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, 1996
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, 1996 were $10,159,443.
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 February 1, 1997, was $2,819,876.
The average bid and asked prices of Class A Common Stock and Class B Common
Stock were $4.625 and $4.625 per share, respectively, on that date.
The number of shares outstanding of each of the issuer's classes of Common
Stock as of February 1, 1997, were as follows:
Title Shares Outstanding
Class A Common Stock .......................... 650,198
Class B Common Stock .......................... 318,148
Transitional Small Business Disclosure Statement
Yes No X
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Proxy Statement relating to the registrant's 1997
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 OR PLAN OF
OPERATIONS . . . . . . . . . . . . . . . . . . . . . 5
ITEM 7. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . 8
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . 8
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. . . . . .9
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, 1996 AND 1995
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 Home-
stead 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, 1996, the Company has
completed lot improvements on one hundred and fifty lots and partial improve-
ments on ninety nine additional lots. Of the one hundred and fifty lots with
completed lot improvements, ten are part of a model complex, one hundred and
one have been built, sold and closed, sixteen are under construction and pre-
sold, nineteen are presold with construction commencing in January, 1997 and
four are for sale with construction also commencing in January, 1997. The
market for homes at Marina Vista improved substantially during the latter
part of 1996. See "Management's Discussion and Analysis or Plan of
Operations" for a discussion of the financing of the Marina Vista property.
Land Development. The Company continues to be part of a Joint
Venture (the "Glenbriar Joint Venture") with Westco Community Builders, Inc.
("Westco") in Tracy, California which owns one hundred and eight acres of
land comprising a portion of the Glenbriar Estates Project. During 1996, the
Company also formed a limited liability company with Westco, known as
Glenbriar Venture #2 which holds options to purchase approximately one
hundred and thirty one acres of land also comprising a portion of the
Glenbriar Estates Project. Glenbriar Joint Venture and Glenbriar Venture #2
have succeeded in rezoning the Glenbriar Estates property to Low Density
Residential and have obtained the approval of new tentative subdivision maps
which provide for up to three hundred and ninety five lots on the Glenbriar
Joint Venture property and up to five hundred lots on the Glenbriar Venture #2
property. In December of 1996, Glenbriar Joint Venture filed final sub-
division maps and improvement plans with the city of Tracy covering certain
off tract improvements for one hundred and seventy two lots. At December 31,
1996, Glenbriar Joint Venture is negotiating with various builders for the
sale of lots upon approval of the final subdivision maps. The Company
anticipates selling lots to merchant builders first in the Glenbriar Joint
Venture property and thereafter in the Glenbriar Venture #2 property.
The Company expects that the Marina Vista project and the Glenbriar
Estates 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 invest-
ment. In order to maintain it's market share of new home sales, the Company
keeps home prices competitive with other builders of a similar product, in
the vicinity of the project.
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 regu-
lations 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 1996. 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 1996.
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 net operating loss carryforward from 1990 of approximately
$29,000,000 due to the worthlessness of the stock of the Association.
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 tax
liability to the IRS and the Franchise Tax Board of the State of California
("FTB"). All 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 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 1996 and 1995 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 1996 Quarter Ended:
March 31 6.875 6.375
June 30 8.000 6.375
September 30 6.000 5.875
December 31 6.250 5.500
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
CLASS B COMMON STOCK
High Low
Fiscal 1996 Quarter Ended:
March 31 6.875 6.375
June 30 8.000 6.375
September 30 6.000 5.875
December 31 6.250 5.500
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
Holders
As of February 1, 1997, there were 567 stockholders of record
of the Class A Common Stock and 171 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, 1996, the Company had repurchased 159,010 shares
of Common Stock at an aggregate purchase price of $830,000.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS
Results of Operations for the Years Ended December 31, 1996 and 1995
The Company had a net loss of $174,000 for the year ended
December 31, 1996, compared to net income of $452,000 for the year ended
December 31, 1995. The net loss for 1996 was the result of increased gross
profit from a higher number of home sales offset by higher selling costs,
increased general administrative costs and a decrease in interest income.
Net income for 1995 was the result of interest income received as a result
of tax settlements and expense reimbursements with the IRS and RTC.
In the year ended December 31, 1996, the Company closed the sale
of 33 homes, compared to 13 homes sold in the year ending December 31, 1995.
Total sales were $10,036,000 for 1996, resulting in a gross profit of
$880,000 and a gross profit margin of 8.77 percent, compared to total sales
of $4,615,000 for 1995, resulting in a gross profit of $612,000 for the year
and a gross profit margin of 13 percent. The decrease in profit margin
is attributable to the reduction in sales prices. Selling expenses of
$697,000 include the costs of maintaining a sales office, the model homes,
commissions payable to outside brokers and fees payable to Westco. General
and administrative expenses increased by $180,000 in 1996. The lower general
& administrative expenses for 1995 were attributable to reimbursements of
professional fees incurred in connection with the IRS settlement and prepa-
ration and filing of claims against the RTC and the receipt of Delaware
Franchise Tax refunds. The Company's cash requirements for the next twelve
months will be satisfied by proceeds from home sales.
Interest income in 1996 decreased to $124,000 compared to
$697,000 in 1995. The increased interest income in 1995 was attributable to
tax refunds from the IRS and settlements with the RTC discussed above
under "Item 3 -- Legal Proceedings". Other interest income for 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 dealers who arranged the transaction. At
December 31, 1996, such overnight investments, with a weighted average
interest rate of 5.35% and a market value of the underlying collateral
of $1,402,081, totalled $1,400,000, compared to $2,300,000 in 1995.
The Company elected to wind up and dissolve its wholly-owned
subsidiary, H.F. Properties, Ltd. and its wholly-owned subsidiary, GIC
Investments Corporation, effective February 16, 1996. All remaining assets
have been distributed to the Company as the sole shareholder.
Costs for the development of property and the building of homes
are capitalized during the construction period. Such costs include expen-
ditures 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, the cost of sale is recognized, which
includes land, site development, construction, management fees and financing
costs.
Liquidity and Capital Resources
At December 31, 1996, the Company had total assets of
$26,725,000, as compared to total assets of $27,967,000 at December 31, 1995.
The cost of the Company's property being developed was $23,119,000 in 1996,
compared to $23,776,000 in 1995.
Highly liquid assets were $2,963,000 at December 31, 1996, compared to
$3,403,000 at December 31, 1995.
The Company's total liabilities decreased to $7,629,000 at
December 31, 1996, compared to $8,384,000 at December 31, 1995. This
decrease was attributable primarily to a reduction in notes payable to
$5,999,000, in 1996, from $8,020,000, in 1995, and an increase in accrued
interest and other liabilities of $1,490,000 in 1996 from $313,000 in 1995.
Additional paid-in capital for the year ended December 31, 1995,
increased 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 $2,310,000, due on September 29, 1996, therefore
reducing the principal balance to $2,500,000. The note requires a principal
payment of $2,500,000 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 date, although no
assurances can be given in this regard. Interest on the loan at 12%
per annum continues to be payable quarterly.
During 1996, the Company's primary liquidity needs were related
to funding development costs of the Marina Vista and Glenbriar Joint Venture
projects, in addition to notes payable, principal payments of $2,021,000 and
interest payments of $812,009.
During 1996, the Company borrowed a total of $1,596,850 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, 1997. The
Company also obtained an $802,000 loan secured by 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 1996, was from
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, 1996 and 1995. . A-2
Consolidated Statements of Operations for the Years Ended
December 31, 1996 and 1995. . . . . . . . . . . . . . . . . A-3
Consolidated Statement of Stockholders' Equity for the
Years Ended December 31, 1996 and 1995. . . . . . . . . . .A-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996 and 1995. . . . . . . . . . . . . . . . .A-5
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1996 and 1995. . . . . . . . . . . . . . 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 1997 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 1997 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 1997 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 1997 Annual Meeting of Stockholders.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) The exhibits listed below are filed with this report.
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 LLP
27.1 Financial Data Schedule for the Year Ended
December 31, 1996.
___________________
(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, 1996.
<PAGE>
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 11 , 1997 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 11, 1997
(Arnold Addison)
/s/ John Gilbert Director March 11, 1997
(John Gilbert)
/s/ Michael Raddie Director and Chief March 11, 1997
(Michael Raddie) Financial Officer
/s/ Lawrence Weissberg Director, Chairman March 11, 1997
(Lawrence Weissberg) of the Board,
President and
Chief Executive
Officer (Principal
Executive Officer and
Principal Accounting
Officer)
/s/ Will C. Wood Director March 11, 1997
(Will C. Wood)
<PAGE>
APPENDIX A
CONSOLIDATED FINANCIAL STATEMENTS
AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
DOVER INVESTMENTS CORPORATION
AND SUBSIDIARIES
December 31, 1996 and 1995
<PAGE>
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 and Joint Ventures as of December
31, 1996 and 1995, and the related consolidated statements of operations,
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 signifi-
cant 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 and Joint Ventures as of
December 31, 1996 and 1995, 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 18, 1997
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
(in thousands except share amounts)
ASSETS 1996 1995
Cash $ 1,438 $ 639
Restricted Cash 125 464
Securities Purchased under Agreement to Resell 1,400 2,300
Income Taxes Receivable 17 79
Homes Held for Sale 1,437 1,263
Property Held for Development 21,682 22,513
Other Assets 626 616
Deferred Income Taxes - 93
Total Assets $26,725 $27,967
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued Interest and Other Liabilities $ 1,490 $ 313
Deferred Income Taxes 9 -
Notes Payable 5,999 8,020
Minority Interest in Joint Venture 131 51
Total Liabilities 7,629 8,384
Stockholders' Equity
Class A Common Stock, Par Value, $.01 Per
Share-Authorized 2,000,000 Shares; Issued
805,098 Shares at 12/31/96 and 801,778
Shares at 12/31/95 8 8
Class B Common Stock, Par Value, $.01 Per
Share-Authorized 1,000,000 Shares; Issued
322,708 Shares at 12/31/96 and 325,578
Shares at 12/31/95 3 3
Additional Paid-In Capital 19,031 19,185
Retained Earnings from January 1, 1993 884 1,058
Treasury Stock (154,450 in 1996 and 129,900
in 1995 of Class A Shares and 4,560
of Class B Shares) (830) (671)
Total Stockholders' Equity 19,096 19,583
Total Liabilities and Stockholders' Equity $26,725 $27,967
The accompanying notes are an integral part of these statements.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
(in thousands except per share amounts)
1996 1995
Home Sales $ 10,036 $ 4,615
Cost of Sales 9,156 4,003
Gross Profit 880 612
Selling Expenses 697 252
General and Administrative Expenses 534 354
1,231 606
Operating (Loss) Profit (351) 6
Other Income (Expense)
Interest 124 697
Other - (3)
124 694
(Loss) Income before Income Taxes (227) 700
Benefit (Provision) for Income Taxes 53 (248)
Net (Loss) Income $ (174) $ 452
Net (Loss) Income per Share $ (0.18) $ 0.42
The accompanying notes are an integral part of these statements.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Two years ended December 31
(in thousands)
<TABLE>
Additional Treasury
Common Stock Paid-In Retained Stock
Class A Class B Capital Earnings at Cost Total
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 $ 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
Reissuance of treasury stock - - (2) - 2 -
Purchase of common stock - - - (161) (161)
Adjustment for utilization of
prior years prequasi-
reorganization net operating
loss tax benefits - - (152) - - (152)
Net loss for the year - - - (174) - (174)
Balance at December 31, 1996 $ 8 $ 3 $19,031 $ 884 $ (830) $19,096
<FN>
The accompanying notes are an integral part of this statement.
</TABLE>
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
(in thousands)
1996 1995
Cash Flows from Operating Activities:
Net (Loss) Income $ (174) $ 452
Reconciliation of Net Income to Net Cash
Provided by (Used in) Operating Activities:
Minority Interest 80 (246)
Deferred Taxes (50) 93
Tax Benefit of Utilizing Prequasi-
reorganization Net Operating Losses - 329
Changes in Assets and Liabilities:
Restricted Cash 339 (372)
Property Held for Development 831 (514)
Homes Held for Sale (174) 28
Other Assets (10) 121
Income Taxes Receivable 62 (230)
Accrued Interest and Other Liabilities, Net 1.177 (3,110)
Net Cash Provided by (Used in)
by Operating Activities: 2,081 (3,449)
Cash Flows from Investing Activities:
Proceeds from Securities Purchased
under Agreement to Resell 900 100
Cash and Securities Held in Trust Account - 2,500
Net Cash Provided by Investing Activities 900 2,600
Cash Flows from Financing Activities:
Repayment of Notes Payable (2,021) (2,380)
Proceeds from Tax Refunds and Related Interest
Prior to Prequasi-Reorganization - 4,141
Purchase of Common Stock (161) (654)
Net Cash (Used in) Provided by
Financing Activities (2,182) 1,107
Net Increase in Cash 799 258
Cash at Beginning of Year 639 381
Cash at End of Year $ 1,438 $ 639
Supplemental Cash Flow Activity:
Income Tax Payments $ - $ 12
The accompanying notes are an integral part of these statements.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
(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. The Company owns property in San Leandro, California and in
Tracy, California.
The Company 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 108 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, H.F.
Properties, Ltd., and its wholly-owned subsidiary, GIC Investment Corpor-
ation, effective February 16, 1996. All remaining assets have been
distributed to the Company as the sole shareholder.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries and joint ventures. 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, 1996 and 1995
(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, the
cost of the sale is recognized, which includes land, site development,
construction, management fees 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. A valuation allowance
is established to reflect the likelihood of realization of deferred
tax assets.
Net Income Per Share
Net income (loss) 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 (loss) per share was 968,346 at December 31, 1996,
and 1,071,917 at December 31, 1995.
Restricted Cash
Restricted cash is to be used for certain infrastructure improvements
relating to the Marina Vista 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, 1996 and 1995
(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, 1996 and 1995, the weighted average
interest rate of such repurchase agreements was 5.35% and 5.56%,
respectively. The market value of the repurchase agreements approximates
cost and all such securities are held-to-maturity.
NOTE C - PROPERTY HELD FOR DEVELOPMENT
Real Estate Development. At December 31, 1996, the Company has
completed lot improvements on one hundred and fifty lots and partial
improvements on ninety nine additional lots. Of the one hundred and fifty lots
with completed lot improvements, ten are part of a model complex, one hundred
and one have been built, sold and closed, sixteen are under construction and
presold, nineteen are presold with construction commencing in January, 1997
and four are for sale with construction also commencing in January, 1997.
Land Development. The Company continues to be part of a Joint
Venture (the "Glenbriar Joint Venture") with Westco Community Builders, Inc.
("Westco") in Tracy, California which owns one hundred and eight acres of
land comprising a portion of the Glenbriar Estates Project. During 1996, the
Company also formed a limited liability company with Westco, known as
Glenbriar Venture #2 which holds options to purchase approximately one
hundred and thirty one acres of land also comprising a portion of the
Glenbriar Estates Project. Glenbriar Joint Venture and Glenbriar Venture #2
have succeeded in rezoning the Glenbriar Estates property to Low Density
Residential and have obtained the approval of new tentative subdivision maps
which provide for up to three hundred and ninety five lots on the Glenbriar
Joint Venture property and up to five hundred lots on the Glenbriar
Venture #2 property. In December of 1996, Glenbriar Joint Venture filed
final subdivision maps and improvement plans with the city of Tracy covering
certain off tract improvements for one hundred and seventy two lots.
At December 31, 1996, Glenbriar Joint Venture is negotiating with various
builders for the sale of lots upon approval of the final subdivision maps.
The Company anticipates selling lots to merchant builders first in the
Glenbriar Joint Venture property and thereafter in the Glenbriar
Venture #2 property.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
(in thousands except share amounts)
NOTE C - PROPERTY HELD FOR DEVELOPMENT (continued)
The carrying value of the developments consist of:
MARINA VISTA - SAN LEANDRO
1996 1995
Land $ 8,408 $10,407
Land improvements 1,205 1,511
Model homes 1,437 1,263
Capitalized interest 3,859 4,222
Construction in progress 2,328 2,733
Developer's fee 900 900
Subtotal $18,137 $21,036
GLENBRIAR ESTATES PROJECT - TRACY
1996 1995
Land $ 1,578 $ 1,526
Land improvements 24 13
Capitalized interest 308 176
Construction in progress 1,395 817
Option Fees 1,395 -
Developer's fee 282 208
Subtotal 4,982 2,740
TOTAL (Marina Vista and
Glenbriar Estates Project) $23,119 $23,776
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
(in thousands except share amounts)
NOTE D - NOTES PAYABLE
Notes payable at December 31, are comprised of the following:
1996 1995
Notes Payable, maturing June 30, 1998, and
bearing interest at 11.25% per annum
secured by four model homes 802 802
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 2,500 4,811
Notes Payable, maturing September 30, 1997,
and bearing interest at prime
(8.25% at December 31, 1996) plus 1.5%;
secured
by 19 lots 1,597 1,307
Notes Payable, maturing September 30, 1997,
and bearing interest at 12% per annum
secured by the Deed of Trust 1,100 1,100
$ 5,999 $ 8,020
Aggregate principal payments subsequent to December 31, 1996, are as follows:
1997 $ 5,197
1998 802
$ 5,999
Interest paid in 1996 and 1995, amounted to $812 and $1,070, respectively,
and was capitalized as part of property held for development.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
(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 $35 per
year from 1995 through 1998 and $4 in 1999. The lease expires
February 15, 1999.
Rent expense for the years ended December 31, 1996 and 1995 totaled $35
per year.
NOTE F - INCOME TAXES
Income tax expenses (benefit) for the year ended December 31, consist of:
1996 1995
Current $ (3) $ 341
Deferred (50) (93)
Total $ (53) $ 248
A tax benefit for 1995 of $618, 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. In 1996, an adjustment of $152 was made reducing paid-in capital
and increasing deferred taxes payable for the utilization of prior years'
prequasi-reorganization net operating loss tax benefits.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
(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:
1996 1995
Tax expense at statutory federal
income tax rate (34%) $ (77) $238
State franchise tax (14) 138
Change in valuation allowance
for deferred tax assets - (126)
Accrual adjustment 36 -
Other 2 (2)
Income tax expense $ (53) $ 248
Net deferred tax asset as of December 31, 1996, is as follows:
1996 1995
Accrued warranty reserve $ 43 $ 27
AMT credit carry forward 18 -
Accrued expenses 14 15
State income taxes 1 51
Capital loss carryover 30 30
Property held for development (207) -
Depreciation (5) -
Net operating loss carry forward 127 -
21 123
Valuation allowance 30 30
Net deferred tax (liability) asset $ (9) $ 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 1996. The deferred
tax asset schedule above does not give effect to any deferred tax asset
related to prequasi-reorganization tax loss carry forwards. Tax benefits
resulting from such tax loss carryforwards of approximately $9,900 for
federal and $900 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) in 1995 with no change in 1996.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
(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 approximately $29,000 due to the worthlessness of the stock of the
Association, which occurred in the taxable year ended December 31, 1990.
As of December 31, 1996, the Company has Federal and State net operating loss
carryforwards of approximately $29,500 and $9,600 expiring through 2011
and 2001, respectively.
NOTE G - CONTINGENCIES
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.
NOTE H - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No 107, "Disclosures about Fair
Value of Financial Instruments", requires disclosure of the estimated fair
value of an entity's financial instrument assets and liabilities. These assets
and liabilities consist of cash, securities and long-term debt. The balance
sheet carrying amounts of cash, securities and debt approximate the estimated
fair values.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
(in thousands except share amounts)
NOTE I - STOCK OPTION PLANS
At December 31, 1996, the Company had three stock-based compensation plans.
The Company applies APB Opinion 25 "Accounting for Stock Issued to Employees"
and related interpretations in accounting for the plans. No compensation
costs have been recognized for the plans.
Under the Amended and Restated 1982 Stock Option Plan, options granted in
1992 to purchase 500 shares Class A Common Stock at $1.50 per share are
outstanding at December 31, 1996. The options become exercisable over 5
years. The options 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"), 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. 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. Awards may be made under the Plan until January 16, 2005.
The exercise price for shares subject to the options granted under the Plan
is the fair market value of the shares at the date of grant. 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 are exercisable in 1/3 increments on each anniversary of the grant
date, with full vesting occurring on the third anniversary date. As of
December 31, 1996, options for 101,000 shares were outstanding.
The 1990 Stock Option Plan for Nonemployed Directors (the "Restated Plan"),
was restated and approved by stockholders on June 7, 1995. The exercise
price for each option granted is the market price of the shares at the
date of grant. Options granted under the Restated Plan are exercisable in
50% increments on each anniversary of the grant date, with full vesting
occurring on the second anniversary date. All 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 optionees
death or (c) ten years after the date such options were granted. The
aggregate number of shares which may be issued under the Restated Plan shall
not exceed 12,500 shares of Class A Common Stock. The compensation effect of
the nonemployed director options on the Company's results of operations and
per share results are immaterial.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
NOTE I - 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 their 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 (c) has not been an
employee of the Company or any subsidiaries for all or any part of the
preceding fiscal years. As of December 31, 1996, options for 7,250 shares
were outstanding.
Had compensation cost for the plans been determined based on the fair value
of the options at the grant dates consistent with the methodology prescribed
by FAS 123, the Company's net income (loss) and income (loss) per share would
be reduced to the pro forma amounts indicated below;
1996 1995
Net income (loss) As reported $ (174) $ 452
Pro forma (233) 394
Net Income (loss)
Per share As reported $ (0.18) $ 0.42
Pro forma (0.24) 0.37
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes options pricing model with the following weighted-average
assumptions used for grants in 1996 and 1995: no expected dividends;
expected volatility of 70%; risk-free interest rates ranging from 5.00%
to 7.76%; and expected lives of 5.4 years.
DOVER INVESTMENTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
NOTE I - STOCK OPTION PLANS (continued)
A summary of the status of the Company's fixed stock plans as of
December 31, 1996 and 1995, and changes during the years ending on
those dates is presented below:
1996 1995
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
Outstanding at beginning of year 107,200 $ 5.72 4,100 $ 1.81
Granted 2,000 6.82 103,500 5.86
Exercised (450) 2.36 (400) 2.73
Outstanding at ending of year 108,750 5.74 107,200 5.72
Options exercisable at year end 36,822 $ 5.63 1,950 $ 1.66
Weighted-average fair value of
options granted during the year $ 4.78 $ 2.82
The following information applies to options outstanding at December 31, 1996:
Range of exercise prices $0.55 - $1.75 $2.00 - $5.875 $6.00 - $7.0125
Options outstanding 2,700 53,050 53,000
Weighted average exercise price $ 1.19 $ 4.74 $ 6.97
Weighted average remaining
contractual life (years) 7.00 4.10 4.20
Options exercisable 1,371 18,117 17,334
Weighted average exercise price $ 1.04 $ 4.68 $ 6.98
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,563
<SECURITIES> 1,400
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 23,119
<CURRENT-ASSETS> 26,082
<PP&E> 643
<DEPRECIATION> 0
<TOTAL-ASSETS> 26,725
<CURRENT-LIABILITIES> 1,630
<BONDS> 5,999
0
0
<COMMON> 11
<OTHER-SE> 19,085
<TOTAL-LIABILITY-AND-EQUITY> 26,725
<SALES> 183
<TOTAL-REVENUES> 10,160
<CGS> 9,853
<TOTAL-COSTS> 9,853
<OTHER-EXPENSES> 534
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 227
<INCOME-TAX> 53
<INCOME-CONTINUING> 174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 174
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0
</TABLE>
