(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _______________.
COMMISSION FILE NUMBER 1-8254
THACKERAY CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 04-2446697
- ------------------------------- ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
400 MADISON AVENUE, SUITE 309, NEW YORK, NEW YORK 10017
-------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 759-3695
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- ------------------- -------------------
Common Stock, $.10 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 [ ].
[cover page 1 of 2 pages]
NY2:\316401\05\6S4X05!.DOC\69555.0001
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy materials or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of the voting stock (which consists solely of shares of
Common Stock) held by non-affiliates of the registrant as of March 25, 1999
computed by reference to the closing bid price of the registrant's Common Stock
on the American Stock Exchange on such date: $8,558,816.
Number of shares of the registrant's Common Stock outstanding as of March 25,
1999: 5,107,401.
DOCUMENTS INCORPORATED BY REFERENCE
1. Certain portions of the registrant's Annual Report to Stockholders for
the fiscal year ended December 31, 1998 (the "Annual Report") are
incorporated by reference into Parts I and II of this report.
2. Certain portions of the registrant's definitive Proxy Statement to be
filed pursuant to Regulation 14A of the Securities Exchange Act of
1934, as amended, in connection with the Annual Meeting of
Stockholders of the registrant to be held on May 3, 1999 are
incorporated by reference into Part III of this report.
[cover page 2 of 2 pages]
<PAGE>
PART I
Item 1. Business
GENERAL DEVELOPMENT OF BUSINESS
Thackeray Corporation ("Thackeray" or the "Company") is a
Delaware corporation which holds real estate for investment.
DESCRIPTION OF BUSINESS
Thackeray's business is the management of its real estate
investments. The Company does not presently intend to acquire additional real
estate assets. For information with respect to Thackeray's real estate, see
Notes 1 and 2 of Notes to Consolidated Financial Statements included in the
Annual Report, which Notes are incorporated herein by reference.
On May 20, 1996, the Company and affiliates of Belz
Enterprises ("Belz") entered into an Agreement of Limited Partnership of BT
Orlando Limited Partnership. Pursuant to this agreement, the Company agreed to
contribute approximately 140 acres of its Orlando, Florida property to the
partnership, which property is valued at $15,246,000 for capital account
purposes. The partnership, with an affiliate of Belz and Brennand-Paige
Industries, Inc., a subsidiary of the Company, as general partners, will
develop, construct, operate and lease an 850,000 square foot retail and
entertainment shopping center complex on the property. The Company will have a
35% general partner interest in the partnership and will be entitled to certain
preferential distributions. The Company will participate in the cash flow, sales
proceeds and refinancing proceeds from the operation, financing or disposition
of such project. The Partnership originally was to terminate in the event
construction financing was not obtained by May 20, 1998. Such date has been
extended to June 30, 1999.
In addition, on May 20, 1996, the Company and Belz Investco
entered into a binding letter agreement regarding the development of the
remaining approximately 78 acres of the Company's Orlando, Florida property,
which property will be valued at $8,487,000 for capital account purposes.
Pursuant to this letter agreement, the parties agreed to form a new partnership
to develop 22.5 acres of such property as commercial property and 55.5 acres
thereof as multi-family residential property, upon completion of the development
of the 140 acres and obtaining the requisite construction financing related to
the 78 acres. The Company, through a subsidiary, and Belz, or one of its
affiliates, will be 50% owners and general partners of such partnership and the
Company will be entitled to certain preferential distributions.
With respect to the 140 acre property, approximately 370,000
square feet of anchor space has been leased to date and leases for approximately
1
<PAGE>
178,000 square feet of anchor tenants are in various stages of negotiation.
Ground breaking commenced mid-1998. Construction financing is currently being
negotiated and, in the interim, Belz Enterprises is providing financing for
construction and development activity.
Indebtedness
The Company has no outstanding borrowings.
General
As of December 31, 1998, the Company had two employees.
Item 2. Properties
For additional information with respect to the Company's
investments in real estate and to its lease obligations, see Notes 1, 2 and 5 of
Notes to Consolidated Financial Statements included in the Annual Report, which
Notes are incorporated herein by reference.
Thackeray's executive offices are located at 400 Madison
Avenue, New York, New York and are occupied on a month to month basis for $1,660
per month.
Item 3. Legal Proceedings
There are no legal proceedings currently pending against the
Company or its subsidiaries.
Item 4. Submission of Matters to a Vote of Stockholders
During the quarter ended December 31, 1998, no matters were
submitted to a vote of stockholders through the solicitation of proxies or
otherwise.
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
Reference is made to the information set forth in the section
entitled "Market for Thackeray's Common Stock and Related Stockholder Matters"
in the Annual Report, which section is incorporated herein by reference.
Thackeray transferred the trading of its common stock to the American Stock
Exchange from the New York Stock Exchange effective April 20, 1998.
2
<PAGE>
Item 6. Selected Financial Data
Reference is made to the information set forth in the section
entitled "Selected Financial Data" in the Annual Report, which section is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Reference is made to the information set forth in the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Annual Report, which section is incorporated
herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
Item 8. Financial Statements and Supplementary Data
Reference is made to the information set forth in the
following sections of the Annual Report, which sections are incorporated herein
by reference:
1. Report of Independent Public Accountants.
2. Consolidated Balance Sheets --December 31, 1998 and
1997.
3. Consolidated Statements of Operations for the years
ended December 31, 1998, 1997 and 1996.
4. Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997 and 1996.
5. Notes to Consolidated Financial Statements -- December
31, 1998, 1997 and 1996.
Item 9. Change in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable.
3
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Reference is made to the information to be set forth in the
section entitled "Election of Directors" in the definitive proxy statement
involving the election of directors in connection with the Annual Meeting of
Stockholders of the Company to be held on May 3, 1999 (the "Proxy Statement"),
which section is incorporated herein by reference. The Proxy Statement will be
filed with the Securities and Exchange Commission not later than 120 days after
December 31, 1998 pursuant to Regulation 14A of the Securities Exchange Act of
1934, as amended.
Item 11. Executive Compensation
Reference is made to the information to be set forth in the
section entitled "Election of Directors" in the Proxy Statement, which section
is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Reference is made to the information to be set forth in the
sections entitled "Ownership of Voting Securities" and "Election of Directors -
Security Ownership of Management" in the Proxy Statement, which sections are
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Reference is made to the information to be set forth in the
section entitled "Election of Directors Compensation and Interest of Management
in Certain Transactions" in the Proxy Statement, which section is
incorporated herein by reference.
4
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) and (2) - The response to this portion of Item 14 is
submitted as a separate section of this report entitled "List of Financial
Statements and Financial Statement Schedules."
(3) - Exhibits:
3(a)(i) - Certificate of Incorporation of the Company. (1)
3(a)(ii) - Certificate of Designation of $4.15 Cumulative
Preferred Stock. (2)
3(a)(iii) - Amendment to Certificate of Incorporation of the
Company.
3(b) - By-Laws of the Company. (1)
10(a) - Agreement of Limited Partnership of BT Orlando
Limited Partnership, dated May 20, 1996, among
BEF, Inc., Brennand-Paige Industries, Inc., BT
Partnership and EST Orlando, Ltd. (3)
10(b) - Number 2 Partnership Letter Agreement, dated May
20, 1996, between the Company and Belz Investco
L.P. (3)
11 - Statement re Computation of Per Share Data.
13 - The Company's 1998 Annual Report to
Stockholders.
21 - Subsidiaries of the Company.
27 - Financial Data Schedule.
--------------------
(1) Incorporated by reference to the Company's
Registration Statement on Form S-14 (SEC File No. 2-73435).
(2) Incorporated by reference to the Company's
Registration Statement on Form S-11 (SEC File No. 2-84299).
(3) Incorporated by reference to the Company's Proxy
Statement, dated August 5, 1996.
(b) - During the quarter ended December 31, 1998, the
Company did not file any reports on Form 8-K.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 26, 1999 THACKERAY CORPORATION
(Registrant)
By: /s/ Martin J. Rabinowitz
-------------------------------------
Name: Martin J. Rabinowitz
Title: President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the Board,
President and Director
/s/ Martin J. Rabinowitz (Principal Executive
- ------------------------------- Officer) March 26, 1999
Martin J. Rabinowitz
Vice President, Finance,
Treasurer, Secretary and
Director
(Principal Financial
/s/ Jules Ross and Accounting Officer) March 26, 1999
- -------------------------------
Jules Ross
/s/ Ronald D. Rothberg Director March 26, 1999
- -------------------------------
Ronald D. Rothberg
/s/ Moses Rothman Director March 26, 1999
- -------------------------------
Moses Rothman
/s/ John Sladkus Director March 26, 1999
- -------------------------------
John Sladkus
6
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2)
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1998
THACKERAY CORPORATION
NEW YORK, NEW YORK
7
<PAGE>
Form 10-K -- Items 14(a)(1) and (2)
THACKERAY CORPORATION
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Thackeray Corporation,
included in the Annual Report to Stockholders for the year ended December 31,
1998, are incorporated by reference in Item 8 of this report.
1. Report of Independent Public Accountants.
2. Consolidated Balance Sheets --December 31, 1998 and
1997.
3. Consolidated Statements of Operations for the years
ended December 31, 1998, 1997 and 1996.
4. Consolidated Statements of Cash Flows for the years
ended December 31, 1998, 1997 and 1996.
5. Notes to Consolidated Financial Statements -- December
31, 1998, 1997 and 1996.
The following financial statement schedules of Thackeray Corporation are filed
herewith:
Report of Independent Public Accountants on Financial
Statement Schedules
Schedule II - Valuation and Qualifying Accounts
Schedule III - Real Estate and Accumulated Depreciation
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.
8
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Stockholders of Thackeray Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Thackeray Corporation's 1998
Annual Report to Stockholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated March 10, 1999. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedules listed in the List of Financial Statements and Financial Statement
Schedules are the responsibility of the Company's management and are presented
for purposes of complying with the Securities and Exchange Commission's rules
and are not part of the basic consolidated financial statements. These schedules
have been subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
Arthur Andersen LLP
New York, New York
March 10, 1999
9
<PAGE>
THACKERAY CORPORATION AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Allowance for possible investment losses
Deducted from "Investments in real estate"
Balance at beginning of year $ 0 $ 0 $ 713,000
Elimination of reserves relating to real - - $ (713,000)
-------- -------- -----------
estate recognized as sold in 1996
Balance at end of year $ 0 $ 0 $ 0
======== ======== ===========
</TABLE>
10
<PAGE>
Schedule III
Thackeray Corporation and Subsidiaries Real Estate and Accumulated Depreciation
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
Gross
amount
Initial Cost carried Life on which
cost capitalized at which depreciation in
to the subsequent to at close Accumulated Date of Date latest income
Description Encumbrances Company acquisition of period depreciation construction acquired statement is computed
- ----------- ------------ ------- ----------- --------- ------------ ------------ -------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
218 Acres of
unimproved land,
Orlando, Florida None $5,331,000 $ 0 $5,331,000 $0 N/A 1981 N/A
Land Leased to
others
Miami, Florida None 425,000 0 425,000 0 N/A 1981 N/A
---------- ----- ---------- --
Totals $5,756,000 $ 0 $5,756,000 $0
========== ===== ========== ==
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Balance at Beginning of period $5,756,000 $5,756,000 $7,059,000
Cost of real estate sold 0 0 1,303,000
---------- ---------- ==========
Balance at End of period $5,756,000 $5,756,000 $5,756,000
========== ========== ==========
Federal tax basis is the same as book basis.
</TABLE>
11
<PAGE>
EXHIBIT INDEX
TO
THACKERAY CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1998
Exhibit No. Description of Document
----------- -----------------------
3(a)(i) - Certificate of Incorporation of the Company. (1)
3(a)(ii) - Certificate of Designation of $4.15 Cumulative
Preferred Stock. (2)
3(a)(iii) - Amendment to Certificate of Incorporation of the
Company.*
3(b) - By-Laws of the Company. (1)
10(a) - Agreement of Limited Partnership of BT Orlando
Limited Partnership, dated May 20, 1996, among
BEF, Inc., Brennand-Paige Industries, Inc., BT
Partnership and EST Orlando, Ltd. (3)
10(b) - Number 2 Partnership Letter Agreement, dated May
20, 1996, between the Company and Belz Investco
L.P. (3)
11 - Statement re Computation of Per Share Data.*
13 - The Company's 1998 Annual Report to
Stockholders.*
21 - Subsidiaries of the Company.*
27 - Financial Data Schedule.*
----------------------------------------------
* Filed herewith
(1) Incorporated by reference to the Company's Registration
Statement on Form S-14 (SEC File No. 2-73435).
(2) Incorporated by reference to the Company's Registration
Statement on Form S-11 (SEC File No. 2-84299).
(3) Incorporated by reference to the Company's Proxy
Statement, dated August 5, 1996.
Exhibit 3(a)(iii)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THACKERAY CORPORATION
----------------------
Thackeray Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of
Thackeray Corporation resolutions were duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of said Corporation, declaring
said amendment to be advisable and calling for such amendment to be submitted to
a vote of the stockholders of said Corporation of consideration thereof at the
Annual Meeting of the stockholders of the Corporation. The resolutions setting
forth the proposed amendment are as follows:
RESOLVED, that the Certificate of Incorporation of
the Corporation be amended in the following respect:
By adding a new Article Eleventh thereof which
Article Eleventh shall be and read as follows:
"ELEVENTH: No director shall be personally liable to
the Corporation or any stockholder for monetary damages for
breach of fiduciary duty as a director, except for any matter
in respect of which such director shall be liable under
Section 174 of Title 8 of the Delaware Code (relating to the
Delaware General Corporation Law) or any amendment thereto or
NY2:\383541\01\87XX01!.DOC\69555.0001
<PAGE>
successor provision thereto or shall be liable by reason that,
in addition to any and all other requirements for such
liability, he (i) shall have breached his duty of loyalty to
the Corporation or its stockholders, (ii) shall not have acted
in good faith or, in failing to act, shall not have acted in
good faith, (iii) shall have acted in a manner involving
intentional misconduct or a knowing violation of law or, in
failing to act, shall have acted in a manner involving
intentional misconduct or a knowing violation of law or (iv)
shall have derived an improper personal benefit. Neither the
amendment nor repeal of this Article Eleventh, nor the
adoption of any provision of the Certificate of Incorporation
inconsistent with this Article Eleventh, shall eliminate or
reduce the effect of this Article Eleventh in respect of any
matter occurring, or any cause of action, suit or claim that,
but for this Article Eleventh, would accrue or arise, prior to
such amendment, repeal or adoption of an inconsistent
provision."
SECOND: That thereafter, pursuant to resolutions of its Board
of Directors and by vote taken at the Annual Meeting of the stockholders of said
Corporation, the necessary number of shares as required by statute were voted in
favor of the adoption of the amendment.
THIRD: That said amendment was duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
2
<PAGE>
IN WITNESS WHEREOF, said Corporation has caused this
certificate to be signed by Martin J. Rabinowitz, its President, and attested by
Ronald D. Rothberg, its Secretary, this 21st day of May, 1987.
THACKERAY CORPORATION
By /s/ Martin J. Rabinowitz
------------------------------
Title: President
ATTEST:
By /s/ Ronald D. Rothberg
------------------------------
Secretary
3
EXHIBIT 11
THACKERAY CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE DATA
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
BASIC AND DILUTED
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Weighted average shares outstanding during the year $5,107,401 $5,107,401 $5,107,401
Net income (loss) attributable to common stock ($187,000) $751,000 $594,000
======= ======= =======
Net income (loss) per share ($.04) $.15 $.12
====== ==== ====
</TABLE>
Exhibit 13
Thackeray Corporation
Annual Report
1998
<PAGE>
The Company
Thackeray Corporation (the "Company") is a Delaware corporation which holds
real estate for investment.
2
<PAGE>
Thackeray Corporation
Dear Stockholder:
Thackeray's focus is now centered on its principal real property asset, its
218 acre tract in Orlando, Florida. Thackeray entered into a joint venture
agreement in 1996 with Belz Enterprises to develop the Orlando property, with
its initial phase being an 850,000 sq.ft. retail/entertainment center. Ground
breaking commenced mid-1998. Construction financing is currently being
negotiated; in the interim, Belz Enterprises is financing construction and
development activity.
We are pleased to report that 368,750 sq.ft. of anchor space has been
leased to date and that leases for an additional 178,000 sq.ft. of anchors are
in various stages of negotiation. Our anchor tenants, in addition to (previously
reported) sporting goods retailer Bass Pro, include a Cinemark 20 screen movie
theater, Van's, an in-line skating and skateboard facility, a Sea Life theme
restaurant and Ron Jon, Florida's leading surfing and swimming gear retailer.
Cinemark has commenced construction and is planning to open November, 1999. Bass
Pro is awaiting a building permit, but expects to complete construction by
mid-2000.
Thackeray Corporation ended 1998 with $4.7 million in cash and cash
equivalents. We believe such balances will be more than sufficient to fund the
Company's cash requirements in the foreseeable future.
Very truly yours,
/s/ Martin J. Rabinowtiz
MARTIN J. RABINOWITZ
Chairman of the Board
March 24, 1999
New York, New York
3
<PAGE>
Selected Financial Data
Five Year Summary
The following tabulation presents selected financial data as restated for
comparability with continuing operations for Thackeray for each of the five
years in the period ended December 31, 1998 (amounts stated in thousands except
for per share data):
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Real estate revenues................. $ 64 $ 64 $ 2,333 $ 80 $ 472
Income (loss) from continuing opera-
tions.............................. (187) 751 594 (719) (861)
Income (loss) from discontinued
operations, net.................... -- -- -- (1,216) 1,031
Net income (loss).................... (187) 751 594 (1,935) 170
Net income (loss) per share.......... (.04) .15 .12 (.38) .03
Total assets......................... 11,345 11,564 10,884 10,203 12,506
Real estate assets................... 6,462 6,212 5,954 7,121 7,254
Stockholders' equity................. 10,912 11,099 10,348 9,754 11,689
</TABLE>
No dividends were declared on Thackeray's common stock during the period
covered by this tabulation.
Quarterly Financial Data: (Unaudited)
Financial data for interim periods were as follows (amounts stated in
thousands except for per share data):
<TABLE>
<CAPTION>
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
1998
Real estate revenues...................... $ 16 $ 16 $ 16 $ 16
Income from real estate operations........ 16 16 16 16
Net loss.................................. (23) (111) (44) (9)
Net loss per share........................ .00 (.02) (.01) (.01)
1997
Real estate revenues...................... $ 16 $ 16 $ 16 $ 16
Income from real estate operations........ 16 16 16 16
Net income (loss)......................... (10) (42) 855 (52)
Net income (loss) per share............... .00 (.01) .17 (.01)
</TABLE>
4
<PAGE>
Operating Review
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Company believes that its current cash balance will be sufficient to
fund its requirements for the foreseeable future.
As more fully described in Note 2, it is expected that by year end 1999 the
Company will contribute 140 acres of its real estate located in Orlando, Florida
having a carrying value of $3,425,000 to the BT Orlando Limited Partnership (the
"Partnership"). Subsequent to such contribution, the Company will not be
required to provide any funding or financing to the Partnership.
Upon contribution of the land and the commencement of development by the
Partnership of the retail and entertainment shopping center, the Company will be
entitled to annual preferential distributions of approximately $1,350,000, and
will participate in the cash flows, sales proceeds and refinancing proceeds from
the operation, financing or disposition of such project.
Following the contribution of land to the Orlando partnerships (see Note
2), the Company will have sold (or contributed) virtually all of its real
estate. Consequently, future income, with the exception of interest income
earned on cash equivalents and $64,000 received annually from a long term land
lease, is dependent upon the development of the Orlando partnerships.
At December 31, 1998, the Company had no commitments for capital
expenditures.
Results of Operations
1998 vs. 1997
Real estate revenues in 1998 and 1997 were $64,000. General and
administrative expenses were $515,000 in 1998 and $429,000 in 1997. The increase
is due in part to costs aggregating $53,000 relating to the Company's listing on
the American Stock Exchange in the second quarter of 1998 and increased employee
compensation costs incurred in 1998.
Interest income was $264,000 in 1998 and $258,000 in 1997.
During 1997, the Company recorded a gain on sale of investment of $873,000.
The gain was realized upon the Company's selling its remaining investment in a
privately owned company.
1997 vs. 1996
Total real estate revenues were $64,000 in 1997 and $2,333,000 in 1996
which included real estate sales of $2,263,000.
Property carrying costs for 1997 were $0 versus $106,000 incurred in 1996.
The absence of such costs in 1997 is due to the Partnership Agreement with Belz
Enterprises, wherein certain expenditures of the related property are paid by
the Company, but are reimbursable by the Partnership (see Note 2). During the
year ended December 31, 1997 there were $258,000 of such expenditures charged to
the Partnership.
General and administrative expenses for 1997 were essentially level with
amounts incurred in 1996.
Interest income for 1997 was $258,000 versus $175,000 for 1996. The higher
interest income in 1997 is due to higher cash investment balances maintained by
the Company.
Impact of Inflation
The Company acknowledges that the costs of carrying and operating its real
estate may be affected by inflation; however it expects that cost increases
would be offset by commensurate increases in market value.
Year 2000
Management has evaluated the impact of Year 2000 issues on the Company's
business and operations. The Company believes, based upon its internal reviews
and other factors, that future external and internal costs to be incurred
relating to the modification of internal use software for the Year 2000 will not
have a material adverse effect on the Company's results of operations or
financial position.
5
<PAGE>
Report of Independent Public Accountants
To the Board of Directors
and Stockholders of
Thackeray Corporation:
We have audited the accompanying consolidated balance sheets of Thackeray
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1998
and 1997, and the related consolidated statements of operations and cash flows
for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Thackeray Corporation and
subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
New York, New York
March 10, 1999
6
<PAGE>
Consolidated Balance Sheets
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Assets:
Cash and cash equivalents................................. $ 4,683,000 $ 5,156,000
Receivables from real estate partnership.................. 706,000 456,000
Investments in real estate................................ 5,756,000 5,756,000
Other assets, net......................................... 200,000 196,000
------------ ------------
$ 11,345,000 $ 11,564,000
============ ============
Liabilities and Stockholders' Equity:
Accounts payable and accrued expenses..................... $ 18,000 $ 31,000
Accrued income and other taxes............................ 293,000 306,000
Other liabilities......................................... 122,000 128,000
------------ ------------
Total liabilities................................. 433,000 465,000
------------ ------------
Commitments
Stockholders' equity (Note 4):
Common stock, $.10 par value (20,000,000 shares
authorized; 5,107,401 shares issued and
outstanding at December 31, 1998 and
6,187,401 shares issued at December 31, 1997......... 511,000 619,000
Capital in excess of par value......................... 43,542,000 53,424,000
Accumulated deficit.................................... (33,141,000) (32,954,000)
Treasury stock (1,080,000 shares at December 31,
1997)................................................ -- (9,990,000)
------------ ------------
Total stockholders' equity........................ 10,912,000 11,099,000
------------ ------------
$ 11,345,000 $ 11,564,000
============ ============
</TABLE>
The accompanying notes are an integral part of these balance sheets.
7
<PAGE>
Consolidated Statements of Operations
For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues from real estate operations:
Rental income............................................ $ 64,000 $ 64,000 $ 70,000
Sales of real estate, net................................ -- -- 2,263,000
---------- ---------- ----------
Total real estate revenues....................... 64,000 64,000 2,333,000
---------- ---------- ----------
Expenses of real estate operations:
Property carrying costs, including real estate taxes..... -- -- 106,000
Cost of property sold.................................... -- -- 1,303,000
---------- ---------- ----------
Total real estate expenses....................... -- -- 1,409,000
---------- ---------- ----------
Income from real estate operations....................... 64,000 64,000 924,000
General and administrative expenses...................... (515,000) (429,000) (435,000)
Interest income.......................................... 264,000 258,000 175,000
Gain on sale of investment............................... -- 873,000 --
---------- ---------- ----------
Income (loss) before income taxes........................ (187,000) 766,000 664,000
Income taxes............................................. -- 15,000 70,000
---------- ---------- ----------
Net income (loss)................................ $ (187,000) $ 751,000 $ 594,000
========== ========== ==========
Income (loss) per share:
Income (loss) per share.................................. $ (.04) $ .15 $ .12
========== ========== ==========
Number of shares......................................... 5,107,401 5,107,401 5,107,401
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
8
<PAGE>
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss)........................................ $ (187,000) $ 751,000 $ 594,000
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization....................... 3,000 4,000 30,000
Gain on sale of investment.......................... -- (873,000) --
Gain on sale of real estate......................... -- -- (960,000)
Changes in assets and liabilities:
Increase in receivables from real estate
partnership...................................... (250,000) (258,000) (198,000)
(Decrease) increase in accounts payable and accrued
liabilities...................................... (32,000) (71,000) 87,000
Other, net.......................................... (7,000) (1,000) (177,000)
---------- ---------- ----------
Net cash used in operating activities............ (473,000) (448,000) (624,000)
---------- ---------- ----------
Cash Flows from Investing Activities:
Collections of mortgage loans............................ -- -- 60,000
Proceeds from sale of investment......................... -- 887,000 --
Proceeds from sale of real estate........................ -- 102,000 2,161,000
Additions to office furniture and fixtures............... -- -- (2,000)
---------- ---------- ----------
Net cash provided by investing activities........ -- 989,000 2,219,000
---------- ---------- ----------
(Decrease) increase in cash and cash equivalents.... (473,000) 541,000 1,595,000
Cash and cash equivalents -- beginning of year........... 5,156,000 4,615,000 3,020,000
---------- ---------- ----------
Cash and cash equivalents -- end of year................. $4,683,000 $5,156,000 $4,615,000
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
9
<PAGE>
Notes to Consolidated Financial Statements
December 31, 1998, 1997 and 1996
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Thackeray
Corporation ("Thackeray" or the "Company") and its subsidiaries, all of which
are wholly owned. All significant intercompany transactions and balances have
been eliminated.
The Company's operations are comprised exclusively of managing its real
estate investments. Accordingly, the Company prepares an unclassified balance
sheet. In addition, the accompanying consolidated statements of operations
reflect the activities of such operations.
Cash Equivalents
The Company considers investments in certificates of deposit which will
mature in three months or less, to be cash equivalents.
Real Estate
Substantially all of Thackeray's real estate was acquired through or in
lieu of foreclosure. The carrying value of such real estate represents unpaid
principal and interest at the date of acquisition.
Long-Lived Assets
Long lived assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. If such review indicates that the carrying amount of an
asset exceeds the sum of its expected future cash flows, on an undiscounted
basis, the asset's carrying amount is written down to fair value. Long-lived
assets to be disposed of are reported at the lower of carrying amount or fair
value less cost to sell.
Investment in Real Estate Partnership
The investment in the real estate partnership (see Note 2) is accounted for
on the equity method of accounting. The partnership is in the development phase
and incurred certain development costs in 1998, 1997 and 1996.
Earnings Per Share
Net income (loss) applicable to common stock in each of the years 1998,
1997, and 1996 was divided by the weighted average number of shares outstanding
during the period.
The Financial Accounting Standards Board issued new pronouncements which
established new standards for computing and presenting earnings per share as
well as new standards for disclosing information about an entity's capital
structure. These statements were adopted in 1997 and had no impact on the
consolidated financial statements.
Revenue Recognition
Rental income is recognized based upon the contractual terms of the lease.
10
<PAGE>
Profit on sales of real estate is recognized in full when the profit is
determinable, an adequate down payment has been received, collectability of the
sales price is reasonably assured and the earnings process is substantially
complete. If the sales transaction does not meet the criteria, all profit or a
portion thereof is deferred until such criteria are met.
Accounting Estimates
The preparation of these consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain 1996 amounts have been reclassified to conform to 1997 and 1998
presentations.
2. Investments in Real Estate
The various classifications of real estate owned by Thackeray, all of which
is located in Florida, at December 31, 1998 and 1997 were as follows:
Undeveloped land............................................ $5,331,000
Land leased to others....................................... 425,000
----------
$5,756,000
==========
On May 20, 1996, the Company and affiliates of Belz Enterprises ("Belz")
entered into an Agreement of Limited Partnership of BT Orlando Limited
Partnership (the "Partnership"). Pursuant to this agreement, the Company agreed
to contribute approximately 140 acres of its Orlando, Florida property to the
Partnership, which property is valued at $15,246,000 for capital account
purposes, when the requisite construction financing is obtained. The
Partnership, with an affiliate of Belz and the Company, as general partners,
will develop, construct, operate and lease a retail and entertainment shopping
center complex on the property. The Company will have a 35% general partner
interest in the Partnership and will be entitled to certain preferential
distributions. The Company will participate in the cash flow, sales proceeds and
refinancing proceeds from the operation, financing or disposition of such
project. The Partnership originally was to terminate in the event construction
financing was not obtained by May 20, 1998; however, the date was extended to
June 30, 1999.
In addition, on May 20, 1996, the Company and Belz Investco entered into a
binding letter agreement regarding the development of the remaining
approximately 78 acres of the Company's Orlando, Florida property, which
property will be valued at $8,487,000 for capital account purposes. Pursuant to
this letter agreement, the parties agreed to form a new partnership to develop
22.5 acres of such property as commercial property and 55.5 acres thereof as
multi-family residential property, upon completion of the development of the 140
acres and obtaining the requisite construction financing related to the 78
acres. The Company, through a subsidiary, and Belz, or one of its affiliates,
will be 50% owners and general partners of such partnership and the Company will
be entitled to certain preferential distributions.
In August, 1996, the Company sold its 90.9 acre Dade County, Florida
property for $2,159,000, realizing a gain on the transaction of $1,009,000.
11
<PAGE>
In November 1996, the Company entered into an agreement for the sale of its
Sumter County, Florida property for $104,000, generating a loss on the
transaction of $49,000. The transaction closed in January 1997. For financial
reporting purposes, the transaction was recorded as having closed in 1996.
3. Income Taxes
For the year 1998 on a consolidated basis, the Company reported a taxable
loss and, therefore, no Federal income taxes were provided.
On a consolidated basis the Company reported taxable income for each of the
years ended December 31, 1997 and 1996. However, the Company had net operating
loss carryforwards well in excess of the reported taxable income and, therefore,
no Federal income taxes are payable for the years ended December 31, 1997 and
1996. Accordingly, the 1997 and 1996 Federal income tax provisions ($260,000 and
$225,000, respectively) have been eliminated through utilization of such loss
carryforwards in the accompanying Consolidated Statements of Operations through
the reversal of the related valuation reserve (see below). The 1997 and 1996
provision for income taxes is comprised primarily of Federal alternative minimum
income taxes.
As of December 31, 1998, Thackeray had net operating loss carryforwards for
Federal income tax purposes of approximately $5,000,000, which can be carried
forward to offset future taxable income through 2013. In addition, the Company
has capital loss carryforwards of $700,000, all of which expire in 2000.
The tax effect of these net operating loss carryforwards is recorded as a
deferred tax asset. However, because no substantial amount of these net
operating loss carryforwards are expected to be realized, a valuation reserve
equal to such deferred tax asset has been established.
4. Stockholders' Equity
Changes in stockholders' equity for the years ended December 31, 1998, 1997
and 1996 were as follows:
<TABLE>
<CAPTION>
Common Stock Treasury Stock
---------------------- Capital ------------------------
Number in excess of Accumulated Number
of Shares Amount Par Value Deficit of Shares Amount
--------- ------ ------------ ----------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1995............ 6,187,401 $ 619,000 $53,424,000 $(34,299,000) (1,080,000) $(9,990,000)
Net income for the year.............. -- -- -- 594,000 -- --
---------- ---------- ----------- ------------ ---------- -----------
Balance December 31, 1996............ 6,187,401 619,000 53,424,000 (33,705,000) (1,080,000) (9,990,000)
Net income for the year.............. -- -- -- 751,000 -- --
---------- ---------- ----------- ------------ ---------- -----------
Balance December 31, 1997............ 6,187,401 619,000 53,424,000 (32,954,000) (1,080,000) (9,990,000)
Cancellation of Treasury Shares...... (1,080,000) (108,000) (9,882,000) -- 1,080,000 9,990,000
Net loss for the year................ -- -- -- (187,000) -- --
---------- ---------- ----------- ------------ ---------- -----------
Balance December 31, 1998............ 5,107,401 $ 511,000 $43,542,000 $(33,141,000) -- $ --
========== ========== =========== ============ ========== ===========
</TABLE>
In March 1998, the Company cancelled the 1,080,000 shares of its common
stock held in treasury, returning them to the status of authorized and unissued
shares of the Company. Accordingly, the Company has eliminated its Treasury
Stock in the amount of $9,990,000, and charged Common Stock and Capital in
Excess of Par Value for $108,000 and $9,882,000, respectively.
5. Commitments
Thackeray leases office space on a month to month basis.
Total rent expense amounted to $20,000 in 1998, $29,000 in 1997 and $31,000
in 1996.
12
<PAGE>
Future minimum rental revenue from the non-cancellable lease, relating to
one of the land parcels, in effect at December 31, 1998, is as follows:
Year Amount
- ---- ------
1999.................................................... $ 64,000
2000.................................................... 64,000
2001.................................................... 64,000
2002.................................................... 64,000
2003.................................................... 64,000
Thereafter.............................................. 4,416,000
6. Business Segments
The operations are comprised exclusively of real estate.
7. Sale of Investment
In August, 1997, the Company sold its remaining investment in a privately
owned company. The Company realized a gain on the sale of $873,000.
13
<PAGE>
Stockholder Reference
Availability of Form 10-K
Stockholders may obtain a copy of Thackeray's Annual Report on Form 10-K for
the year ended December 31, 1998, without exhibits, free of charge by writing
to the Assistant Secretary, Thackeray Corporation, 400 Madison Avenue, Suite
309 New York, New York 10017
Registrar and Transfer Agent
Chase Mellon
450 W. 33rd Street
New York, New York 10001
Independent Public Accountants
Arthur Andersen LLP
New York, New York
General Counsel
Weil, Gotshal & Manges LLP
New York, New York
Market for Thackeray's Common Stock and
Related Stockholder Matters
Effective April 20, 1998, the Company's common stock, which previously had
been listed on the New York Stock Exchange, became listed on the American Stock
Exchange. The following table sets forth the reported high and low sales prices
for Thackeray's common stock during the periods indicated as reported in the
record of composite transactions for New York Stock Exchange listed securities
and American Stock Exchange listed securities, as appropriate.
Quarter Ended
--------------------------------------------
September December
March 31 June 30 30 31
-------- ------- --------- --------
1998 High 3 15/16 3 13/16 4 1/16 3 1/2
Low 3 3 1/4 3 5/16 3 1/16
1997 High 3 1/8 2 5/8 4 4 3/16
Low 2 1/4 2 1/4 2 7/16 3 1/4
As of the close of business on March 25, 1999, there were approximately 1,300
holders of record of Thackeray's common stock.
During the three years ended December 31, 1998, no dividends were paid on
Thackeray's common stock.
14
<PAGE>
Directors
Martin J. Rabinowitz(1)
Managing member RFIA Holdings LLC,
a private investment company.
Jules Ross(1)
Ronald D. Rothberg(2)
President, The RDR Group Inc., a private
investment company
Pomona, New York
Moses Rothman(2)
Chairman, Black Inc. A.G., a film distributor
London, England
John Sladkus(1)
Consultant,
Peter Sharp & Co., Inc.,
a real estate management company
New York, New York
Officers
Martin J. Rabinowitz
Chairman of the Board and President
Jules Ross
Vice President, Finance, Treasurer and Secretary
Executive Office
400 Madison Avenue, Suite 309
New York, New York 10017
(212) 759-3695
(1) Member of Executive Committee and Nominating Committee
(2) Member of Audit Committee
15
EXHIBIT 21
SUBSIDIARIES OF THACKERAY CORPORATION
NAME OF CORPORATION STATE OF INCORPORATION
- ------------------- ----------------------
Wholly-Owned by Thackeray Corporation
- -------------------------------------
Brennand-Paige Industries, Inc. Delaware
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE ACCOMPANYING FORM 10-K AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 4,683,000
<SECURITIES> 0
<RECEIVABLES> 706,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,345,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 511,000
<OTHER-SE> 10,401,000
<TOTAL-LIABILITY-AND-EQUITY> 11,345,000
<SALES> 0
<TOTAL-REVENUES> 64,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 515,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (187,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (187,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (187,000)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
