<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 24, 1996
MAJOR REALTY CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
0-1748 590898509
- ------------------------ --------------------------------
(Commission File Number) (IRS Employer Identification No.)
5728 Major Boulevard, Suite 306, Orlando, Florida 32819
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (407) 351-1111
--------------
<PAGE> 2
ITEM 5. OTHER EVENTS
Restatement of Financial Statements
- -----------------------------------
As discussed in the Registrant's Annual Report on Form 10-KSB for the
year ended December 31, 1995, on March 27, 1996, Cracker Barrel Old Country
Store, Inc. ("Cracker Barrel"), formally notified the Registrant of its intent
to default its mortgage note held by the Registrant and reconvey the property
securing the note to the Registrant. Consequently, the Registrant has restated
its financial statements for the quarter and nine months ended September 30,
1995, to record the sale of only 4.0 acres of land for $2,700,000 during 1995
and include the cost of the 6.36 acres of land to be reconveyed to the
Registrant by Cracker Barrel as "Land held for sale or development" at
September 30, 1995. Restated financial statements for the quarter and nine
months ended September 30, 1995, are attached hereto as Exhibit 99.1, including
Consolidated Balance Sheets at September 30, 1995 and December 31, 1994,
Consolidated Statements of Operations for the three and nine months ended
September 30, 1995 and 1994, Consolidated Statements of Cash Flows for the nine
months ended September 30, 1995 and 1994, and Notes to Consolidated Financial
Statements.
Director Resignation
- --------------------
Mr. Kenneth M. Miller resigned from the Board of Directors of the
Registrant effective April 24, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------ -------------------
<S> <C>
99.1 Consolidated Balance Sheets at September 30, 1995 and December 31, 1994, Consolidated
Statements of Operations for the three and nine months ended September 30, 1995 and
1994, Consolidated Statements of Cash Flows for the nine months ended September 30,
1995 and 1994, and Notes to Consolidated Financial Statements.
27 Financial Data Schedule (for SEC use only)
</TABLE>
-2-
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Major Realty Corporation has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MAJOR REALTY CORPORATION
By: /s/ David L. Treadwell
--------------------------
David L. Treadwell
Chairman and CEO
May 14, 1996
- ---------------------------
Date
-3-
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Pagination By
Sequential
Exhibit Numbering
Number Exhibit Description System
------ ------------------- -------
<S> <C> <C>
99.1 Consolidated Balance Sheets at September 30, 1995 and December 31, 5
1994, Consolidated Statements of Operations for the three and nine
months ended September 30, 1995 and 1994, Consolidated Statements
of Cash Flows for the nine months ended September 30, 1995 and
1994, and Notes to Consolidated Financial Statements.
27 Financial Data Schedule (for SEC use only)
</TABLE>
-4-
<PAGE> 1
EXHIBIT 99.1
MAJOR REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1995 and December 31, 1994
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ ------------
ASSETS (unaudited) (audited)
<S> <C> <C>
Cash and cash equivalents $ 765 $ 244
Restricted cash 252 36
Mortgage note receivable 4,060 2,750
Land held for sale or development 5,017 7,038
Land under lease 171 171
Other assets 646 513
--------- ---------
$ 10,911 $ 10,752
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable - trade $ 84 $ 101
Accrued expenses 1,060 1,311
Deferred income - 50
Mortgage notes payable 5,463 8,038
Deferred income taxes 104 149
--------- ---------
6,711 9,649
--------- ---------
Stockholders' equity:
Series A Junior participating preferred stock -
$1.00 par value; authorized, 80,000 shares,
none outstanding - -
Common stock - $.01 par value; authorized,
12,000,000 shares; issued and outstanding,
6,893,378 shares 69 69
Capital in excess of par value 7,821 7,822
Accumulated deficit (3,690) (6,788)
--------- ---------
Total stockholders' equity 4,200 1,103
--------- ---------
TOTAL $ 10,911 $ 10,752
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 2
MAJOR REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands; except per share data)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
------------- ------------
MONTHS ENDED: MONTHS ENDED:
------------ ------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Sales of real estate $ 4,800 $ - $ 6,810 $ 3,618
Lease income 38 40 115 135
Interest income 100 68 235 201
Other income 3 11 11 20
-------- --------- -------- --------
Total revenues 4,941 119 7,171 3,974
-------- --------- -------- --------
COSTS AND EXPENSES:
Cost of real estate sold:
Improved and unimproved land 1,552 11 2,113 771
Commissions & other expenses 357 - 437 266
Selling, general and administrative 245 197 721 664
Interest cost 200 218 802 631
-------- --------- -------- --------
Total costs and expenses 2,354 426 4,073 2,332
-------- --------- -------- --------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES 2,587 (307) 3,098 1,642
PROVISION FOR INCOME TAXES - - - -
-------- --------- -------- --------
NET INCOME (LOSS) $ 2,587 $ (307) $ 3,098 $ 1,642
======== ========= ======== ========
NET INCOME (LOSS) PER COMMON SHARE $ .38 $ (.04) $ .45 $ .24
======== ========= ======== ========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 6,893 6,893 6,893 6,893
======== ========= ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 3
MAJOR REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1995 and 1994
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,098 $ 1,642
-------- --------
Adjustments to reconcile net income (loss) to net
cash used for operating activities:
Depreciation and amortization 118 71
Net gain on sales of real estate (4,579) (2,592)
Increase in other assets and other receivables (254) (247)
(Decrease) increase in accounts payable
and accrued liabilities (316) 214
Change in deferred income taxes (45) (305)
-------- --------
Total adjustments (5,076) (2,859)
-------- --------
Net cash used for operating activities (1,978) (1,217)
-------- --------
Cash flows from investing activities:
Additions to land held for sale or development (92) (255)
Proceeds from the sale of real estate, net 5,383 3,238
-------- --------
Net cash provided by
investing activities 5,291 2,983
-------- --------
Cash flows from financing activities:
Proceeds from mortgage notes payable 1,707 -
Principal payments of mortgage
notes payable (4,283) (1,399)
Decrease in land sales deposits - (100)
Increase in restricted cash (216) (251)
-------- --------
Net cash used for
financing activities (2,792) (1,750)
-------- --------
Net (decrease) increase in cash and cash equivalents 521 16
Cash and cash equivalents at beginning
of period 244 297
-------- --------
Cash and cash equivalents at end of period $ 765 $ 313
======== ========
</TABLE>
See Note 4 for non-cash activities.
See Notes to Consolidated Financial Statements
<PAGE> 4
MAJOR REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 - Consolidated Financial Statements
The interim consolidated financial statements for Major Realty Corporation and
its subsidiaries (the "Company") are unaudited and should be read in
conjunction with the financial statements and notes thereto contained in the
Company's Form 10-KSB Annual Report for the year ended December 31, 1994.
In the opinion of management, all adjustments (which include only normal
recurring adjustments except as otherwise disclosed) necessary to present
fairly the financial position, results of operations and cash flows for the
interim periods reported herein have been made. Interim financial statements
are not necessarily indicative of the results which may be reported for the
year ended December 31, 1995.
Note 2 - Per Share Data
Per share data is computed by dividing net income (loss) by the
weighted average number of shares of common stock and common stock equivalents
outstanding during each period. Common stock equivalents include shares
issuable on the exercise of stock options net of shares assumed to have been
purchased from the proceeds. For the nine months ended September 30, 1995 and
1994, common stock equivalents have been excluded from the computation since
their effect would be antidilutive.
Note 3 - Land Held for Sale or Development
During February, 1994 the Company sold 4.84 acres of commercial land
located at the intersection of Kirkman Road and Vineland Road near the entrance
to Universal Studios Florida to Bara Investments for $3,618,000. The sales
transaction consisted of $2,125,000 cash plus a 30-day $1,493,000 mortgage
which was paid in full during March, 1994. The net proceeds from the sale were
used for company operations and for the payment of company debt.
During October, 1994, the Company signed a $240,000 contract for the
sale of 30,000 square feet of vacant land near the corner of Conroy Road and
Vineland Road in Orlando, Florida. The contract was canceled in September
1995. The Buyer was unable to obtain financing.
(Continued)
<PAGE> 5
MAJOR REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 3 - Land Held for Sale or Development (continued)
During November, 1994, the Company signed a $2,100,000 contract for the
sale of approximately five acres of vacant land at the northwest intersection
of Major Boulevard and Vineland Road in Orlando, Florida. The Buyer made a
$50,000 deposit which became non-refundable during December, 1994, and the
transaction closed on May 5, 1995. Additional cash in the amount of $650,000
was received at closing and was used to retire company debt and for operations.
The balance of the purchase price, $1,310,000, was represented by a promissory
note originally due in May, 1996. The note was satisfied at a discount on
October 18, 1995 for $1,234,000.
During November, 1994, the Company signed a $925,000 contract for the
sale of 2.26 acres of commercial land located at the northwest corner of the
intersection of Conroy Road and Vineland Road in Orlando. The contract
subsequently was modified to provide for the sale of 1.38 acres of land for a
purchase price of $750,000. The sale closed on September 8, 1995. The sales
price was paid in cash at closing. Proceeds from the sale were used to retire
company debt and for company operations.
During December, 1994, the Company signed a contract for $2,040,000,
subsequently adjusted to $1,800,000, for approximately 55 acres gross (17 acres
net) of multi-family land located on Vineland Road at the Florida Turnpike in
Orlando. The contract was cancelled in April, 1995 when the Buyer informed
the Company that it was unable to satisfy the conventional financing
contingency.
During January, 1995, the Company signed a $6,280,000 contract for sale
of 10.36 acres of commercial land located at the northeast intersection of
Interstate 4 and Kirkman Road in Orlando. The Buyer made an additional escrow
deposit on April 30, 1995 and the six months "free look" period expired on July
31, 1995. The Company received $3,640,000 cash at closing on September 1,
1995, plus a $3,580,000 non-recourse mortgage note (the "Mortgage Note").
Approximately $2,000,000 of the net proceeds was used to repay company debt and
the remainder has been and will be used for company operations.
(Continued)
<PAGE> 6
MAJOR REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 3 - Land Held for Sale or Development (continued)
The Mortgage Note provided for two equal payments, without interest,
one in April 1996 and the other in April 1997. On March 27, 1996, the obligor
under the Mortgage Note formally notified the Company of its intent to default
on the April 1996 payment and reconvey the property securing the Mortgage Note
to the Company. Consequently, the Company recorded the sale of only 4.0 acres
of land for $2,700,000 in the third quarter of 1995 and included the cost of
the remaining 6.36 acres of land subject to the sale as "Land held for sale or
development" at September 30, 1995.
During April, 1995, the Company signed a $1,000,000 contract for sale
of 12.95 acres of multi-family land located at the northeast corner of Cason
Cove Road and Mission Road in Orlando. The transaction was closed on August
18, 1995, and the sales price was paid in cash at closing. Proceeds from the
sale were used to retire company debt and for company operations.
During June, 1995, the Company executed an agreement for the purchase
of 1.06 acres located at the southeast corner of Vineland Road and Major
Boulevard in Orlando for $350,000. The transaction closed on September 25,
1995, and the sales price was paid in cash at closing.
Note 4 - Related Party Transactions
On March 25, 1992, the Company entered into a loan agreement (the "Loan
Agreement") with Valassis Enterprises, L.P. ("Enterprises"), a Delaware limited
partnership controlled by George F. Valassis, a 9.7% shareholder, pursuant to
which Enterprises made a loan in the amount of $3 million, a substantial
portion of which was used by the Company to pay 1991 real estate taxes due on
March 31, 1992. During 1994, the Company made payments on this obligation
aggregating $665,000 including accrued interest of $63,000. Charlotte Drake
Apartments, Inc. ("Apartments"), a Maryland corporation and affiliate of Allied
Domecq Pension Funds, a 6.46% shareholder of the Company, participated in
Enterprises' loan to the Company pursuant to arrangements between it and
Enterprises. There was no contractual relationship between the Company and
Apartments.
(Continued)
<PAGE> 7
MAJOR REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 4 - Related Party Transactions continued:
On September 1, 1990, the Company entered into a Management and
Advisory Agreement (the "Agreement") with The Major Group, Inc. ("Major Group")
at that time a 51% owned subsidiary of Acceptance Insurance Companies Inc.
("Acceptance"), f/k/a Stoneridge Resources, Inc., the Company's principal
shareholder, pursuant to which Major Group provided real estate advisory
services, as well as day-to-day managerial and administrative services and
personnel, to the Company.
The Company entered into an agreement for settlement and termination of
the Agreement with Major Group in March, 1992 pursuant to which Major Group
accepted two promissory notes from the Company in the aggregate amount of
$1,515,000 ("Notes"). Interest costs on the Notes were $17,000 for 1994.
During 1994, the Company made payments aggregating $335,000 on the Notes
including accrued interest of $25,000. On September 25, 1992, Major Group
assigned the Notes to Acceptance in connection with the settlement of certain
mortgage notes payable to Acceptance by Major Group and the merger of Major
Group and a wholly-owned subsidiary of Acceptance.
The Company's obligations to Enterprises and Acceptance, as assignee of
Major Group, were collateralized by a second mortgage on the Core Area
Commercial property, the International/Republic Drive Area property, and the
Cypress Creek and Lakes Residential Area property, located in Orlando, Florida
(collectively the "Property"). Acceptance also held a third mortgage on the
Property.
During February, 1995, the Company entered into a loan arrangement with
Acceptance whereby Acceptance acquired the Company's promissory note and
mortgage to Enterprises of $282,000, including accrued interest, and provided
additional funds which were used to repay two promissory notes in the aggregate
amount of $103,000, including accrued interest, held by Acceptance, fund the
$770,000 interest reserve required by PNC Bank, Kentucky Inc. ("PNC"), the
Company's primary lender, pay real estate taxes in the amount of $327,000, pay
loan closing and extension costs of $75,000 and provide working capital of
approximately $43,000. The aggregate indebtedness to Acceptance in connection
with these transactions was $1,600,000, represented by a single promissory note
due in January, 1996, which provided for interest, at the rate of twelve
percent (12%) per annum, to accrue monthly and be paid at maturity. Subject to
the Company's right to repay the note, the outstanding principal amount of the
note (or any portion thereof), plus accrued but unpaid interest, was
convertible into the Company's common stock at the option of Acceptance at
(Continued)
<PAGE> 8
MAJOR REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 4 - Related Party Transactions continued:
any time upon 20 days prior notice, based upon a price per share equal to the
average closing price of the common stock during the 30-day period immediately
preceding the date of Acceptance's notice of its election to convert. The note
to Acceptance was collateralized by a second mortgage on substantially all of
the Company's property.
During October, 1995, Acceptance acquired from PNC a note made by the
Company with an outstanding balance of approximately $4,316,831, the first
mortgage securing the note and other associated loan documents. The
indebtedness to PNC was due on January 31, 1996. On October 18, 1995, the
Company entered into a debt restructuring agreement with Acceptance, for the
Company's $5,064,144 debt to Acceptance ($747,313 due from the February 1995
loan plus the PNC Note).
The interest rate on the restructured loan is prime plus 1.5%, and
interest is payable quarterly in arrears. The maturity of the loan, which
prior to the restructuring was January 31, 1996, was extended to May 1, 1998,
unless there is a change in control prior to such time, in which event the
maturity of the loan will be accelerated. The Company's indebtedness to
Acceptance is secured by a first mortgage on substantially all of the Company's
property, including certain notes and mortgages payable to the Company from
third parties. The restructured loan extended the maturity and improved the
Company's cash flow through the elimination of the PNC interest reserve.
On March 26, 1992, the Board of Directors elected David L. Treadwell to
the Board of Directors and appointed him as Chairman of the Board and Chief
Executive Officer of the Company. The Company entered into an agreement (the
"Employee Lease Agreement") with Heritage Network, Incorporated ("Heritage"),
Mr. Treadwell's primary employer, pursuant to which the Company agreed to pay
Heritage $100,000 per year for Mr. Treadwell's services as Chief Executive
Officer ("the Annual Fee"). The Employee Lease Agreement was subsequently
amended to defer 75% of the Annual Fee incurred from April 1, 1994 through
March 31, 1995, and Heritage has agreed informally to continue the deferral
until December, 1995. Interest accrues on the deferred amount at 12% per
annum, beginning December 31, 1994. At September 30, 1995, the Company owed
Heritage $120,400 under the Employee Lease Agreement, including $7,900 in
interest. In addition, the Company reimburses Mr. Treadwell for all reasonable
travel expenses including transportation to and from his home city of
Southgate, Michigan. The Company has also granted Mr. Treadwell options to
purchase 200,000 shares of common stock.
(Continued)
<PAGE> 9
MAJOR REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 5 - Other
During October, 1995, the Company settled litigation relating to a
condominium project in Orlando, Florida, The Townes of Southgate, developed by
Major Development Company ("MDC"), a wholly-owned, now dissolved, subsidiary of
the Company.
The condominium association sought damages in excess of $1.5 million
relating to defects in the construction of the project, together with interest,
costs and attorneys fees, against the Company, MDC, and the individual members
of MDC's last board of directors. Under the terms of the settlement agreement
approved by the Circuit Court for Orange County, Florida, the Company agreed,
without acknowledging any liability, to make installment payments totalling
$596,000 to the plaintiff. The Company previously had accrued reserves for a
substantial portion of the settlement amount, and the net financial impact on
the Company is expected to be less than $100,000.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,017
<SECURITIES> 0
<RECEIVABLES> 4,060
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,252
<PP&E> 5,084
<DEPRECIATION> 58
<TOTAL-ASSETS> 10,911
<CURRENT-LIABILITIES> 6,711
<BONDS> 0
0
0
<COMMON> 69
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10,911
<SALES> 6,810
<TOTAL-REVENUES> 7,171
<CGS> 2,113
<TOTAL-COSTS> 437
<OTHER-EXPENSES> 721
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 802
<INCOME-PRETAX> 3,098
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,098
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,098
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
</TABLE>
