U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[x] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 1-8631
DOVER INVESTMENTS CORPORATION
(Name of small business issuer in its charter)
DELAWARE 94-1712121
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
350 California Street, Suite 1650, San Francisco, California 94104
(Address of Principal Executive Offices) (Zip Code)
(415) 951-0200
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None None
Securities registered under Section 12(g) of the Exchange Act:
Class A Common Stock, $.01 par value per share
(Title of class)
Class B Common Stock, $.01 par value per share
(Title of class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [x]
The issuer's revenues for its most recent fiscal year, which is the year
ended December 31, 1995 were $5,311,323.
The aggregate market value of the voting stock held by non-affiliates,
computed by reference to the average bid and asked prices of the Class A
Common Stock and Class B Common Stock as of March 1, 1996, was $4,036,308.
The average bid and asked prices of Class A Common Stock and Class B Common
Stock were $6.625 and $6.625 per share, respectively, on that date.
The number of shares outstanding of each of the issuer's classes of Common
Stock as of March 1, 1996, were as follows:
Title Shares Outstanding
Class A Common Stock .......................... 646,878
Class B Common Stock .......................... 321,018
Transitional Small Business Disclosure Statement
Yes No X
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Proxy Statement relating to the registrant's 1996
Annual Meeting of Stockholders are incorporated by reference into Part III of
this Report on Form 10-KSB.
TABLE OF CONTENTS
Page No.
PART I
ITEM 1. DESCRIPTION OF BUSINESS . . . . . . . . . . . . . . . . 1
ITEM 2. DESCRIPTION OF PROPERTY . . . . . . . . . . . . . . . . 3
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . 3
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . 4
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 4
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . 6
ITEM 7. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . 8
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . 9
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ITEM 10. EXECUTIVE COMPENSATION .. . . . . . . . . . . . . . . . .9
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . 9
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . 10
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K. . . . . . . . . 10
APPENDIX A. CONSOLIDATED FINANCIAL STATEMENTS OF DOVER INVESTMENTS
CORPORATION AND SUBSIDIARIES, AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS,
DECEMBER 31, 1995 AND 1994
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Dover Investments Corporation as Thrift Holding Company
Dover Investments Corporation (the "Company"), formerly Homestead
Financial Corporation, previously owned all of the outstanding stock of
Homestead Savings, a Federal Savings and Loan Association (the
"Association"). (The term "the Company", as used herein, includes the
Company and all of its wholly-owned subsidiaries.) On August 6, 1991, the
Association completed the exchange of certain subordinated debentures for
convertible voting preferred stock of the Association. The exchange reduced
the Company's voting control of the Association to 20.7%.
On October 30, 1992, the Office of Thrift Supervision ("OTS")
placed the Association in receivership with the Resolution Trust Corporation
("RTC") as receiver. Certain assets and liabilities of the Association were
transferred to a newly created federal savings association. The new
association was then placed in conservatorship and the RTC appointed as
conservator. The Company retains no interest in the Association or in the new
institution.
Current Operations
The Company engages primarily in land development and building of
single family homes.
Real Estate Development. At December 31, 1995, the Company has
completed lot improvements on 150 lots at Marina Vista in San Leandro. The
Company has built 80 homes at Marina Vista and, aside from the 4 model homes
which are not for sale, all but 8 have been sold. In addition to the lots
which are currently improved, the Company has land for an additional 99 lots
at Marina Vista. The market for homes at Marina Vista has been slow and the
Company has recently adjusted its sales prices to be more competitive in its
market place. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" for a
discussion of the financing of the Marina Vista property.
Land Development. In 1994 the Company entered into a Joint Venture
(the "Glenbriar Joint Venture") with Westco Community Builders, Inc.
("Westco") to acquire and develop property located in Tracy, California. The
Glenbriar Joint Venture property has an approved vested tentative subdivision
map for 160 half-acre lots (the "Old Map"). The engineering has been
completed for the improvements plans and final subdivision map on the first
50 lots covered by the Old Map. Notwithstanding the Old Map, the Glenbriar
Joint Venture is proceeding to process applications for a new subdivision map
for the property covered by the Old Map which, if approved, would subdivide
the property into approximately 395 lots. The Company believes that such a
subdivision of the property would enhance the eventual development and sale
of the property. The Tracy City Planning Commission and the Tracy City
Council have (I) approved the application of the Glenbriar Joint Venture for
an amendment to the Tracy General Plan which would allow a change in the
zoning on the property from Very Low Density Residential ("VLDR"), which
permits no more than two lots to the acre, to Low Density Residential
("LDR"), which permits up to six lots per acre; (ii) approved the application
of the Glenbriar Joint Venture for a change in the zoning from VLDR to LDR;
and (iii) certified the new Supplemental Environmental Impact Report on the
property which is consistent with a subdivision of the property into 395 lots.
The Tracy Planning Commission has also approved the Preliminary Development
Plan for the Property showing the property subdivided into 395 lots.
On January 1, 1996, the Company formed Glenbriar Venture #2, a limited
liability company ("LLC"), with Westco. The LLC purchased from Westco options
to purchase land adjacent to the Glenbriar Joint Venture property. This
adjacent land is sufficient for approximately 506 residential lots and
currently has exactly the same entitlement status as the Glenbriar Joint
Venture property. The Company anticipates developing and selling lots in both
the Glenbriar Joint Venture property and the Glenbriar Venture #2 property.
The Company expects that the Marina Vista project and the Glenbriar
project will provide a profit from the sale of homes and lots. The Company
expects to invest in other real estate projects when appropriate opportunities
occur and is not subject to any limitations on the percentage of assets which
may be invested in any single investment or type of investment.
Other Assets. The Company also holds approximately $3.4 million of
cash, cash equivalents, and securities purchased under agreement to resell.
Regulation
Because the Company owned 100% of the outstanding common stock of
the Association, it was required to register as a savings and loan holding
company under the Home Owners' Loan Act of 1933, as amended, and the
regulations promulgated by the OTS at 12 CFR 584. Although the Company does
not have an interest in and does not exercise control of the Association, the
OTS takes the position that the Company continues to be registered as a
savings and loan holding company. As a result, the Company may be subject to
the examination, supervision and reporting requirements of the OTS and the
Federal Deposit Insurance Corporation (the "FDIC").
The Company is evaluating the possibility of obtaining a release
from registration as a savings and loan holding company. There can be no
assurance as to when, or if, the OTS will approve a release, or what
conditions might accompany such approval.
Employees
The Company currently has four full-time employees, all of whom
work at the Company's executive offices in San Francisco.
Leases
The Company entered into an agreement to sublease new premises from a
related party corporation for a term that commenced on April 1, 1993 and ends on
February 15, 1999. The Company's share of the sublease equals 46% of the
total rent paid which approximates $2,876 per month for 1995. The Company is
also responsible for a yearly operating cost payment equal to 1.256 percent
of the basic operating cost, which amounted to $1,877 for 1995.
ITEM 2. DESCRIPTION OF PROPERTY
Information required by this item is incorporated by reference to
the information included under "Item 1 -- Description of Business -- Current
Operations -- Real Estate Development" and " -- Leases" in this report.
ITEM 3. LEGAL PROCEEDINGS
The Company, as the parent company of a group of affiliated
corporations filing consolidated Federal income tax returns, was contingently
liable for any liabilities arising with respect to the Association from such
returns filed for tax years through August 6, 1991. The Internal Revenue
Service ("IRS") has completed examinations of all such federal income tax
returns from 1985 through 1990; no examination of the 1991 return is
anticipated. The resolution of such examinations involved settlements which
were approved by the Congressional Joint Tax Committee. Pursuant to such
settlements, the Company received $3,987,918.66 from the IRS in July 1995,
$1,029,660.89 of which represents interest. Additionally, the Company has
been allowed a loss carryforward from 1990 of $37,853,056, due to the
worthlessness of the stock of the Association, which occurred in the taxable
year ended December 31, 1990.
The Company filed a lawsuit against the Resolution Trust Corporation
("RTC") in 1994, based on the RTC's disallowance of certain claims made
against the RTC by the Company in its capacity as a creditor of the
Association. This lawsuit has now been settled. A Final Judgment was entered
on January 18, 1996. Most of the claims made by the Company against the RTC
had to do with the Company's potential liability to the IRS and the Franchise
Tax Board of the State of California ("FTB"), for taxes which tax claims have
now been resolved.
The settlement agreement entered into by the Company and the RTC
provided for a distribution to the Company of $707,395 plus interest.
Therefore, on September 21, 1995, the Company received a check from the Trust
Account in the total amount of $741,632. This Trust Account in the total
amount of approximately $2,500,000 had been established in connection with
the RTC litigation. The balance of the Trust Account was distributed to the
RTC pursuant to the settlement agreement on January 4, 1996 and January 22,
1996. By letter dated January 3, 1996 the Company was advised by the FTB
that the liabilities for the years 1980 through 1988 had been satisfied in
full and that there were no unsatisfied assessments for California Franchise
Tax against the Association.
The result of the above is that the contingent liabilities for taxes
and/or RTC matters as described above have been satisfied in full.
The Company has an agreement to indemnify its directors who formerly
served as directors and/or officers of the Association and its subsidiaries.
The RTC, in a letter dated March 10, 1993, advised the present and former
directors and officers of the Association and its subsidiaries of potential
claims that the RTC may assert against them for the recovery of losses
suffered by the Association and its subsidiaries in connection with certain
specified actions and loan transactions. No action has been taken by the RTC
on this matter for quite some time and the RTC went out of existence on
December 31, 1995. Counsel to the Company have advised the Company that in
light of these circumstances and the likelihood of the expiration of the
statute of limitations, they do not see any prospect of material liability to
the RTC. Consequently, the Company has not provided for any further
contingencies on these matters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information
Shares of the Class A Common Stock and the Class B Common Stock are
currently traded on the NASD OTC Bulletin Board under the symbols DOVR-A and
DOVR-B.
The high and low bid information for 1995 and 1994 are as reported
on the National Quotation Bureau Pink Sheets. Such bid quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and may
not represent actual transactions.
CLASS A COMMON STOCK
High Low
Fiscal 1995 Quarter Ended:
March 31 2.500 2.000
June 30 4.750 4.000
September 30 5.875 5.375
December 31 7.000 6.250
Fiscal 1994 Quarter Ended:
March 31 1.750 1.375
June 30 2.750 2.250
September 30 4.000 3.500
December 31 2.625 2.125
CLASS B COMMON STOCK
High Low
Fiscal 1995 Quarter Ended:
March 31 2.500 2.000
June 30 4.750 4.000
September 30 5.875 5.375
December 31 7.000 6.250
Fiscal 1994 Quarter Ended:
March 31 1.750 1.375
June 30 2.750 2.250
September 30 4.000 3.500
December 31 2.625 2.125
Holders
As of March 1, 1996, there were 599 stockholders of record of the
Class A Common Stock and 178 stockholders of record of the Class B Common
Stock.
Dividends
The Company has not paid dividends on the Class A Common Stock and
Class B Common Stock since June 30, 1989 and presently has no intention to
pay dividends in the foreseeable future.
In June 1995, the Company's Board of Directors approved a stock
repurchase program under which the Company may, subject to certain
requirements, purchase up to 200,000 shares of its Common Stock in the open
market. As of December 31, 1995, the Company had repurchased 134,860 shares
of Common Stock at an aggregate purchase price of $672,873.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Years Ended December 31, 1995 and 1994
The Company had net income of $452,000 for the year ended December 31,
1995, compared to $248,000 for the year ended December 31, 1994. The increase
in net income is attributable to interest income received as a result of tax
settlements and expense reimbursements with the IRS and RTC and higher average
cash balances and interest rates in 1995.
In the year ended December 31, 1995, the Company closed the sale of
13 homes, compared to 26 homes sold in the year ending December 31, 1994.
Total sales were $4,615,000 for 1995, resulting in a gross profit of $612,000
and a gross profit margin of 13 percent, compared to total sales of
$9,087,000 for 1994, resulting in a gross profit of $2,028,000 for the year
and a gross profit margin of 22 percent. The decrease in profit is
attributable to the cost of additional buyer incentives granted due to a
decrease in demand. Selling expenses of $252,000 include the costs of
maintaining a sales office, the 4 model homes and fees payable to Westco.
General and administrative expenses decreased from $804,000 in 1994 to
$354,000 in 1995. The decrease resulted from reimbursement of professional
fees incurred by the Company in connection with the IRS settlement and
preparation and filing of claims against the RTC and the receipt of Delaware
Franchise Tax refunds.
Interest income in 1995 increased to $697,000 compared to $235,000
in 1994. The increase was attributable to two sources; $523,000 was received
from the IRS as a result of the tax refunds and $34,000 as a result of
settlements with the RTC discussed above under "Item 3 -- Legal Proceedings".
The remaining $140,000 was attributable to the Company investing its funds in
overnight investments which are collateralized by mortgage-backed certificates
and are held on behalf of the Company by dealers who arranged the transaction.
At December 31, 1995, such overnight investments, with a weighted average
interest rate of 5.56% and a market value of the underlying collateral of
$2,304,263, totalled $2,300,000, compared to $2,400,000 in 1994.
The Company elected to wind up and dissolve its wholly-owned
subsidiary, Gramercy Mortgage Corporation ("GMC"), and its wholly-owned
subsidiary, Homestead Insurance Services, Inc. ("HISI"), effective December
31, 1994. All remaining assets have been distributed to the Company as the
sole shareholder. Operations for both entities were discontinued in 1992.
Costs for the development of property and the building of homes are
capitalized during the construction period. Such costs include expenditures
for land, land improvements, model homes, capitalized interest, and
construction in progress. (See NOTE C to the Consolidated Financial
Statements). When a home is sold, proceeds are reduced by the cost of sales
which includes land, site development, construction, management and financing
costs.
Liquidity and Capital Resources
At December 31, 1995, the Company had total assets of $28,120,000, as
compared to total assets of $29,818,000 at December 31, 1994. The cost of
the Company's property being developed was $24,008,000 in 1995, compared to
$23,522,000 in 1994. Highly liquid assets were $3,403,000 at December 31,
1995, compared to $2,873,000 at December 31, 1994.
The Company's total liabilities decreased to $8,486,000 at December
31, 1995, compared to $14,206,000 at December 31, 1994. This decrease was
attributable primarily to a decrease in other liabilities to $466,000, in
1995, from $3,806,000, in 1994, resulting from accrued tax liabilities, and a
$2,380,000 reduction in notes payable.
During 1995 and 1994, additional paid-in capital increased by
$618,000 and $368,000, respectively, due to the realization of a benefit from
net operating loss carryforwards.
Other increases in the additional paid-in capital for the year ended
December 31, 1995, were due to the following: $3,465,000, of which $507,000
represented interest from an IRS refund; $282,000 in interest from the RTC
settlement; and an adjustment of $394,000 for previously accrued liabilities.
These increases, less related income taxes of $289,000, are related to the
period prior to the quasi-reorganization.
During 1992, the Company renegotiated several terms of a $10,000,000
mortgage loan payable to the seller of the Marina Vista property. The loan
had been secured by a deed of trust which encumbered the entire Marina Vista
property and matured on March 21, 1994. The loan has been modified to mature
on March 29, 1997, with interim payments of principal as described below, and
the seller released the first fifty-four lots (Phase I) from the lien of its
deed of trust without receiving any release price in exchange. The release
price on the balance of the lots securing the deed of trust was adjusted
accordingly. The Company has made the required principal payment of
$2,500,000, due on September 29, 1995, as follows: $1,500,000 on December 6,
1994, and $1,190,000 on September 29, 1995, therefore reducing the principal
balance to $4,810,000. The note requires a principal payment of $2,500,000
on September 29, 1996, and the balance of unpaid principal on March 29, 1997.
The Company expects that proceeds from the sale of the homes to be constructed
will be sufficient to pay down the principal balance of the loan by the
required dates, although no assurances can be given in this regard. Interest
on the loan at 12% per annum continues to be payable quarterly.
During 1995, the Company's primary liquidity need was funding
development costs of the Marina Vista and Glenbriar Joint Venture projects,
principal payments of $2,380,000 and interest payments of $1,069,551.
During 1995, the Company borrowed a total of $1,307,000 from a
private source to pay for home construction costs. The loan is secured by
lots and homes under construction in the Marina Vista project and will be paid
from the proceeds of home sales. The loan bears interest at the rate of prime
plus 1.5 percent per annum and matures on September 30, 1996. The Company
also obtained an $802,000 loan secured by the four model homes. The loan
bears interest at the rate of 11.25 percent per annum and matures on June 30,
1998.
The Company's primary source of liquidity during 1995 was from
settlements with the IRS and RTC, described in "Item 3 -- Legal Proceedings",
and the proceeds of home sales. The Company may also borrow funds from time
to time to develop fully both the Marina Vista and the Glenbriar Joint Venture
projects.
ITEM 7. FINANCIAL STATEMENTS
The following consolidated financial statements of the Company, as
set forth on the pages indicated, are filed as part of this report.
Index to Financial Statements
Report of Independent Certified Public Accountants . . . . . .A-1
Consolidated Balance Sheets at December 31, 1995 and 1994 . . A-2
Consolidated Statements of Income for the Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . .A-3
Consolidated Statement of Stockholders' Equity for the
Years Ended December 31, 1995 and 1994 . . . . . . . . . .A-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995 and 1994 . . . . . . . . . . . . . . . .A-5
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1995 and 1994 . . . . . . . . . . . . .A-6
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
The information required by this item is incorporated by reference
to the information set forth under the caption "Proposal 1 -- Election of
Directors" contained in the Proxy Statement to be used by the Company in
connection with its 1996 Annual Meeting of Stockholders.
ITEM 10. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference
to the information set forth under the caption "Compensation of Executive
Officers and Directors" contained in the Proxy Statement to be used by the
Company in connection with its 1996 Annual Meeting of Stockholders.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this item is incorporated by reference
to the information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" contained in the Proxy Statement to be used
by the Company in connection with its 1996 Annual Meeting of Stockholders.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference
to the information set forth under the caption "Certain Transactions"
contained in the Proxy Statement to be used by the Company in connection with
its 1996 Annual Meeting of Stockholders.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) The exhibits listed below are filed with this report.
Copies of such exhibits may be obtained without charge by any
stockholder upon request addressed to the Assistant Secretary of the
Company.
3.1 Restated Articles of Incorporation and Restated
By-Laws of the Company.(4)
10.1 1982 Stock Option Plan.(1)
10.2 Form of Nonqualified Incentive Stock Option
Agreement.(1)
10.3 $10,000,000 Promissory Note Secured by Deed of Trust
dated March 29, 1991.(1)
10.4 Development Agreement dated November 15, 1991 between
H.F. Properties, Ltd. and Westco Marina, Inc., as
amended.(1)
10.5 Tax Sharing Agreement dated November 20, 1989 among
the Company, the Association, Homestead Land
Development Corporation and Gramercy.(1)
10.6 Stock Option Plan for Nonemployee Directors.(2)
10.7 Sublease Agreement dated April 1, 1993 between the
Company and Wilfred, Inc.(2)
10.8 Extension and Modification Agreement for Promissory
Note and Deed of Trust dated August 25, 1992.(2)
10.9 Partnership Agreement, Glenbriar Joint Venture, dated
January 7, 1994 between GIC Investment Corporation
and Westco Community Builders.(3)
10.10 Stock Option Plan for Nonemployee Directors.(5)
10.11 Form of Nonqualified Stock Option Agreement as of
November 16, 1994.(5)
10.12 1995 Stock Option Plan.(5)
10.13 Form of Incentive Stock Option Agreement.(5)
10.14 Form of Nonqualified Stock Option Agreement.(5)
22.1 Subsidiaries of the registrant.(3)
24.1 Consent of Grant Thornton.
27.1 Financial Data Schedule for the Year Ended December
31, 1995.
___________________
(1) - Incorporated by reference to the Exhibit bearing the same
numerical description in the Company's Annual Report on Form
10-K for the Year Ended December 31, 1991.
(2) - Incorporated by reference to the Exhibit bearing the same
numerical description in the Company's Annual Report on Form
10-KSB for the Year Ended December 31, 1992.
(3) - Incorporated by reference to the Exhibit bearing the same
numerical description in the Company's Annual Report on Form
10-KSB for the Year Ended December 31, 1993.
(4) - Incorporated by reference to the Exhibit bearing the same
numerical description in the Company's Annual Report on Form
10-KSB for the Year Ended December 31, 1994.
(5) - Incorporated by reference to the Exhibit bearing the same
numerical description in the Company's Quarterly Report on Form
10-QSB for the Quarter Ended June 30, 1995.
(b) No reports on Form 8-K were filed with the Securities and Exchange
Commission during the fourth quarter of the year ended December 31,
1995.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DOVER INVESTMENTS CORPORATION
Date: March 19, 1996 By: /s/ Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board,
President and Chief
Executive Officer
In accordance with the Exchange Act, 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
/s/ Arnold Addison Director March 19, 1996
(Arnold Addison)
/s/ Larry Freels Director March 19, 1996
(Larry Freels)
/s/ John Gilbert Director March 19, 1996
(John Gilbert)
/s/ Michael Raddie Director and Chief March 19, 1996
(Michael Raddie) Financial Officer
/s/ Lawrence Weissberg Director, Chairman of the March 19, 1996
(Lawrence Weissberg) Board, President and Chief
Executive Officer (Principal
Executive Officer and
Principal Accounting Officer)
/s/ Will C. Wood Director March 19, 1996
(Will C. Wood)
APPENDIX A
CONSOLIDATED FINANCIAL STATEMENTS
AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
December 31, 1995 and 1994
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
Dover Investments Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Dover
Investments Corporation and Subsidiaries as of December 31, 1995 and 1994, and
the related consolidated statements of income, stockholders' equity and cash
flows for the years then ended. 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 consolidated financial position of Dover
Investments Corporation and Subsidiaries as of December 31, 1995 and 1994, and
the consolidated results of their operations and their consolidated cash flows
for the years then ended in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
San Francisco, California
February 15, 1996
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
(in thousands except share amounts)
ASSETS 1995 1994
Cash $ 639 $ 381
Restricted Cash 464 92
Securities Purchased under Agreement to Resell 2,300 2,400
Cash and Securities Held in Trust Account - 2,500
Homes Held for Sale 1,263 1,291
Property Held for Development 22,745 22,231
Other Assets 709 923
Total Assets $28,120 $29,818
LIABILITIES AND STOCKHOLDERS' EQUITY
Income Taxes Payable $ - $ 230
Accrued Interest and Other Liabilities 466 3,576
Notes Payable 8,020 10,400
Total Liabilities 8,486 14,206
Minority Interest in Joint Venture 51 297
Stockholders' Equity
Class A Common Stock, Par Value, $.01 Per Share-
Authorized 2,000,000 Shares; Issued 801,778
Shares at 12/31/95 and 795,070 Shares at 12/31/94 8 8
Class B Common Stock, Par Value, $.01 Per Share-
Authorized 1,000,000 Shares; Issued 325,578
Shares at 12/31/95 and 327,338 Shares at 12/31/94 3 3
Additional Paid-In Capital 19,185 14,715
Retained Earnings from January 1, 1993 1,058 606
Treasury Stock (129,900 in 1995 and 5,000
in 1994 of Class A Shares and 4,560
in 1995 of Class B Shares) (671) (17)
Total Stockholders' Equity 19,583 15,315
Total Liabilities and Stockholder's Equity $28,120 $29,818
The accompanying notes are an integral part of these statements.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
(in thousands except per share amounts)
19 95 1994
Home Sales $ 4,615 $ 9,087
Cost of Sales 4,003 7,059
Gross Profit 612 2,028
Selling Expenses 252 865
General and Administrative Expenses 354 804
606 1,669
Operating Profit 6 359
Other Income (Expense)
Interest 697 235
Other (3) 22
694 257
Income before Provision for Income Taxes 700 616
Provision for Income Taxes 248 368
Net Income $ 452 $ 248
Net Income per Share $ 0.42 $ 0.22
The accompanying notes are an integral part of these statements.
<TABLE>
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Two years ended December 31
(in thousands)
<CAPTION>
Additional Treasury
Common Stock Paid-In Retained Stock
Class A Class B Capital Earnings at Cost Total
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 $ 8 $ 3 $11,478 $ 358 $ - $11,847
Prequasi-reorganization
tax refund - - 2,869 - - 2,869
Purchase of common stock - - - - (17) (17)
Realization of prequasi-
reorganization net
operating loss tax
benefits - - 368 - - 368
Net income for the year - - - 248 - 248
Balance at December 31, 1994 $ 8 $ 3 $14,715 $ 606 $ (17) $15,315
Prequasi-reorganization tax
refund and related interest,
less income taxes of $289 - - 3,852 - - 3,852
Purchase of common stock - - - - (654) (654)
Realization of prequasi-
reorganization net
operating loss tax
benefits - - 618 - - 618
Net income for the year - - - 452 - 452
Balance at December 31, 1995 $ 8 $ 3 $19,185 $ 1,058 $ (671) $19,583
The accompanying notes are an integral part of these statements.
</TABLE>
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
(in thousands)
1995 1994
Cash Flows from Operating Activities:
Net Income $ 452 $ 248
Reconciliation of Net Income to Net Cash
Used in Operating Activities:
Minority Interest (246) 297
Deferred Taxes 93 -
Tax Benefit of Utilizing Prequasi-
reorganization Net Operating Losse s 329 368
Changes in Assets and Liabilities:
Restricted Cash (372) 424
Property Held for Development (514) (2,360)
Homes Held for Sale 28 118
Other Assets 121 672
Income Taxes Payable (230) (12)
Accrued Interest and Other Liabilities, Net (3,110) (551)
Net Cash Used in Operating Activities (3,449) (796)
Cash Flows from Investing Activities:
Proceeds from Securities Purchased
under Agreement to Resell 100 100
Cash and Securities Held in Trust Account 2,500 (2,500)
Net Cash Provided by (Used in) Investing Activities 2,600 (2,400)
Cash Flows from Financing Activities:
Repayment of Notes Payable (2,380) (942)
Proceeds from Tax Refunds and Related Interest
Prior to Prequasi-Reorganization 4,141 2,869
Purchase of Common Stock (654) (17)
Net Cash Provided by Financing Activities 1,107 1,910
Net Increase (Decrease) in Cash 258 (1,286)
Cash at Beginning of Year 381 1,667
Cash at End of Year $ 639 $ 381
Supplemental Cash Flow Activity:
Income Tax Payments $ 12 $ -
The accompanying notes are an integral part of this statement.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
(in thousands except share amounts)
NOTE A - ORGANIZATION AND ACCOUNTING POLICIES
Dover Investments Corporation (the Company), formerly Homestead Financial
Corporation, is in the business of developing land and building single family
homes. In that connection, the Company is the parent corporation for H.F.
Properties, Ltd. (H.F. Properties), which owns property in San Leandro,
California, and GIC Investment Corporation ("GIC"), which owns property in
Tracy, California.
GIC and Westco Community Builders, Inc. ("WCB") formed a joint venture general
partnership, Glenbriar Joint Venture ("Glenbriar"), for the purpose of owning,
subdividing and developing a tract of land comprising of approximately 105
acres located in Tracy, California known as the Glenbriar project.
On January 1, 1996, the Company formed Glenbriar Venture #2, a limited
liability company ("LLC"), with Westco Community Builders, Inc. ("Westco"),
its partner in the Glenbriar Joint Venture. The LLC purchased from Westco
options to purchase land adjacent to the Glenbriar Joint Venture property.
This adjacent land has exactly the same entitlement status as the Glenbriar
Joint Venture property. The Company anticipates developing and selling lots
in both the Glenbriar Joint Venture property and the Glenbriar Venture #2
property.
The Company elected to wind up and dissolve its wholly-owned subsidiary, GMC,
and its wholly-owned subsidiary, HISI, effective December 31, 1994. All
remaining assets have been distributed to the Company as the sole shareholder.
Operations for both entities were discontinued in 1992.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries and joint venture general partnership. All
significant intercompany transactions are eliminated in consolidation.
Property Held for Development
Costs for the development of property and the building of homes are
capitalized during the construction period. Such costs include
expenditures for land, land improvements, model homes, capitalized
interest, various fees, and costs of construction-in-progress. (See
Note C.)
Use of Estimates
In preparing the financial statements in conformity with generally
accepted accounting principles, management is required to make estimates
that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
(in thousands except share amounts)
NOTE A - ORGANIZATION AND ACCOUNTING POLICIES (continued)
Revenues From and Cost of Home Sales
The Company recognizes income from home sales upon the closing and
transfer of title to the buyer of the home. When a home is sold,
proceeds are reduced by the cost of sale which includes land, site
development, construction, management and financing costs. For each home
sold, a reserve equal to one percent of the selling price is established
to cover warranty expense incurred subsequent to the home sale. Warranty
expenditures are charged to the reserve when paid.
Income Taxes
The Company follows the liability method in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined
based on differences between the financial reporting and tax basis of
assets and liabilities and on the expected future tax benefit to be
derived from tax loss carryforwards, if any. Additionally, deferred tax
items are measured using current tax rates. The principal types of
differences between assets and liabilities for financial statement and
tax return purposes are certain accrued liabilities.
Net Income Per Share
Net income per share is computed based on the weighted average number of
common and common equivalent shares on a combined basis for the two
classes of common stock, Class A and Class B. The weighted average
number of Class A and Class B common share equivalents used to compute
income per share was 1,071,917 at December 31, 1995, and 1,127,358 at
December 31, 1994.
Restricted Cash
Restricted cash is to be used for certain infrastructure improvements
relating to the development.
Reclassification
Prior year financial statements have been reclassified to conform to
current year presentation.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
(in thousands except share amounts)
NOTE B - SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
The Company purchased securities under agreements to resell (repurchase
agreements) with primary securities dealers. Such repurchase agreements are
typically overnight investments and collateralized by mortgage-backed
certificates which are held on behalf of the Company by the dealers who
arrange the transaction. At December 31, 1995 and 1994, the weighted average
interest rate of such repurchase agreements was 5.56% and 4.08%, respectively.
The market value of the repurchase agreements approximates cost and all such
securities are held-to-maturity.
NOTE C - PROPERTY HELD FOR DEVELOPMENT
Through December 31, 1995, the Company has completed lot improvements on 150
lots. The Company has built 80 homes at Marina Vista and, aside from the 4
model homes which are not for sale, all but 8 have been sold. In addition to
the lots which are currently improved, the Company has land for an additional
99 lots in this development.
The Glenbriar Joint Venture property located in Tracy has an approved vested
tentative subdivision map for 160 half-acre lots (the Old Map). The
engineering has been completed for the improvements plans and final
subdivision map on the first 50 lots covered by the Old Map. Notwithstanding
the Old Map, the Glenbriar Joint Venture is proceeding to process applications
for a new subdivision map for the property covered by the Old Map which, if
approved, would subdivide the property into approximately 395 lots. The
Glenbriar Joint Venture believes that such a subdivision of the property would
enhance the eventual development and sale of the property. The Tracy City
Planning Commission and the Tracy City Council have (i) approved the
application of the Glenbriar Joint Venture for an amendment to the Tracy
General Plan which would allow a change in the zoning on the property from
Very Low Density Residential ("VLDR"), which permits no more than two lots to
the acre, to Low Density Residential ("LDR"), which permits up to six lots per
acre; (ii) approved the application of the Glenbriar Joint Venture for a
change in the zoning from VLDR to LDR; and (iii) certified the new
Supplemental Environmental Impact Report on the property which is consistent
with a subdivision of the property into 395 lots. The Tracy Planning
Commission has also approved the Preliminary Development Plan for the Property
showing the property subdivision into 395 lots.
On January 1, 1996, the Company formed Glenbriar Venture #2, a limited
liability company ("LLC"), with Westco Community Builders, Inc. ("Westco"),
its partner in the Glenbriar Joint Venture. The LLC purchased from Westco
options to purchase land adjacent to the Glenbriar Joint Venture property.
This adjacent land is sufficient for approximately 506 residential lots and
currently has exactly the same entitlement status as the Glenbriar Joint
Venture property. The Company anticipates developing and selling lots in both
the Glenbriar Joint Venture property and the Glenbriar Venture #2 property.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
(in thousands except share amounts)
NOTE C - PROPERTY HELD FOR DEVELOPMENT (continued)
The carrying value of the developments consists of:
MARINA VISTA - SAN LEANDRO
1995 1994
Land $10,407 $11,172
Land improvements 1,511 1,634
Model homes 1,263 1,291
Capitalized interest 4,222 3,669
Construction in progress 2,733 2,694
Developer's fee 900 900
Subtotal $21,036 $21,360
GLENBRIAR JOINT VENTURE - TRACY
1995 1994
Land $ 1,526 $ 1,526
Land improvements 13 3
Capitalized interest 176 44
Construction in progress 1,084 529
Developer's fee 173 60
Subtotal 2,972 2,162
TOTAL (Marina Vista and
Glenbriar Joint Venture) $24,008 $23,522
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
(in thousands except share amounts)
NOTE D - NOTES PAYABLE
Notes payable at December 31, are comprised of the following:
1995 1994
Notes Payable, maturing June 30, 1998,
and bearing interest at 11.25% per annum
secured by four model homes 802 800
Notes Payable, maturing March 29, 1997,
payable in annual installments of $2,500
and bearing interest at 12% per annum,
payable quarterly; secured by 99 lots 4,811 6,000
Notes Payable, maturing September 30, 1996,
and bearing interest at prime (8.5% at
December 31, 1995) plus 1.5% secured by
19 lots 1,307 2,500
Notes Payable, maturing September 30, 1996,
and bearing interest at 12% per annum
secured by the Deed of Trust 1,100 1,100
$ 8,020 $10,400
Aggregate principal payments subsequent to December 31, 1995, are as follows:
1996 $ 4,907
1997 2,311
1998 802
$ 8,020
Interest paid in 1995 and 1994, amounted to $1,070 and $1,312, respectively,
and was capitalized as part of property held for development.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
(in thousands except share amounts)
NOTE E - LEASE COMMITMENT
The Company has entered into an agreement with a related party to sublease
its office space. The agreement requires monthly payments totaling $34 per
year from 1995 through 1998 and $7 in 1999. The lease expires February 15,
1999.
Rent expense for the years ended December 31, 1995 and 1994 totaled $34 per
year.
NOTE F - INCOME TAXES
Income tax expenses for the year ended December 31, consist of:
1995 1994
Current
Federal $203 $276
State 138 92
341 368
Deferred
Federal (93) -
State - -
- -
$248 $368
A tax benefit for 1995 and 1994 of $618 and $368, respectively, for prequasi-
reorganization net operating losses has been credited to paid-in capital.
Additionally, the interest on the IRS refund credited to paid-in capital has
been reduced by income taxes of $289.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
(in thousands except share amounts)
NOTE F - INCOME TAXES (continued)
The following is a reconciliation between the federal statutory rate and the
effective rate used for the Company's provision for taxes:
1995 1994
Tax expense at statutory federal
income tax rate (34%) $238 $211
State franchise tax 138 92
Change in valuation allowance for
deferred tax assets (126) 52
Other (2) 13
Income tax expense $248 $368
Net deferred tax asset as of December 31, 1995, is as follows:
1995 1994
Accrued warranty reserve $ 27 $ 40
Interest - 33
Accrued expenses 15 -
State income taxes 51 52
Capital loss carryover 30 31
123 156
Valuation allowance 30 156
Net deferred tax asset $ 93 $ -
Statement of Financial Accounting Standards ("SFAS") 109 requires the
establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets. The Company has recorded a valuation
allowance for the capital loss carryforward in 1995 and for the entire
deferred tax asset in 1994. The deferred tax asset schedule above does not
give effect to any deferred tax asset related to available tax loss
carryforward. Tax benefits resulting from net operating loss carryforwards of
approximately $12,500 for federal and $800 for state will be reflected in the
financial statements as credits to additional paid-in capital rather than as
reductions in current income tax expense, when and if recognized. The change
in the valuation allowance was ($126) and $52 for the years ended December 31,
1995 and 1994, respectively.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
(in thousands except share amounts)
NOTE F - INCOME TAXES (continued)
The Company, as the parent company of a group of affiliated corporations
filing consolidated Federal income tax returns, was contingently liable for
any liabilities arising with respect to the Association from such returns
filed for tax years through August 6, 1991. The Internal Revenue Service
("IRS") has completed examinations of all such federal income tax returns from
1985 through 1990; no examination of the 1991 return is anticipated. The
resolution of such examinations involved settlements which were approved by
the Congressional Joint Tax Committee. Pursuant to such settlements, the
Company received $3,988 from the IRS in July 1995, $1,030 of which represents
interest. Additionally, the Company was allowed a loss carryforward from 1990
of $37,853, due to the worthlessness of the stock of the Association, which
occurred in the taxable year ended December 31, 1990. As of December 31,
1995, the Company has Federal and State net operating loss carryforwards of
approximately $36,931 and $8,668 expiring through 2007 and 1998, respectively.
G - CONTINGENCIES
The Company filed a lawsuit against the Resolution Trust Corporation ("RTC")
in 1994, based on the RTC's disallowance of certain claims made against the
RTC by the Company in its capacity as a creditor of the Association. This
lawsuit has now been settled. A Final Judgment was entered on January 18,
1996. Most of the claims made by the Company against the RTC had to do with
the Company's potential liability to the IRS and the Franchise Tax Board of
the State of California ("FTB"), for taxes which tax claims have now been
resolved.
The settlement agreement entered into by the Company and the RTC provided for
a distribution to the Company of $707 plus interest. Therefore, on September
21, 1995, the Company received a check from the Trust Account in the total
amount of $742. This Trust Account in the total amount of approximately
$2,500 had been established in connection with the RTC litigation. The
balance of the Trust Account was distributed to the RTC pursuant to the
settlement agreement on January 4, 1996 and January 22, 1996. By letter dated
January 3, 1996 the Company was advised by the Franchise Tax Board that the
liabilities for the years 1980 through 1988 had been satisfied in full and
that there were no unsatisfied assessments for California Franchise Tax
against Homestead Savings.
The result of the above is that the contingent liabilities for taxes and/or
RTC matters as described above have been satisfied in full.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
(in thousands except share amounts)
NOTE G - CONTINGENCIES (continued)
The Company has an agreement to indemnify its directors who formerly served as
directors and/or officers of the Association and its subsidiaries. The RTC,
in a letter dated March 10, 1993, advised the present and former directors and
officers of the Association and its subsidiaries of potential claims that the
RTC may assert against them for the recovery of losses suffered by the
Association and its subsidiaries in connection with certain specified actions
and loan transactions. No action has been taken by the RTC on this matter for
quite some time and the RTC went out of existence on December 31st of this
year. Counsel to the Company have advised the Company that in light of these
circumstances and the likelihood of the expiration of the statute of
limitations, they do not see any prospect of material liability to the RTC.
Consequently, the Company has not provided for any further contingencies on
these matters.
NOTE H - STOCK OPTION PLANS
Under the Amended and Restated 1982 Stock Option Plan, 1,000 options to
purchase Class A Common Stock at $1.50 a share were granted in 1992. The
options become exercisable over 5 years. A grant of 500 options expired due
to the termination of employment. The options will terminate upon the
earliest of (a) thirty days after the date of cessation of employment,
(b) one year after an optionee's death or (c) ten years after the date such
options were granted.
Under the 1995 Stock Option Plan (the "Plan") which was approved by the
stockholders at the 1995 Annual Meeting, 200,000 shares of Class A Common
Stock and 200,000 shares of Class B Common Stock of the Corporation have been
reserved for issuance pursuant to the Plan. Options to purchase 101,000
shares of Class A Common Stock were granted in 1995. The per share option
prices range from $1.50 to $7.0125. The aggregate number of shares which may
be issued under the Plan shall not exceed 200,000 shares of any combination of
shares of Class A Common Stock and Class B Common Stock.
The Plan shall be administered by the Compensation Committee of the Board of
Directors of the Company (the "Committee"). The Committee shall from time to
time at its discretion make determinations with respect to the officers and
key employees of the Company to whom options shall be granted and the amount
of such options. Awards may be made under the Plan until January 16, 2005.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE H - STOCK OPTION PLANS (continued)
The exercise price for shares subject to options granted under the Plan is the
fair market value of the shares at the date of the option grant.
Notwithstanding the foregoing, the option price per share of a stock option
granted to a person who, on the date of such grant, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company shall be not less than 110% of the fair market value on the date that
the option is granted. Options granted under the Plan become exercisable in
1/3 increments on each anniversary of the grant date, with full vesting
occurring on the third anniversary date.
Under the 1990 Stock Option Plan for Nonemployee Directors (the "Restated
Plan"), which was restated and approved by stockholders on June 7, 1995,
options to purchase 900 shares of Class A Common Stock were granted in 1994
and 2,500 in 1995. The per share option prices range from $1.50 to $3.25 for
1994 grants and $2.375 to $6.375 for 1995 grants. The aggregate number of
shares which may be issued under the Restated Plan shall not exceed 12,500
shares of Class A Common Stock.
At December 31, 1995 and 1994, there were exercisable options outstanding
under the option plans to purchase an aggregate of 1,200 and 1,950 shares,
respectively.
A summary of changes in Class A stock options during 1994 and 1995 is:
Number Option Price
of Shares per Share
Outstanding at January 1, 1994 3,700 $0.55 to $1.75
Granted 900 $1.50 to $3.25
Cancelled 500 $0.55 to $1.75
Outstanding at December 31, 1994 4,100 $0.55 to $3.25
Granted 103,500 $1.50 to $7.0125
Exercised (400) $1.5625 to $3.125
Outstanding at December 31, 1995 107,200 $0.55 to $7.0125
Exercisable at December 31, 1994 1,200 $0.55 to $3.25
Exercisable at December 31, 1995 1,950 $0.55 to $7.0125
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE H - STOCK OPTION PLANS (continued)
The Restated Plan provides that each director who is not an employee of the
Company and has not been an employee of the Company for all or any part of the
preceding fiscal year automatically receives options to purchase 1000 shares
of Class A Common Stock upon his election or appointment as a director of the
Company. Thereafter, every year options to purchase 500 shares of Class A
Common Stock (subject to adjustment for recapitalizations, stock splits and
similar events) will automatically be granted to such director, provided,
however, that such automatic option grants will be made only if the director
(a) has served on the Board of Directors for the entire two preceding fiscal
years, (b) is not otherwise an employee of the Company or any subsidiaries on
the date of grant and has not been an employee of the Company or any
subsidiaries for all or any part of the preceding fiscal years.
The exercise price for shares subject to options granted under the Restated
Plan is the fair market value of the shares at the date of the option grant.
Options granted under the Restated Plan become exercisable in 50% increments
on each anniversary of the grant date, with full vesting occurring on the
second anniversary date. In October 1995, 400 options were exercised. All of
such options terminate upon the earliest of (a) thirty days after an optionee
ceases to be a director of the Company for any reason other than death,
(b) six months after an optionee's death or ten years after the date such
options were granted.
NOTE I - FUTURE EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
The Financial Accounting Standards Board issued SFAS No. 123, Accounting for
Stock Issued to Employees. This pronouncement is effective for fiscal years
beginning December 15, 1995. The Bank will continue to apply APB 25 for
employee stock options and the only effect of adopting SFAS No. 123 will be
certain new disclosure requirements. SFAS No. 123 requires the disclosure of
the fair value of stock issuances to employees at the date of granting such
options, although they will not have to record the options at fair value in
their financial statements.
EXHIBIT INDEX
Exhibit
Number Exhibit
24.1 Consent of Grant Thornton LLP
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1103
<SECURITIES> 2300
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 24008
<CURRENT-ASSETS> 27411
<PP&E> 709
<DEPRECIATION> 0
<TOTAL-ASSETS> 28120
<CURRENT-LIABILITIES> 466
<BONDS> 8020
0
0
<COMMON> 11
<OTHER-SE> 19623
<TOTAL-LIABILITY-AND-EQUITY> 28120
<SALES> 360
<TOTAL-REVENUES> 5309
<CGS> 4255
<TOTAL-COSTS> 4255
<OTHER-EXPENSES> 354
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 700
<INCOME-TAX> 248
<INCOME-CONTINUING> 452
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 452
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0
</TABLE>
