U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended June 30, 2000
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from to
Commission file number 1-8631
DOVER INVESTMENTS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-1712121
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 Spear Street, Suite 520, San Francisco, CA 94105
(Address of Principal Executive Offices) (Zip Code)
(415) 777-0414
(Registrant's telephone number)
Indicate by check mark whether the registrant: (1) has 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
The number of shares outstanding of each of the registrant's classes of
Common Stock as of June 30, 2000,
were as follows:
Title Shares Outstanding
Class A Common Stock, $.01 par value............ 828,939
Class B Common Stock, $.01 par value............ 318,411
DOVER INVESTMENTS CORPORATION
INDEX
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2000 and
December 31, 1999. . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Earnings for the Three Months and
Six Months Ended June 30, 2000 and 1999 . . . . . . . . . . . . 4
Consolidated Statement of Stockholders' Equity for the
Six Months Ended June 30, 2000 . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2000 and 1999. . . . . . . . . . . . .6
Notes to Consolidated Financial Statements. . . . . . . . . . .. 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . 7
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK. . . . . . . . . . . . . . . . . . . . . . . . . 10
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . .. 11
Item 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . .. 12
INDEX OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . 13
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOVER INVESTMENTS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
06-30-00 12-31-99
ASSETS
Cash and Cash Equivalents $16,181 $15,449
Restricted Cash 419 409
Homes Held for Sale 1,847 1,753
Property Held for Development 17,602 21,632
Notes Receivable 5,917 3,540
Other Assets 1,441 1,335
Total Assets $43,407 $44,118
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued Interest and Other Liabilities 478 3,824
Notes Payable 6,656 8,299
Minority Interest in Joint Venture 2,136 2,059
Total Liabilities 9,270 14,182
Stockholders' Equity
Class A Common Stock, Par Value $.01
Per Share -- Authorized 2,000,000
Shares; Issued 828,939 Shares
at 6/30/00 and 832,180 at 12/31/99 8 8
Class B Common Stock, Par Value $.01
Per Share -- Authorized 1,000,000
Shares; Issued 318,411 Shares
at 6/30/00 and 319,920 at 12/31/99 3 3
Additional Paid-In Capital 24,186 22,963
Retained Earnings from January 1, 1993 9,965 6,987
Treasury Stock (0 at 6/30/00
and 12/31/99 of Class A Shares and
4,560 of Class B Shares at
6/30/00 and 12/31/99 (25) (25)
Total Stockholders' Equity 34,137 29,936
Total Liabilities and Stockholders' Equity $43,407 $44,118
See accompanying Notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Home Sales $ 7,992 $17,103 $22,344 $32,963
Lot Sales 3,387 1,488 4,516 2,595
Total Sales 11,379 18,591 26,860 35,558
Cost of Home Sales 5,889 12,579 15,709 24,699
Cost of Lot Sales 1,851 1,161 2,331 2,025
Total Cost of Sales 7,740 13,740 18,040 26,724
Minority Interest in
Joint Venture 1,293 1,361 2,677 2,382
GROSS PROFIT 2,346 3,490 6,143 6,452
Selling Expenses 519 856 1,383 1,562
General and Administrative
Expenses 271 223 612 439
790 1,079 1,995 2,001
Operating Income 1,556 2,411 4,148 4,451
Other Income
Interest 398 188 736 346
Fees - - 11 -
Total Other Income 398 188 747 346
Income before Income Taxes 1,954 2,599 4,895 4,797
Provision for Income Taxes 908 1,037 1,917 1,848
NET INCOME $1,046 $1,562 $2,978 $2,949
Basic Earnings Per Share $0.92 $1.47 $2.61 $2.77
Diluted Earnings Per Share $0.89 $1.38 $2.55 $2.61
Weighted Average Number of
Shares Outstanding:
Basic: 1,142,790 1,062,585 1,142,790 1,063,946
Diluted: 1,168,960 1,131,884 1,169,075 1,129,885
See accompanying Notes to Consolidated Financial Statements.
<TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 2000
(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, 2000 $ 8 $ 3 $22,963 $6,987 $(25) $29,936
Realization of Prequasi-
reorganization Net Operating
Loss Tax Benefits - - 1,223 - - 1,223
Net Income - - - 2,978 - 2,978
Balance at June 30, 2000 $ 8 $ 3 $24,186 $9,965 $(25) $34,137
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
June 30,
2000 1999
Cash Flows from Operating Activities:
Net Income $2,978 $2,949
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Income Accruing to Minority Interest 2,677 2,382
Tax Benefit of Utilizing Prequasi-
reorganization Net Operating Losses 1,223 756
Changes in Assets and Liabilities:
Restricted Cash (10) (7)
Property Held for Development 4,030 4,195
Homes Held for Sale (94) (1)
Other Assets (106) (146)
Notes Receivable (2,377) (881)
Accrued Interest and Other
Liabilities, Net (3,346) 118
Net Cash Provided by Operating Activities 4,975 9,365
Cash Flows from Financing Activities:
Payment to Minority Interest (2,600) (1,045)
Proceeds from Notes Payable 3,087 6,821
Payment of Notes Payable (4,730) (11,672)
Issuance of Treasury Stock - 327
Net Cash Used in Financing Activities (4,243) (5,569)
Net Increase in Cash and Cash Equivalents 732 3,796
Cash and Cash Equivalents at
Beginning of Period 15,449 8,622
Cash and Cash Equivalents at
End of Period $16,181 $12,418
Supplemental Cash Flow Activity:
Cash Paid for Interest $33 $110
Cash Paid for Taxes $1,218 $435
See accompanying Notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
Notes to Consolidated Financial Statements
June 30, 2000
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared
from the records of Dover Investments Corporation without audit. Accordingly,
they do not include all of the information and notes required by accounting
principles generally accepted in the United States of America for annual
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months and
six months ended June 30, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. For further
information, refer to the consolidated financial statements and notes thereto
included in the Company's 1999 Annual Report to Stockholders.
2. Net Earnings per Share
Basic earnings 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 shares used to compute basic income
per share was 1,142,790 at June 30, 2000, and 1,063,946 at June 30, 1999.
Diluted income per share took into consideration the outstanding stock options.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth below and elsewhere in this document contains
forward-looking statements, which reflect the Company's current views with
respect to future events and financial performance. The words "expects",
"intends", "believes", "anticipates", "likely" and "will" and similar
expressions generally identify forward-looking statements. These forward-
looking statements are subject to certain risks and uncertainties, including,
among others, the risks discussed herein, that could cause actual results and
events to differ materially from historical results or those anticipated in
the forward-looking statements.
General
Dover Investments Corporation (the "Company") engages primarily in
residential real estate development. Westco Community Builders, Inc.,
a California corporation ("WCB"), is primarily responsible for the
construction and the development of real estate.
Real Estate Development
Below is a summary of the Company's major real estate development
activities during the quarter ended June 30, 2000.
Marina Vista
The Company completed development of its Marina Vista project in San
Leandro, California during the quarter ended March 31, 2000.
Glenbriar Estates
The Company, through joint ventures with WCB, continued to develop the
Glenbriar Estates project in Tracy, California. All of the land owned by
the joint ventures is covered by either vesting tentative subdivision
maps or final subdivision maps. The joint ventures are currently building
two product types of homes at Glenbriar Estates, the Glenbrook Subdivision
and the Meadowbrook Subdivision. The market for homes at Glenbriar Estates
remained strong during the second quarter of 2000. Future development in
Tracy is subject to the availability of residential growth allocations issued
by the City of Tracy, which could be negatively affected by the passage of a
citizens initiative during the year 2000, reduced availability of water or
waste water capacity, and the state of the economy generally in the Bay Area.
Higher Priced Homes
In September of 1999, the Company entered into a joint venture with WCB
to develop one higher priced home. The property is located in Atherton,
California, and construction is scheduled for completion in approximately
January 2001.
South Tracy Industrial Park
In 1999 the Company, through a joint venture with WCB, entered into an
agreement to purchase and develop for industrial use approximately fifty
acres of industrial property in the southern part of the City of Tracy.
The South Tracy property currently is zoned industrial. A tentative
subdivision map has been approved by the City of Tracy, and approval of a
final subdivision map is pending. The Company expects that site improvements
will commence in the fourth quarter of 2000 and that development will
continue for several years.
Coram Plaza Shopping Center, Coram, New York
In 1999 a limited liability company formed by the Company and three
other parties entered into an agreement to purchase property, with buildings
and improvements, located in the Coram Plaza Shopping Center, in Coram,
New York. The property is intended to be developed for commercial use.
Liquidity and Capital Resources
During the three months ended June 30, 2000, the Company used liquid
assets primarily to fund expenditures in connection with the Glenbriar
Estates project, the higher priced home, debt service and its general
and administrative expenses. The Company met its funding requirements
primarily from cash reserves and from revenues from home and lot sales.
The Company also obtained construction financing from private sources secured
by the homes under construction.
The Company's primary sources of liquidity in the future will continue
to be cash reserves and revenues generated from the development projects,
and construction financing when appropriate.
At June 30, 2000, the Company had an aggregate outstanding balance of
$6,656,000 under its construction loans. These loans will be repaid from
the proceeds of home and lot sales. The loans bear interest at the rate of
prime plus 0.75% through 1.25% per annum and have various maturity dates.
Results of Operations
For the quarter ended June 30, 2000, the Company had net income of
$1,046,000, compared to $1,562,000 for the same period in 1999.
For the quarter ended June 30, 2000, the Company closed no home sales
at the Marina Vista project, compared to 11 homes for the same period in 1999.
At the Glenbriar Estates project, the Company closed the sale of 25 homes and
25 lots for the period ended June 30, 2000, compared to 43 homes and 43 lots
for the same period in 1999.
Total sales for the quarter ended June 30, 2000 were $11,379,000,
resulting in a gross profit of $2,346,000 and a gross profit margin of 20.62%,
compared to total sales of $18,591,000, resulting in a gross profit of
$3,490,000 and a gross profit margin of 18.77%, for the same period in 1999.
The decrease in gross profit resulted primarily from a decrease in sales of
homes and lots for the period.
Minority interest in joint ventures for the second quarter of 2000 was
$1,293,000, compared to $1,361,000 for the same period in 1999. The decrease
in minority interest is attributable to the sale of fewer homes and lots at
the Glenbriar Estates project.
Selling expenses for the quarter ended June 30, 2000 were $519,000,
which represents 4.56% of revenues for that quarter, compared to $856,000,
which represents 4.60% of revenues for the same period in 1999. The
decrease in selling expenses was primarily due to decreased sales at the
development projects and decreased marketing and related commission expenses.
General and administrative expenses for the quarter ended June 30, 2000
were $271,000, compared to $223,000 for the same period in 1999, an increase
of 21.52%. The increase was primarily due to increased staffing, salary
increases, and increased professional and legal fees.
Interest income for the quarter ended June 30, 2000 was $398,000,
compared to $188,000 for the same period in 1999. The increase is
attributable to higher cash balances, increases in interest rates and
increased interest income from notes receivable.
The Company expects that the development projects will continue to
generate profits. Factors such as interest rates and general economic
conditions influence the prices at which the Company is able to sell homes
and lots and other developed properties.
Year 2000 Disclosure
The Company has taken steps to become year 2000 compliant and has
experienced no problems with the year 2000 issue. The expense to become
Year 2000 compliant had no material effect on the Company's financial
position or results of operation. The Company believes that its subsidiaries
and major suppliers are year 2000 compliant.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposure to market risk for changes in interest rates
relates primarily to the Company's investment in high credit quality
securities maintained with three financial institutions and the Company's
notes payable. The Company's objective in managing its exposure to interest
rate changes is to limit the impact of changes on earnings and cash flow and
to lower its overall borrowing costs. The Company believes the financial
risks associated with these investments and notes are minimal.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 24, 2000, the Company held its annual meeting of
stockholders for the purpose of electing directors, ratifying and
approving an amendment to the Stock Option Plan for Nonemployee
Directors to extend the date of termination of the plan until
September 28, 2004, ratifying the appointment of Grant
Thornton LLP as the Company's independent public accountant
for the year ended December 31, 2000, and considering a stockholder
proposal regarding the hiring of an investment banker and listing
of shares.
All of the Company's nominees for directors were elected as
follows: Arnold Addison, 718,666 votes for, 64,211 votes against
and 45,812 broker non-votes; John Gilbert, 2,922,920 votes for,
123,440 votes against and 92,150 broker non-votes; Lawrence
Weissberg, 2,922,920 votes for, 123,440 against and 92,150 broker
non-votes; and Will C. Wood, 2,922,920 votes for, 123,440 votes
against and 92,150 broker non-votes. The proposal to ratify and
approve the amendment to the Stock Option Plan for Nonemployee
Directors to extend the date of termination of the plan until
September 28, 2004, was approved with 3,609,850 votes for, 200,049
votes against, 19,338 votes abstaining and 137,962 broker non-votes.
The proposal to ratify the appointment of Grant Thornton LLP as the
Company's independent public accountant for the year ended
December 31, 2000, was approved with 3,664,532 votes for, 5,292
votes against, 159,413 votes abstaining and 137,962 broker
non-votes. The stockholder proposal regarding the hiring of an
investment banker and listing of shares was defeated with 285,403
votes for, 2,818,696 votes against, 119,365 votes abstaining
and 743,735 broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits listed below are filed with or incorporated into this
report.
Exhibit No. Description
10.20 Stock Option Plan for Nonemployee Directors as
amended and restated. (1)
27.1 Financial Data Schedule for the Quarter Ended
June 30, 2000.
(b) Reports on Form 8-K.
None.
_________
(1) Incorporated by reference to Exhibit A to the Company's
Proxy Statement for its 2000 Annual Meeting of
Stockholders.
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: August 7, 2000 By: /s/Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board, President
and Chief Executive Officer
EXHIBIT INDEX
Exhibit Number Description
10.20 Stock Option Plan for Nonemployee Directors, as amended
and restated. (1)
27.1 Financial Data Schedule for the Quarter Ended
June 30, 2000.
_______________
(1) Incorporated by reference to Exhibit A to the
Company's Proxy Statement for its 2000 Annual
Meeting of Stockholders.
