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 September 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 October 25, 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 September 30, 2000 and
December 31, 1999. . . . . . . . . . . . . . . . . . . . . . . .3
Consolidated Statements of Earnings for the Three Months and
Nine Months Ended September 30, 2000 and 1999 . . . . . . . . ..4
Consolidated Statement of Stockholders' Equity for the
Nine Months Ended September 30, 2000 . . . . . . . . . . . . . .5
Consolidated Statements of Cash Flows for the
Nine Months Ended September 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 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)
09-30-00 12-31-99
ASSETS
Cash and Cash Equivalents $17,127 $15,449
Restricted Cash 424 409
Homes Held for Sale 1,847 1,753
Property Held for Development 16,721 21,632
Notes Receivable 4,656 3,540
Other Assets 1,054 1,335
Total Assets $41,829 $44,118
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued Interest and Other Liabilities 233 3,824
Notes Payable 4,095 8,299
Minority Interest in Joint Venture 1,599 2,059
Total Liabilities 5,927 14,182
Stockholders' Equity
Class A Common Stock, Par Value $.01
Per Share -- Authorized 2,000,000 Shares;
Issued 828,939 Shares at 9/30/00
and 827,180 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 9/30/00
and 319,920 at 12/31/99 3 3
Additional Paid-In Capital 24,533 22,963
Retained Earnings from January 1, 1993 11,383 6,987
Treasury Stock (0 at 9/30/00 and 12/31/99
of Class A Shares and 4,560 of Class B
Shares at 9/30/00 and 12/31/99 (25) (25)
Total Stockholders' Equity 35,902 29,936
Total Liabilities and Stockholders' Equity $41,829 $44,118
See accompanying Notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Home Sales $12,513 $20,528 $34,857 $53,491
Lot Sales 1,102 1,280 5,618 3,875
Total Sales 13,615 21,808 40,475 57,366
Cost of Home Sales 9,071 15,474 24,780 40,173
Cost of Lot Sales 412 998 2,743 3,023
Total Cost of Sales 9,483 16,472 27,523 43,196
Minority Interest in Joint Venture 1,394 1,211 4,071 3,593
GROSS PROFIT 2,738 4,125 8,881 10,577
Selling Expenses 605 1,406 1,988 2,968
General and Administrative Expenses 443 213 1,055 652
1,048 1,619 3,043 3,620
Operating Income 1,690 2,506 5,838 6,957
Other Income
Interest 443 198 1,179 544
Fees 61 51 72 51
Total Other Income 504 249 1,251 595
Income before Income Taxes 2,194 2,755 7,089 7,552
Provision for Income Taxes 776 1,072 2,693 2,920
NET INCOME $1,418 $1,683 $4,396 $4,632
Basic Earnings Per Share $ 1.24 $ 1.55 $ 3.85 $ 4.28
Diluted Earnings Per Share $ 1.21 $ 1.52 $ 3.76 $ 4.18
Weighted Average Number of
Shares Outstanding:
Basic: 1,142,790 1,082,933 1,142,639 1,082,933
Diluted: 1,170,234 1,107,907 1,170,341 1,107,907
See accompanying Notes to Consolidated Financial Statements.
<TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Nine Months Ended September 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 - - 1,570 - - 1,570
Net Income - - - 4,396 - 4,396
Balance at September 30, 2000 $ 8 $ 3 $24,533 $11,383 $ (25) $35,902
<FN>
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
DOVER INVESTMENTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
2000 1999
Cash Flows from Operating Activities:
Net Income $4,396 $4,632
Reconciliation of Net Income to Net Cash
Provided by Operating Activities:
Income Accruing to Minority Interest 2,012 3,373
Tax Benefit of Utilizing Prequasi-
reorganization Net Operating Losses 1,570 1,355
Changes in Assets and Liabilities:
Restricted Cash (15) (11)
Property Held for Development 4,911 6,451
Homes Held for Sale (94) -
Other Assets 281 35
Notes Receivable (1,116) (968)
Accrued Interest and Other Liabilities, Net (3,591) 735
Net Cash Provided by Operating Activities 8,354 15,602
Cash Flows from Financing Activities:
Payment to Minority Interest (2,472) (2,105)
Proceeds from Notes Payable 10,904 7,596
Payment of Notes Payable (15,108) (16,526)
Issuance of Treasury Stock - 327
Net Cash Used in Financing Activities (6,676) (10,708)
Net Increase in Cash and Cash Equivalents 1,678 4,894
Cash and Cash Equivalents at Beginning of Period 15,449 8,622
Cash and Cash Equivalents at End of Period $17,127 $13,516
Supplemental Cash Flow Activity:
Cash Paid for Interest $49 $119
Cash Paid for Taxes $1,593 $1,214
See accompanying Notes to Consolidated Financial Statements.
DOVER INVESTMENTS CORPORATION
Notes to Consolidated Financial Statements
September 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
nine months ended September 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 1,142,639 at September 30, 2000, and 1,082,933 at
September 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 September 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 third 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
July 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 construction of the first
two industrial buildings (approximately 30,000 sq. ft. each) will commence
in the first quarter of 2001. Development and rental of the industrial
park is expected to continue for several years.
Other Properties
The company in conjunction with WCB has entered into contracts to
purchase two additional properties in San Leandro (19 lots) and Novato
(20 lots). Both purchase contracts are conditional upon receipt of
entitlements prior to close of escrow. Close of escrow is not expected
to occur prior to year end.
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 September 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 September 30, 2000, the Company had an aggregate outstanding balance
of $4,095,000 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 September 30, 2000, the Company had net income of
$1,418,000, compared to $1,683,000 for the same period in 1999.
For the quarter ended September 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
41 homes and 41 lots for the quarter ended September 30, 2000, compared to
37 homes and 37 lots for the same period in 1999.
Total sales for the quarter ended September 30, 2000 were $13,615,000,
resulting in a gross profit of $2,738,000 and a gross profit margin of
20.11%, compared to total sales of $21,808,000, resulting in a gross
profit of $4,125,000 and a gross profit margin of 18.92%, for the same
period in 1999. The increase in gross profit resulted primarily from an
increase in sales prices and the strong California real estate market in
general. The decrease in sales resulted primarily from no home sales at
the Marina Vista project and no sales of higher priced homes for the period.
Minority interest in joint ventures for the third quarter of 2000
was $1,394,000, compared to $1,211,000 for the same period in 1999. The
increase in minority interest is attributable to the sale of a larger
number of homes and lots at the Glenbriar Estates project.
Selling expenses for the quarter ended September 30, 2000 were $605,000,
which represents 4.44% of revenues for that quarter, compared to $1,406,000,
which represents 6.45% 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
September 30, 2000 were $443,000, compared to $213,000 for the same period
in 1999, an increase of 107.98%. The increase was primarily due to
increased staffing, salary increases, increased professional, legal and
printing fees, and the initial funding of the Company's qualified
retirement plan.
Interest income for the quarter ended September 30, 2000 was $443,000,
compared to $198,000 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.
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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits listed below are filed with into this report.
Exhibit No. Description
27.1 Financial Data Schedule for the Quarter Ended
September 30, 2000.
(b) Reports on Form 8-K.
None.
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: November 7, 2000 By: /s/Lawrence Weissberg
Lawrence Weissberg
Chairman of the Board, President
and Chief Executive Officer
EXHIBIT INDEX
Exhibit Number Description
27.1 Financial Data Schedule for the Quarter Ended
September 30, 2000.
