<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-K
----------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED APRIL 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-5891
------------------
MHI GROUP, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-1214129
(State of other jurisdiction of (I.R.S. employer
incorporation of organization) identification No.)
3100 Capital Circle, NE 32308-3760
Tallahassee, Florida (Zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code: 904/385-8883
--------------------
SECURITIES REGISTER PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
Common Stock ($.40 par value) New York Stock Exchange
Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not 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-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant on June 20, 1995 is $50,546,486, based upon a closing market price
of $8.125 a share of common stock as reported on the New York Stock
Exchange -- Composite Transactions Tape.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
----- -----
The number of shares of the registrant's common stock outstanding as of June
20, 1995 was 6,271,126 (excluding treasury shares).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 1995 Annual Report to shareholders (Parts I and II)
Portions of the Registrant's Proxy Statement in connection with its 1995 Annual
Meeting of Shareholders (Part III)
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Page 1 of 65
Index to Exhibits starts on page 9
<PAGE> 2
PART I
ITEM 1. BUSINESS
THE COMPANY
MHI Group, Inc. (together with its subsidiaries, the "Company") was
incorporated in Florida in 1968, and since 1987, has been engaged in the
ownership and operation of funeral homes, cemeteries and crematories.
At April 30, 1995 the Company operated 16 funeral homes, five cemeteries and
four crematories in the States of Florida and Colorado and are functionally
defined by six regions or clusters. The Company entered the death care products
and services business to capitalize on opportunities for consolidation in a
highly fragmented industry, favorable demographic trends and historically
stable business volumes and profitability of established operations in the
industry. The Company believes it is a leader in the industry trend toward
sales of prearranged death care products and services and has become a
significant provider of funeral and cemetery products and services in the
United States.
The Company has grown primarily through acquisitions and is focused upon
expanding through further acquisitions. In fiscal year 1995, the Company
acquired four funeral homes, two crematories and one cemetery. For information
regarding acquisitions of funeral home and cemetery operations, see Note 4 to
the Notes to Consolidated Financial Statements.
OPERATIONS
Operations include the Company's funeral homes, crematories, cemeteries and
related businesses.
The Company's funeral homes offer a complete range of services including family
consultation, the planning and arrangement of funeral services, the sale of
caskets and related products, the removal and preparation of remains, the use
of funeral home facilities for visitation and worship, the preparation of death
certificates, transportation services and after-care services, such as support
groups and self-help information.
In addition to traditional services, all of the Company's funeral homes offer
cremation services. Consistent with the Company's clustering strategy, its four
cremation facilities service five of the Company's six market areas. The
Company's sixth operation uses independent cremation facilities located in its
market. In addition to supporting its own operations, the Company also performs
cremation services for third-party operations. Cremations are often combined
with traditional funeral services and various types of memorialization, which
are sold in packages prior to or at the time of need.
The Company's cemetery products and services include cemetery property (grave
sites), lawn crypts, mausoleum spaces, internment niches, caskets, related
vaults, markers, memorials and interment services. Cemetery operations generate
revenues through pre-need and at-need sales, fees for interment services,
marker and memorial installations, interest income from installment sales
contracts and investment income from perpetual care trust funds and merchandise
and service trust funds. A portion of the proceeds from certain cemetery sales
is required by law to be paid into trust funds. Earning of perpetual care trust
funds are used to maintain the cemeteries.
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During the fiscal year ended April 30, 1995, the Broward Operations accounted
for approximately 75% of the Company's burials, 38% of the Company's funerals,
56% of the Company's revenues and 89% of the Company's earnings before
interest, taxes, depreciation and amortization.
A major focus of the Company's operations is the sale of prearranged funeral
and cemetery products and services. The sale of a prearranged funeral service
is a contractual right to a funeral service and other related services to be
performed in the future. Prearranged funeral services are usually paid on an
installment basis. The funds collected from prearranged funeral contracts are
generally deposited into trust funds. Funds placed in trust for prearranged
funerals may not be withdrawn until death or cancellation by the customer. The
backlog of approximately 29,475 pre-need funeral services sold but not yet
delivered at April 30, 1995 totaled $33,168,000 in deferred revenue.
Prearranged funerals as a percentage of total funerals performed for the year
ended April 30, 1995 were 44%.
Pre-need cemetery sales typically involve an installment sale contract covering
an interment right in a Company cemetery and frequently includes caskets,
related vaults, markers, and other merchandise or services. In the year ended
April 30, 1995, approximately 90% of the Company's cemetery sales were on a
pre-need basis. All or a portion of the proceeds from the sale of pre-need
cemetery merchandise may be required to be paid into trust funds. See Note 1 of
Notes to Consolidated Financial Statements for additional information regarding
revenue recognition.
Each funeral home and cemetery operation is managed by a local manager and each
of the Company's funeral home and cemetery properties operates as a distinct
profit center with annual operating budgets. Local managers have substantial
autonomy with respect to the operation of the funeral home and cemetery and the
manner in which services are conducted. The Company's 27 members of management
and administrative staff, headquartered in Tallahassee, Florida, provide
support functions to each of the Company's operations. These services include
overall corporate planning and supervision, maintenance and monitoring of
service quality, acquisition analysis, marketing and pricing strategy and
coordination, as well as accounting services, investment trust management,
budgeting, auditing, personnel and various other services.
COMPETITION
All of the Company's funeral home and cemetery operations are subject to
extensive competition from both separately operated and combined local funeral
homes and cemeteries in their respective markets. Market share for funeral
homes is largely determined by reputation, location, tradition and heritage
although the quality and condition of facilities and services, pricing and
advertising also are important factors. The sale of pre-arranged funeral
services has also become an increasingly important marketing tool for funeral
homes to capture and influence market share. While the Company believes that
cemetery and funeral home combinations such as the Broward Operations and the
Pasco Operations have important competitive advantages, the Company believes
that the high regard in which its operations are held in the communities in
which they operate has been a significant factor in establishing and
maintaining the favorable market positions of each operation.
Cemeteries receive the majority of their revenues from pre-need sales and, as
such, pre-need sales efforts are important to obtain and maintain market share.
Reputation, location, tradition, heritage and quality of maintenance of grounds
also are important competitive factors.
A significant area of competition for the Company is and will be acquisitions.
There are several major publicly and privately owned companies that are
aggressive buyers of funeral homes and cemeteries. Certain of those companies
are larger and have greater financial resources than the Company. The Company
believes that because of the large portion of the funeral and cemetery
3
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industry that remains controlled by local family-owned firms, opportunities for
growth through acquisitions continue to be significant. However, because of the
competition for such acquisitions, prices paid for funeral homes and cemeteries
have increased in recent years and may continue to do so. There can be no
assurance that the Company will be able to make acquisitions on satisfactory
terms and conditions.
In June of 1995, the Company engaged a financial advisor to provide investment
banking services to the Company, including analysis of possible strategic
investments in, or acquisitions of, the Company. While Company officials from
time to time have discussed the possibility of such transactions with other
industry participants, and expect to continue to do so, no such discussions
have thus far resulted in any agreements or agreements in principle, nor has
the Company altered its longstanding principal strategy of independence and
growth through acquisitions.
NET OPERATING LOSS CARRYFORWARD
As a result of losses incurred in connection with its operations prior to its
entry into the funeral home and cemetery industry, the Company, as of April 30,
1995, had approximately $3,211,000 of net operating loss carryforwards for
federal income tax purposes, $3,122,000 of which will expire over a period
ending in 2002. Such losses may be applied to reduce the Company's future
income tax liability. Under current tax law, a corporation's ability to carry
forward its net operating loss following an "ownership change" is limited on an
annual basis to an amount equal to the product of the fair market value of the
corporation's outstanding stock (including qualifying preferred stock)
immediately before the ownership change and the long-term tax-exempt interest
rate, subject to certain adjustments for built-in gains of the corporation. The
risk of change in a company's stock ownership is always present and may result
from market purchases that are beyond the control of the company. As described
in Note 14 of Notes to Consolidated Financial Statements, as of April 30, 1995,
the risk of materially impairing the net operating loss carryforward has been
significantly reduced.
EMPLOYEES
As of April 30, 1995, the Company employed approximately 200 full-time persons,
and 40 part time persons. Of these employees, approximately 78 persons are
employed at the Broward Operations. As of April 30, 1995, there were 27
employees located at the Company's executive offices in Tallahassee, Florida,
and all other employees are located in the Company's respective operating
units. The Company has no union contracts and believes that its relationship
with its employees is generally good.
ITEM 2. PROPERTIES
The Company's executive offices are located at 3100 Capital Circle, NE,
Tallahassee, Florida 32308, where the Company leases approximately 8,375 feet
of office space. The term of the lease is for ten years ending in June 2002
with the Company having an option to renew the lease for two additional five
year terms. Rent approximated $80,000 in fiscal year 1995. The building is
leased from the Company's funeral service trust fund. See Note 17 to Notes to
Consolidated Financial Statements.
The Company's dedicated cemetery properties located within the states of
Florida and Colorado consist of approximately 151 acres, of which 83 acres have
been developed.
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In addition to its cemetery property, the Company owns 16 funeral chapels and
administrative offices, four crematories and leases one funeral chapel and
three sales offices. The Company considers its properties to be in excellent
condition and adequate to satisfy business needs. The Company operated
approximately 51 vehicles, all of which were owned at April 30, 1995.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any material litigation nor, to
management's knowledge, is any material litigation currently threatened against
the Company, other than routine litigation arising in the ordinary course of
business, most of which is expected to be covered by liability insurance. The
Company carries insurance with coverages and coverage limits that it believes
to be customary in the funeral home and cemetery industries. Although there can
be no assurance that such insurance is sufficient to protect the Company
against all contingencies, the Company believes that its insurance protection
is reasonable in view of the nature and scope of the Company's operations.
CHAPTER 11 REORGANIZATION
On December 3, 1984, the Company filed a petition for reorganization under
provisions of Chapter 11 of the Bankruptcy Code. On April 15, 1986, the Court
confirmed the Company's Plan of Reorganization which was approved by all
classes of creditors and shareholders. However, the Court retained jurisdiction
to take appropriate actions until all distributions had been made pursuant to
the Plan and a final order terminating the Company's case had been entered.
During fiscal year 1995, the Company extinguished all claims and the final
decree was entered on March 16, 1995. See Note 11 of Notes to Consolidated
Financial Statements for further information.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth
quarter ended April 30, 1995.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
Certain information required by this Item 5 is contained on Page 22 of the
Company's 1995 Annual Report to Shareholders and is hereby incorporated herein
by reference.
The Company's common stock is listed on the New York and Pacific Stock
Exchanges.
As of June 26, 1995, there were approximately 3,386 holders of record of the
Company's common stock.
There were no cash dividends paid on the Company's common stock for fiscal
years ended April 30, 1995 or 1994. Significant restrictions apply to the
Company's ability to pay such dividends. See Note 12 of Notes to Consolidated
Financial Statements.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data on Page 4 of the Company's 1995 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this Item 7 is contained on Pages 5 to 8 of the
Company's 1995 Annual Report to Shareholders and is hereby incorporated herein
by this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements included on Pages 9 to 21 of the
Company's 1995 Annual Report to Shareholders is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information called for by Part III (Items 10, 11, 12 and 13) has been omitted
as the Company intends to file with the Securities and Exchange Commission (the
"Commission") not later than 120 days after the close of its fiscal year, a
definitive Proxy Statement pursuant to General Instruction G of Form 10-K under
the Securities Exchange Act of 1934. Such information will be set forth in such
Proxy Statement under caption "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT," "ELECTION OF DIRECTORS," "EXECUTIVE COMPENSATION,"
"COMPENSATION OF DIRECTORS," "EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS," "COMPENSATION AND STOCK OPTION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION" and "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS," and is incorporated herein by reference thereto.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1)-(2) Financial Statements and Schedules:
The financial statements and schedules listed in the accompanying
Index to Consolidated Financial Statements at Page F-1 are filed as
part of this report.
(3) Exhibits:
The Exhibits listed on the accompanying Index to Exhibits at Pages E-1
through E-3 are filed as part of this report.
(b) Reports on Form 8-K:
(1) The Company did not file a Form 8-K in the fourth quarter of
1995.
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<PAGE> 8
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MHI GROUP, INC.
Dated: July 13, 1995 By: /s/ J.C. Ogier Mathewes
----------------- --------------------------------
J.C. Ogier Mathewes
Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ William Fred Lindsey, MD Director and July 13, 1995
- - --------------------------------------- Chairman of the
William Fred Lindsey, MD Board
/s/ Clifford R. Hinkle Director, President and July 13, 1995
- - --------------------------------------- Chief Executive Officer
Clifford R. Hinkle (Principal Executive Officer)
/s/ J.C. Ogier Mathewes Vice President and July 13, 1995
- - --------------------------------------- Chief Financial
J.C. Ogier Mathewes Officer (Principal Financial
and Accounting Officer)
/s/ W. Dexter Douglass Director July 13, 1995
- - ---------------------------------------
W. Dexter Douglass
/s/ George A. Kellner Director July 13, 1995
- - ---------------------------------------
George A. Kellner
/s/ Carl R. Pennington, Jr. Director July 13, 1995
- - ---------------------------------------
Carl R. Pennington, Jr.
/s/ Benson L. Skelton, Jr. Director July 13, 1995
- - ---------------------------------------
Benson L. Skelton, Jr.
</TABLE>
8
Page 8 of 65
<PAGE> 9
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
REPORT OR REGISTRATION SEQUENTIALLY
STATEMENT IN WHICH NUMBERED
EXHIBIT NO. DESCRIPTION DOCUMENT IS CONTAINED PAGE
<S> <C> <C> <C>
2.1 Plan of reorganization. Filed as Exhibit 2.1 to the
Company's Form 10-K fiscal year
ended August 31, 1984.*
2.1(a) Disclosure statement. Filed as Exhibit 2.1(a) to the
Company's Form 10-K fiscal year
ended August 31, 1984.*
2.1(b) Confirmation Order of United States Filed as Exhibit 2.1 to Current
Bankruptcy Court including as exhibits Report on Form 8-K dated May 8,
thereto the Settlement Agreement 1986.*
between Registrant and Commercial Credit
Corporation dated April 16, 1986
modifying Plan of Reorganization.
2.1(c) Final Decree Filed herewith. 15
3.1(a) Restated Certificate of Incorporation Filed as Exhibit 3.1 to the Company's
dated February 9, 1987. Form 10-K fiscal year ended April 30,
1988.*
3.1(b) Bylaws of the Company Filed herewith. 17
4.13 Note and Stock Purchase Agreement, Filed as Exhibit 2 to the Company's
dated October 26, 1990, between the Current Report on Form 8-K dated
Company and MH Associates. November 7, 1990.*
10.2 Deferred compensation agreement dated Filed as Exhibit 10-2 to the Company's
October 13, 1992 between the Company Form 10-K fiscal year ended April 30,
and Mr. David J. McLaurin, Vice 1993.*+
President of the Company.
</TABLE>
E-1
Page 9 of 65
<PAGE> 10
<TABLE>
<CAPTION>
REPORT OR REGISTRATION SEQUENTIALLY
STATEMENT IN WHICH NUMBERED
EXHIBIT NO. DESCRIPTION DOCUMENT IS CONTAINED PAGE
<S> <C> <C> <C>
10.3 Agreement between the Company and Filed as Exhibit 10.1 to the Company's
KD Equities dated April 22, 1986 Current Report on Form 8-K dated
including Stock Option Agreement May 8, 1986.*
dated April 22, 1986 appended
thereto as Exhibit A.
10.4 Registration Rights Agreement dated Filed as Exhibit 10.7 to the Company's
June 6, 1986 between the Company Form 10-K fiscal year ended April 30,
and MH Associates. 1986.*
10.12 Deferred Compensation Agreement Filed as Exhibit 10.13 to the Company's
dated February 19, 1991 between the Form 10-K fiscal year ended April 30,
Company and Mr. Fred O. Drake, Jr., 1991.*+
Chairman of the Board and Chief
Executive Officer.
10.13 Amendment to Deferred Compensation Filed as Exhibit 10.13 to the Company's
Agreement dated April 15, 1994 Form 10-K fiscal year ended April 30,
between the Company and Mr. Fred O. 1994.*
Drake, Jr., Chairman of the Board
and Chief Executive Officer.
10.14(a) Amended and Restated Credit and Filed as Exhibit 10 to the Company's
Security Agreement between the Form 10-Q dated January 31, 1995.*
Company and Heller Financial, Inc.
dated February 2, 1995.
10.14(b) Credit and Security Agreement, Filed as Exhibit 4.1 to Current Report
dated October 9, 1992, by and among on Form 8-K dated October 22, 1992.*
Funeral Service Acquisition Group,
Inc., the Company and Heller
Financial, Inc.
11.1 Computation of net income per Filed herewith. 26
common share.
13.1 1995 Annual Report to Shareholders. Filed herewith. 27
13.1(a) Report of Independent Certified Filed herewith. 61
Public Accountant.
</TABLE>
E-2
Page 10 of 65
<PAGE> 11
<TABLE>
<CAPTION>
REPORT OR REGISTRATION SEQUENTIALLY
STATEMENT IN WHICH NUMBERED
EXHIBIT NO. DESCRIPTION DOCUMENT IS CONTAINED PAGE
<S> <C> <C> <C>
16 Letters regarding change in Filed as Exhibits 16(a) and 16(b)
Certifying Accountants to the Company's Form 8-K dated
August 19, 1993.*
21 Subsidiaries of Registrant. Filed herewith. 62
23.1 Consent of Independent Certified Filed herewith. 63
Public Accountants, Ernst & Young,
LLP.
23.2 Consent of Independent Certified Filed herewith. 64
Public Accountants, Price
Waterhouse, LLP.
27 Financial Data Schedule Filed herewith. 65
(for SEC use only)
</TABLE>
* Incorporated herein by reference.
+ A management contract or compensatory plan or arrangement required to
be filed pursuant to Item 14(c) of this report.
E-3
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<PAGE> 12
MHI GROUP, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM 14(A)(1) - (2)
<TABLE>
<CAPTION>
Reference
-----------------------
1995 Annual
Form Report to
10-K Shareholders
-----------------------
<S> <C> <C>
Data incorporated by reference from the 1995 Annual Report to Shareholders of
MHI Group, Inc. for the year ended April 30, 1995:
Report of Independent Certified Public Accountants 9
Consolidated Statements of Income for the Years Ended
April 30, 1995, 1994 and 1993 10
Consolidated Balance Sheets at April 30, 1995 and 1994 11
Consolidated Statements of Cash Flows for the Years
Ended April 30, 1995, 1994 and 1993 12
Consolidated Statements of Changes in Stockholders'
Equity for the Years Ended April 30, 1995, 1994 and 1993 13
Notes to Consolidated Financial Statements 14
Schedules for the years ended April 30, 1995, 1994 and 1993 are included in
Item 14(d):
Report of Independent Certified Public
Accountants on Financial Statement Schedules F-2
VIII. Valuation and Qualifying Accounts F-3
</TABLE>
All other schedules have been omitted because the required information
is not applicable or is not present in amounts sufficient to require submission
of the schedule or because the information required is included in the
Consolidated Financial Statements, including the notes thereto.
The Consolidated Financial Statements listed in the above index, which
are included in the 1995 Annual Report to Shareholders, are hereby incorporated
by reference. With the exception of the information incorporated by reference
into Items 5, 6, 7 and 8 of this Form 10-K, the 1995 Annual Report to
Shareholders is not deemed filed as part of this Form 10-K report.
The report of Ernst & Young on the 1993 financial statements and
financial statement schedules appears at Exhibit 13.1(a) and is incorporated
herein by reference.
F-1
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<PAGE> 13
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of MHI Group, Inc.
Our audits of the consolidated financial statements referred to in our report
dated June 16, 1995 appearing on page 9 of the 1995 Annual Report to
Shareholders of MHI Group, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedules listed in Item
14(a) of this Form 10-K. In our opinion, these Financial Statement Schedules
present fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Tampa, Florida
June 16, 1995
F-2
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<PAGE> 14
Schedule VIII
MHI GROUP, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(000s OMITTED)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING -------------------------- AT END
DESCRIPTION OF PERIOD OPERATIONS OTHER DEDUCTIONS OF PERIOD
- - ----------- --------- ---------- ----- ---------- ---------
<S> <C> <C> <C> <C> <C>
As of and for the
year ended April 30, 1995:
Allowance for contract
cancellations and doubtful
accounts $ 679 $ 406 $ 303 $ 926 $ 462
As of and for the
year ended April 30, 1994:
Allowance for contract
cancellations and doubtful
accounts $ 294 $ 142 $ 252 $ 9 $ 679
Deferred tax asset
valuation allowance 4,795 - - 4,795 -
As of and for the
year ended April 30, 1993:
Allowance for contract
cancellations and doubtful
accounts $ 339 $ 21 - $ 66 $ 294
Deferred tax asset
valuation allowance 6,586(1) - - 1,791 4,795
</TABLE>
F-3
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<PAGE> 1
EXHIBIT 2.1(c)
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF FLORIDA
TALLAHASSEE DIVISION
IN RE:
MOBILE HOME INDUSTRIES, INC., CASE NO. 84-07135
Debtor. CHAPTER 11
FINAL DECREE
THIS CAUSE is before the Court for consideration and entry of Final
Decree. The Court, having reviewed the Bankruptcy Closing Report entered
herein, and this Court having entered its Order Granting Joint Motion for
Dismissal herein, dismissing the Debtor's objection to the Proof of Claim of
Guerdon Industries, Inc. and having approved the withdrawal by Guerdon
Industries, Inc. of its Claim No. 1170, which matters appeared to be the last
contested matters to be dealt with in these proceedings by the Court, and the
Plan of Reorganization for the Debtor appearing to have been substantially
consummated and that the estate has been fully administered, it is,
accordingly,
ORDERED AND NOTICE IS HEREBY GIVEN THAT:
1. Pursuant to 11 U.S.C. Section 1141, and except as provided
therein or in the Plan or Order Confirming Plan, confirmation of the Debtor's
Plan of Reorganization binds the Debtor, all creditors of Debtor and all other
parties in interest; vests all of the property of
U.S. BANKRUPTCY COURT. CLERK
Northern District of Florida BANKRUPTCY COURT
DATE ENTERED ON DOCKET: NORTH/DIST-FLA
3/17/95 TALLAHASSEE, FLA
-------
95 MAR 17 AM11:41
X
FILED
Page 15 of 65
<PAGE> 2
the estate in the Debtor; and renders all of the property dealt with by the
Plan free and clear of all claims and interests of creditors and all other
parties in interest; and operates as a discharge of the Debtor.
2. This estate is hereby closed.
DONE AND ORDERED in Tallahassee, Leon County, Florida this 16th day of
March, 1995.
/s/ William Stafford
--------------------
WILLIAM STAFFORD
U.S. District Court Judge
This Order Prepared by:
C. Edwin Rude, Jr., Esquire
Pennington & Haben, P.A.
Post Office Box 10095
Tallahassee, FL 32302-2095
Page 16 of 65
<PAGE> 1
EXHIBIT 3.1(b)
MHI GROUP, INC.
BYLAWS
(As Restated @ November 22, 1991)
ARTICLE I. - OFFICES
Section 1. The principal office of MHI Group, Inc., the
"Company" shall be in the City of Tallahassee, County of Leon, State of
Florida.
Section 2. The Company may also have offices at such other
places, both within and without the State of Florida, as the Board of Directors
may from time to time determine or the business of the Company may require.
ARTICLE II. - MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election
of directors shall be in the City of Tallahassee, State of Florida, at such
place as may be fixed from time to time by the Board of Directors, or at such
other place either within or without the State of Florida as shall be
designated from time to time by the Board of Directors and stated in the notice
of meeting. Meetings of stockholders for any other purpose may be held at such
time and place, within or without the State of Florida, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on a
date and time as may be designated from time to time by the Board of Directors
and stated in the notice of the meeting, at which they shall elect by a
plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not less than ten nor more than sixty days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of
the Company shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meetings, arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of the Company, may be called by the Chairman and shall be called
by the Chairman or Secretary at the
Page 17 of 65
<PAGE> 2
request in writing of a majority of the Board of Directors, or at the request
in writing of stockholders owning a majority in amount of the entire capital
stock of the Company issued and outstanding and entitled to vote. Such request
shall state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purposes for which the meeting is
called, shall be given not less than ten nor more than fifty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of the Company. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present or represented. At such
adjourned meeting, at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of the statutes or
of the certificate of the Company, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder; but no proxy
shall be voted on after three years from its date, unless the proxy provides
for a longer period.
Section 11. Whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken for or in connection with any
corporate action, by any provision of the statutes, the meeting and vote of
stockholders may be dispensed with if all of the stockholders who would have
been entitled to vote upon the action of such meeting were held shall consent
in writing to such corporate action being taken; or if the certificate of the
Company authorizes the action to be taken with the written consent of the
holders of less than all of the stock who would have been entitled to vote upon
the action if a meeting were held, then on the written consent of the
stockholders having not less than such percentage of the total number of votes
as may be authorized in the certificate of the Company; provided that in no
case shall the written consent be by the
Page 18 of 65
<PAGE> 3
holders of stock having less than the minimum percentage of the total vote
required by statute for the proposed corporate action, and provided that prompt
notice must be given to all stockholders of the taking of corporate action
without a meeting and by less than unanimous written consent.
ARTICLE III - DIRECTORS
Section 1. The number of directors which shall constitute the
whole Board shall be not less than three nor more than fifteen. The first Board
shall consist of three directors. Thereafter, within the limits above
specified, the number of directors shall be determined by resolution of the
Board of Directors or by the stockholders at the Annual Meeting. The directors
shall be elected at the Annual Meeting of the stockholders, except as provided
in Section 2 of this Article, and each director elected shall hold office until
his successor is elected and qualified. Directors need not be stockholders.
Any director may be removed from office, with or without
cause, at any time by vote of the stockholders at a regular or special meeting
thereof, or by a majority of the directors then in office with the director
whose removal is under consideration being disqualified from voting on such
removal. A successor director need not be elected to fill any vacancy by
removal of a director.
Section 2. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. If, at the
time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the whole Board (as
constituted immediately prior to any such increase), a Court of competent
jurisdiction may, upon application of any stockholder or stockholders holding
at least ten percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office.
Section 3. The business of the Company shall be managed by its
Board of Directors which may exercise all such powers of the Company and do all
such lawful acts and things as are not by statute or by the certificate of the
Company or by these bylaws directed or required to be exercised or done by the
stockholders.
Section 4. The Board of Directors of the Company may hold
meetings, both regular and special, either within or without the State of
Florida.
Section 5. The first meeting of each newly elected Board of
Directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the Annual Meeting and no notice of such meeting shall be
necessary to the newly elected directors in order to legally constitute the
meeting, provided a quorum shall be present. In the event of the failure of
the stockholders to fix the time or place of such first
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<PAGE> 4
meeting of the newly elected Board of Directors, or in the event such meeting
is not held at the time and place so fixed by the stockholders, the meeting may
be held at such time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors, or as
shall be specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time
be determined by the Board.
Section 7. Special meetings of the Board may be called by the
Chairman on one day's notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the Chairman or Secretary in
like manner and on like notice on the written request of two directors.
Section 8. At all meetings of the Board a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of the Company. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate in
the Company or these bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committees.
Section 10. The Board of Directors may, by majority of the
vote of the Board, designate one or more committees, each committee to consist
of two or more of the officers and directors of the Company. The Board may
designate one or more officers or directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Company, and may authorize the
seal of the Company to be affixed on all papers which may require it; provided,
however, that in the absence or disqualification of a member of such committee
or committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum may
unanimously appoint another officer or director to act at the meeting in the
place of any such absent or disqualified member. Such committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by the Board of Directors.
Section 11. Each committee shall keep regular minutes of its
meeting and report the same to the Board of Directors when required.
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<PAGE> 5
Section 12. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a stated salary
as a director. No such payment shall preclude any director from serving the
Company in any other capacity and receiving compensation therefor. Members of
special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV - NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the certificate of the Company or of these bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean
personal notice unless expressly stated, but such notice may be given in
writing, by mail, addressed to such director or stockholder, at his address as
it appears on the records of the Company, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given by
telegram, telephone or facsimile.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of the Company or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE V - OFFICERS
Section 1. The officers of the Company shall be elected by the
Board of Directors and shall be a Chairman of the Board (who shall be a
director of the Company), a President, a Vice-President, a Secretary and/or a
Treasurer. The Board of Directors may also elect additional Vice-Presidents,
and one or more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers. Any number of offices may be held by the same person, unless the
certificate of the Company or these bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting after
each Annual Meeting of stockholders shall choose a Chairman of the Board, a
President, one or more Vice-Presidents, a Secretary and/or a Treasurer.
Section 3. The Board of Directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board.
Section 4. The salaries of all officers and agents of the
Company shall be fixed by the Board of Directors.
Section 5. The officers of the Company shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors. Any vacancy occurring in any office of the
Company shall be filled by
Page 21 of 65
<PAGE> 6
the Board of Directors.
Section 6. The Chairman or President shall execute bonds,
mortgages, deeds and other contracts requiring a seal, under the seal of the
Company, except where required or permitted by law to be otherwise signed and
executed and except where the signing and execution thereof shall be expressly
delegated by the Board of Directors, some other officer or agent of the
Company.
Section 7. In the absence or disability of the Chairman of the
Board, or in the event of his refusal to act, the President shall exercise the
powers and perform the duties of the Chairman. In the absence or disability of
the President, or in the event of his refusal to act, then the Vice-Presidents
(in the order designated by the Board of Directors, or in the absence of such
designation in the order of their election) shall exercise the powers and
perform the duties of the Chairman.
Section 8. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and maintain records of
all the proceedings of the meetings of the Company and of the Board of
Directors in a book to be kept for that purpose and shall perform like duties
for the standing committees when required. He/she shall give, or cause to be
given, notice of all meetings of the stockholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors or Chairman under whose supervision he/she shall be.
He/She shall have custody of the corporate seal of the Company and he/she, or
an Assistant Secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his/her
signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the Company and to attest the affixing by his/her signature.
Section 9. The Assistant Secretary, or if there be more than
one, the assistant secretaries in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Secretary or in the event of his/her
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 10. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Company and shall deposit
all moneys and other valuable effects in the name and to the credit of the
Company in such depositories as may be designated by the Board of Directors.
Section 11. The Treasurer shall disburse the funds of the
Company as may be ordered by the Board of Directors, taking proper vouchers for
such disbursements, and shall render to the Chairman and the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
an account of all transactions of the Treasurer and of the financial condition
of the Company.
Section 12. If required by the Board of Directors, the
Treasurer shall give
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<PAGE> 7
the Company a bond (which shall be renewed every six years) in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of his/her office and for the
restoration to the Company, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property
of whatever kind in his possession or under his/her control belonging to the
Company.
Section 13. The Assistant Treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Treasurer or in the event of his/her
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
ARTICLE VI - CERTIFICATES OF STOCK
Section 1. Every holder of stock in the Company shall be
entitled to have a certificate, signed by, or in the name of the Company by,
the Chairman of the Board of Directors, the President or Vice-President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the Company, certifying the number of shares owned by him in the Company.
If the Company shall be authorized to issue more than one
class of stock or more than one series of any class, the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the certificate which the Company shall issue to represent such
class or series of stock. Alternatively, each certificate may contain the
requirements of form and content of certificates as required by Florida Statute
607.025(3) or such other statute as hereinafter amended.
Section 2. When a certificate is countersigned (1) by a
transfer agent other than the Company or its employee, or, (2) by a registrar
other than the Company or its employee, the signatures of the officers of the
Company may be facsimiles. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the Company
with the same effect as if he were such officer at the date of issue.
Section 3. The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate theretofore issued by
the Company alleged to have been lost, stolen or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors may, in
its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate or certificates or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the Company a bond in such sum as it may direct as indemnity
against any claim that may be made against the Company with respect to the
certificate alleged to have been lost, stolen or destroyed.
Page 23 of 65
<PAGE> 8
Section 4. Upon surrender to the Company or the transfer agent
of the Company of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the Company to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 5. In order that the Company may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
Section 6. The Company shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Florida.
ARTICLE VII - GENERAL PROVISIONS
Dividends
Section 1. Dividends upon the capital stock of the Company,
subject to the provisions of the certificate of the Company, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of the Company.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the Company available for dividends such sum or sums
as the directors from time to time, in their absolute discretion, think proper
as a reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property, of the Company, or for such other
purpose as the directors shall think conducive to the interest of the Company,
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Annual Statement
Section 3. The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition
of the Company.
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<PAGE> 9
Checks
Section 4. All checks or demands for money and notes of the
Company shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Fiscal Year
Section 5. The fiscal year of the Company shall be fixed by
resolution of the Board of Directors.
Seal
Section 6. The corporate seal shall have inscribed thereon the
name of the Company and the year of its organization. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
ARTICLE VIII - AMENDMENTS
Section 1. These bylaws may be altered or repealed at any
regular meeting of the stockholders or of the Board of Directors or at any
special meeting of the stockholders or of the Board of Directors if notice of
such alteration or repeal be contained in the notice of such special meeting.
* * * * *
Page 25 of 65
<PAGE> 1
Exhibit 11.1
MHI GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE (1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
APRIL 30
-------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net income applicable to
adjusted common shares $3,047,000 $5,945,000 $5,376,000
---------- ---------- ----------
Average common shares
outstanding 6,243,129 4,634,200 3,562,503
Shares to be issued upon
conversion of Series C
Preferred Shares - - 11,438
Shares to be issued from
exercise of dilutive stock
options from application of
treasury stock method 714,019 603,953 672,037
---------- ---------- ----------
Adjusted shares outstanding,
primary diluted basis 6,957,148 5,238,153 4,245,978
Contingent issuance of
common stock for unsettled
bankruptcy claims - - 18,610
---------- ---------- ----------
Adjusted shares outstanding,
fully diluted basis 6,957,148 5,238,153 4,264,588
---------- ---------- ----------
Earnings per common and
common equivalent share -
Primary and fully diluted:
Income before cumulative effect
of change in accounting principle $ .44 $ 1.13 $ .83
Cumulative effect of change in
accounting principle - - - .44
Net income $ .44 $ 1.13 $ 1.27
---------- ---------- ----------
</TABLE>
(1) All data adjusted for the one-for-four reverse stock split effective in
November 1993.
Page 26 of 65
<PAGE> 1
EXHIBIT 13.1
SELECTED FINANCIAL DATA
FIVE YEAR FINANCIAL SUMMARY
(000'S OMITTED EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR 1995 1994 1993 1992 1991
STATEMENT OF INCOME DATA
<S> <C> <C> <C> <C> <C>
Revenues $ 23,793 $20,189 $ 17,384 $ 16,730 $ 13,039
Income (loss) before income taxes,
cumulative effect of change
in accounting principle
and extraordinary item(1) 4,354 3,214 2,894 3,415 (616)
Income (loss) before cumulative
effect of change in accounting
principle and extraordinary item(1) 3,047 5,945 3,516 2,074 (623)
Net income (loss)(1) 3,047 5,945 5,376 3,305 (623)
Per share(2):
Primary and fully diluted
Income (loss) before
cumulative effect of change in
accounting principle and
extraordinary item $ .44 $ 1.13 $ .83 $ .50 $ (.20)
Net income (loss) .44 1.13 1.27 .80 (.20)
Dividends declared - - - - -
Weighed average
common and common
equivalent shares outstanding:
--Primary 6,957 5,238 4,246 4,123 3,098
--Fully diluted 6,957 5,238 4,265 4,140 3,098
BALANCE SHEET DATA
Total assets $108,556 $98,913 $ 81,975 $ 64,188 $ 58,026
Long-term debt 12,625 13,750 22,875(3) 16,869(3) 18,984(3)
Shareholders' equity 42,788 38,911 16,955 11,271 7,478
</TABLE>
(1) The loss in 1991 is primarily due to a non-recurring, non-cash item of
$1,734.
(2) All share and per share information has been restated for the one-for-four
reverse stock split effected in November 1993.
(3) Includes notes payable to related party(ies).
5
Page 27 of 65
<PAGE> 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
INTRODUCTION
The Company is a provider of comprehensive death care products and
services. The Company derives revenues primarily from the at-need delivery of
funeral services and cemetery products and services, and the pre-need sale of
cemetery products and services.
The performance of prearranged funeral services is secured by placing
a substantial portion of the funds collected in trust for the benefit of the
customer, the proceeds of which will pay for such services at the time of need.
Proceeds from the sale of pre-need funeral services are recognized by the
Company as revenues only at the time such services are provided. The Company's
performance is presently highly dependent on its Broward Operations.
The Company has grown primarily through acquisitions, which to date
have been treated as purchases for accounting purposes. Pursuant to such
required accounting treatment, the revenues and earnings of each acquired
business have been included in the Company's results of operations only after
the date of purchase. Therefore, period to period results are not necessarily
comparable.
6
Page 28 of 65
<PAGE> 3
RESULTS OF OPERATION
YEAR ENDED APRIL 30, 1994 COMPARED TO YEAR ENDED APRIL 30, 1995
Total revenues increased $3,604,000 or 17.9%, from fiscal year 1994 to
fiscal year 1995. These changes consisted of increases in net sales and
interest income and decreases in trust income. The Company increased its net
sales by $4,272,000 or 25.8% from fiscal year 1994 to fiscal year 1995. The
increase in net sales for fiscal year 1995 reflected an increase in at-need
funeral net sales of $1,882,000 or 28.5%, of which $1,289,000 was attributable
to properties acquired by the Company during fiscal years 1994 and 1995 with
the remaining increase primarily due to increases in volume. Net sales also
reflected increases in pre-need cemetery net sales of $2,039,000 or 22.5% from
fiscal year 1994 and fiscal year 1995 with 20% of the increase due to increases
in volume at operations, excluding current year acquisitions.
Trust fund income decreased $856,000 or 28.6% from fiscal year 1994 to
fiscal year 1995, due to a decrease in capital gains of $1,260,000 from fiscal
1994 to fiscal 1995, offset by income yields. The fall of interest rates
throughout fiscal 1994 attributed to the increased capital gains on the sale of
fixed income investments. Excluding capital gains, income yields were
approximately 4.5% and 4.7% for fiscal year 1994 and 1995, respectively and
8.2% and 5.0% with capital gains included. No significant changes are expected
in yields on the fixed income portfolio in the near future.
Interest income for the Company is principally generated by the
Broward operations representing imputed interest on its portfolio of
installment receivables and by interest earned on investment of the remaining
proceeds from the Company's secondary public offering completed in December,
1993. Interest income increased $196,000 or 32.7% from fiscal year 1994 to
fiscal year 1995, primarily due to interest earned on the investment of the
public offering proceeds.
Cost of merchandise and cemetery property increased $844,000 or 19.1%
from fiscal year 1994 to fiscal year 1995, due to the 25.8% increase in net
sales volume. As a percentage of net sales, cost of merchandise and cemetery
property decreased from 26.7% to 25.2% from fiscal year 1994 to fiscal year
1995.
Selling, general and administrative expenses increased $3,047,000, or
28.3%, from fiscal year 1994 to fiscal year 1995, consistent with the 25.8%
increase in sales volume and the acquisitions made during fiscal year 1995.
Selling, general and administrative expenses of operations acquired since the
second quarter of fiscal year 1994 accounted for $1,209,000 of the increase. As
a percentage of net sales, selling, general and administrative expenses
increased from 65.2% to 66.5% from fiscal year 1994 to fiscal year 1995. This
percentage should decrease as acquisition revenues continue to leverage off the
existing management structure.
Interest expense decreased $427,000 or 24% from fiscal year 1994 to
fiscal year 1995, primarily due to the lower average outstanding borrowing
resulting from the Company's repayment of the acquisition line of credit and
the 10% subordinated note in the third quarter of 1994.
Nonrecurring income of $1,000,000 was recorded in fiscal year 1995
from the receipt of key-man life insurance proceeds due to the death of the
former chairman. No nonrecurring items were incurred in fiscal year 1994.
The Company's net tax benefit of $2,731,000 for fiscal year 1994
reflected a $2,395,000 benefit from reduction of the valuation allowance and
increases in the deductible temporary differences related to pre-need funeral
service contracts. The tax provision of $1,307,000 for fiscal year 1995
reflects that the full benefit of the Net Operating Loss ("NOL") was recorded
in the fourth quarter of fiscal year 1994 and that a full tax provision is
recorded on the taxable income generated for fiscal year 1995. The resulting
change in the income tax (provision) benefit from fiscal year 1994 to fiscal
year 1995 was a $4,038,000 increase. The Company continues to enjoy a
significant cash flow benefit from continuing utilization of the NOL for tax
purposes; however, the benefit to shareholders' equity of the NOL has been
fully reflected in the financial statements by fully recording the deferred tax
asset. The 30% effective tax rate during fiscal 1995 is less than the statutory
rate because the key-man life insurance proceeds are not taxable. This effect
is partially offset by nondeductible amortization.
7
Page 29 of 65
<PAGE> 4
RESULTS OF OPERATION
YEAR ENDED APRIL 30, 1993 COMPARED TO YEAR ENDED APRIL 30, 1994
Total revenues increased $2,805,000 or 16.1%, from fiscal year 1993 to
fiscal year 1994, primarily due to an increase in net sales from funeral home
properties acquired by the Company in the third and fourth quarters of fiscal
1993. Net sales increased $2,923,000 or 21.5%, from fiscal year 1993 to fiscal
year 1994, reflecting a $2,319,000 or 54.1%, increase in at-need funeral net
sales and a slight increase in pre-need cemetery sales. The increase in at-need
funeral service net sales was primarily attributable to acquisitions and, to a
lesser extent, to an increase in volume at existing operations.
Trust fund income decreased $177,000, or 5.5%, from fiscal year 1993
to fiscal year 1994, primarily due to lower yields on fixed income investments
and cash equivalents and diversifying the portfolio into equity investments.
Capital gains, approximately 57% of which were attributable to corporate equity
securities with the remainder primarily attributable to government-secured and
fixed income securities, totaled $1,242,000 for fiscal year 1993 compared to
$1,393,000 for fiscal year 1994. Excluding capital gains, income yields were
approximately 6.0% and 4.5% for fiscal year 1993 and 1994, respectively and
9.9% and 8.2% with capital gains included. No changes are expected in yields on
fixed income portfolios in the near future due to present market conditions.
Interest income increased $68,000, or 12.8%, from fiscal year 1993 to
fiscal year 1994, primarily due to an increase in installment receivables
balances. Interest income is principally generated by the Broward operations
representing interest imputed on outstanding installment receivables.
Cost of merchandise and cemetery property increased $915,000, or
26.1%, from fiscal year 1993 to fiscal year 1994, primarily due to the 21.5%
increase in net sales volume. As a percentage of net sales, cost of sales
increased from 25.7% to 26.7% from fiscal year 1993 to fiscal year 1994. This
increase reflects the classification of certain charges in 1994 as a component
of cost of sales. Excluding this change in classification, cost of sales as a
percentage of sales decreased 1.3%. This improvement in gross profit margins
principally reflects improved pricing and the benefit of further merchandise
volume discounts and lower crematory costs through the synergies made possible
by the fiscal year 1993 and 1994 acquisitions.
Selling, general and administrative expenses increased $2,117,000, or
24.4%, from fiscal year 1993 to fiscal year 1994. The increase in selling,
general and administrative expenses was primarily due to an increase in
personnel salary and related benefits costs to support the Company's growth
from fiscal year 1993 and 1994 acquisitions and anticipated growth from future
acquisitions. To a lesser extent, the increase was due to increased
depreciation and amortization attributable to the fiscal year 1993 and 1994
acquisitions. As a percentage of net sales, selling, general and administrative
expenses increased from 63.6% to 65.2% from fiscal year 1993 to fiscal year
1994. This percentage will drop as acquisition revenues begin to offset this
administrative growth.
Interest expense decreased $14,000, or 0.8% from fiscal year 1993 to
fiscal year 1994, primarily due to the repayment of the Company's acquisition
line of credit in the third quarter of 1994 and lower average interest rates.
See Note 12 "Financing Transactions".
Nonrecurring expenses of $533,000 were incurred in fiscal year 1993
related to an aborted private placement and other financing arrangements,
related legal fees and the charge to operations for unamortized loan costs in
connection with the Company's debt refinancing in October 1992. No nonrecurring
charges were incurred in fiscal year 1994.
8
Page 30 of 65
<PAGE> 5
YEAR ENDED APRIL 30, 1993 COMPARED TO YEAR ENDED APRIL 30, 1994 (CONTINUED)
Effective May 1, 1992, the Company changed its method of accounting
for income taxes from the deferred method to the asset and liability method as
required by Statement of Financial Accounting Standards No. 109, " Accounting
for Income Taxes." The cumulative effect of this change resulted in a non-cash,
non-recurring increase in net income of $1,860,000 in the first quarter of
fiscal year 1993. In the fourth quarter of fiscal year 1994, a non-cash,
non-recurring increase in net income of $2,395,000 resulted from a reduction in
the valuation allowance previously established against the net deferred tax
asset. See Note 14 of Notes to Consolidated Financial Statements.
Through third quarter 1994, there was a substantial risk that a
significant portion of the NOL carryforward could be limited due to
contemplated changes in the Company's ownership through the issuance of common
stock in equity offerings and acquisition/merger transactions. In recognition
of the substantial risk of realizing these tax benefits, upon adoption of SFAS
No. 109 and through third quarter 1994, the Company provided a full valuation
allowance for the deferred tax asset relating to the NOL and alternative
minimum tax (AMT) credit carryforwards. In fiscal year 1994 significant
favorable events occurred and a substantial amount of taxable income was
generated further reducing the NOL carryforward. These events culminated in the
fourth quarter 1994 and the Company concluded based on the changed
circumstances that a valuation allowance on the deferred tax asset relating to
the NOL and AMT credit carryforwards was no longer necessary. Realization of
these tax benefits in future years is now considered to be more likely than
not. In the fourth quarter 1994, the Company reduced the valuation allowance
and increased the income tax benefit and the income by $2,395,000 or $.46 per
share.
At April 30, 1994, the Company has deferred revenue of $29,168,000 and
for the three year period ended April 30, 1994 has average taxable income of
approximately $5 million per year. The Company expects sufficient taxable
income in the NOL carryforward period to realize the entire net deferred tax
asset.
The Company's net tax benefit of $2,731,000 for fiscal year 1994
primarily reflects the $2,395,000 benefit from reduction of the valuation
allowance and an increase in the deductible temporary difference from
collections on pre-need funeral service installment receivables exceeding
revenue recognized on pre-need funeral services performed. The $2,109,000
increase in the net tax benefit primarily reflects the elimination of the
deferred tax asset valuation allowance.
Income before cumulative effect of change in accounting principle
increased $2,429,000, or 69.1%, from $3,516,000 in fiscal year 1993 to
$5,945,000 in fiscal year 1994. The increase was primarily attributable to the
$2,395,000 tax benefit from eliminating the valuation allowance on the deferred
tax asset in the fourth quarter 1994 and the absence of the nonrecurring
expenses in fiscal year 1994.
9
Page 31 of 65
<PAGE> 6
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 1995, the Company's working capital was $14,620,000,
compared to $15,532,000 at April 30, 1994. At April 30, 1995, the Company's
debt to equity ratio was 0.30:1 compared to 0.35:1 at April 30, 1994. The
decrease in working capital is primarily due to cash outlay to purchase the
acquisitions during fiscal 1995. The improvement in the debt to equity ratio
for fiscal 1995 primarily reflects increased equity in fiscal 1995 generated
from net income during the year.
Total assets increased $9,643,000, or 9.7% from April 30, 1994 to
April 30, 1995, due to results from operations, the acquisitions made during
fiscal 1995 and proceeds from the insurance policy of our deceased chairman.
Trust fund assets increased $5,213,000 or 14.6% from fiscal year 1994 to fiscal
year 1995, with $646,000 of that increase attributable to the fiscal 1995
acquisitions. Trust funds continued to increase due to deposits exceeding
withdrawals and earnings which have not been withdrawn from the trusts. The
increase included recovery of $380,000 from the prior years lower of cost or
market adjustment (see Note 9). Receivables increased $3,046,000, or 17.2%,
from April 30, 1994 to April 30, 1995 as a result of continued sales of
pre-need cemetery and funeral service contracts. Consistent with the increase
in pre-need funeral sales and with the current fiscal year acquisitions,
deferred revenues increased $4,000,000, or 13.7%, from April 30, 1994 to April
30, 1995.
At April 30, 1995 the Company's Credit Facility consisted of a
$12,625,000 outstanding term loan and provides for up to $22,375,000 revolving
loan to be used as an acquisition and working capital loan facility. No amounts
were outstanding on the revolving loan at April 30, 1995. Payment is due under
this agreement on January 31, 2000, at which time the loans outstanding will be
payable in full. The Credit Facility is secured by the pledge of substantially
all of the Company's assets (except cemetery land and trust fund assets). See
Notes to Consolidated Financial Statements, Note 12, for additional information
with respect to the Company's Credit Facility.
Capital expenditures (exclusive of funeral home and cemetery
acquisitions) were $259,000 and $1,048,000 for fiscal years 1994 and 1995,
respectively. Capital expenditures in fiscal year 1995 included vehicles,
furniture, equipment, renovations and improvements at existing funeral homes,
additional investment in the Company's management information system and the
purchase of land and a funeral home at the Company's Okaloosa operation which
was formerly leased by the Company. The Company plans to develop additional
cemetery burial spaces and construct additional mausoleum crypts as required to
adequately maintain the inventory level to support projected pre-need and
at-need sales.
The Company believes that, for the foreseeable future, funds from
operations and borrowings under the Company's Credit Facility will be
sufficient to support the Company's current operations and effect certain
acquisitions. However, the Company's acquisition strategy may eventually
require future debt financings. The proceeds of the offering in fiscal 1994 has
significantly improved the Company's liquidity by reducing both the Company's
interest expense and the principal amount of the Company's indebtedness. Based
on such improvement in liquidity, the Company was able to obtain financings on
more favorable terms than the terms under its preceeding Credit Facility.
Inflation has not been a significant factor in the operations
of the Company as normal inflationary increases in costs for pre-need contracts
have been exceeded by earnings on trust fund assets. With respect to at-need
contracts, the Company has generally been successful in passing along cost
increases. However, there can be no assurance that the Company will be able to
continue to pass along such cost increases in the future.
10
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<PAGE> 7
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of MHI Group, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of cash flows and of changes in
stockholders' equity present fairly, in all material respects, the financial
position of MHI Group, Inc. and its subsidiaries at April 30, 1995 and 1994,
and the results of their operations and their cash flows for each of the two
years in the period ended April 30, 1995, in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above. The consolidated financial
statements of MHI Group, Inc. for the year ended April 30, 1993 was audited by
other independent accountants whose report dated June 16, 1993 expressed an
unqualified opinion on those statements and included an explanatory paragraph
to describe the Company's adoption of Statement of Financial Accounting
Standard No. 109, effective May 1, 1992.
PRICE WATERHOUSE LLP
Tampa, Florida
June 16, 1995
11
Page 33 of 65
<PAGE> 8
MHI Group. Inc. and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
YEARS ENDED
APRIL 30,
-----------------------------------------
1995 1994 1993
(In Thousands)
<S> <C> <C> <C>
Revenues:
Net sales $20,808 $16,536 $13,613
Trust income 2,132 2,988 3,165
Interest income 795 599 531
Other income 58 66 75
-----------------------------------------
Total revenues 23,793 20,189 17,384
Cost and expenses:
Cost of merchandise and cemetery property 5,253 4,409 3,494
Selling, general and administrative
expenses 13,827 10,780 8,663
-----------------------------------------
Income before interest, non-recurring items
and income taxes 4,713 5,000 5,227
Interest expense (1,359) (1,786) (1,800)
Non-recurring income (expenses) 1,000 - (533)
-----------------------------------------
Income before income taxes and cumulative
effect of change in accounting principle 4,354 3,214 2,894
Income tax (provision) benefit (1,307) 2,731 622
-----------------------------------------
Income before cumulative effect of
change in accounting principle 3,047 5,945 3,516
Cumulative effect of change in
accounting principle - - 1,860
-----------------------------------------
Net income $ 3,047 $ 5,945 $ 5,376
=========================================
</TABLE>
12
Page 34 of 65
<PAGE> 9
MHI Group. Inc. and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
YEARS ENDED
APRIL 30,
-------------------------------------
1995 1994 1993
(In Thousands)
<S> <C> <C> <C>
Earnings per common and common
equivalent share - Primary and fully
diluted
Income before cumulative effect of
change in accounting principle $ .44 $ 1.13 $ .83
Cumulative effect of change in
accounting principle - - .44
-------------------------------------
Net income $ .44 $ 1.13 $ 1.27
=====================================
</TABLE>
See accompanying notes.
13
Page 35 of 65
<PAGE> 10
MHI Group. Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
APRIL 30,
--------------------------
1995 1994
(In Thousands)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 4,332 $ 6,842
Installment contracts receivable and
other receivables, net 9,405 8,073
Inventories 2,358 2,420
Other current assets 174 160
Deferred tax asset, net 1,352 1,846
---------- ----------
Total current assets 17,621 19,341
Cemetery property 6,898 6,391
Property and equipment, net 11,883 9,778
Installment contract receivables and
other receivables, net 11,362 9,648
Trust funds 40,829 35,616
Cost in excess of fair value
of net assets acquired, net 11,921 10,547
Other assets 3,135 2,278
Deferred tax asset, net 4,907 5,314
---------- ----------
Total assets $ 108,556 $ 98,913
========== ==========
</TABLE>
See accompanying notes.
14
Page 36 of 65
<PAGE> 11
MHI Group. Inc. and Subsidiaries
Consolidated Balance Sheets (continued)
<TABLE>
<CAPTION>
APRIL 30,
------------------------
1995 1994
(In Thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued expenses $ 3,001 $ 2,309
Notes payable - 1,500
-------- ----------
Total current liabilities 3,001 3,809
-------- ----------
Notes payable 12,625 12,250
Other long-term liabilities 1,335 656
Accrued merchandise 15,639 14,119
-------- ----------
29,599 27,025
Deferred revenue 33,168 29,168
-------- ----------
Total liabilities 65,768 60,002
-------- ----------
Commitments and contingencies - -
Stockholders' equity:
Series B Convertible Preferred Stock, $1 par
value; authorized 100,000 shares; outstanding
1995 and 1994--24,757 shares 25 25
Series C Convertible Preferred Stock, $1 par
value; authorized 200,000 shares; outstanding
1995 and 1994--13,938 shares; 14 14
Common Stock, $.40 par value; authorized
10,000,000 shares; issued 1995--6,328,255 shares
and 1994--6,221,353 shares; outstanding 1995--
6,271,126 shares and 1994--6,164,224 shares 2,531 2,489
Capital in excess of par value 48,334 47,926
Unrealized (loss) on marketable securities (677) (1,057)
Accumulated deficit (5,839) (8,886)
Common stock in treasury, 57,129 shares, at cost (1,600) (1,600)
-------- ----------
Total stockholders' equity 42,788 38,911
-------- ----------
Total liabilities and stockholders' equity $108,556 $ 98,913
======== ==========
</TABLE>
See accompanying notes.
15
Page 37 of 65
<PAGE> 12
MHI Group. Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEARS ENDED
APRIL 30,
-------------------------------------------
1995 1994 1993
(In Thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,047 $ 5,945 $ 5,376
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 1,352 1,199 1,418
Deferred tax expense (benefit) 840 (3,141) (1,031)
Amortization of discounts on note payable - - 83
Undrawn trust income (1,043) (1,371) (1,591)
Cumulative effect of change
in accounting principle - - (1,860)
Other, net (490) (39)
Changes in assets and liabilities, net of
effect of acquisitions:
Increase in installment contract
receivables (2,978) (759) (2,481)
Decrease (increase) in inventories,
net of transfers from cemetery
property 386 (332) (191)
Decrease (increase) in cemetery property 46 (735) 413
Increase in trust funds (3,170) (2,714) (2,538)
Decrease (increase) in other assets 298 132 (107)
Increase (decrease) in accounts payable and
and accrued expenses 467 (268) (31)
Decrease in other liabilities (18) (683) (689)
Increase in accrued merchandise 1,520 1,777 1,237
Increase in deferred revenue 3,236 2,240 3,477
-------------------------------------------
Net cash provided by operating activities 3,983 800 1,446
-------------------------------------------
</TABLE>
16
Page 38 of 65
<PAGE> 13
MHI Group. Inc. and Subsidiaries
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
YEARS ENDED
APRIL 30,
-------------------------------------------
1995 1994 1993
(In Thousands)
<S> <C> <C> <C>
Cash flows from investing activities:
Additions to property and equipment $ (1,048) $ (259) $ (499)
Acquisitions (4,428) (2,200) (4,875)
Acquisition costs (155) (99) (121)
Proceeds from sale of marketable securities 222 - -
-------------------------------------------
Net cash used in investing activities (5,409) (2,558) (5,495)
-------------------------------------------
Cash flows from financing activities:
Loan costs (409) - (1,524)
Borrowings under revolving credit
agreement and notes payable - 2,154 21,525
Principal payments on revolving credit
agreement and notes payable (1,125) (11,279) (15,778)
Issuance of preferred stock,
common stock and exercise of options and warrants 450 16,974 308
Purchase fractional shares - (6) -
-------------------------------------------
Net cash (used in) provided by financing
activities (1,084) 7,843 4,531
-------------------------------------------
Net (decrease) increase in cash and cash equivalents (2,510) 6,085 482
Cash and cash equivalents at beginning of year 6,842 757 275
-------------------------------------------
Cash and cash equivalents at end of year $ 4,332 $ 6,842 $ 757
===========================================
Supplemental disclosure of cash flow
information:
Non-cash financing activities:
Common stock issued in acquisition - $ 100 -
Cash payments of:
Interest $ 1,365 $ 1,817 $ 1,649
Income taxes $ 344 $ 390 $ 401
</TABLE>
See accompanying notes.
17
Page 39 of 65
<PAGE> 14
MHI Group. Inc. and Subsidiaries
Consolidated Statements of Changes
In Stockholders' Equity
<TABLE>
<CAPTION>
YEARS ENDED
APRIL 30,
-------------------------------------
1995 1994 1993
(In Thousands)
<S> <C> <C> <C>
Series B Convertible Preferred Stock:
Balance, beginning of year $ 25 $ 25 $ 25
-------------------------------------
Balance, end of year 25 25 25
-------------------------------------
Series C Convertible Preferred Stock:
Balance, beginning of year 14 14 22
Shares converted to common stock - - (8)
-------------------------------------
Balance, end of year 14 14 14
-------------------------------------
Common Stock:
Balance, beginning of year 2,489 1,469 1,431
Conversion of preferred stock - - 12
Shares issued in the exercise of
warrants and options 42 135 26
Common stock issued for acquisition - 5 -
Common stock issued in stock offering - 880 -
-------------------------------------
Balance, end of year 2,531 2,489 $ 1,469
-------------------------------------
Capital in Excess of Par Value:
Balance, beginning of year 47,926 31,878 31,600
Conversion of preferred stock - - (4)
Common stock issued for exercise of warrants
and options 408 425 282
Common stock issued for acquisitions - 95 -
Common stock issued in stock offering - 15,463 -
Purchase fractional shares and convert to
unissued - (6) -
Issue warrants - 71 -
-------------------------------------
Balance, end of year 48,334 47,926 31,878
-------------------------------------
Unrealized loss on marketable securities:
Balance, beginning of year (1,057) - -
Unrealized appreciation (depreciation) of investments,
net of deferred income tax benefit 380 (1,057) -
-------------------------------------
Balance, end of year (677) (1,057) -
-------------------------------------
Accumulated Deficit:
Balance, beginning of year (8,886) (14,831) (20,207)
Net income for the year 3,047 5,945 5,376
-------------------------------------
Balance, end of year (5,839) (8,886) (14,831)
-------------------------------------
Treasury Stock:
Balance, beginning of year (1,600) (1,600) (1,600)
-------------------------------------
Balance, end of year (1,600) (1,600) (1,600)
-------------------------------------
Total stockholders' equity $42,788 $ 38,911 $ 16,955
=====================================
</TABLE>
See accompanying notes.
18
Page 40 of 65
<PAGE> 15
MHI Group. Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
MHI Group, Inc. (the Company) provides comprehensive death care services
through company owned funeral homes, cemeteries and crematories, which are
located in the states of Florida and Colorado at April 30, 1995.
Accounting policies that significantly affect the determination of results of
operations, financial position, and cash flow are summarized below.
CONSOLIDATION - The consolidated financial statements include the accounts of
MHI Group, Inc. and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated. See Note 4 for acquisitions in
fiscal year 1995.
CEMETERY OPERATIONS - Cemetery revenue is recognized in accordance with
accounting principles prescribed for sales of real estate. Such principles
require, among other things, the receipt of a certain portion of the
installment sales price prior to the recognition of any revenue or cost on a
contract. Installment sales prices are reduced by the imputation of interest.
Cemetery installment contracts are typically payable over a 24 to 30 month
period. Costs, including interest, relating to land under development are
capitalized. A portion of the proceeds from the cemetery sales is required by
state law to be paid into the perpetual care trusts to provide for future
maintenance of the cemeteries. Cost of sales is charged for amounts due the
perpetual care trusts at the time of sale.
MERCHANDISE - Merchandise revenue and cemetery related services are recognized
at the time of sale with concurrent recognition of related costs. The
corresponding liability for the estimated current cost to deliver merchandise
and cemetery related services is adjusted through a charge to earnings to
reflect inflationary cost increases. Allowance for customer cancellations of
merchandise contract is made at the time of sale based on historical
experience. A portion of the proceeds from certain cemetery sales is paid into
trust funds according to applicable state law. The principal and accumulated
earnings are released to the Company when the contract becomes at-need and the
merchandise and services are delivered.
MAUSOLEUMS (CRYPTS) - The Company recognizes revenue from the sale of
unconstructed mausoleum crypts to the extent it has available inventory. The
costs of mausoleum crypts sold but not yet constructed are based on
management's estimated cost to construct the crypts.
FUNERAL SERVICES - The Company sells pre-arranged funeral services under
contracts which are typically payable over a 36 to 60 month period. The selling
price of pre-need funeral services is deferred until the service is performed.
The related sales commissions are deferred and amortized over the estimated
life of the pre-arranged funeral service contracts. The Company maintains an
allowance for estimated contract cancellations based on historical experience.
The funds collected from pre-arranged funeral service contracts are paid into
trust funds according to applicable state law. The principal of these trust
funds is available to the Company only upon the death of the purchaser.
Investment income is available to the Company pursuant to applicable state law.
19
Page 41 of 65
<PAGE> 16
MHI Group. Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
TRUST FUNDS - Trust fund investments are stated at market, with unrealized
appreciation or depreciation recorded as either a charge or credit, net of
deferred income tax, to stockholders equity. Trust fund earnings are recognized
currently.
INVENTORIES - Developed cemetery lots and mausoleum crypts are stated at
average cost. Vaults, caskets, markers and funeral supplies inventory are
stated at the lower of cost or market; cost is determined principally by the
first-in, first-out method for vaults and funeral supplies while remaining
inventory costs are specifically identified.
PROPERTY AND EQUIPMENT - Property and equipment is stated at cost and
depreciation is provided over the estimated service lives, principally on the
straight-line method. The estimated service lives used in determining
depreciation range from 3 to 15 years on machinery and equipment, furniture and
fixtures and land improvements, 35 to 40 years on the funeral chapels and 25 to
35 years on administration buildings. Improvements to leased premises are
amortized by the straight-line method over the terms of the respective leases
or the estimated useful lives of the improvements, whichever is less.
COST IN EXCESS OF FAIR VALUE OF NET ASSETS ACQUIRED - Cost in excess of fair
value of net assets acquired is being amortized over 30 years. Accumulated
amortization was $2,474,000 and $1,996,000 at April 30, 1995 and 1994,
respectively. Amortization expense was $477,000, $428,000 and $357,000 in 1995,
1994 and 1993, respectively.
INCOME TAXES - Effective May 1, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes" ("SFAS No.
109"). The statement requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of temporary differences
between tax bases and financial reporting bases of assets and liabilities. The
cumulative effect as of May 1, 1992 of adopting SFAS No. 109 increased net
income by $1,860,000 ($.44 per share) representing the application of SFAS No.
109 to the cumulative temporary differences, alternative minimum tax credits
and net operating loss carryforwards existing at April 30, 1992.
20
Page 42 of 65
<PAGE> 17
MHI Group. Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE - Primary earnings per share
are based on 6,957,148, 5,238,153 and 4,245,978 weighted average common and
common equivalent shares outstanding during the fiscal years ended April 30,
1995, 1994 and 1993, respectively. Common share equivalents include dilutive
stock options and warrants using the treasury stock method. Each common stock
equivalent was assumed converted at the beginning of the period or at the date
of issuance, if later. Shares applicable to fully diluted earnings per share
are either immaterial or antidilutive for the years presented.
SUPPLEMENTAL CASH FLOW INFORMATION - For purposes of the consolidated statement
of cash flows, all short term investments with an original maturity less than
three months are considered to be the equivalent of cash and the carrying
amount approximates fair value because of the short maturity. The Company
deposits its cash and cash equivalent investments in high quality credit
institutions. At April 30, 1995 and 1994, certain cash balances exceeded
applicable FDIC insurance limits.
RECLASSIFICATION - Certain amounts in prior years financial statements have
been reclassified to conform to current year financial statement presentation.
These reclassifications are not considered material to the consolidated
financial statements.
2. REVERSE STOCK SPLIT
On October 29, 1993, the Board of Directors authorized a one for four reverse
stock split of the Company's common stock to be effective after the close of
business on November 19, 1993 which decreased the number of authorized, issued
and outstanding shares of common stock, and increased the par value of each
share from $.10 to $.40. All references in the accompanying consolidated
financial statements to the number of common shares, par value per share and
other per share information have been restated to give retroactive effect to
the one for four reverse stock split for all periods presented.
3. ACCOUNTING CHANGE
Effective May 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115 "Accounting for Certain Investments in Debt and Equity
Securities." In contrast to prior accounting treatment, unrealized gains and
losses on the trading portion of the trust fund investment portfolio will now
be recognized in earnings currently. The effect of adopting this pronouncement
was not material.
21
Page 43 of 65
<PAGE> 18
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
4. ACQUISITIONS
The Company acquired four funeral homes, one cemetery and one crematory during
fiscal year ended April 30, 1995 for total consideration of $4,428,316. During
the fiscal year ended April 30, 1994 the Company acquired three funeral homes
for total consideration of $2,300,000. Operating results of the acquired
entities have been included in the consolidated financial statements from their
date of acquisition.
The acquisitions were accounted for as a purchase; accordingly, the aggregate
purchase price was allocated to the assets acquired based upon their estimated
fair value at the dates of acquisition. The excess of the acquisition cost over
the fair value of the net tangible assets acquired is reflected as cost in
excess of fair value of net assets acquired and is being amortized over 30
years using the straight-line method. The purchase price allocations are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994
----------- ------------
<S> <C> <C>
Current assets $ 393,021 $ 156,580
Property and equipment 1,667,303 1,673,067
Cost in excess of fair value of net assets acquired 1,741,494 644,127
Other assets 2,288,754 866,675
Current liabilities (49,203) (35,490)
Deferred revenue and other liabilities (1,613,053) (1,004,959)
----------- ------------
$ 4,428,316 $ 2,300,000
=========== ============
</TABLE>
Included in other assets is $885,700 and $300,000 for non-compete agreements
related to the acquisitions in fiscal years 1995 and 1994, respectively. The
balances are being amortized over their respective lives ranging from 5 years
to 10 years.
The following table reflects, on an unaudited pro forma basis, the combined
results of the Company's operations and the operations acquired in fiscal 1995
and 1994, as if the acquisitions had taken place on May 1, 1993. Appropriate
adjustments have been made to reflect the accounting basis used in recording
these acquisitions.
<TABLE>
<CAPTION>
UNAUDITED
PROFORMA
YEAR ENDED APRIL 30,
----------------------------
1995 1994
<S> <C> <C>
Revenues $ 24,326 $ 22,613
Net income 3,114 6,438
Earnings per share $ .45 $ 1.23
</TABLE>
Pro forma information does not purport to be indicative of the results that
would have occurred had the acquisitions been made as of that date and is not
intended to be a projection of future results.
22
Page 44 of 65
<PAGE> 19
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
5. INSTALLMENT AND OTHER RECEIVABLES
Installment and other receivables consist of the following:
<TABLE>
<CAPTION>
1995 1994
-----------------------------
<S> <C> <C>
Pre-need funeral contracts receivable $10,985,000 $10,283,000
Pre-need cemetery contracts receivable 8,606,000 7,478,000
At-need funeral contracts receivable 585,000 414,000
Due from pre-need trusts and other 1,318,000 557,000
Notes receivable 242,000 108,000
----------- -----------
21,736,000 18,840,000
Less allowance for contract cancellations
and doubtful accounts (462,000) (679,000)
Less imputed interest on pre-need cemetery
contracts (507,000) (440,000)
----------- -----------
20,767,000 17,721,000
Due within one year, net (9,405,000) (8,073,000)
----------- -----------
Long-term, net $11,362,000 $ 9,648,000
=========== ===========
</TABLE>
Installment contracts are generally collected over terms of twenty-four to
sixty months.
23
Page 45 of 65
<PAGE> 20
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
6. INVENTORIES
The major components of inventories include:
<TABLE>
<CAPTION>
1995 1994
----------------------------
<S> <C> <C>
Developed cemetery lots and mausoleum crypts $1,646,000 $1,776,000
Caskets and vaults 565,000 461,000
Construction in progress 66,000 136,000
Other 81,000 47,000
---------- ----------
$2,358,000 $2,420,000
========== ==========
</TABLE>
7. CEMETERY PROPERTY
Cemetery property consists of the following:
<TABLE>
<CAPTION>
1995 1994
-----------------------------
<S> <C> <C>
Developed cemetery property $ 707,000 $ 709,000
Undeveloped cemetery land 6,191,000 5,682,000
----------- -----------
$ 6,898,000 $ 6,391,000
=========== ===========
</TABLE>
Undeveloped cemetery land consists of approximately 68 acres of land being held
for future development.
8. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
1995 1994
-----------------------------
<S> <C> <C>
Land and land improvements $3,941,000 $ 3,194,000
Funeral chapels and administration buildings 6,985,000 5,958,000
Machinery and equipment 2,549,000 1,868,000
Furniture and fixtures 916,000 723,000
Leasehold improvements 117,000 93,000
----------- -----------
14,508,000 11,836,000
Less accumulated depreciation (2,625,000) (2,058,000)
----------- -----------
$11,883,000 $ 9,778,000
=========== ===========
</TABLE>
Depreciation expense, computed by the straight-line method, was $611,000,
$539,000, and $372,000 in 1995, 1994 and 1993, respectively.
24
Page 46 of 65
<PAGE> 21
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
9. TRUST FUNDS AND ACCRUED MERCHANDISE
In accordance with applicable state law, the Company has established,
maintained and funded certain pre-need (prior to death) trusts to provide for
future funeral service, construction and merchandise obligations incurred in
connection with its pre-need sales. At April 30, 1995 and 1994 such pre-need
trust funds consisted of cash, cash equivalents and marketable debt and equity
securities and have been recorded as assets of the Company. The pre-need trusts
are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
-----------------------------
<S> <C> <C>
Pre-Need Merchandise Trust $19,629,000 $19,205,000
Pre-Need Funeral Services Trust 17,754,000 16,659,000
Pre-Need Services and Merchandise Trust 4,232,000 1,269,000
Pre-Construction Trust 283,000 178,000
----------- -----------
Total at cost $41,898,000 $37,311,000
=========== ===========
Total at market value $40,829,000 $35,616,000
=========== ===========
Unrealized depreciation of marketable
securities reflected in stockholders'
equity (net of income tax) $ 677,000 $ 1,057,000
=========== ===========
</TABLE>
Deposits to trust funds were $6,822,000 and $5,761,000 in 1995 and 1994,
respectively. Principal withdrawals related to fulfillment of pre-arranged
services and merchandise totaled $3,652,000 and $3,047,000 for 1995 and 1994,
respectively. The market value of trust fund investments at April 30, 1995 and
1994 includes gross unrealized gains of $445,000 and $158,000, and gross
unrealized losses of $1,514,000 and $1,853,000, respectively. Realized capital
gains and losses were $325,000 and $192,000 in 1995; $1,404,000 and $11,000 in
1994; and $1,256,000 and $14,000 in 1993. Interest and capital gains are
available to be withdrawn as received by the Pre-Need Funeral Service Trust.
Income from the Pre-Need Merchandise trust and the Pre-Need Services and
Merchandise trust is withdrawn on a pro-rata basis at the time of death.
Pre-Construction trust income remains in the trust until construction is
completed.
In addition, the Company maintains a Perpetual Care Trust to provide for future
cemetery maintenance. At April 30, 1995 and 1994, the trust balances were
$3,038,000 and $2,563,000, respectively. The trust principal can never be
withdrawn; accordingly, the trust is not recorded as an asset of the Company.
Income is available as earned for maintenance of the cemetery property.
25
Page 47 of 65
<PAGE> 22
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
9. TRUST FUNDS AND ACCRUED MERCHANDISE (CONTINUED)
The trust funds (including the Perpetual Care Trust) consist of the following
investments:
<TABLE>
<CAPTION>
1995 1994
------------------------------ ----------------------------
Cost Market Cost Market
<S> <C> <C> <C> <C>
U.S. Government Securities $12,054,000 $11,789,000 $ 8,544,000 $ 8,234,000
Corporate Bonds 14,593,000 13,848,000 14,985,000 14,140,000
Equity Securities 5,820,000 5,729,000 6,515,000 6,013,000
Cash Equivalents 9,346,000 9,346,000 6,502,000 6,502,000
Real Estate 687,000 687,000 687,000 687,000
Other 2,436,000 2,410,000 2,641,000 2,581,000
------------------------------ ----------------------------
$44,936,000 $43,809,000 $39,874,000 $38,157,000
============================== ============================
</TABLE>
As of April 30, 1995, all investment securities were deemed to be
available-for-sale. Included are debt securities at market of $27,355,000 with
maturities as follows: less than 1 year--$3,376,000; 1 to 5 years--$18,334,000,
and over 5 years--$5,645,000.
Accrued merchandise of $15,639,000 and $14,119,000 at April 30, 1995 and 1994,
respectively, represents the liability for the future delivery of caskets,
vaults, markers, and urns which were sold under pre-need contracts. The
liability is carried at current cost. Funds representing principal and interest
will be withdrawn from the pre-need merchandise trust fund and the pre-need
services and merchandise trust fund to provide the merchandise at the time of
death.
10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The major components of accounts payable and accrued expenses are:
<TABLE>
<CAPTION>
1995 1994
------------------------------
<S> <C> <C>
Accounts payable $ 365,000 $ 226,000
Accrued trust fund liabilities 581,000 640,000
Accrued compensation 624,000 586,000
Perpetual care payable 277,000 232,000
Accrued interest 371,000 203,000
Income taxes payable 163,000 41,000
Other 620,000 381,000
---------- ----------
$3,001,000 $2,309,000
========== ==========
</TABLE>
26
Page 48 of 65
<PAGE> 23
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
11. CHAPTER 11 AND REORGANIZATION MATTERS
On December 3, 1984, the Company filed a petition for reorganization under
provisions of Chapter 11 of the United States Bankruptcy Code. On April 15,
1986, the Court confirmed the Company's Plan of Reorganization which was
approved by all classes of creditors and shareholders. However, the Court
retained jurisdiction to take appropriate actions until all distributions have
been made pursuant to the Plan and a final order terminating the Company's case
has been entered. During fiscal year 1995, the Company extinguished all claims
and the final decree was entered on March 16, 1995.
12. FINANCING TRANSACTIONS
At April 30, 1995 and 1994, notes payable consisted of the following:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Term loan agreement, due in 2000 $12,625,000 $13,750,000
Revolving credit agreement - -
----------- -----------
12,625,000 13,750,000
Less current maturities - 1,500,000
----------- -----------
$12,625,000 $12,250,000
=========== ===========
</TABLE>
The Company entered into an amended senior financing agreement with Heller
Financial, Inc. ("Heller") on February 2, 1995. The Amended and Restated Credit
and Security Agreement ("the Agreement") provides for a Term Loan in the amount
of $12,625,000 and a Revolving Loan in the amount of $22,375,000. The Agreement
is collateralized by all properties and business assets of the Company and its
subsidiaries, except cemetery property and trust funds. The agreement contains
certain financial and restrictive covenants which provide for, among other
things, restrictions on the disposition of assets, limiting the payment of
dividends and the incurrence of certain liens, and the maintenance of certain
financial ratios. The Company is in compliance with the covenants contained in
the agreement as of April 30, 1995 and 1994.
The $12,625,000 Term Loan amended the Company's former Term Loan with Heller of
the same principal amount. The credit agreement provides for interest on the
outstanding Amended Term Loan at the prime rate plus 1-1/2% with interest
payable monthly, or at the Company's option, LIBOR plus 3-3/4% in one-, two-,
three- or six-month periods. The aggregate principal balance of the Term Loan
is payable in full on January 31, 2000.
27
Page 49 of 65
<PAGE> 24
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
12. FINANCING TRANSACTIONS (CONTINUED)
The $22,375,000 Revolving Loan provides for an Acquisition Loan Facility, as
well as a Working Capital Loan Facility. Amounts borrowed under the Revolving
Loan Facility may be repaid and reborrowed. At April 30, 1995 no funds have
been borrowed under this facility. Interest on outstanding Revolving Loan
balances is the prime rate plus 1% or LIBOR plus 3 1/4% in one-, two-, three-
or six-month periods. In addition, a commitment fee of 3/8 of 1% per annum
during the first loan year and 1/2 of 1% per annum thereafter, is payable
monthly, in arrears on the Revolving Loan Commitment less the sum of the
average daily balance of the Revolving Loan.
The Revolving Loan Facility provides for loans to be made from time to time
during the period from February 2, 1995 to January 30, 2000, for the purpose of
financing acquisitions and working capital. Heller's decision to make loans
under this facility will be based upon its evaluation and approval of the
business and financial condition of proposed acquisitions, approval of the
acquisition documentation and the meeting of certain minimum financial
criteria. The outstanding principal amount of loans under this facility will be
payable in full on January 31, 2000.
The total costs associated with the Amended Heller Loan Agreement amounted to
$410,000, of which $235,000 was paid and $175,000 of which shall be due and
payable on the earlier of the date of any prepayment in full of both the Term
Loan and Revolver or the first anniversary of the closing date. This $410,000
was added to the unamortized balance of the refinancing cost associated with
the original Heller loan for a total unamortized balance, at April 30, 1995, of
$1,425,000 which will be amortized over the remaining life of the loan on a
straight-line basis. If, during the first two loan years, the Company makes a
prepayment in full of the Term Loan and Revolving Loan, it shall pay to Heller
a fee for liquidated damages and compensation for the costs of Heller's being
prepared to make funds available to the Company in the amount of 2% in the
first loan year and 1% in the second loan year of the sum of the outstanding
balance of the loan.
13. DEFERRED REVENUE
Deferred revenue consists of the following:
<TABLE>
<CAPTION>
1995 1994
-----------------------------
<S> <C> <C>
Deferred revenue on the sale of pre-need
funeral services $34,205,000 $30,058,000
Less unamortized selling costs incurred (1,037,000) (890,000)
----------- -----------
$33,168,000 $29,168,000
=========== ===========
</TABLE>
28
Page 50 of 65
<PAGE> 25
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
14. INCOME TAXES
Upon adoption of SFAS No. 109 and through third quarter 1994 there was a
substantial risk that a significant portion of the NOL carryforward could be
limited due to contemplated changes in the Company's ownership through the
issuance of common stock in equity offerings (public or private placement) and
acquisition/merger transactions. In recognition of the substantial risk of
realizing these tax benefits the Company had provided a full valuation
allowance for the deferred tax asset relating to the NOL and AMT credit
carryforwards. In fiscal year 1994 significant favorable events occurred as
described below and a substantial amount of taxable income was generated
further reducing the NOL carryforward. During fiscal year 1994, income tax
regulations were finalized which substantially reduced the likelihood that a
change in ownership event would occur from a public equity offering. Subsequent
to the issuance of these regulations, the Company completed a secondary public
offering of common stock which increased the number of shares by approximately
35%. However, a Section 382 change in ownership did not occur. These events
substantially reduced the risk of a significant impairment of the tax benefits
of the NOL carryforward occurring from additional equity offerings or
acquisition/merger transactions. Accordingly, the Company revised its estimate
of the realizability of the tax benefits from the NOL carryforwards. The
Company concluded based on the changed circumstances that a valuation allowance
on the deferred tax asset relating to the NOL and AMT credit carryforwards was
no longer necessary. Realization of these tax benefits in future years is now
considered to be more likely than not. Therefore, in the fourth quarter of
fiscal year 1994, the Company reduced the valuation allowance and increased net
income by $2,395,000 or $.46 per share. Although the risk of a change in
ownership is always present, any limitation on ownership change would have on
the NOL carryforward should not impact the full utilization of the NOL
carryforwards before they are scheduled to expire.
At April 30, 1995, the Company has an income tax NOL carryforward of
approximately $3,211,000 available to offset future taxable income. These
carryforwards expire through 2010 as follows: 2000--$1,339,000,
2002--$1,783,000 and $89,000 thereafter.
29
Page 51 of 65
<PAGE> 26
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
14. INCOME TAXES (CONTINUED)
Significant components of the Company's deferred net tax asset (liability) as
of April 30, 1995 and April 30, 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
-----------------------------
<S> <C> <C>
Tax effects of:
NOL carryforwards $1,093,000 $ 2,640,000
Deductible temporary differences
Pre-need funeral contracts 4,207,000 3,368,000
Unrealized loss on trust fund securities 409,000 638,000
Other, net (72,000) 155,000
Alternative minimum tax credits 486,000 359,000
Purchase accounting adjustments 136,000 -
---------- ------------
Deferred tax asset 6,259,000 7,160,000
Valuation allowance - -
---------- ------------
Net deferred tax asset $6,259,000 $ 7,160,000
========== ============
Reflected in consolidated balance sheets as:
Current deferred tax asset, net $1,352,000 $ 1,846,000
Non-current deferred tax asset, net 4,907,000 5,314,000
---------- ------------
$6,259,000 $ 7,160,000
========== ============
</TABLE>
The current portion of the deferred tax asset at April 30, 1995 is based
primarily upon the expected utilization of the NOL carryforward and AMT credits
in 1996 from the Company's taxable income projection.
Significant components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------------------------------------------------
<S> <C> <C> <C>
Current tax expense $ 499,000 $ 410,000 $ 409,000
Deferred tax expense (benefit) 808,000 (3,141,000) (1,031,000)
---------- ------------ -----------
Income tax expense (benefit) $1,307,000 $(2,731,000) $ (622,000)
========== =========== ===========
</TABLE>
Current tax expense includes state income tax expense of $334,000, $302,000 and
$150,000 for fiscal years 1995, 1994 and 1993, respectively. The deferred tax
expense (benefit) for fiscal years 1995, 1994 and 1993 is principally from
utilization of federal income tax NOL carryforwards.
30
Page 52 of 65
<PAGE> 27
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
14. INCOME TAXES (CONTINUED)
The components of deferred tax expense (benefit) are summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------------------------------------------------
<S> <C> <C> <C>
Utilization of NOL carryforwards $1,547,000 $ - $ -
Pre-need funeral service contracts (839,000) (832,000) (1,039,000)
Reduction of valuation allowance - (2,395,000) -
Deferred compensation 50,000 199,000 (16,000)
Other 50,000 (113,000) 24,000
---------- ----------- -----------
$ 808,000 $(3,141,000) $(1,031,000)
========== =========== ===========
</TABLE>
A reconciliation between the effective income tax rate and federal statutory
rate is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-----------------------------------------
<S> <C> <C> <C>
Federal taxes at statutory rate $ 1,478,000 $ 1,093,000 $ 984,000
State income taxes, net of federal
benefit 220,000 199,000 99,000
Alternative minimum tax - - 122,000
Amortization of cost in excess of
fair value of net assets acquired 11,000 55,000 62,000
Officers' life insurance proceeds (340,000) - -
Other (62,000) 8,000 28,000
Utilization of net operating loss
carryforward - (1,691,000) (1,917,000)
Reduction in valuation allowance - (2,395,000) -
----------- ----------- -----------
Income tax expense (benefit) $ 1,307,000 $(2,731,000) $ (622,000)
=========== =========== ===========
</TABLE>
31
Page 53 of 65
<PAGE> 28
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
15. EMPLOYEE BENEFIT PLAN
Effective May 1, 1991, the Company adopted a defined contribution retirement
plan which covers substantially all employees. Contributions are made to the
plan at the discretion of the Company's Board of Directors. Subject to certain
limitations, employee contributions are eligible for Company matching
contributions. The Company's expense, including matching contributions, for the
fiscal year ended April 30, 1995, 1994 and 1993 was approximately $72,000,
$52,000, and $48,000, respectively.
16. STOCKHOLDERS' EQUITY
COMMON STOCK - Ten million (10,000,000) shares of the Company's $.40 par value
shares have been authorized with 6,271,126 shares and 6,164,224 shares
outstanding (excluding 57,129 shares held in treasury) at April 30, 1995 and
1994, respectively.
In December, 1993, the Company completed a secondary public offering of
2,200,000 shares of common stock which generated net proceeds of $16,343,000
after deducting applicable issuance cost and expenses. During fiscal year 1994,
the Company used approximately $7,469,000 of the net proceeds to completely
reduce indebtedness under its then existing acquisition line of credit,
$2,100,000 of the net proceeds to retire the Company's 10%, Subordinated Note
and $1,167,000 to acquire seven acres of land contiguous to its Broward
Operation. During fiscal year 1995, the Company used a portion of the proceeds
for current year acquisitions and intends to use the remainder of the net
proceeds of the offering (which are invested in high quality short-term cash
equivalents at April 30, 1995) for future acquisitions.
PREFERRED STOCK - The Company's Board of Directors may direct the issuance of
Preferred Stock in series and may, at the time of issuance, determine the
rights, preferences and limitations of each series. The Board of Directors of
the Company have, thus far, designated five series of Preferred Stock: Series A
Preferred Stock; Series B Preferred Stock; Series C Preferred Stock; $20
Preferred Stock; and Series D Preferred Stock. No Series A or D preferred
shares are outstanding or authorized for issuance. Principal rights,
preferences and limitations of outstanding designated series are as follows:
$1 PAR VALUE SERIES B CONVERTIBLE PREFERRED STOCK (SERIES B PREFERRED
STOCK) - One hundred thousand (100,000) shares of Series B Preferred
Stock have been designated. The shares have no dividend preference,
either cumulative or otherwise. Holders of Series B Preferred Stock
have the right to vote only on any decision submitted to the Company's
shareholders regarding any liquidation of the Company. Redemption and
conversion rights expired on June 20, 1988. At April 30, 1995 and
1994, there were 24,757 outstanding shares. Each share is entitled to
a liquidation preference of $20 per share aggregating $495,000.
32
Page 54 of 65
<PAGE> 29
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
16. STOCKHOLDER'S EQUITY (CONTINUED)
$1 PAR VALUE SERIES C PREFERRED STOCK - Two hundred thousand (200,000)
shares of Series C Preferred Stock have been designated. These shares
were issued to various creditors in settlement of certain litigation
and other pre-reorganization claims. Holders of Series C Preferred
Stock have the right to vote on any decision regarding the liquidation
of the Company.
At April 30, 1995 and 1994, there were 13,938 shares outstanding. Each
share is entitled to a liquidation preference of $20 per share
aggregating $278,800. Redemption and conversion rights expired for all
shares in fiscal year 1992.
MANDATORILY REDEEMABLE $20 PAR VALUE PREFERRED - One hundred thousand
(100,000) shares of $20 Par Value Preferred have been authorized.
No shares have been issued.
EMPLOYEE AND DIRECTOR STOCK OPTIONS - The 1984 Incentive Stock Option Plan and
1984 Non-Statutory Stock Option Plans expired on March 22, 1994, with all
options exercised prior to termination of the plan. The 1989 Stock Option Plan
was amended and restated on May 26, 1994 and ratified by the Stockholders on
September 15, 1994, adding an additional 600,000 shares authorized for grants
of options. Total shares authorized for grants of options under this plan are
1,075,000. Options under the 1989 Plan may be granted for a period of ten years
from the adoption of the plan and are exercisable at the date of grant. Such
options granted must be exercised prior to the termination date of the plan or
at an earlier date determined by the Stock Option Committee.
33
Page 55 of 65
<PAGE> 30
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
16. STOCKHOLDER'S EQUITY (CONTINUED)
During fiscal years 1995, 1994 and 1993, options granted under the 1989 plan
were granted at fair market value at the time of the grants.
Per share option prices noted below were the quoted market price at the dates
the options were granted.
<TABLE>
<CAPTION>
NUMBER OF PER SHARE
SHARES OPTION PRICE
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at April 30, 1992 310,628 $1.800 - $5.800
Canceled (125) $4.400
Exercised (37,438) $2.500 - $7.900
Granted 116,189 $6.100 - $7.900
--------
Options outstanding at April 30, 1993 389,254 $1.800 - $7.900
Canceled (1,625) $2.625 - $7.900
Exercised (124,063) $1.800 - $7.900
Granted 66,751 $7.500 - $8.726
--------
Options outstanding at April 30, 1994 330,317 $2.250 - $8.726
Canceled (125) $7.900
Exercised (106,902) $2.250 - $8.726
Granted 128,000 $7.075 - $9.800
--------
Options outstanding at April 30, 1995 351,290
--------
Exerciseable at April 30, 1995 351,290
--------
Shares available for future grants:
April 30, 1993 96,186
April 30, 1994 31,058
April 30, 1995 488,183
</TABLE>
34
Page 56 of 65
<PAGE> 31
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
16. STOCKHOLDER'S EQUITY (CONTINUED)
OTHER STOCK OPTIONS - Through December 23, 1993, MH Associates (see Note 17)
held an option to purchase up to 475,000 shares of common stock at $5.84 per
share, which was the average closing price of the Company's common stock for
the 30-day period ended on April 7, 1986 (date of grant). Under the terms of
the Option Amendment Agreement, dated October 26, 1990, the option may be
exercised at any time or from time to time prior to April 22, 1996 in whole or
in part. The exercise price was reduced from $5.84 per share to $2.25 per share
(closing price was $1.75 on the date of the reduction). The option has an
anti-dilution provision in the event the Company issues or sells additional
shares of common stock other than for cash at or below the then market price,
as defined. Under this provision, in December 1993, 11,352 additional shares of
the common stock were added to the option due to the secondary public offering
of common stock in December 1993. The number of shares of common stock under
this option at April 30, 1994 and 1995 were 486,352. If the option had been
exercised on April 30, 1995, the 486,352 shares issued as a result thereof
would have represented approximately 7.2% of the Company's outstanding common
stock. The purchase price of the original option was $1.00 per share, or an
aggregate of $475,000.
A warrant to purchase 37,500 shares of the Company's Common Stock was issued in
October 1992 at an exercise price of $7.00 per share for investment banking
services rendered by an unrelated party in connection with the Company's senior
financing agreement.
Warrants to purchase 210,522 shares of common stock held by The First National
Bank of Boston were registered in June 1993 and exercised by the bank in July,
1993. The Company's Star of David Merchandise Income Trust Fund acquired
100,000 of these shares from the bank in July, 1993 for $700,000.
WARRANTS ISSUED IN CONNECTION WITH THE SECONDARY PUBLIC OFFERING - the Company
sold to the representatives of the underwriters warrants, at a purchase price
of $.001 per warrant, to purchase from the Company 140,000 shares of common
stock. The representatives' warrants are exercisable for a period of four years
commencing December 15, 1994 at a per share exercise price equal to 120% of the
public offering price of $8.50. The representatives' warrants may not be sold,
transferred, assigned or hypothecated for a period of one year from the
effective date of the offering except to officers and other employees of the
representatives. The representatives' warrants contain anti-dilution provisions
for adjustment of the exercise price upon the occurrence of certain events,
including stock dividends, stock splits, recapitalizations and the issuance of
common stock for consideration less than the fair market value. The holders of
representatives' warrants have no voting, dividend or other rights as
shareholders of the Company with respect to shares underlying the warrants,
unless and until the warrants have been exercised.
DIVIDENDS - The payment of dividends is limited by the credit agreement (see
Note 12).
35
Page 57 of 65
<PAGE> 32
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
17. PENDING ACCOUNTING CHANGE
Statement of Financial Accounting Standards No. 114 "Accounting by Creditors
for Impairment of a Loan", which was amended by FAS No. 118, becomes effective
in fiscal year 1996. This Statement requires present value computations for
impaired loans when determining allowances for loan losses. Adoption of the
Statement is not expected to materially affect the Company's financial position
or results of operation.
18. RELATED PARTY TRANSACTIONS
In October 1990, the Company issued a $2,100,000 non convertible 10%
Subordinated Note, due in 1996, to MH Associates in exchange for the Company's
4% convertible subordinated notes, $1,100,000 in principal amount and all of
its outstanding Series D Redeemable Convertible Preferred Stock, face value
$1,000,000, (which together were convertible into 1,900,000 shares of the
Company's Common Stock). This 10% Subordinated Note was retired in the third
quarter of fiscal year 1994.
Interest paid to related parties totaled $0, $135,000 and $275,000 during the
fiscal years ended April 30, 1995, 1994 and 1993, respectively.
A law firm, with which a director is affiliated, received fees from the Company
for legal services of approximately $96,000, $87,000 and $153,000 during fiscal
1995, 1994 and 1993, respectively. In fiscal 1995, 1994 and 1993, $38,000,
$32,000 and $83,000 (relating to acquisition and refinancing costs) was
capitalized.
The Company's executive offices are owned by the Company's funeral trust fund
(Note 9) and was leased to the Company commencing in June 1992. The term of the
lease is ten years ending in June 2002 with options to renew the lease for two
additional five year terms. Rent approximated $80,000, $77,000 and $74,000 in
fiscal years 1995, 1994 and 1993, respectively. The rental agreement calls for
increases annually by three percent for years 2 through 5 and an annual
increase of four percent for years 6 through 10. In the opinion of management,
the terms of the lease are comparable to lease terms available from
unaffiliated third parties.
The amended employment agreement, dated April, 1994, with our deceased former
chairman provided for the Company to loan his spouse, upon request, the sum of
$136,000, bearing interest at the rate of 6.25% payable in 120 equal
consecutive monthly installments, including both principal and interest. The
request for such a loan was made in April, 1995.
19. COMMITMENTS AND CONTINGENCIES
PENDING AND THREATENED LITIGATION - The Company and its subsidiaries are party
to litigation involving claims arising in the normal course of business, none
of which, in the opinion of management, will have a materially adverse effect
on the financial position or results of operations when resolved.
36
Page 58 of 65
<PAGE> 33
MHI Group, Inc. and Subsidaries
Notes to Consolidated Financial Statements (continued)
20. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(amounts in thousands except per share data)
YEAR ENDED APRIL 30, 1995
-----------------------------------------------------
FIRST SECOND THIRD FOURTH
----- ------ ----- ------
<S> <C> <C> <C> <C>
Revenues $5,056 $6,183 $5,940 $6,614
Gross profit 3,422 3,873 3,929 4,331
Non-recurring income(1) 1,000 - - -
Net income 1,128 780 654 485
Earnings per common share $ .17 $ .11 $ .09 $ .07
</TABLE>
(1)Non-recurring income consists of key-man life insurance proceeds due to the
death of the former chairman.
37
Page 59 of 65
<PAGE> 34
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is listed on the New York and Pacific Stock
Exchanges. The following table sets forth the reported high and low sales
prices per share of common stock on the New York Stock Exchange from each
quarter of fiscal 1995 and 1994 as reported on the composite tape for issues on
the New York Stock Exchange, as restated for the Company's one-for-four reverse
stock split effected in November 1993.
<TABLE>
<CAPTION>
First Second Third Fourth
1995 Quarter Quarter Quarter Quarter
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High 10 3/8 9 3/4 7 7/8 8
Low 7 1/2 7 1/8 6 3/8 6 5/8
- - -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
1994 Quarter Quarter Quarter Quarter
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High 8 11 1/2 10 8 3/4
Low 6 1/2 7 7 5/8 7 3/8
- - -------------------------------------------------------------------------------------------------
</TABLE>
As of June 26, 1995, there were approximately 3,386 holders of record of the
Company's common stock.
There were no cash dividends paid on the Company's common stock for fiscal
years ended April 30, 1995 or 1994. Significant restrictions apply to the
Company's ability to pay such dividends. See Note 12 of Notes to Consolidated
Financial Statements.
The Form 10-K Annual Report filed with the Securities and Exchange Commission
is available to interested shareholders upon request to:
Secretary
MHI Group, Inc.
3100 Capital Circle N.E.
Tallahassee, Florida 32308
Telephone (904) 385-8883
38
Page 60 of 65
<PAGE> 1
Exhibit 13.1(a)
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
MHI Group, Inc.
We have audited the consolidated statements of operations, cash flows and
changes in stockholders' equity of MHI Group, Inc. for the year ended April 30,
1993, included in the 1995 Annual Report to Shareholders of MHI Group, Inc.
which are incorporated by reference in this Annual Report on Form 10-K. These
financial statements are the responsbility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated results of operations, cash
flows, and changes in stockholders' equity of MHI Group, Inc. for the year
ended April 30, 1993, in conformity with generally accepted accounting
principles.
As more fully discussed in Note 1, effective May 1, 1992, the Company adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes".
Our audit also included the financial statement schedules of MHI Group, Inc.
listed in Item 14(a) as of April 30, 1993 and for the year then ended. These
schedules are the responsibility of the Company's management. Our
responsbility is to express an opinion based on our audit. In our opinion, the
financial statement schedules referred to above, when considered in relation to
the basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Tallahassee, Florida
June 16, 1993, except for Note 2,
as to which the date is October 29, 1993
Page 61 of 65
<PAGE> 1
Exhibit 21
MHI GROUP, INC. AND SUBSIDIARIES
APRIL 30, 1995
Subsidiaries of Registrant:
Funeral Services Acquisition Group, Inc.
Incorporated in the State of Florida and State of Colorado
d/b/a - Star of David Memorial Gardens
Cemetery and Funeral Chapel
Star of David Family Assurance Plan
McLaughlin Mortuary
McLaughlin Twin Cities Funeral Home
McLaughlin Family Assurance Plan
Liveoak Park Memorial Cemetery
Oakley Funeral Home
Chapel Hill Gardens
Oakley Family Assurance Plan
Coleman & Ferguson Funeral Home
Richie Chapel
Coleman & Ferguson Family Assurance Plan
McNeil-Keyes Funeral Home
Crematory of Northwest Florida
Cedar Hill Chapel
McNeil-Keyes Family Assurance Plan
Koontz Little Chapel Funeral Home
C.E. Prevatt Funeral Home - Temple Terrace
C.E. Prevatt Funeral Home - St. Petersburg
Prevatt Family Services - Tampa
Howe Mortuary of Boulder
Darrell Howe Mortuary
Green Mountain Cemetery
McLaughlin-Aultman Funeral Home
Schmanski Funeral Home
MHI Institute
MHI Financial, Inc.
Incorporated in the State of Florida
Page 62 of 65
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our report dated June 16, 1993, except for Note 2, as
to which the date is October 29, 1993, is this Annual Report (Form 10-K) of MHI
Group, Inc.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-44183) pertaining to the Amended and Restated 1989 Stock
Option Plan of MHI Group, Inc. of our report dated June 16, 1993, except for
Note 2, as to which the date is October 29, 1993, with respect to the
consolidated financial statements incorporated herein by reference and with
respect to the financial statement schedules included in this Annual Report
(Form 10-K) of MHI Group, Inc.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Jacksonville, Florida
July 13, 1995
Page 63 of 65
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-44183) of MHI Group, Inc. of our report dated
June 16, 1995 appearing on page 9 of the Annual Report to Shareholders which is
incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedules,
as of and for the two years ended April 30, 1995, which appears on page F-2 of
this Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Tampa, Florida
July 13, 1995
Page 64 of 65
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K
FOR THE YEAR ENDED APRIL 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-START> MAY-01-1994
<PERIOD-END> APR-30-1995
<CASH> 4,332
<SECURITIES> 0
<RECEIVABLES> 9,405
<ALLOWANCES> 969
<INVENTORY> 2,358
<CURRENT-ASSETS> 17,621
<PP&E> 14,508
<DEPRECIATION> 2,625
<TOTAL-ASSETS> 108,558
<CURRENT-LIABILITIES> 3,001
<BONDS> 12,625
<COMMON> 2,531
0
39
<OTHER-SE> 40,218
<TOTAL-LIABILITY-AND-EQUITY> 108,556
<SALES> 20,808
<TOTAL-REVENUES> 24,793
<CGS> 5,253
<TOTAL-COSTS> 13,827
<OTHER-EXPENSES> 2,666
<LOSS-PROVISION> 406
<INTEREST-EXPENSE> 1,359
<INCOME-PRETAX> 4,354
<INCOME-TAX> 1,307
<INCOME-CONTINUING> 3,047
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,047
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
