<PAGE>
<PAGE> 1
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
__________________________________________________
[X] Quarterly report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
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 0-7616
I.R.S. Employer Identification Number 23-1739078
Avatar Holdings Inc.
(a Delaware Corporation)
255 Alhambra Circle
Coral Gables, Florida 33134
(305) 442-7000
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
issuer's classes of common stock, as of the latest
practicable date: 9,095,102 shares of the Company's common
stock ($1.00 par value) were outstanding as of October 31,
1995.
1 of 48
<PAGE>
<PAGE> 2
AVATAR HOLDINGS INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. Financial Information
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets --
September 30, 1995 and December 31,1994.............. 3
Consolidated Statements of Operations --
Nine months and three months ended
September 30, 1995 and 1994.......................... 4
Consolidated Statements of Cash Flows --
Nine months ended September 30, 1995 and 1994........ 5
Notes to Consolidated Financial Statements............ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 13
PART II. Other Information
Item 1. Legal Proceedings........................... 15
Item 6. Exhibits and Reports on Form 8-K............ 15
Exhibit Index.......................................... 17
2<PAGE>
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AVATAR HOLDINGS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Unaudited
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- -----------
<S> <C> <C>
Assets
Cash $4,890 $4,560
Restricted cash 3,561 1,477
Investments - trading 51,695 51,582
Contracts, mortgage notes and other receivables, net 64,705 71,424
Land and other inventories 140,750 125,637
Property, plant and equipment, net 178,293 172,897
Other assets 16,567 15,835
Regulatory assets 3,747 3,165
-------- --------
Total Assets $464,208 $446,577
======== ========
Liabilities and Stockholders' Equity
Liabilities
Notes, mortgage notes and other debt:
Real estate and corporate $122,050 $102,768
Utilities 39,865 38,194
Estimated development liability for sold land 16,411 19,165
Accounts payable 5,942 5,610
Accrued and other liabilities 33,812 29,114
Deferred customer betterment fees 19,033 19,214
Minority interest in consolidated subsidiaries 9,062 9,059
-------- --------
Total Liabilities 246,175 223,124
Commitments and contingent liabilities
Contributions in aid of construction 54,726 54,702
Stockholders' Equity
Common Stock, par value $1 per share
Authorized: 15,500,000 shares
Issued: 12,715,448 shares 12,715 12,715
Additional paid-in capital 207,271 207,271
Retained earnings 5,294 10,738
-------- --------
225,280 230,724
Treasury stock, at cost, 3,620,346 shares 61,973 61,973
-------- --------
Total Stockholders' Equity 163,307 168,751
-------- --------
Total Liabilities and Stockholders' Equity $464,208 $446,577
======== ========
</TABLE>
See notes to consolidated financial statements.
3<PAGE>
<PAGE> 4
AVATAR HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Nine Months and Three Months Ended September 30, 1995 and 1994
(Unaudited)
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
Nine Months Three Months
---------------- -------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues
Real estate sales $38,388 $31,955 $13,940 $9,593
Deferred gross profit (901) (1,752) (357) (523)
Utility revenues 22,630 21,593 7,115 6,743
Interest income 7,181 8,477 2,285 2,784
Trading account profit, net 8,073 1,750 1,852 589
Other 471 448 161 130
Total revenues 75,842 62,471 24,996 19,316
Expenses
Real estate expenses 46,907 34,405 16,659 11,384
Utility expenses 18,187 17,186 5,946 5,643
General and administrative expenses 7,021 7,886 2,587 2,439
Interest expense 8,561 8,461 3,066 2,142
Other 610 610 202 203
------- ------- ------- -------
Total expenses 81,286 68,548 28,460 21,811
------- ------- ------- -------
Loss before income taxes (5,444) (6,077) (3,464) (2,495)
Provision (credit) for income taxes - - - (255)
------- ------- ------- -------
Net loss ($5,444) ($6,077) ($3,464) ($2,240)
======= ======= ======= =======
Per share amounts:
Net loss ($.60) ($.67) ($.38) ($.25)
======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
4<PAGE>
<PAGE> 5
AVATAR HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
-------------------------
1995 1994
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss ($5,444) ($6,077)
Adjustments to reconcile net loss to
net cash (used in) provided by operating activities:
Depreciation and amortization 7,737 5,967
Deferred gross profit 901 1,752
Cost of sales not requiring cash 2,506 1,627
Trading account profit, net (8,073) (2,288)
Changes in operating assets and liabilities:
Restricted cash (2,084) 67
Investments - trading 9,000 -
Principal payments on contracts receivable 14,859 15,483
Receivables (9,258) (7,664)
Other receivables 217 303
Inventories (20,373) (6,507)
Other assets (732) (1,635)
Accounts payable and accrued and other
liabilities 3,227 6,251
------- -------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (7,517) 7,279
INVESTING ACTIVITIES
Investment in property, plant and equipment (13,109) (10,618)
------- -------
NET CASH USED IN INVESTING ACTIVITIES (13,109) (10,618)
FINANCING ACTIVITIES
Net proceeds from revolving lines of credit
and long-term borrowings 38,103 14,463
Principal payments on revolving lines of credit
and long-term borrowings (17,147) (14,673)
------- -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 20,956 (210)
------- -------
INCREASE (DECREASE) IN CASH 330 (3,549)
Cash at beginning of period 4,560 7,178
------- -------
CASH AT END OF PERIOD $4,890 $3,629
======= =======
</TABLE>
5<PAGE>
<PAGE> 6
AVATAR HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows -- continued
(Unaudited)
(Dollars in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
For the nine months ended
September 30,
-------------------------
Cash paid during the period for: 1995 1994
------- -------
<S> <C> <C>
Interest (net of amount capitalized of $1,825 and
$1,180 in 1995 and 1994, respectively) $6,320 $4,861
======= =======
Income taxes $1,288 $276
======= =======
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES
1995 1994
------- -------
Contributions in aid of construction $1,668 $859
======= =======
</TABLE>
See notes to consolidated financial statements.
6<PAGE>
<PAGE> 7
AVATAR HOLDINGS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(Dollars in thousands)
Basis of Statement Presentation and Summary of Significant
Accounting Policies
The consolidated balance sheets as of September 30, 1995
and December 31, 1994, and the related consolidated statements
of operations for the nine month and three month periods ended
September 30, 1995 and 1994 and the consolidated statements of
cash flows for the nine month periods ended September 30, 1995
and 1994 have been prepared in accordance with generally
accepted accounting principles for interim financial
information, the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statement
presentation. In the opinion of management, all adjustments
necessary for a fair presentation of such financial statements
have been included. Such adjustments consisted only of normal
recurring items. Interim results are not necessarily
indicative of results for a full year.
For a complete description of the Company's other
accounting policies, refer to Avatar Holdings Inc.'s 1994
Annual Report on Form 10-K and the notes to Avatar's
consolidated financial statements included therein.
Reclassifications
Certain amounts presented for 1994 have been reclassified
in the financial statements for comparative purposes.
Net Loss Per Common Share
For the nine and three months ended September 30, 1995
and 1994, net loss per common share is computed on the basis
of the weighted average number of shares outstanding of
9,095,102.
Restricted Cash
Restricted cash includes collections of monthly
payments totaling $971 at September 30, 1995, on pledged
mortgage notes receivable. These collections will be applied
to reduce the related mortgage trust notes. Also included in
restricted cash, at September 30, 1995, are utility deposits
of $70, as well as housing and vacation ownership deposits of
$2,520 which have been placed in escrow. The housing
deposits will become available to the Company when the housing
contracts close and the vacation ownership deposits will
become available upon approval from the state of Tennessee.
Investments - trading
The Company classifies all of its investment portfolio as
trading. This category is defined as including debt and
marketable equity securities held for resale in anticipation
of earning profits from short-term movements in market prices.
Trading account securities are carried at fair market value,
and both realized and unrealized gains and losses are included
in net trading account profit. Fair values for actively traded
debt securities and equity securities are
7<PAGE>
<PAGE> 8
Notes to Consolidated Financial Statements (Unaudited) -- continued
Investments - trading -- continued
based on quoted market prices on national markets. Fair values
for thinly traded investment securities are generally based on
prices quoted by brokerages .
Avatar's investment portfolio at September 30, 1995 and
December 31, 1994 included corporate bonds and other bonds
rated B- or above by Moody's and/or Standard and Poor's, non-
rated bonds of companies which are in bankruptcy and have
defaulted as to payments of principal and interest on such
bonds, equity securities, money market accounts and U.S.
Government and Agency securities. The portfolio also includes
obligations for securities which have been sold that the
Company does not own and will, therefore, be obligated to
purchase at a future date. Such obligations have been recorded
at the fair market value of the securities and contain an
element of market risk in that, if the securities increase in
value, it will be necessary to purchase the securities at a
cost in excess of the fair market value price.
The following table sets forth the fair values of
investments (including securities sold short which are valued
at the cost to purchase):
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Corporate bonds $27,699 $21,352
Other rated bonds 508 -
Non-rated bonds 13,047 13,069
Equity securities 5,678 8,472
U.S. Government and Agency securities - 1,930
Money market accounts 5,145 11,065
Less:
Securities sold short (382) (1,856)
Forward foreign exchange contracts - (2,450)
------- -------
Total market value $51,695 $51,582
======= =======
Aggregate cost $46,123 $52,717
======= =======
</TABLE>
The portfolio at December 31, 1994 included certain
forward foreign exchange contracts, with a fair value
(carrying amount) of $2,450, used by portfolio managers to
hedge the foreign currency risk associated with certain bonds
denominated in foreign currency. As of September 30, 1995, the
portfolio does not include any forward foreign exchange
contracts. The average fair value during 1995 and 1994 of
forward foreign exchange contracts was $1,819 and $3,025.
8<PAGE>
<PAGE> 9
Notes to Consolidated Financial Statements (Unaudited) -- continued
Contracts, Mortgage Notes and Other Receivables
Contracts, mortgage notes, and other receivables are
summarized as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Contracts and mortgage notes receivable $92,549 $101,280
Notes and other receivables 5,808 5,948
------- --------
98,357 107,228
------- --------
Less:
Deferred gross profit 28,488 30,221
Allowance for doubtful accounts 993 1,387
Market valuation reserve 873 1,184
Other 3,298 3,012
------- -------
33,652 35,804
------- -------
$64,705 $71,424
======= =======
</TABLE>
Land and Other Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Land developed and in process of development $92,125 $80,629
Land held for future development or sale 34,596 34,730
Dwelling units completed or under construction 12,476 8,720
Other 1,553 1,558
-------- --------
$140,750 $125,637
======== ========
</TABLE>
Minority Interest in Consolidated Subsidiaries
Minority interest in consolidated subsidiaries is
represented by preferred stock of Avatar Utilities'
subsidiaries. Total preferred stock outstanding is as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
9% Cumulative preferred stock $9,000 $9,000
Other 62 59
------ ------
$9,062 $9,059
====== ======
</TABLE>
Avatar's utility subsidiary's 9% cumulative preferred
stock issue provides for redemption to occur no earlier than
March 1, 1997, in whole or in part; however, a minimum of
$1,800 of the preferred stock must be redeemed per annum
beginning in 1997. A redemption of all outstanding shares
shall occur no later than March 1, 2001.
Charges to operations recorded as "Other expenses" relate
to preferred stock dividends of subsidiaries for the nine
months ended September 30, 1995 and 1994, which amount to $610
and $610, respectively, and for the three months ended
September 30, 1995 and 1994 amounted to $202 and $203,
respectively.
9<PAGE>
<PAGE> 10
Notes to Consolidated Financial Statements (Unaudited) -- continued
Income Taxes
Deferred income taxes reflect the net tax effect of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Significant components
of the Company's deferred income tax assets and liabilities as
of September 30, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
------- ------
<S> <C> <C>
Deferred income tax assets
Net operating loss carryforward $14,000 $9,000
Tax over book basis of land inventory 21,000 21,000
Unrecoverable land development costs 4,000 5,000
Tax over book basis of depreciable assets 5,000 5,000
Alternative minimum tax and investment tax credit carryforward 5,000 5,000
Other 2,000 2,000
------- -------
Total deferred income taxes 51,000 47,000
Valuation allowance for deferred income tax assets (40,000) (35,000)
------- -------
Deferred income tax assets after valuation allowance 11,000 12,000
Deferred income tax liabilities
Book over tax income recognized on land sales (3,000) (3,000)
Deferred carrying charges on utility plant (3,000) (3,000)
Other (5,000) (6,000)
Total deferred income tax liabilities (11,000) (12,000)
------- -------
Net deferred income taxes $0 $0
======= =======
</TABLE>
The provision for income taxes for the nine months and
three months ended September 30, 1995 and 1994 consists of the
following:
<TABLE>
<CAPTION>
Nine months Three months
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Federal:
Current - - - ($255)
Deferred - - - -
------ ------ ------ ------
- - - (255)
State:
Current - - - -
Deferred - - - -
------ ------ ------ ------
- - - -
Total - - - ($255)
====== ====== ====== ======
</TABLE>
10<PAGE>
<PAGE> 11
Notes to Consolidated Financial Statements (Unaudited) -- continued
Income Taxes -- continued
A reconciliation of income tax expense to the expected
income tax expense (credit) at the federal statutory rate of
34% for the nine months and three months ended September 30,
1995 and 1994 is as follows:
<TABLE>
<CAPTION>
Nine months Three Months
1995 1994 1995 1994
------- ------- ------- ------
<S> <C> <C> <C> <C>
Income tax (credit) computed at statutory
rate ($1,851) ($2,066) ($1,178) ($848)
Income tax effect of non-deductible dividends
on preferred stock of subsidiary 207 207 69 68
State income tax (credit), net of
federal effect (180) (209) (126) (108)
Other (176) 68 235 (367)
Change in valuation allowance on deferred
tax assets 2,000 2,000 1,000 1,000
------ ------ ------ -----
Provision (credit) for income taxes $0 $0 $0 ($255)
====== ====== ====== =====
</TABLE>
Contingencies
Avatar is involved in various pending litigation matters
primarily arising in the normal course of its business.
Although the outcome of these and the following matters cannot
be determined, management believes that the resolution of
these matters will not have a material effect on Avatar's
business or financial position.
On October 1, 1993, the United States, on behalf of the
U.S. Environmental Protection Agency, filed a civil action
against Florida Cities Water Company, a utility subsidiary of
Avatar, in the U.S. District Court for the Middle District of
Florida. (United States v. Florida Cities Water Company,
Civil Action No. 93-281-C1). The complaint alleges that the
Waterway Estates wastewater treatment plant, located in Lee
County, Florida, operated in violation of the Federal Clean
Water Act, 33 U.S.C. S1251 et seq. The Federal Clean Water
Act provides for maximum civil penalties of $25 per day for
each violation. On May 5 and June 26, 1995, the United States
amended the complaint to include allegations of Federal Clean
Water Act violations against Florida Cities Water Company for
violations that allegedly occurred at two other wastewater
treatment plants, Barefoot Bay, located in Brevard County, and
Carrolwood, located in Hillsborough County, Florida. The
amended complaint alleges that the three wastewater treatment
plants were operated for various periods of time without a
federal discharge permit and that, subsequently, certain
pollutants were discharged in excess of applicable federal
permit limitations. In addition, the government amended the
complaint to include Avatar Holdings Inc. as a defendant. The
case is currently proceeding through the discovery process,
and the court has set an initial trial date for January 2,
1996. Based upon the information currently available to it,
Avatar believes that it has strong defenses to the amended
complaint and intends to pursue those defenses vigorously.
11<PAGE>
<PAGE> 12
Notes to Consolidated Financial Statements (Unaudited) -- continued
Contingencies - continued
On March 1, 1994, the Wisconsin Department of Natural
Resources (the "Department") sent Avatar notice that the
Department had recently issued a second Record of Decision
("ROD") in connection with the Edgerton Sand & Gravel Landfill
site ("the Site"). The ROD calls for the City of Edgerton's
public water supply system to be extended to the owners of
private wells in the vicinity of the Site. The ROD also
states that other work related to soil and groundwater
remedial action would be required at the Site. The Department
demanded that all potentially responsible parties ("PRPs")
associated with the Site organize into a PRP group to
undertake the implementation of the ROD. Avatar responded in
writing to the Department. No further action has since been
taken by the Department against Avatar in connection with the
ROD.
On November 1, 1994, certain private parties filed a
civil action against Avatar in Rock County Circuit Court,
Wisconsin. (Alderman, et al v. Avatar Holdings Inc., et al,
Civil Action Case No. 94 CV 675). The plaintiffs allege that
Avatar and other named defendants disposed of various
substances at the Site, thereby causing contamination of the
groundwater source used by the plaintiffs. The parties have
negotiated a settlement in principle by which the defendants
have agreed to pay the plaintiffs an aggregate of $3,600 in
damages. A final settlement will depend upon, among other
things, an agreement among the defendants regarding the
allocation of payment obligations. Most of the defendants'
settlement payments will go towards the construction and
implementation of a municipal water supply system extension,
as required by the ROD. If a final settlement cannot be
reached, Avatar has available to it a number of factual and
legal defenses, which if successful, would eliminate or
substantially reduce Avatar's potential liability.
12<PAGE>
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (dollars in thousands except per share data)
RESULTS OF OPERATIONS
Operations for the nine and three month periods ended
September 30, 1995, resulted in a net loss of $5,444 and
$3,464 or $.60 and $.38 per share, respectively, compared to a
net loss of $6,077 and $2,240 or $.67 and $.25 and per share,
respectively, for the same periods of 1994. The improvement
in operations for the nine months is primarily a result of
increased trading account profits. The decline in operations
for the three months is primarily a result of an increase in
net interest expense.
Avatar's real estate revenues for the nine and three
months ended September 30, 1995, increased $6,433 or 20.1% and
$4,347 or 45.3%, respectively, while real estate expenses
increased $12,502 or 36.3% and $5,275 or 46.3%, respectively,
when compared to the same periods of 1994. The increase in
real estate revenues for the nine month period ended September
30, 1995 is generally a result of increased housing and
vacation ownership sales and increased resort revenues
partially offset by a 1994 bulk land sale. The increase in
real estate revenues for the three month period ended
September 30, 1995 is primarily due to increased housing and
vacation ownership sales and a bulk land sale. The increase
in real estate expenses for the nine and three month periods
ended September 30, 1995, when compared to the same periods of
1994, is essentially a result of a change in the sales mix
between product lines within the Company's real estate
operations and increased selling expenses related to new
projects within the home-building and vacation ownership
operations.
Data from home-building operations for the nine months
and three months ended September 30, 1995 and 1994 is
summarized as follows :
<TABLE>
<CAPTION>
Nine Months Three Months
1995 1994 1995 1994
------ ------ ------ -------
<S> <C> <C> <C> <C>
Units closed
Number of units 87 54 32 26
Aggregate dollar volume $7,406 $4,604 $2,726 $2,443
Average price per unit $85 $85 $85 $94
Units sold, net
Number of units 161 75 52 28
Aggregate dollar volume $29,773 $5,935 $5,408 $2,413
Average price per unit $185 $79 $104 $86
Backlog September 30,
1995 1994
------ ------
Number of units 153 85
Aggregate dollar volume $29,131 $7,224
Average price per unit $190 $85
</TABLE>
Utility revenues for the nine months and three months
ended September 30, 1995, increased $1,037 or 4.8% and $372 or
5.5%, respectively, when compared to the same periods of 1994.
The increase in utility revenues is primarily attributable to
increases due to rate cases settled in the latter part of
1994. Utility expenses for the nine and three months ended
September
13<PAGE>
<PAGE> 14
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (dollars in thousands except per share data)
-- continued
RESULTS OF OPERATIONS -- continued
30, 1995, increased $1,001 or 5.8% and $303 or 5.4%,
respectively, when compared to the same periods of 1994. The
increase in utility expenses is due to higher utility
operating costs.
Interest income for the nine and three months ended
September 30, 1995, decreased $1,296 or 15.3% and $499 or
17.9%, respectively, when compared to the same periods for
1994. The decline in interest income is due in part to
lower average aggregate amounts outstanding in the Company's
contract and mortgage notes receivable portfolio. Avatar's
contracts and mortgage notes receivable portfolio amounted to
$92,549 at September 30, 1995, compared to $104,823 at
September 30, 1994.
Trading account profit, net for the nine and three months
ended September 30, 1995, increased $6,323 and $1,263,
respectively, compared to the same periods for 1994. Trading
account profit represents interest income and realized and
unrealized gains and losses related to the trading investment
portfolio, net of commissions payable to brokers.
General and administrative expenses for the nine and
three months ended September 30, 1995, decreased $865 or 11.0%
and increased $148 or 6.1%, respectively, compared to the same
periods of 1994. The decrease for the nine months ended
September 30, 1995 is mainly attributable to reductions in the
accrual for incentive compensation and expenses related to a
legal settlement included in 1994. The increase for the three
months ended September 30, 1995 is due, in part, to an
increase in the accrual for incentive compensation when
compared to 1994.
Interest expense for the nine and three months ended
September 30, 1995, increased $100 or 1.2% and $924 or 43.1%,
respectively, compared to the same periods of 1994. The
increase for the three months is principally attributable to
the capitalization of interest of $ 588 for 1995 compared to
$1,180 in 1994.
LIQUIDITY AND CAPITAL RESOURCES
Avatar's primary business activities, which include
housing, vacation ownership, retail land sales, land
development, resort operations and utility services, are
capital intensive in nature. Avatar expects to fund its
operations and capital requirements through a combination of
cash and investment securities on hand, operating cash flows
and external borrowings. Maturities for 1995 and 1996 include
$4,000 and $57,564, respectively, of the Company's bank credit
lines. Avatar intends to secure an extension or refinancing
of such credit lines; however, there can be no assurance that
Avatar will be able to do so.
Avatar had $51,695 in investments, at September 30, 1995,
which were classified as trading. The Company intends to
continue to actively trade such securities in an effort to
generate profits and will reinvest such profits until such
time as the Company's cash requirements necessitate the use or
partial use of the portfolio proceeds. During the three
months ended September 30, 1995, the Company withdrew $9,000
from its portfolio to fund operations.
14<PAGE>
<PAGE> 15
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (dollars in thousands except per share data)
-- continued
LIQUIDITY AND CAPITAL RESOURCES - continued
A portion of the investment portfolio collateralizes a
$36,000 line of credit which had an outstanding balance at
September 30, 1995, of $36,000 and will mature during the
second quarter of 1996.
In April 1995, the Company entered into Mortgage and
Security Agreements ( the "Agreements" ) with respect to the
land development and construction of the Harbor Islands
project. The Agreements provide for borrowings up to $29,000
at prime plus 1.5% with repayments over periods of 36 to 42
months. Under the terms of the Agreements, borrowings are
secured primarily by land and inventories of the Harbor
Islands project and the Company is required to maintain
minimum levels of net worth, as defined. At September 30,
1995, the outstanding balance was $6,349.
On October 5, 1995, the Company obtained various loans
with respect to its vacation ownership operations at Sunrise
Ridge Resorts. These loans provide for borrowings up to
$13,000 with interest rates ranging from prime plus 2.00% to
prime plus 2.25%. Under the terms of the loans, borrowings
are secured primarily by land and inventories at Sunrise Ridge
Resort and certain contracts receivable. The Company is
required to maintain minimum levels of net worth, as defined
in the loan agreements pursuant to which such loans were made.
At October 31, 1995, the outstanding balance was
approximately $2,000.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
The information, which is set forth in the final
paragraph under the caption "Contingencies" in the Notes to
Consolidated Financial Statements (Unaudited) in Item 1 of
Part I of this Report, relating to the November 1, 1994
civil action against Avatar, is incorporated herein by
reference.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
10(m) Employment Agreement, dated July 27, 1995, by
and between Avatar Holdings Inc. and Edwin
Jacobson (filed herewith)
27 Financial Data Schedule (filed herewith)
Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended September 30, 1995.
15<PAGE>
<PAGE> 16
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.
AVATAR HOLDINGS INC.
Date: November 14, 1995 By: /s/ Lawrence L. Colditz
----------------- ------------------------
Lawrence L. Colditz
Controller
Date: November 14, 1995 By: /s/ Charles L. McNairy
----------------- ------------------------
Charles L. McNairy
Executive Vice President,
Treasurer and Chief Financial
Officer
16<PAGE>
<PAGE> 17
Exhibit Index
10(m) Employment Agreement, dated July 27, 1995 by and
between Avatar Holdings Inc. and Edwin Jacobson (filed
herewith)..................................................... 18
27 Financial Data Schedule (filed herewith)...................... 48
17<PAGE>
<PAGE>
<PAGE> 1
AVATAR HOLDINGS INC.
255 Alhambra Circle
Coral Gables, Florida 33134
July 27, 1995
Mr. Edwin Jacobson
2575 South Bayshore Drive
Penthouse A
Coconut Grove, Florida 33133
Dear Mr. Jacobson:
We are writing with respect to your employment by Avatar
Holdings Inc. (the "Company") as Chairman of the Executive Committee
and President and Chief Executive Officer of the Company. The Company
acknowledges and recognizes the value of your experience and abilities
to the Company since the beginning of your employment with the Company
pursuant to an Employment Agreement, dated June 15, 1992 (the
"Original Employment Agreement"), the term of which expires on June
15, 1997, and desires to continue to retain and make secure for itself
such experience and abilities on the terms hereinafter provided.
1. Employment. The Company agrees to employ you and you
----------
agree to be employed by the Company commencing on
18
<PAGE>
<PAGE> 2
June 16, 1997 (the "Commencement Date") and ending on the third
anniversary thereof (unless sooner terminated as hereinafter
provided), on the terms and subject to the conditions set forth in
this agreement ("Agreement").
2. Duties. (a) You shall continue to be nominated as a
------
director of the Corporation and, subject to your election thereto by
the Board of Directors or the stockholders of the Company, you shall
be employed as Chairman of the Executive Committee of the Company; and
you shall also be employed as the President and Chief Executive
Officer of the Company. In such capacities, you shall serve as a
senior executive officer of the Company and shall have the duties and
responsibilities prescribed for such positions by the By-Laws of the
Company, and shall have such other duties and responsibilities as may
from time to time be prescribed by the Board of Directors of the
Company or the Executive Committee of the Board of Directors, provided
that such duties and responsibilities are consistent with your
positions as Chairman of the Executive Committee and President and
Chief Executive Officer. In the performance of your duties, you shall
be subject to the supervision and direction of the Board of Directors
of the Company and the Executive Committee of the Board of Directors.
19
<PAGE>
<PAGE> 3
(b) Subject to the term of your employment hereunder, you
shall devote such time as is reasonably necessary to the proper
performance of your duties and responsibilities as
Chairman of the Executive Committee and President and Chief Executive
Officer. During the term of your employment hereunder, you shall have
the right to continue to be employed as President and Chief Executive
Officer of each of Chicago Milwaukee Corporation, CMC Heartland
Partners and Milwaukee Land Company. You hereby represent and warrant
to the Company that, except as described above, you have no
obligations under any existing employment or service agreement and
that your performance of the services required of you hereunder will
not conflict with your other existing obligations described above.
(c) You shall perform the services contemplated hereunder
at the principal executive office of the Company and at such other
locations as may be reasonably necessary to the performance of such
services, but you shall not be required to relocate your principal
residence from its existing location.
3. Compensation.
------------
(a) (i) Base Salary. During the term of your employment
-----------
hereunder, the Company shall pay you, and you shall accept from the
Company for your services, a salary at
20
<PAGE>
<PAGE> 4
the rate of not less than $400,000 per year ("Base Salary"), payable
in accordance with the Company's policy with respect to the compensation
of executives. You shall have the right to defer receipt of some or all
of the compensation which you are entitled to receive hereunder by written
notice to the Company, which notice shall set forth the date to which you
wish to defer receipt of such compensation. If you elect to defer receipt
of all or any portion of the Base Salary ("Deferred Compensation"), the
amount due you shall be adjusted periodically to reflect any interest that
would be realized with respect to the Deferred Compensation had it been
invested at the rate of interest announced publicly by Citibank, N.A.
in New York, New York, from time to time, as Citibank's base rate. No
specific assets of the Company shall be allocated or segregated with
respect to the Deferred Compensation and the foregoing shall not be
construed to create a trust of any kind or a fiduciary relationship
between the Company and you, the executor or administrator of your
estate or any other person. Your right, or the right of your estate,
to receive the Deferred Compensation, as adjusted in accordance with
this paragraph 3(a), shall be no greater than the right of an
unsecured general creditor of the Company.
21
<PAGE>
<PAGE> 5
(ii) Final Payment. Subject to the provisions of
-------------
paragraph 8(d)(ii) hereof, in addition to your Base Salary, within 10
days following the third anniversary of the Commencement Date or, if
earlier, the Date of Termination (as hereinafter defined), the Company
shall pay you an amount ("Final Payment") determined as follows:
(1) $120,000, provided that you are still employed by the
Company on the third anniversary of the Commencement Date;
(2) $80,000, in the event that there is a Date of Termination
prior to the third anniversary of the Commencement Date but
on or after the second anniversary of the Commencement Date;
(3) $40,000, in the event that there is a Date of Termination
prior to the second anniversary of the Commencement Date but
on or after the first anniversary of the Commencement Date;
or
(4) no Final Payment if the Date of Termination shall occur
prior to the first anniversary of the Commencement Date.
(b) Incentive Compensation.
----------------------
(i) In addition to the compensation provided in
paragraph (a) above, within 10 days following the third
anniversary of the Commencement Date or,
22
<PAGE>
<PAGE> 6
if earlier, the Date of Termination, the Company shall pay you,
as incentive compensation ("Incentive Compensation"), a cash
amount equal to the product of (x) the number of shares of the
Company's Common Stock in which you are vested (as the same may
be adjusted pursuant to paragraph 3(b)(ii)(x) below), times (y)
the excess, if any, of the market value per share of the Common
Stock over the Strike Price (being the closing price per share of
the Common Stock on the date hereof as reported on NASDAQ-NMS
(as hereinafter defined), as the same may be adjusted
pursuant to paragraph 3(b)(ii)(y) below) on the third
anniversary of the Commencement Date or, if earlier, on the
Date of Termination (in either case, the "Determination
Date"). For the purposes of this paragraph 3(b)(i), you
will vest in 25,000 shares of Common Stock on each of the
first through third anniversaries of the Commencement Date
provided that you are still employed by the Company on such
anniversary. In the event that there is a Date of
Termination prior to the third anniversary of the
Commencement Date as a result of the circumstances
contemplated by paragraphs 7(a), (b) or (d)
23
<PAGE>
<PAGE> 7
hereof, you shall immediately vest on the Date of Termination
in 50% of the remaining unvested shares and you shall forfeit any
unvested shares. In the event there is a Date of
Termination prior to the third anniversary of the
Commencement Date as a result of the circumstances
contemplated by paragraph 7(c) hereof, you shall forfeit the
remaining unvested shares.
(ii) In the event the Company shall at any time after
the date hereof (A) declare or pay any dividend on the
Common Stock payable in shares of Common Stock, (B)
subdivide or split the outstanding shares of Common Stock
into a greater number of shares or (C) combine or
consolidate the outstanding shares of Common Stock into a
smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, then and in each such
event (x) the number of shares of Common Stock on the basis
of which the Incentive Compensation is to be calculated
shall be adjusted by multiplying (a) such number of shares
as determined immediately prior to such event by (b) a
fraction (the "Adjustment Fraction"), the numerator of which
is the number of shares of
24
<PAGE>
<PAGE> 8
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
outstanding immediately prior to such event, and (y) the Strike
Price shall be adjusted by multiplying (a) the Strike Price as
determined immediately prior to such event by (b) the reciprocal
of the Adjustment Fraction.
In addition, in the event the Company shall at any time
after the date hereof make any distribution on the shares of
Common Stock, whether by way of a dividend or
a reclassification of stock, a recapitalization, a spin-off
of interests in an affiliated entity, a reorganization of
the Company or otherwise, in cash or any debt security, debt
instrument, real or personal property or any other property
(other than any shares of Common Stock or other capital
stock of the Company), then for the purpose of calculating
the Incentive Compensation to be paid to you, the market
value of the Common Stock of the Company on the
Determination Date shall be increased in accordance with the
remaining provisions of this paragraph 3(b)(ii). In the
case of a cash
25
<PAGE>
<PAGE> 9
dividend, the market value per share of the
Common Stock on the Determination Date shall be increased by
an amount equal to the per share cash amount of such
dividend. In all other cases, the market value per share of
the Common Stock on the Determination Date shall be
increased by an amount equal to the excess of (A) the
average market value per share of the Common Stock for the
five (5) business days immediately preceding the ex-dividend
date for a dividend or distribution on such stock or the
five (5) business days immediately preceding the effective
date of a reclassification, recapitalization or other
transaction involving such stock over (B) the average
market value per share of the Common Stock of the Company
for the five (5) business days next succeeding such ex-
dividend date or effective date, as the case may be;
provided, however, that if the Company's Board of Directors,
-------- -------
in good faith, believes that the adjustment, as determined
by the preceding formula, is insufficient to reflect the per
share reduction in value of the Company as a result of such
transaction, in addition to the adjustment determined by
such
26
<PAGE>
<PAGE> 10
formula the Board of Directors may increase the market
value per share of the Common Stock on the Determination
Date by such amount as the Board of Directors determines, in
good faith, to be appropriate to reflect such per share
reduction in value of the Company. In addition to the
adjustments specifically provided for in this paragraph
3(b)(ii), the manner of determining the Incentive
Compensation due to you shall be further modified or amended
as mutually determined by you and the Board of Directors of
the Company (acting in its good faith judgment) to equitably
account for any extraordinary transaction or occurrence not
specifically described in this paragraph 3(b)(ii) and which
would by itself adversely affect the value of
the Common Stock or the computation of the Incentive
Compensation due and owing to you.
(iii) For purposes of this Agreement, the "market value"
per share of the Company's Common Stock as of a
Determination Date shall mean the average closing price (or,
if there is no closing price on any date, then the mean
between the closing bid and asked prices) per share of such
27
<PAGE>
<PAGE> 11
Common Stock during the twenty (20) business days
immediately preceding a Determination Date as reported in
the trading reports of the principal securities exchange the
United States on which such stock is listed, or, if such
stock is not listed on a securities exchange in the United
States, as reported by the National Association of
Securities Dealers Automated Quotation - National Market
System ("NASDAQ-NMS") or NASDAQ-NMS's successor, or if not
reported on NASDAQ-NMS, the fair market value per share of
such stock as determined by the Board of Directors in good
faith.
(iv) Notwithstanding paragraph 3(b) of the Original
Employment Agreement and subject to paragraph 14(c) hereof,
your Incentive Compensation (as defined in the Original
Employment Agreement) shall not be determined and paid by
reference to the date of June 15, 1997 (i.e., the fifth
----
anniversary of your commencing employment pursuant to the
Original Employment Agreement), and instead shall be deferred
and determined and paid by reference to the third anniversary of
the Commencement Date hereunder or,
28
<PAGE>
<PAGE> 12
if the Date of Termination hereunder is
earlier than the third anniversary of the Commencement Date,
such Date of Termination.
(v) You and the Company agree that the Incentive
Compensation hereunder is intended to qualify as
"performance-based compensation" within the meaning of
Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as
amended (the "Code").
(c) During your employment, you will be entitled to receive
prompt reimbursement for all reasonable expenses incurred by you in
performing your services hereunder, provided that you properly account
therefor in accordance with Company policy.
4. Vacations. During your employment, you shall be
---------
entitled to reasonable vacations from time to time in accordance with
the regular procedures of the Company governing senior executives.
You shall also be entitled to all paid holidays given by the Company
to its senior executives.
5. Participation in Benefit Plans. You shall be entitled
------------------------------
to participate in and to receive benefits under all the
Company's employee benefit plans and arrangements (other than plans
relating to stock options, restricted stock, stock appreciation
rights, "phantom stock" or similar plans)
29
<PAGE>
<PAGE> 13
in effect on the date hereof, and you shall also be entitled to participate
in or receive benefits under any pension or retirement plan, savings plan,
or health-and-accident plan made available by the Company in the future
to its senior executives and other key management employees, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements and provided that you
meet the eligibility requirements thereof.
6. Other Offices. You further agree to serve without
-------------
additional compensation, if elected or appointed thereto, as an
officer or director of any of the Company's subsidiaries or
affiliates.
7. Termination.
-----------
(a) Death. Your employment hereunder shall terminate upon
-----
your death.
(b) Disability. In the event of your permanent disability
----------
(as hereinafter defined) during the term of your employment hereunder,
the Company shall have the right, upon written notice to you, to
terminate your employment hereunder, effective upon the giving of such
notice. For the purposes hereof, "permanent disability" shall be
defined as any physical or mental disability or incapacity which renders
you incapable of fully performing the services required of you in
accordance with your obligations here-
30
<PAGE>
<PAGE> 14
under for a period of 120 consecutive days or for
shorter periods aggregating 120 days during any period of twelve (12)
consecutive months.
(c) Cause. The Company may terminate your employment
-----
hereunder for "Cause". For the purposes hereof, termination for
"Cause" shall mean termination after:
(i) your commission of a material act of fraud against
the Company or its affiliates;
(ii) your conviction of (or pleading by you of nolo
----
contendere to) any crime which constitutes a felony in the
----------
jurisdiction involved; or
(iii) the willful, repeated and demonstrable failure by
you substantially to perform your duties over a period of
not less than 30 days, other than any such failure resulting
from your incapacity due to physical or mental illness, or
material breach of any of your obligations under this
Agreement, and your failure to cure such failure or breach
within 30 days after receipt of written notice from the
Chairman of the Board of Directors of the Company.
(d) Termination by You. You may terminate your employment
------------------
hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean (A) the failure of the
31
<PAGE>
<PAGE> 15
Board of Directors or the stockholders of the Company to continue to elect
you as a director of the Company throughout the term of your employment
hereunder, provided that if you are not so continued, the Company
--------
shall be entitled to cure such failure within thirty (30) days after
you cease to serve as a director, (B) any assignment to you of any
material duties other than those contemplated by, or any limitation of
your powers or in any respect not contemplated by, paragraph 2 hereof,
provided that you first deliver written notice thereof to the Chairman
--------
of the Board of Directors of the Company and the Company shall have
failed to cure such non-permitted assignment or limitation within
thirty (30) days after receipt of such written notice, or (C) a
reduction in your rate of compensation, or a material reduction in
your fringe benefits or any other material failure by the Company to
comply with paragraphs 3 through 5 hereof, provided that you first
--------
deliver written notice thereof to the Chairman of the Board of the
Company and the Company shall have failed to cure such reduction or
failure within thirty (30) days after receipt of such written notice.
(e) Any termination by the Company pursuant to paragraphs
(b) or (c) above or by you pursuant to paragraph (d) above shall be
communicated by written Notice of Termination to the other party
hereto. For the purposes hereof, a "Notice of
32
<PAGE>
<PAGE> 16
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision
so indicated.
(f) "Date of Termination" shall mean (i) if your employment
is terminated by your death, the date of your death, and (ii) if your
employment is terminated for any other reason, the date on which a
Notice of Termination is given.
8. Compensation Upon Termination or During Disability.
--------------------------------------------------
(a) If your employment shall be terminated by reason of
your death, the Company shall pay, to such person as you shall
designate in a notice filed with the Company, or, if no such person
shall be designated, to your estate as a lump sum death benefit, an
amount equal to (i) any accrued but unpaid Base Salary at the time of
your death, plus (ii) the Final Payment, if any, provided for in
paragraph 3(a)(ii) hereof, plus (iii) the Incentive Compensation
provided for in paragraph 3(b) hereof. This amount shall be exclusive
of and in addition to any payments
33
<PAGE>
<PAGE> 17
your widow, beneficiaries or estate
may be entitled to receive pursuant to any pension or employee benefit
plan maintained by the Company. Your designated beneficiary or the
executor of your estate, as the case may be, shall accept the payment
provided for in this paragraph 8 in full discharge and release of the
Company of and from any further obligations under this Agreement.
(b) During any period that you fail to perform your duties
hereunder as a result of incapacity due to physical or mental illness,
you shall continue to receive your full Base Salary until your
employment is terminated pursuant to paragraph 7(b) hereof. If your
employment is terminated by the Company pursuant to paragraph 7(b),
the Company shall be discharged and released of and from any further
obligations under this Agreement, other than the obligation of the
Company to pay the Final Payment, if any, provided for in paragraph
3(a)(ii) hereof and Incentive Compensation provided for in paragraph
3(b) hereof. During any such period and thereafter you shall continue
to bear the obligations provided for in paragraph 9 below in
accordance with the terms of such paragraph 9.
(c) If your employment shall be terminated for Cause or you
shall terminate your employment other than for Good Reason, the
Company shall pay you your full Base Salary
34
<PAGE>
<PAGE> 18
through the Date of Termination or the date on which you terminate your
employment at the rate in effect at the time Notice of Termination is given
or the date on which you terminate your employment. The Company shall be
discharged and released of and from any further obligations under this
Agreement, other than the obligation of the Company to pay the Final
Payment, if any, pursuant to paragraph 3(a)(ii) hereof and Incentive
Compensation pursuant to paragraph 3(b) hereof. Thereafter you shall
continue to have the obligations provided for in paragraph 9 below.
Nothing contained herein shall be deemed to be a waiver by the Company of
any rights that it may have against you in respect of your actions which
gave rise to the termination of your employment for Cause.
(d) If the Company shall terminate your employment other
than pursuant to paragraphs 7(b) or 7(c) hereof or if you shall
terminate your employment for Good Reason, then
(i) The Company shall continue to pay you your full
Base Salary in accordance with normal payroll practices and
without interest through the third anniversary of the
Commencement Date at the rate in effect at the time Notice
of Termination is given in accordance with paragraph 7(e)
hereof;
35
<PAGE>
<PAGE> 19
(ii) Notwithstanding the provisions of paragraph
3(a)(ii) hereof, the Company shall pay you the sum of
$120,000 as the Final Payment within 10 days following the
third anniversary of the Commencement Date;
(iii) The Company shall pay you the Incentive
Compensation provided for in paragraph 3(b) hereof; and
(iv) The Company shall maintain in full force and
effect, for your continued benefit for the full term
this Agreement, all employee benefit plans and programs in
which you were entitled to participate immediately prior to
the Date of Termination provided that your continued
participation is possible under the general terms and
provisions of such plans and programs. In the event that
your participation in any such plan or program is barred,
you shall be entitled to receive an amount equal to the
annual contributions, payments, credits or allocations made
by the Company to you, to your account or on your behalf
under such plans and programs from which your continued
participation is barred.
36
<PAGE>
<PAGE> 20
(e) If the Company shall terminate your employment
hereunder other than pursuant to paragraphs 7(b) or 7(c) hereof, or if
you shall terminate your employment pursuant to paragraph 7(d) hereof,
you agree, during the entire period of time that you are entitled to
receive any benefits pursuant to paragraph 8(d) above, to make known
your availability for employment involving services of a nature
substantially similar and of a comparable stature to those performed
by you on behalf of the Company in a manner customary for executives
holding positions substantially similar and of a comparable stature to
your position with the Company. You agree to keep the Chairman of the
Board of the Company (or his designee) appraised of your employment
status during such period and, if requested, you will provide appropriate
supporting documentation with respect to the salary, bonuses or other
compensation earned by and benefits made available to you in respect
of such employment. In the event you secure employment as described
in this paragraph (e) (other than your existing positions with Chicago
Milwaukee Corporation, CMC Heartland Partners or Milwaukee Land
Company), the Company shall be entitled to (i) deduct from the amounts
payable to you pursuant to paragraphs 8(d)(i), 8(d)(ii) and 8(d)(iii)
above any salary, bonuses or other compensation paid to you in
connection with
37
<PAGE>
<PAGE> 21
such employment or any increased salary, bonuses or
other compensation (other than routine increases that do not require
the provision of additional services) paid to you by Chicago Milwaukee
Corporation, CMC Heartland Partners or Milwaukee Land Company due to
increases in the amount of time you are able to devote to, or
increased responsibilities you are able to assume with, one or more of
such companies due to the termination of your employment with the
Company and (ii) terminate your participation in (and shall not be
required to pay you any sums in respect of) any employee benefit plans
and programs described in paragraph 8(d)(iv) that are substantially
similar to any employee benefit plans and programs in which you
participate in connection with such new or existing employment. You
agree promptly to repay to the Company any amounts paid to you by the
Company pursuant to paragraphs 8(d)(i), 8(d)(ii) and 8(d)(iii) which
the Company was entitled to deduct from such amounts pursuant to this
paragraph (e).
9. Restrictive Covenants and Confidentiality; Injunctive
-----------------------------------------------------
Relief.
------
(a) You agree, as a condition to the performance by the
Company of its obligations hereunder, particularly its obligations
under paragraph 3 hereof, that during the term of your employment
hereunder and during the further
38
<PAGE>
<PAGE> 22
period of one (1) year after the termination of such employment, you shall
not, without the prior written approval of the Board of Directors of the
Company, directly or indirectly through any other person, firm or
corporation:
(i) Solicit, raid, entice or induce any person, firm
or corporation that presently is or at any time during the
term of your employment hereunder shall be a customer of the
Company, or any of its subsidiary companies, to become a
customer of any other person, firm or corporation, and you
shall not approach any such person, firm or corporation for
such purpose or authorize or knowingly approve the taking of
such actions by any other person; or
(ii) Solicit, raid, entice or induce any person that
presently is or at any time during the term of
your employment hereunder shall be an employee of the
Company, or any of its subsidiary companies, to become
employed by any person, firm or corporation, and you shall
not approach any such employee for such purpose or authorize
or knowingly approve the taking of such actions by any other
person.
39
<PAGE>
<PAGE> 23
(b) Recognizing that the knowledge, information and
relationship with customers, suppliers, and agents, and the knowledge
of the Company's and its subsidiary companies' business methods,
systems, plans and policies which you shall hereafter establish,
receive or obtain as an employee of the Company or its subsidiary
companies, are valuable and unique assets of the respective businesses
of the Company and its subsidiary companies, you agree that, during
and after the term of your employment hereunder, you shall not
(otherwise than pursuant to your duties hereunder) disclose, without
the prior written approval of the Board of Directors of the Company,
any such knowledge or information pertaining to the Company or any of
its subsidiary companies, their business, personnel or policies, to
any person, firm, corporation or other entity, for any reason or
purpose whatsoever. The provisions of this paragraph 9 shall not
apply to information which is or shall become generally known to the
public or the trade (except by reason of your breach of your
obligations hereunder), information which is or shall become
available in trade or other publications, information known to you
prior to entering the employ of the Company, and information which you
are required to disclose by order of a court of competent jurisdiction
(provided that prior to your disclosure of any such information you
shall
40
<PAGE>
<PAGE> 24
provide the Company with reasonable notice and a reasonable
opportunity to seek a protective order to prevent such disclosure).
(c) The provisions of this paragraph 9 shall survive the
termination of your employment hereunder, irrespective of the reason
therefor.
(d) You acknowledge that the services to be rendered by you
are of a special, unique and extraordinary character and, in
connection with such services, you will have access to confidential
information vital to the Company's and its subsidiary companies'
businesses. By reason of this, you consent and agree that if you
violate any of the provisions of this Agreement with respect to
diversion of the Company's or its subsidiary companies' customers or
employees, or confidentiality, the Company and its subsidiary
companies would sustain irreparable harm and, therefore, in addition
to any other remedies which the Company may have under this Agreement
or otherwise, the Company shall be entitled to an injunction
restraining you from committing or continuing any such violation of
this Agreement.
10. Deductions and Withholdings. The Company shall be
---------------------------
entitled to withhold any amounts payable under this Agreement on
account of payroll taxes and similar matters as
41
<PAGE>
<PAGE> 25
are required by applicable law, rule or regulation of appropriate
governmental authorities.
11. Successors; Binding Agreement.
-----------------------------
(a) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company, by
agreement in form and substance reasonably satisfactory to you, to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle
you to compensation from the Company in the same amount and on the
same terms as you would be entitled to hereunder if you terminated
your employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall include any successor to the Company's
business and/or assets as aforesaid which executes and delivers the
agreement provided for in this paragraph 11 or which
42
<PAGE>
<PAGE> 26
otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) This Agreement and all your rights hereunder shall
inure to the benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any
amounts would still be payable to you hereunder if you had continued
to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee,
legatee, or other designee or, if there be no such designee, to your
estate. Your obligations hereunder may not be delegated and except as
otherwise provided herein relating to the designation of a devisee,
legatee or other designee, you may not assign, transfer, pledge,
encumber, hypothecate or otherwise dispose of this Agreement or any of
your rights hereunder, and any such attempted delegation or
disposition shall be null and void and without effect.
12. Notice. For the purposes of this Agreement, notices
------
and all other communications provided for shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
43
<PAGE>
<PAGE> 27
If to you:
Mr. Edwin Jacobson
2575 South Bayshore Drive
Penthouse A
Coconut Grove, Florida 33133
If to the Company:
Avatar Holdings Inc.
255 Alhambra Circle
Coral Gables, Florida 33134
Attention: Chairman of the Board
or to such other address as any party may have furnished to the other
in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
13. Miscellaneous. No provisions of this Agreement may be
-------------
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by you and by the Company.
No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. This Agreement constitutes the
complete understanding between the parties with respect to your
employment and no agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been
44
<PAGE>
<PAGE> 28
made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of Florida.
14. Validity; Effectiveness.
-----------------------
(a) The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
(b) This Agreement has been approved by the Board of
Directors of the Company, and the Incentive Compensation provided in
paragraphs 3(b)(i)-(iii) hereof has been established by a committee of
the Board of Directors of the Company, which is comprised solely of
two or more outside directors within the meaning of Section 162(m)(4)
(C)(i) of the Code.
(c) This Agreement shall not become effective unless (i)
you are continuously employed by the Company through and including
June 15, 1997, and are not then in breach of the Original Employment
Agreement, (ii) the material terms under which Incentive Compensation
is to be paid pursuant to paragraphs 3(b)(i)-(iii) hereof have been
disclosed to the stockholders of the Company, and (iii) the Agreement
(including the material terms under which such
45
<PAGE>
<PAGE> 29
Incentive Compensation is to be paid) has been approved prior to the
Commencement Date at a meeting of stockholders of the Company by the
affirmative vote of a majority of the shares present in person or
represented by proxy and entitled to vote on the matter. The Company
hereby undertakes to submit this Agreement (including the material terms
under which such Incentive Compensation is to be paid) for approval by
stockholders prior to the Commencement Date. If this Agreement shall
not be effective on the Commencement Date, you and the Company shall
continue to have the rights and obligations provided under the
Original Employment Agreement, including the obligation of the Company
to pay you Incentive Compensation (as defined in the Original
Employment Agreement) in accordance with the terms thereof.
15. Counterparts. This Agreement may be executed in one or
------------
more counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
46
<PAGE>
<PAGE> 30
If the foregoing is satisfactory, would you please so
indicate by signing and returning to the Company the enclosed copy of
this letter whereupon this will constitute our agreement on the
subject.
AVATAR HOLDINGS INC.
By: /s/ Leon Levy
__________________________
Leon Levy
Chairman of the Board
ACCEPTED AND AGREED TO:
/s/ Edwin Jacobson
____________________________
Edwin Jacobson
47
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 8,451
<SECURITIES> 51,695
<RECEIVABLES> 98,357
<ALLOWANCES> (33,652)
<INVENTORY> 140,750
<CURRENT-ASSETS> 0
<PP&E> 178,293
<DEPRECIATION> 0
<TOTAL-ASSETS> 464,208
<CURRENT-LIABILITIES> 0
<BONDS> 161,915
<COMMON> 12,715
0
0
<OTHER-SE> 150,592
<TOTAL-LIABILITY-AND-EQUITY> 464,208
<SALES> 38,388
<TOTAL-REVENUES> 75,842
<CGS> 20,530
<TOTAL-COSTS> 38,717
<OTHER-EXPENSES> 13,582
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,561
<INCOME-PRETAX> (5,444)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,444)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,444)
<EPS-PRIMARY> (0.60)
<EPS-DILUTED> (0.60)
<FN>
NOTE: Total Current Assets and Total Current Liabilities are not
applicaple because Registrant does not present a classified
balance sheet.
</TABLE >
48
</TABLE>
