U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996
Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file number 1-8631
Dover Investments Corporation
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 94-1712121
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
350 California Street, Suite 1650, San Francisco, CA 94104
(Address of Principal Executive Offices)
(415) 951-0200
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
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
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of each of the issuer's classes of
common stock, as of April 30, 1996, were as follows:
Class A Common Stock, $.01 par value 649,480 Shares of Common Stock
Class B Common Stock, $.01 par value 318,416 Shares of Common Stock
Transitional Small Business Disclosure Statement
Yes No X
THIS REPORT CONSISTS OF 13 SEQUENTIALLY NUMBERED PAGES.
DOVER INVESTMENTS CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets
as of March 31, 1996 and December 31, 1995......................... 3
Consolidated Statements of Operations
for the Three Months Ended March 31, 1996 and 1995................. 4
Consolidated Statement of Stockholders'
Equity for the Three Months Ended March 31, 1996................... 5
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1996 and 1995................. 6
Notes to Consolidated Financial Statements......................... 7
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operation..................................9
PART II. OTHER INFORMATION ............................................11
SIGNATURES .............................................................13
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1996 and December 31, 1995
(in thousands except share amounts)
03-31-96 12-31-95
ASSETS
Cash $ 525 $ 639
Restricted Cash 415 464
Securities Purchased under Agreement to Resell 2,500 2,300
Homes Held for Sale 1,263 1,263
Property Held for Development 21,304 22,745
Other Assets 817 709
TOTAL ASSETS $26,824 $28,120
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued Interest and Other Liabilities 558 466
Notes Payable 7,020 8,020
TOTAL LIABILITIES 7,578 8,486
Minority Interest in Joint Venture 68 51
STOCKHOLDERS' EQUITY
Class A Common Stock Par Value, $.01 Per Share --
Authorized 2,000,000 Shares; Issued 804,380 at
3/31/96 and 801,778 at 12/31/95 8 8
Class B Common Stock Par Value, $.01 Per Share --
Authorized 1,000,000 Shares; Issued 322,976 at
3/31/96 and 325,578 at 12/31/95 3 3
Additional Paid-in Capital 19,185 19,185
Retained Earnings from January 1, 1993 814 1,058
Treasury Stock (25,000 in 1996 and 129,000 in 1995 of
Class A Shares and 4,565 in 1995 of Class B Shares) (832) (671)
TOTAL STOCKHOLDERS' EQUITY 19,178 19,583
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $26,824 $28,120
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share amounts)
Three Months Ended
March 31,
1996 1995
Home Sales $ 2,446 $ 1,007
Cost of Sales (2,360) (819)
Gross Profit 86 188
Selling Expenses (233) (133)
General and Administrative
Expenses (145) (168)
(378) (301)
Operating Loss (292) (113)
Interest Income
Interest 48 29
Total Interest Income 48 29
Loss before Taxes (244) (84)
Net Loss $ (244) $ (84)
Net Loss Per Share $ (0.25) $ (0.07)
See accompanying notes to Consolidated Financial Statements.
<TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 1996
(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, 1996 $ 8 $ 3 $19,185 $ 1,058 $ (671) $19,583
Purchase of Class A Common
Stock - - - - (161) (161)
Net Loss - - - (244) - (244)
Balance at March 31, 1996 $ 8 $ 3 $19,185 $ 814 $ (832) $19,178
See accompanying notes to Consolidated Financial Statements.
</TABLE>
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months ended March, 31, 1996 and 1995
(in thousands)
Three Months
Ended March 31,
1996 1995
Cash Flows from Operating Activities:
Net Income $ (244) $ (84)
Reconciliation of Net Income to Net Cash
Used in Operating Activities:
Minority Interest 17 55
Changes in Assets and Liabilities:
Restricted Cash 49 5
Property Held for Development 1,441 (94)
Other Assets (108) (400)
Accrued Interest and Other Liabilities, Net 92 452
Net Cash Provided by (Used in) Operating
Activities 1,247 (66)
Cash Flows from Investing Activities:
Proceeds from Securities Purchased under
Agreement to Resell (200) 1,100
Net Cash Provided by (Used in) Investing
Activities (200) 1,100
Cash Flows from Financing Activities:
Repayment of Notes Payable (1,000) (1,000)
Purchase of Common Stock (161) -
Net Cash Provided by Financing Activities (1,161) (1,000)
Net (Decrease) in Cash (114) 34
Cash at Beginning of Period 639 381
Cash and End of Period $ 525 $ 415
See accompanying notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1996
1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim consolidated
balance sheets as of March 31, 1996, and December 31, 1995, the related
consolidated statements of operations for the three month periods ended March
31, 1996 and 1995, the consolidated statements of stockholders' equity ended
March 31, 1996, and cash flows for the three month periods ended March 31,
1996 and 1995, reflect all adjustments (consisting of normal recurring
accruals and elimination of significant intercompany transactions and
balances) necessary for a fair presentation of Dover Investments Corporation
("Dover") and its wholly-owned subsidiaries (collectively with Dover, the
"Company").
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Accordingly, these statements
should be read in conjunction with the statements and notes thereto included
in the Company's 1995 Form 10-KSB and the Notes to the Consolidated Financial
Statements, included therein. The results of operations for the quarter ended
March 31, 1996, are not necessarily indicative of the results which may be
expected for the entire year.
Prior year financial statements have been reclassified to conform to current
year presentation.
The symbols for the Class A Common Stock and the Class B Common Stock are
"DOVR-A" and "DOVR-B", respectively.
2. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed, on a combined basis, for the two
classes of common stock, Class A and Class B. Computations are based upon
the weighted average number of common shares outstanding. The weighted
average number of Class A and Class B share equivalents used to compute net
income per share was 975,199 at March 31, 1996, and 1,122,358 at March 31,
1995.
3. CONTINGENCIES
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 Homestead Savings, a Federal Savings and
Loan Association ("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 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 limitation, 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.
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND PART I
RESULTS OF OPERATIONS ITEM 2
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company's investment in property held for development
and homes held for sale decreased by $1,441,000 from its carrying value at
December 31, 1995. This decrease resulted primarily from the sale of homes
and a reduction of capitalized expenditures for the ongoing development of
real property located in San Leandro, California (the "Marina Vista
property"), and the subdivision in Tracy, California (the "Tracy Joint
Venture"). At March 31, 1996, the Company has improved 97 lots, and has built
eighty seven houses at the Marina Vista property. Aside from four model
homes, which are not for sale, all but one of the houses have been sold. The
Company will commence construction on an additional 14 houses. In addition,
the Marina Vista property has land for an additional 152 lots.
The Glenbriar Joint Venture property located in Tracy was rezoned and has
preliminary development approval for 395 lots and a tentative map for 120 of
those lots was submitted to the Tracy Planning Commission. The Glenbriar
Joint Venture is proceeding to complete the city finance plan and related map.
The Glenbriar Venture #2 has zoning and preliminary development approval for
approximately 470 lots. The final development plan was submitted to the Tracy
Planning Commission for approval. The Company anticipates developing and
selling lots in both the Glenbriar Joint Venture property and the Glenbriar #2
property.
During the three months ended March 31, 1996, the Company used its liquidity
to fund expenditures in connection with the Marina Vista property, the Tracy
Joint Venture, and its general and administrative expenses. The Company met
its funding requirements primarily from cash reserves and from revenues from
home sales. The Company also obtained construction financing from private
sources secured by the homes under construction. The Company's primary source
of liquidity in the future will continue to be from revenues generated from
home sales and from construction financing when deemed appropriate. The
Company believes that it will have sufficient cash available to complete the
development and construction of the Marina Vista property, has the ability to
pay off the debt discussed below when it becomes due, and make its required
contributions to the Tracy Joint Venture.
The Company is the obligor on a $4,810,814 promissory note carried back by the
seller of the Marina Vista property. The note requires a principal payment of
$2,500,000 on September 29, 1996, and the balance of unpaid principal on March
29, 1997. At March 31, 1996, the Company has outstanding construction
borrowing of $306,850 secured by lots and homes under construction with a
maturity date of September 30, 1996. The Company also has previously obtained
an $802,000 loan secured by the four model homes. The loans on the model
homes mature on June 30, 1998. The interest rates on the construction loan
and model homes are prime plus one and one half percent and eleven and one
quarter percent, respectively.
RESULTS OF OPERATIONS
For the quarter ended March 31, 1996, the Company had a net loss of $244,000,
compared to a loss of $84,000 for the same period in 1995. Total sales for
the quarter ended March 31, 1996, were $2,446,000, resulting in a gross profit
of $86,000, compared to $1,007,000 in sales and a gross profit of $188,000 for
the same period in 1995.
The real estate market for new homes in the San Francisco Bay Area is highly
competitive. Factors such as interest rates and general economic conditions
influence the prices at which the Company is able to sell homes at Marina
Vista. The Company has noted a slowing in the real estate market during 1995
and has therefore adjusted the prices to remain competitive in the current
market environment.
The interest income of $48,000 in the first quarter of 1996 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 the dealers who arranged the transaction. At March 31, 1996, such
overnight investments, with a weighted average interest rate of 5.28% and a
market value of the underlying collateral of $2,557,940, totaled $2,500,000.
For the first three months ended March 31, 1996, general and administrative
expenses decreased by $23,000 from those expenses incurred in the same period
in 1995. The expense decrease resulted from a reduction in professional fees
and other administrative expenses.
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Information required by this item is incorporated by reference to
footnote 3 to the notes to the Consolidated Unaudited Financial
Statements included herein and to Item 3 of the Annual Report on
Form 10-KSB for the year ended December 31, 1995 of the Company.
There have been no material developments since the filing of such
report except as to the income tax disclosure described in footnote
3.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 26, 1996, the Company held its annual meeting of
stockholders for the purpose of electing directors and ratifying
the appointment of the Company's auditors. All of the Company's
nominees were elected directors as follows: Arnold Addison, 639,961
votes for and 2,328 votes withheld; Michael Raddie, 639,901 votes
for and 2,388 votes withheld; Larry Freels, 2,975,470 votes for and
1,930 votes withheld; John Gilbert, 2,975,590 votes for and 1,810
votes withheld; Lawrence Weissberg, 2,975,470 votes for and 1,930
votes withheld; and Will C. Wood, 2,975,590 votes for and 1,810
votes withheld. The proposal to ratify the appointment of Grant
Thornton LLP as the Company's independent public accountant for the
year ended December 31, 1995, was approved with 3,608,653 votes
for, 2,306 votes against and 1,970 votes abstaining.
Item 5. OTHER INFORMATION
The Company's Class A Common Stock and Class B Common Stock are
traded on the National Quotation Bureau pink sheets and on the NASD
OTC Bulletin Board under the symbols DOVR-A and DOVR-B.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
The exhibit listed below is filed with this report.
27.1 Financial Data Schedule for the Quarter Ended March 31, 1996.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K (continued)
B. Reports on Form 8-K
A report on Form 8-K, dated April 28, 1995, reported a tax
settlement with the IRS for tax years 1985 - 1990.
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.
DOVER INVESTMENTS CORPORATION
Date: May 9, 1996 By: /s/Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board, President
and Chief Executive Officer
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<PERIOD-END> MAR-31-1996
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<ALLOWANCES> 0
<INVENTORY> 22567
<CURRENT-ASSETS> 26007
<PP&E> 817
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