term is defined in Section 7(b)(i)) in the year in which employment
terminates, (3) the cash value of the LTIP Target Amount (as that term is
defined in Section 8(c)), which cash payment shall be in lieu and in full
satisfaction of any rights under the LTIP in respect of such stock or shares as
described in Exhibit A or any similar bonus or incentive plans or programs in
effect at the time of such payment (all of which stock or shares shall be
cancelled upon such payment and receipt), and (4) the additional payments
necessary to discharge certain tax liabilities (the "Gross Up") as that term is
defined in Section 13 of this Agreement (the sum of the foregoing amounts other
than the Gross Up being referred to as the "Change in Control Payment"). If the
Executive fails to exercise his rights under this Section 8(d) within one year
following a Change in Control, such rights shall expire and be of no further
force or effect.
(e) Termination of Employment of Chief Executive Officer. Upon the
termination of Darryl A. LeClair's employment with the Company (the "CEO
Termination Date"), for any reason other than the death of Darryl A. LeClair,
the Executive, for a period of six (6) months from the CEO Termination Date, may
terminate the Executive's employment hereunder upon giving at least thirty (30)
days' prior written notice; provided however, the Executive shall not be
entitled to terminate this agreement in accordance with this section if the
Executive, either as an individual, partner, officer, director, stockholder,
employee, advisor, independent contractor, joint venturer, consultant, agent, or
representative or salesman for any person, firm, partnership, corporation or
other entity, is to be employed by or consult with Darryl A. LeClair or any
entity employing Darryl A. LeClair after the CEO Termination Date (the
"Prohibited Activity"). In the event of the death of Darryl A. LeClair, provided
this Agreement remains in effect for a period of one year from the date of
Darryl A.
Employment Agreement -- 9
<PAGE> 10
LeClair's death (the "Trigger Event"), the Executive, for a period of six (6)
months after the Trigger Event, may terminate the Executive's employment
hereunder upon giving at least thirty (30) days' prior written notice. Upon
termination of the Executive's employment pursuant to this section, the
Executive shall be entitled to receive, until the end of the term of this
Agreement then in effect as provided for in Section 2 or until the date which is
12 months after the CEO Termination Date, whichever is later, (1) the Base
Salary, paid in the same monthly or other periodic installments as in effect
prior to the CEO Termination Date; (2) an equal monthly pro rata portion of an
amount of cash equal to the MICP Target Amount (as that term is defined in
Section 7(b)(i)) in respect of the year during which the Executive's employment
terminates, or, if greater, the MICP Target Amount multiplied times the number
of years (or fractions thereof) remaining in the then unexpired term of this
Agreement plus; (3) the cash value of the LTIP Target Amount (as that term is
defined in Section 8(c)), which cash payment shall be in lieu and in full
satisfaction of any rights under the LTIP in respect of such stock or shares as
described in Exhibit A or any similar bonus or incentive plans or programs in
effect at the time of such payment (all of which stock or shares shall be
cancelled upon such payment and receipt); and (4) any other cash or other bonus
compensation earned prior to the date of such termination pursuant to the terms
of all incentive compensation plans then in effect other than the Company's
Management Incentive Compensation Plan as described on Exhibit A or any similar
bonus on incentive plans or programs then in effect; provided that,
notwithstanding such termination of employment, the Executive's covenants set
forth in Section 10 and Section 11 are intended to and shall remain in full
force and effect and provided further that in the event of such termination, the
Company shall have the right (but not the obligation) to relieve the Executive,
in whole or in part, of the Executive's duties under this Agreement, or direct
the Executive to no longer perform such duties, or direct that the Executive no
longer be required to report to work, or any combination of the foregoing.
Notwithstanding the foregoing, the payments provided for under this section
shall immediately cease if the Executive engages in any Prohibited Activity
after the CEO Termination Date. After receiving the payments provided in this
Section the Executive shall have no further rights under this Agreement (other
than those rights already accrued).
(f) Intentions Regarding Certain Stock and Benefit Plans. Except as
otherwise provided herein, upon any termination of the Executive's employment
Without Good Cause or upon the exercise by the Executive of his rights to
terminate his employment in accordance with Section 8(e) or pursuant to Section
8(d), it is the intention of the parties that any and all vesting or performance
requirements or conditions affecting any outstanding restricted stock,
performance stock, stock option, stock appreciation right, bonus, award, right,
grant or any other incentive compensation under any of the Plans, under this
Agreement, or otherwise received, shall be deemed to be fully satisfied and any
risk of forfeiture with respect thereto shall be deemed to have lapsed.
(g) Certain Rights Mutually Exclusive. The provisions of Section 8(c)
and Section 8(d) are mutually exclusive, provided, however, that if within one
year following commencement of an 8(c) payout there shall be a Change in Control
as defined in Section 8(d)(i), then the Executive shall be entitled to the
amount payable to the Executive under Section 8(d)(ii). The triggering of the
lump sum payment requirement of Section 8(d) shall cause the provisions of
Section 8(c) to become inoperative.
Employment Agreement -- 10
<PAGE> 11
9. DISCLOSURE
The Executive agrees that during the term of the Executive's employment
by the Company, the Executive will disclose and disclose only to the Company all
ideas, methods, plans, developments or improvements known by him which relate
directly or indirectly to the business of the Company, whether acquired by the
Executive before or during the Executive's employment by the Company. Nothing in
this Section 9 shall be construed as requiring any such communication where the
idea, plan, method or development is lawfully protected from disclosure as a
trade secret of a third party or by any other lawful prohibition against such
communication. The covenants of this Section 9 shall not be violated by ordinary
and customary communications with reporters, bankers and securities analysts and
other members of the investment community.
10. CONFIDENTIALITY
The Executive agrees to keep in strict secrecy and confidence any and
all information the Executive assimilates or to which the Executive has access
during the Executive's employment by the Company and which has not been publicly
disclosed and is not a matter of common knowledge in the fields of work of the
Company. The Executive agrees that both during and after the term of the
Executive's employment by the Company, the Executive will not, without the prior
written consent of the Company, disclose any such confidential information to
any third person, partnership, joint venture, company, corporation or other
organization. The foregoing covenants shall not be breached to the extent that
any such confidential information becomes a matter of general knowledge other
than through a breach by the Executive of the Executive's obligations under this
Section 10 or to the extent the disclosure is required by applicable law.
11. NONCOMPETITION AND NONSOLICITATION
(a) General. The Executive hereby acknowledges that, during and solely
as a result of the Executive's employment by the Company, the Executive has
received and shall continue to receive: (1) special training and education with
respect to the operations of the Company's real estate development and
management businesses and its leasing, lending and financing activities, and
other related matters, and (2) access to confidential information and business
and professional contacts. In consideration of the special and unique
opportunities afforded to the Executive by the Company as a result of the
Executive's employment, as outlined in the previous sentence, the Executive
hereby agrees to the restrictive covenants in this Section 11.
(b) Noncompetition. During the term of the Executive's employment,
whether pursuant to this Agreement, any automatic or other renewal hereof or
otherwise, and, except as may be otherwise herein provided, for a period of one
(1) year after the termination of the Executive's employment with the Company,
regardless of the reason for such termination, the Executive shall not, directly
or indirectly, enter into, engage in, be employed by or consult with any
business which competes with the Company's real estate lending, leasing,
development or management businesses in Florida. The Executive shall not engage
in such prohibited activities, either as an individual, partner, officer,
director, stockholder, employee, advisor, independent contractor, joint
venturer, consultant, agent,
Employment Agreement -- 11
<PAGE> 12
or representative or salesman for any person, firm, partnership, corporation or
other entity so competing with the Company. The restrictions of this Section 11
shall not be violated by (i) the ownership of no more than 2% of the outstanding
securities of any company whose stock is traded on a national securities
exchange or is quoted in the Automated Quotation System of the National
Association of Securities Dealers (NASDAQ), or (ii) other outside business
investments that do not in any manner conflict with the services to be rendered
by the Executive for the Company and that do not diminish or detract from the
Executive's ability to render the Executive's required attention to the business
of the Company.
(c) Nonsolicitation. During the Executive's employment with the Company
and, except as may be otherwise herein provided, for a period of one (1) year
following the termination of the Executive's employment with the Company,
regardless of the reason for such termination, the Executive agrees the
Executive will refrain from and will not, directly or indirectly, as an
individual, partner, officer, director, stockholder, employee, advisor,
independent contractor, joint venturer, consultant, agent, representative,
salesman or otherwise solicit any of the employees of the Company to terminate
their employment; provided however, that except upon the termination of the
Executive's employment with the Company for "Good Cause," the provisions of this
section shall not apply to the Executive with respect to the solicitation of J.
Patrick Rahmey, K. Brent Little, Kerry Adams and Elizabeth Harvey or any persons
employed by the Company to replace such individuals.
(d) Term Extended or Suspended. The period of time during which the
Executive is prohibited from engaging in certain business practices pursuant to
Sections 11(b) or (c) shall be extended by any length of time during which the
Executive is in breach of such covenants.
(e) Essential Element. It is understood by and between the parties
hereto that the foregoing restrictive covenants set forth in Sections 11(a)
through (c) are essential elements of this Agreement, and that, but for the
agreement of the Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement. Such covenants by the Executive shall
be construed as agreements independent of any other provision in this Agreement.
The existence of any claim or cause of action of the Executive against the
Company, whether predicated on this Agreement, or otherwise, shall not
constitute a defense to the enforcement by the Company of such covenants.
(f) Severability. It is agreed by the Company and Executive that if any
portion of the covenants set forth in this Section 11 are held to be invalid,
unreasonable, arbitrary or against public policy, then such portion of such
covenants shall be considered divisible both as to time and geographical area.
The Company and Executive agree that, if any court of competent jurisdiction
determines the specified time period or the specified geographical area
applicable to this Section 11 to be invalid, unreasonable, arbitrary or against
public policy, a lesser time period or geographical area which is determined to
be reasonable, non-arbitrary and not against public policy may be enforced
against the Executive. The Company and the Executive agree that the foregoing
covenants are appropriate and reasonable when considered in light of the nature
and extent of the business conducted by the Company.
(g) Limitation on Breach by Company of Material Provision.
Notwithstanding anything to the contrary, if at any time during the term of this
Agreement the Company is in material breach of its obligations under this
Agreement, such breach remains uncured for a period of fifteen (15)
Employment Agreement -- 12
<PAGE> 13
business days after written notice thereof by the Executive to the Company, the
Executive is not in material breach his obligations under this Agreement and the
Executive elects on account of such breach by the Company to terminate his
Employment by the Company, then Sections 11(b) and 11(c) of this Agreement shall
not apply to the Executive upon or after such termination.
12. SPECIFIC PERFORMANCE
The Executive agrees that damages at law will be an insufficient remedy
to the Company if the Executive violates the terms of Sections 9, 10 or 11 of
this Agreement and that the Company would suffer irreparable damage as a result
of such violation. Accordingly, it is agreed that the Company shall be entitled,
upon application to a court of competent jurisdiction, to obtain injunctive
relief to enforce the provisions of such Sections, which injunctive relief shall
be in addition to any other rights or remedies available to the Company. The
Executive agrees to pay to the Company all reasonable costs and expenses
incurred by the Company relating to the enforcement of the terms of Sections 9,
10 or 11 of this Agreement, including reasonable fees and reasonable
disbursements of counsel selected by the Company (during investigation and
before and at trial and in appellate proceedings).
13. PAYMENT OF EXCISE TAXES
(a) Payment of Excise Taxes. If the Executive is to receive any (1)
Change of Control Payment under Section 8(d), (2) any benefit or payment under
Section 7 as a result of or following the death or Permanent Disability of the
Executive, (3) any benefit or payment under Section 8(c) as a result of or
following any termination of employment hereunder Without Good Cause, (4) any
benefit or payment under Section 8(e), (5) any benefit or payment under the
Plans as a result of a Change of Control, following the death of Permanent
Disability of the Executive or following the termination of employment hereunder
Without Good Cause (such sections being referred to as the "Covered Sections"
and the benefits and payments to be received thereunder being referred to as the
"Covered Payments"), the Executive shall be entitled to receive the amount
described below to the extent applicable. If any Covered Payment(s) under any of
the Covered Sections or by the Company under another plan or agreement
(collectively, the "Payments") are subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 (as amended from time to time, the
"Code"), or any successor or similar provision of the Code (the "Excise Tax"),
the Company shall pay the Executive an additional amount (the "Gross Up") such
that the net amount retained by the Executive after deduction of any Excise Tax
on the Payments and the federal income tax on any amounts paid under this
Section 13 shall be equal to the Payments.
(b) Certain Adjustment Payments. For purposes of determining the Gross
Up, the Executive shall be deemed to pay the federal income tax at the highest
marginal rate of taxation (currently 39.5%) in the calendar year in which the
payment to which the Gross Up applies is to be made. The determination of
whether such Excise Tax is payable and the amount thereof shall be made upon the
opinion of tax counsel selected by the Company and reasonably acceptable to the
Executive. The Gross Up, if any, that is due as a result of such determination
shall be paid to the Executive in cash in a lump sum within thirty (30) days of
such computation. If such opinion is not finally accepted by
Employment Agreement -- 13
<PAGE> 14
the Internal Revenue Service upon audit or otherwise, then appropriate
adjustments shall be computed (without interest but with Gross Up, if
applicable) by such tax counsel based upon the final amount of the Excise Tax so
determined; any additional amount due the Executive as a result of such
adjustment shall be paid to the Executive by his or her Company in cash in a
lump sum within thirty (30) days of such computation, or any amount due the
Executive's Company as a result of such adjustment shall be paid to the Company
by the Executive in cash in a lump sum within thirty (30) days of such
computation.
14. MISCELLANEOUS
(a) Waiver of Breach. The waiver by either party to this Agreement of a
breach of any of the provisions of this Agreement by the other party shall not
be construed as a waiver of any subsequent breach by such other party.
(b) No Right to Continued Employment. Notwithstanding the fact that
certain provisions of this Agreement and Exhibit A reference a three year cycle
or provide for benefits upon a third year of employment, this Agreement shall
have a two year term with annual one year renewal terms subject to the
termination provisions contained herein.
(c) Compliance With Other Agreements. The Executive represents and
warrants that the execution of this Agreement by him and the Executive's
performance of the Executive's obligations hereunder will not conflict with,
result in the breach of any provision of or the termination of or constitute a
default under any Agreement to which the Executive is a party or by which the
Executive is or may be bound.
(d) Binding Effect; Assignment. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company. This Agreement is a personal
employment contract and the rights, obligations and interests of the Executive
hereunder may not be sold, assigned, transferred, pledged or hypothecated.
(e) Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge is sought.
(f) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(g) No Duty to Mitigate. The Executive shall be under no duty to
mitigate any loss of income as result of the termination of his employment
hereunder and any payments due the Executive upon termination of employment
shall not be reduced in respect of any other employment compensation received by
the Executive following such termination.
Employment Agreement -- 14
<PAGE> 15
(h) Florida Law. This Agreement shall be construed pursuant to and
governed by the substantive laws of the State of Florida (except that any
provision of Florida law shall not apply if the law of a state or jurisdiction
other than Florida would otherwise apply).
(i) Venue; Process. The parties to this Agreement agree that
jurisdiction and venue in any action brought pursuant to this Agreement to
enforce its terms or otherwise with respect to the relationships between the
parties shall properly lie in and only in the Circuit Court of the Sixth
Judicial Circuit of the State of Florida in and for Pinellas County (the
"Circuit Court") and the parties agree that jurisdiction shall not properly lie
in any other jurisdiction provided, however, if jurisdiction does not properly
lie with the Circuit Court, the parties agree that jurisdiction and venue shall
properly lie in and only in the United States District Court for the Middle
District of Florida, Tampa Division. The parties hereby waive any objections
which they may now or hereafter have based on venue and/or forum non conveniens
and irrevocably submit to the jurisdiction of any such court in any legal suit,
action or proceeding arising out of or relating to this Agreement. The parties
further agree that the mailing by certified or registered mail, return receipt
requested, of any process required by any such court shall constitute valid and
lawful service of process against them, without the necessity for ser vice by
any other means provided by statute or rule of court.
(j) Severability. Any provision of this Agreement which is determined
by a court of competent jurisdiction to be prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction. In any
such case, such determination shall not affect any other provision of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect. If any provision or term of this Agreement is susceptible to
two or more constructions or interpretations, one or more of which would render
the provision or term void or unenforceable, the parties agree that a
construction or interpretation which renders the term or provision valid shall
be favored.
(k) Deduction for Tax Purposes. The Company's obligations to make
payments under this Agreement are independent of whether any or all of such
payments are deductible expenses of the Company for federal income tax purposes.
(l) Enforcement. If, within 10 days after demand to comply with the
obligations of one of the parties to this Agreement served in writing on the
other, compliance or reasonable assurance of compliance is not forthcoming, and
the party demanding compliance engages the services of an attorney to enforce
rights under this Agreement, the prevailing party in any action shall be
entitled to recover all reasonable costs and expenses of enforcement (including
reasonable attorneys' fees and reasonable expenses during investigation, before
and at trial and in appellate proceedings). In addition, each of the parties
agrees to indemnify the other in respect of any and all claims, losses, costs,
liabilities and expenses, including reasonable fees and reasonable disbursements
of counsel (during investigation prior to initiation of litigation and at trial
and in appellate proceedings if litigation ensues), directly or indirectly
resulting from or arising out of a breach by the other party of their respective
obligations hereunder. The parties' costs of enforcing this Agreement shall
include prejudgment interest. Additionally, if any party incurs any
out-of-pocket expenses in connection with the enforcement of this Agreement, all
such amounts shall accrue interest at 18% per annum (or such lower rate as may
be required to avoid any limit imposed by applicable law) commencing 30 days
after any such expenses are incurred.
Employment Agreement -- 15
<PAGE> 16
(m) Notices. All notices which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
received if personally delivered; when transmitted if transmitted by telecopy or
similar electronic transmission method; one working day after it is sent, if
sent by recognized expedited delivery service; and three days after it is sent,
if mailed, first class mail, certified mail, return receipt requested, with
postage prepaid. In each case notice shall be sent to:
To the Company: Echelon International Corporation
One Progress Plaza, Suite 1500
St. Petersburg, FL 33701
Attn: Chairman of the Board
Telecopy: (813) 824-6750
To the Executive at the Executive's address herein first above written,
or to such other address as either party may specify by written notice to the
other in accordance with this section 14(m).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ATTEST: ECHELON INTERNATIONAL CORPORATION
(Corporate Seal)
________________________________ By:____________________________________
Secretary Darryl A. LeClair, President
EXECUTIVE
Witnesses:
________________________________ _______________________________________
W. Michael Doramus
________________________________
As to Executive
Employment Agreement -- 16
<PAGE> 17
EXHIBIT A
TO
EMPLOYMENT AGREEMENT WITH W. MICHAEL DORAMUS
DATED OCTOBER 1, 1997
The Company has established a Management Incentive Compensation Plan
("MICP") and Long Term Incentive Plan ("LTIP") for its senior management in
which the Executive will participate. During the three months ending on December
31, 1997, the MICP will provide for an annual cash bonus based upon the
Company's net income for such year. During the fiscal years ending on December
31, 1998, and December 31, 1999, respectively (the "Covered Years"), the MICP
will provide for annual cash bonuses 60% of which will be payable upon
satisfaction of specific threshold, target and maximum goals to be determined
each year by the Board of Directors or the Compensation Committee, which
specific goals shall be set forth in writing and attached as a schedule hereto
no later than January 31 of each year (the "Performance Goals"), and 40% will be
payable based upon the Company's net income for each of the Covered Years. The
LTIP will provide the opportunity to earn restricted shares and options 60% of
which will be earned upon the cumulative satisfaction of the Performance Goals
for each of the Covered Years and 40% of which will be earned based upon the
Company's cumulative results of operation for three year cycles, beginning with
the three year cycle including the Covered Years and the year ending December
31, 1997 (the "Cycle Years"), provided in each case that the Executive continues
to be employed by the Company under this Agreement. The Executive's
participation in the MICP and the LTIP during the Covered Years and the Cycle
Years shall be based upon the criteria set forth below and set forth on the
schedules to be attached hereto and shall include awards with the values
indicated in the tables set forth below and as more fully described in this
Exhibit A.
MICP
During each of the Covered Years, (i) all MICP bonuses shall be paid in
cash; (ii) if Threshold Net Income is not achieved, no MICP cash bonus will be
paid; (iii) if actual net income exceeds Threshold Net Income, but is less than
Target Net Income, or exceeds Target Net Income but is less than Maximum Net
Income, the percentage of the MICP bonus shall be proportionately increased
above the Threshold bonus amount or the Target Bonus amount, as the case may be,
and (iv) if actual net income equals or exceeds Maximum Net Income, the Maximum
MICP cash bonus will be paid, but no additional cash bonus will be payable under
the MICP regardless of the amount by which actual net income in that Covered
Year exceeds Maximum Net Income. The following table sets forth information
regarding the MICP Net Income Threshold, Target and Maximum and the total cash
bonuses to be paid upon satisfaction of both the MICP Performance Goals and Net
Income Goals. Of the total cash bonuses set forth below, 60% of the applicable
cash bonus amount (Threshold, Target or Maximum) shall be paid, if any, upon
satisfaction of the applicable Performance Goals (Threshold, Target or Maximum)
as set forth on the schedule to be attached hereto and 40% of the applicable
cash bonus amount (Threshold, Target or Maximum) shall be paid, if any, upon
satisfaction of the applicable Net Income level (Threshold, Target or Maximum).
Employment Agreement -- 17
<PAGE> 18
<TABLE>
<CAPTION>
MICP 1997 1998 1999
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
THRESHOLD
- -----------------------------------------------------------------------------------
Net Income $1,584,274.00 $1,768,816.00 $2,132,640.00
- -----------------------------------------------------------------------------------
MICP Cash Bonus $11,250.00 $45,000.00 $45,000.00
(% of Base Salary) (5%) (20%) (20%)
- -----------------------------------------------------------------------------------
TARGET
- -----------------------------------------------------------------------------------
Net Income $2,112,366 $2,358,422.00 $2,843,521.00
- -----------------------------------------------------------------------------------
MICP Cash Bonus $22,500.00 $90,000.00 $90,000.00
(% of Base Salary) (10%) (40%) (40%)
- -----------------------------------------------------------------------------------
MAXIMUM
- -----------------------------------------------------------------------------------
Net Income $2,640,457 $ 2,948,027.00 $3,554,401.00
- -----------------------------------------------------------------------------------
MICP Cash Bonus $45,000.00 $135,000.00 $135,000.00
(% of Base Salary) (20%) (60%) (60)%
- -----------------------------------------------------------------------------------
</TABLE>
LTIP
The sum of each year's Threshold Net Income for the three Cycle Years
shall be referred to as the "Threshold LTIP Net Income"; the sum of each year's
Target Net Income for the three Cycle Years shall be referred to as "Target LTIP
Net Income"; and the sum of each year's Maximum Net Income forth the three Cycle
Years shall be referred to as "Maximum LTIP Net Income," in each case, as set
forth in the following tables.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
LTIP 1997 1998 1999 LTIP NET INCOME
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THRESHOLD THRESHOLD
- ------------------------------------------------------------------------------------------------
Net Income $1,584,274.00 $1,768,816.00 $2,132,640.00 $5,485,730.00
- ------------------------------------------------------------------------------------------------
TARGET TARGET
- ------------------------------------------------------------------------------------------------
Net Income $2,112,366.00 $2,358,422.00 $2,843,521.00 $7,314,309.00
- ------------------------------------------------------------------------------------------------
MAXIMUM MAXIMUM
- ------------------------------------------------------------------------------------------------
Net Income $2,640,457.00 $2,948,027.00 $3,554,401.00 $9,142,885.00
- ------------------------------------------------------------------------------------------------
</TABLE>
The following table sets for information regarding the Threshold,
Target and Maximum LTIP Net Income and the total restricted stock values and
number of options associated with satisfying the Performance Goals and achieving
such levels of cumulative net income. Of the total restricted stock values and
number of options set forth below, 60% of the applicable restricted stock values
and number of options (Threshold, Target or Maximum) shall be paid, if any, upon
satisfaction of the applicable Performance Goals (Threshold, Target or Maximum)
as set forth on the schedule to be attached hereto and 40% of the total
applicable restricted stock values and number of options
Employment Agreement -- 18
<PAGE> 19
(Threshold, Target or Maximum) shall be paid, if any, upon satisfaction of the
applicable cumulative Net Income level (Threshold, Target or Maximum) set forth
below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
LTIP Three Years Ending December 31, 1999
- -------------------------------------------------------------------------------------
Options to Purchase
Dollar Value of Number of Shares
Restricted Stock of Common Stock
- -------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------
THRESHOLD
- -------------------------------------------------------------------------------------
Cumulative Net Income $5,485,730.00
- -------------------------------------------------------------------------------------
LTIP Value $45,000.00 5,000
(% of Base Salary) (20%)
- -------------------------------------------------------------------------------------
TARGET
- -------------------------------------------------------------------------------------
Cumulative Net Income $7,314,309.00
- -------------------------------------------------------------------------------------
LTIP Value $90,000.00 10,000
(% of Base Salary) (40%)
- -------------------------------------------------------------------------------------
MAXIMUM
- -------------------------------------------------------------------------------------
Cumulative Net Income $9,142,885.00
- -------------------------------------------------------------------------------------
LTIP Value $135,000.00 15,000
(% of Base Salary) (60%)
- -------------------------------------------------------------------------------------
</TABLE>
For purposes of administering the LTIP, during the first three-year
cycle, (i) all LTIP awards shall be paid in the form of restricted shares and
options as indicated above; (ii) the number of restricted shares shall be
determined by dividing the dollar value of the Maximum LTIP Value $135,000 by
the closing price on January 1, 1998, or the first trading day thereafter, on
the New York Stock Exchange (or such other market on which the Company's stock
trades if it is not listed on the New York Stock Exchange); (iii) the restricted
shares, among other things, shall be subject to a risk of forfeiture if and to
the extent that the performance criteria set forth in this Exhibit A are not
met; (iv) if actual cumulative net income for the three-year period ending
December 31, 1999, does not equal or exceed Threshold LTIP Net Income, all
restricted shares shall be forfeited, and no LTIP bonus will have been earned;
(v) if actual cumulative net income for the three year period ending December
31, 1999, exceeds Threshold LTIP Net Income, but is less than Target LTIP Net
Income, or exceeds Target LTIP Net Income but is less than Maximum LTIP Net
Income, the percentage of the LTIP restricted shares as to which the risks on
forfeiture shall lapse shall be proportionately increased above the Threshold
bonus amount or the Target Bonus amount, as the case may be; (vi) if cumulative
net income for the three-year period ending December 31, 1999 equals or exceeds
Maximum LTIP Net Income, the risks of forfeiture shall lapse as to all
restricted shares, but no additional restricted shares will be issuable under
the LTIP regardless of the amount by which actual cumulative net income for the
three years ending December 31, 1999 exceeds Maximum LTIP Net Income (vii) the
option exercise price shall be the closing price on December 31 1999, or the
first trading day thereafter, on the New York Stock Exchange (or such other
market on which the
Employment Agreement -- 19
<PAGE> 20
Company's stock trades if it is not listed on the New York Stock Exchange); and
(vii) the options shall be 100% vested as of the date of the satisfaction of the
applicable performance goal.
Employment Agreement -- 20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ECHELON INTERNATIONAL CORPORATION FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 19,700
<SECURITIES> 44,500
<RECEIVABLES> 32,600
<ALLOWANCES> 0
<INVENTORY> 1,400
<CURRENT-ASSETS> 98,600
<PP&E> 139,000
<DEPRECIATION> 23,800
<TOTAL-ASSETS> 455,900
<CURRENT-LIABILITIES> 25,800
<BONDS> 61,700
0
0
<COMMON> 100
<OTHER-SE> 209,800
<TOTAL-LIABILITY-AND-EQUITY> 455,900
<SALES> 0
<TOTAL-REVENUES> 28,500
<CGS> 0
<TOTAL-COSTS> 14,900
<OTHER-EXPENSES> (1,600)
<LOSS-PROVISION> (700)
<INTEREST-EXPENSE> 7,100
<INCOME-PRETAX> 8,800
<INCOME-TAX> 1,300
<INCOME-CONTINUING> 7,500
<DISCONTINUED> 0
<EXTRAORDINARY> (900)
<CHANGES> 0
<NET-INCOME> 6,600
<EPS-PRIMARY> .97
<EPS-DILUTED> .97
</TABLE>
<PAGE> 1
EXHIBIT 99.1
Darryl A. LeClair
Echelon International Corporation
President and Chief Executive Officer
813-824-6767
John W. Heilshorn, Jr./Danielle L. Reilly
Lippert/Heilshorn & Assoc., Inc.
212-838-3777
[email protected]
[email protected]
ECHELON OFFERS ODD-LOT BUY-BACK PROGRAM FOR
STOCKHOLDERS WITH 10 SHARES OR LESS
ST. PETERSBURG, FLORIDA, NOVEMBER 12, 1997 -- ECHELON INTERNATIONAL CORPORATION
(NYSE: EIN) announced today a voluntary program to offer stockholders with 10 or
fewer shares of common stock (odd-lots) an opportunity to sell all their Echelon
shares.
Echelon will purchase up to $2.5 million worth of its common stock from
participating stockholders. These stockholders will be paid the average of the
closing market value of EIN reported on the NYSE from November 12, 1997 through
December 15, 1997 (the "Program Period"). Echelon will use cash on hand to
purchase the shares, incurring no additional debt. If more than $2.5 million of
stock is submitted for sale, the excess shares will be sold on the open market
through a registered broker/dealer. Those stockholders will receive a
market-based weighted average price based upon the shares sold in the open
market. Participating stockholders will not incur any brokerage commissions,
although a nominal per share processing fee of $3.00 will be deducted from the
stockholders' proceeds of sale to defray the costs of administering this
program.
- MORE -
<PAGE> 2
ECHELON INTERNATIONAL CORPORATION
PAGE 2
According to Darryl A. LeClair, Chairman, President and CEO of Echelon,
"We value all of our stockholders and realize that the cost of brokerage
commissions may have deterred some individuals from selling a small amount of
shares. This voluntary program will provide these stockholders with a convenient
and inexpensive opportunity to sell their Echelon shares through the mail at a
small fee, while enabling the Company to save the annual administrative costs
associated with servicing odd-lot accounts." Many Echelon stockholders received
odd-lots in connection with the spin-off from Florida Progress Corporation
(NYSE: FPC) in December 1996.
Shareholder Communications Corporation, a specialist in the design and
implementation of odd-lot programs, will administer and manage the program for
the Company and expects to mail program materials to stockholders by November
12, 1997 based on their holdings as of November 6, 1997. The program will run
through December 15, 1997, unless extended by the Company and will be conducted
entirely by mail. All sales will be made only through Shareholder
Communications.
Echelon International Corporation is a real estate and financial
services company involved in development, ownership and management of commercial
and multifamily residential real estate. The company also manages a portfolio of
aircraft and real estate loans and aircraft leases. Echelon plans to gradually
withdraw from the aircraft and real estate lending business and focus on its
core real estate operations.
INQUIRIES REGARDING THE PROGRAM SHOULD BE DIRECTED TO MR. MICHAEL MACLEOD OF
SHAREHOLDER COMMUNICATIONS, AT 212/805-7000.
# # #
<PAGE> 1
EXHIBIT 99.2
DRAFT Darryl A. LeClair
Echelon International Corporation
President and Chief Executive Officer
813-824-6767
John W. Heilshorn, Jr./Danielle L. Reilly
Lippert/Heilshorn & Assoc., Inc.
212-838-3777
[email protected]
ECHELON INTERNATIONAL CORPORATION
ANNOUNCES THIRD QUARTER AND NINE MONTHS FINANCIAL
RESULTS
ST. PETERSBURG, FLORIDA, NOVEMBER 14, 1997 - ECHELON INTERNATIONAL CORPORATION
(NYSE: EIN), today announced financial results for its third quarter and nine
months ended September 30, 1997.
Sales and revenues for the three months ended September 30, 1997 were
$9.7 million, compared to $21.0 million for the same year ago period. Net income
for the three month period was $1.3 million, or $0.19 per share, compared to a
net loss of $1.5 million, or $(0.23) per share, for the quarter ended September
30, 1996.
Sales and revenues for the nine months ended September 30, 1997 were
$28.5 million compared to $48.6 million for the comparable year ago period. Net
income for the first nine months of 1997 was $6.6 million, or $0.97 per share,
compared to a net loss of $21.7 million, or $(3.34) per share, for the nine
months ended September 30, 1996.
As of September 30, 1997, the Company's long term debt/equity ratio was
27/73 with a cash position, including marketable securities, of $64.2 million.
The decrease in sales and revenue for the three and nine month periods
ended September 30, 1997 from the previous year was primarily due to a decrease
of $11.1 million and $17.4 million, respectively, in the sale of development
properties and a $1.5 million and $4.6 million, respectively, decrease in
interest income. The decrease in the sale of development properties was due
primarily to fewer sales of land in Carillon in 1997 versus the previous year,
and the decrease in interest income was due to loan receivable payoffs and
sales.
Operating expenses for the three and nine month periods ended September
30, 1997 were $8.1 million and $19.7 million, which decreased by $18.4 million
and $67.6 million, compared to the same period the previous year. The decrease
is primarily due to the $34.6
<PAGE> 2
ECHELON INTERNATIONAL CORPORATION
PAGE 2
million decrease in the provision for lease, loan and real estate losses, the
decline in the sale of development properties and the increase of $2.3 million
and $10.6 million in other income.
The Company is continuing to implement its strategy to grow the
real estate portion of its business and dispose of certain non-strategic
assets. During the third quarter, Echelon received $10.6 million in full
repayment of two real estate loans receivable and used $6.0 million of the
proceeds to pay down debt to Salomon Brothers Realty Corporation. As a result
of the debt repayment, the Company wrote off approximately $0.2 million of
debt issuance costs, which is reflected as a $0.1 million after-tax
extraordinary loss.
Larry J. Newsome, Senior Vice President and Chief Financial Officer,
stated, "We are pleased with the results for the third quarter and the nine
months ended. We are ahead of our original strategic plan projections. We
continue to redeploy our non-strategic assets to reinvest in real estate or to
pay down debt. This has allowed us to aggressively restructure our balance
sheet."
- MORE -
<PAGE> 3
ECHELON INTERNATIONAL CORPORATION
PAGE 3
Darryl LeClair, President and Chief Executive Officer, stated, "We have begun
constructon of our 369-unit multi-family community, Bay Isle Key, located on
Company-owned land on 9th Street in St. Petersburg, Florida. In addition, site
work has begun on our 314-unit multi-family community, the Reserve at Carillon,
also located in St. Petersburg. Physical construction is on target to begin in
December. We are also in discussions to acquire sites in select southwest and
southeast locations for additonal multi-family communities. In addition, the
Company has continued to evaluate the feasibility for commercial development at
Carillon and our downtown St. Petersburg holdings."
Echelon International Corporation is a real estate and financial
services company involved in development, ownership and management of commercial
and multifamily residential real estate. The Company also manages a portfolio of
aircraft and real estate loans and aircraft leases. Echelon plans to gradually
withdraw from the aircraft and real estate lending business and focus on its
core real estate operations.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS: CERTAIN STATEMENTS
CONTAINED HEREIN REGARDING MATTERS THAT ARE NOT HISTORICAL FACTS ARE
FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS CONCERNING ECHELON'S EXPECTED
SOURCES AND USES OF FUNDS AND CAPITAL EXPENDITURES AND ITS BUSINESS STRATEGY
INCLUDING ITS PLANS TO GRADUALLY WITHDRAW FROM THE AIRCRAFT AND REAL
UNCERTAINTIES, ACTUAL STRATEGIES AND THE TIMING AND EXPECTED RESULTS THEREOF
MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. FACTORS THAT COULD CAUSE SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO, THOSE SET FORTH IN MATERIALS FILED BY ECHELON WITH THE SECURITIES
AND EXCHANGE COMMISSION.
- TABLES TO FOLLOW -
<PAGE> 4
ECHELON INTERNATIONAL CORPORATION
PAGE 4
ECHELON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept 30, Sept. 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES AND REVENUES:
Real estate operations -
Rental income $ 3.5 $ 3.0 $ 9.6 $ 8.9
Sale of development properties .5 11.6 .8 18.2
Marina and other revenues 2.4 1.5 7.0 5.5
Equity in losses of partnerships (.2) -- (1.0) --
Lending and leasing operations -
Interest income 1.3 2.8 5.5 10.1
Earned income on finance leases 1.1 1.0 2.6 2.8
Other 1.1 1.1 4.0 3.1
-------- ------- -------- --------
9.7 21.0 28.5 48.6
OPERATING EXPENSES:
Real estate operations 3.7 2.7 10.5 8.6
Cost of development properties sold .5 11.6 .8 18.5
Depreciation 1.1 1.4 3.6 4.3
Provision for lease, loan and real estate losses -- 2.8 (.7) 33.9
Interest expense:
Former parent advances -- 4.3 -- 13.9
Long-term debt 1.9 .5 7.1 1.7
Allocated administrative expenses of former parent -- .9 -- 1.3
Marketing and other administrative 2.2 1.3 6.8 2.9
Other (income) expenses, net (1.3) 1.0 (8.4) 2.2
-------- ------- -------- --------
8.1 26.5 19.7 87.30
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 1.6 (5.5) 8.8 (38.7)
INCOME TAX EXPENSE (BENEFIT) .2 (1.9) 1.3 (14.9)
-------- ------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 1.4 (3.6) 7.5 (23.8)
EXTRAORDINARY ITEM:
Gain (loss) on extinguishment of debt, net of income
tax effect (.1) 2.1 (.9) 2.1
-------- ------- -------- --------
NET INCOME (LOSS) $ 1.3 $ ( 1.5) $ 6.6 $ (21.7)
-------- ------- -------- --------
Average shares of common stock outstanding 6.8 6.5 6.8 6.5
Per share data:
Income (loss) before extraordinary item $ .20 $ (0.55) $ 1.10 $ (3.66)
Extraordinary item (.01) .32 (.13) .32
-------- ------- -------- --------
Net income (loss) per common share $ .19 $ (.23) $ .97 $ (3.34)
</TABLE>
- MORE -
<PAGE> 5
ECHELON INTERNATIONAL CORPORATION
PAGE 5
ECHELON INTERNATIONAL CORPORATION
SELECTED CONSOLIDATED BALANCE SHEET INFORMATION
(IN MILLIONS)
<TABLE>
<CAPTION>
Sept. 30, December 31,
1997 1996
---- ----
(unaudited)
<S> <C> <C>
Cash And Marketable Securities $ 64.2 $ 63.3
Total Current Assets 98.6 144.1
Leases, Loans, Property & Other Investments 352.7 353.2
Total Assets 455.9 531.0
Total Current Liabilities 25.8 92.2
Long-Term Debt 61.7 73.8
Deferred Income Taxes 158.2 163.3
Total Stockholders' Equity 209.9 201.4
Total Liabilities And Stockholders' Equity 455.9 531.0
</TABLE>
# # #
