<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended: June 30, 1994 Commission File No. 1-6963
ORIOLE HOMES CORP.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-1228702
- - -------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1690 S. Congress Ave., Suite 200 Delray Beach, Fl. 33445
- - --------------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 274-2000
- - -------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the close of the period covered by this report.
Class Outstanding at June 30, 1994
- - ------------------------------------- ----------------------------
Common Stock, Class A, par value $.10 1,895,549
Common Stock, Class B, par value $.10 2,729,975
<PAGE> 2
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
(Unaudited) (Audited)
-------------- ------------
<S> <C> <C>
Cash and cash equivalents $ 4,634,418 $ 14,650,532
-------------- ------------
Receivables:
Mortgage notes 1,965,527 1,618,659
Other - 4,000
-------------- ------------
1,965,527 1,622,659
-------------- ------------
Inventories:
Land 112,139,094 111,959,716
Houses and condominiums completed or
under construction 51,212,974 38,057,470
Model houses and condominiums 2,502,014 2,416,948
-------------- ------------
165,854,082 152,434,134
Less: Estimated costs of completion
included in inventories 27,346,758 24,031,951
-------------- ------------
138,507,324 128,402,183
-------------- ------------
Property and equipment (at cost):
Land 7,171,220 7,172,279
Buildings 22,898,188 23,130,421
Furniture, fixtures and equipment 5,404,222 5,357,097
-------------- ------------
35,473,630 35,659,797
Less: Accumulated depreciation 10,190,034 9,920,818
-------------- ------------
25,283,596 25,738,979
-------------- ------------
Other:
Prepaid expenses 2,797,120 1,812,081
Unamortized debt issuance costs 2,457,143 2,497,438
Investment in and advances to joint venture 7,000,000 3,500,000
Land held for investment (at cost) 2,791,450 2,791,450
Other assets 1,579,077 727,271
-------------- ------------
16,624,790 11,328,240
-------------- ------------
Total Assets $ 187,015,655 $181,742,593
============== ============
</TABLE>
See notes to consolidated financial statements
-1-
<PAGE> 3
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
(Unaudited) (Audited)
-------------- --------------
<S> <C> <C>
Liabilities:
Notes payable - banks $ 10,000 $ 96,317
Mortgage notes payable 14,611,711 14,399,479
Accounts payable 6,258,184 6,507,891
Dividends payable - 762,078
Customer deposits 11,974,916 6,091,570
Income taxes payable - 647,326
Accrued expenses and other liabilities 7,844,774 7,157,750
Deferred income taxes 753,844 850,908
12 1/2% Senior Notes due January 15, 2003,
net of $1,747,322 discount in 1994 and
$1,812,306 discount in 1993 68,252,678 68,187,694
------------- --------------
Total Liabilities 109,706,107 104,701,013
Shareholders' Equity:
Class A common stock, $.10 par value
Authorized - 10,000,000 shares
Issued and outstanding -
1,895,549 in 1994 and in 1993 189,555 189,555
Class B common stock, $.10 par value
Authorized - 10,000,000 shares
Issued and outstanding -
2,729,975 in 1994 and in 1993 272,998 272,998
Additional paid-in capital 19,267,327 19,267,327
Retained earnings 57,579,668 57,311,700
------------- --------------
Total Shareholders' Equity 77,309,548 77,041,580
------------- --------------
Total Liabilities and Shareholders' Equity $ 187,015,655 $ 181,742,593
============= ==============
</TABLE>
See notes to consolidated financial statements
-2-
<PAGE> 4
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
--------------------------- ---------------------------
1994 1993 1994 1993
------------ ------------- -------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Sale of houses and condominiums $ 36,762,606 $ 35,819,322 $ 16,247,023 $ 17,835,520
Sale of land 872,483 418,444 686,473 418,444
Other operating revenues 1,731,133 1,871,952 849,386 846,378
Interest, rentals and other income 1,670,114 1,551,625 930,688 668,861
Gain on sale of property and
land held for investment, net 56,177 16,486 35,219 9,234
------------- ------------- -------------- ------------
41,092,513 39,677,829 18,748,789 19,778,437
------------- ------------- -------------- ------------
Costs and Expenses:
Cost of houses and condominiums sold 31,419,697 29,166,448 13,934,218 14,530,267
Cost of land sold 770,714 362,462 610,976 361,992
Costs relating to other operating revenues 1,307,996 1,182,168 660,061 584,067
Selling, general and administrative
expenses 7,164,842 7,338,086 3,394,438 3,652,950
Interest costs incurred 5,110,893 5,019,709 2,555,125 2,544,946
Interest capitalized (deduct) (5,110,893) (4,862,878) (2,555,125) (2,544,946)
------------- ------------- -------------- ------------
40,663,249 38,205,995 18,599,693 19,129,276
------------- ------------- -------------- ------------
Income before provision for income taxes
and extraordinary item 429,264 1,471,834 149,096 649,161
Provision for income taxes 161,296 581,361 56,068 272,032
------------- ------------- -------------- ------------
Income before extraordinary item 267,968 890,473 93,028 377,129
Extraordinary Item-Loss on
repurchase of debt (less applicable
income taxes of $602,906) - (999,288) - -
------------- ------------- -------------- ------------
Net Income $ 267,968 $ (108,815) $ 93,028 $ 377,129
============= ============= ============== ============
Earnings per Class A and
Class B Common Share:
Net income before extraordinary item $ .06 $ .20 $ .02 $ .09
Extraordinary item - (.22) - -
------------- ------------- -------------- ------------
Total Net Income $ .06 $ (.02) $ .02 $ .09
============= ============= ============== ============
Average Number of Class A and Class B
Common Shares Outstanding 4,625,524 4,625,524 4,625,524 4,625,524
============= ============= ============== ============
Dividends per Class A Common Share $ - $ .40 $ - $ -
============= ============= ============== ============
Dividends per Class B Common Share $ - $ .425 $ - $ -
============= ============= ============== ============
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE> 5
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(Unaudited)
<TABLE>
<CAPTION>
June 30,
---------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 267,968 $ (108,815)
-------------- --------------
Adjustments to reconcile net income to net
cash (used in) operating activities
Depreciation 613,388 619,127
Amortization 180,279 1,762,441
Deferred income taxes (97,064) (69,678)
Gain on sale of property and equipment and other assets (56,177) (16,486)
Changes in assets and liabilities
(Increase) in investments - (2,933,140)
(Increase) in receivables (342,868) (582,719)
(Increase) in inventories (10,105,141) (11,326,781)
(Increase) in other assets (1,836,845) (1,090,842)
(Decrease) increase in accounts payable (249,707) 283,653
Increase in customer deposits 5,883,346 4,348,154
(Decrease) in income taxes payable (647,326) (415,704)
Increase in accrued expenses and other liabilities 686,938 3,652,997
Total adjustments (5,971,177) (5,768,978)
-------------- --------------
Net cash (used in) operating activities (5,703,209) (5,877,793)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in joint venture (3,500,000) -
Capital expenditures (332,812) (254,458)
Proceeds from the sale of property
and equipment and other assets 230,984 50,040
-------------- --------------
Net cash (used in) investing activities (3,601,828) (204,418)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgage notes 212,318 -
Repayments under line of credit agreements (86,317) (13,000,000)
Payment of term loan - (22,000,000)
Repurchase of debentures - (18,563,000)
Proceeds of Senior Notes (net) - 68,069,400
Senior notes issuance cost (75,000) (2,453,038)
Dividends paid (762,078) (1,918,459)
-------------- --------------
Net cash (used in) provided by financing activities (711,077) 10,134,903
-------------- --------------
NET (DECREASE) INCREASE IN CASH (10,016,114) 4,052,692
CASH AT BEGINNING OF PERIOD 14,650,532 6,942,103
-------------- --------------
CASH AT END OF PERIOD $ 4,634,418 $ 10,994,795
============== ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest (net of amount capitalized) $ - $ -
Income taxes $ 1,042,331 $ 579,200
</TABLE>
See notes to consolidated financial statements
-4-
<PAGE> 6
FORM 10Q
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated balance sheet as of June 30, 1994, the related
statements of income and cash flows for the three and six months ended
June 30, 1994 and 1993 have been prepared by the Company without
audit. In the opinion of the management of the Company, all
adjustments (consisting of normal recurring accruals) necessary for a
fair presentation of the unaudited interim periods have been reflected
herein.
Certain footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these consolidated financial
statements be read in conjunction with the financial statements and
notes thereto included in the Company's December 31, 1993 annual
report to shareholders.
Certain balances have been reclassified to conform to the current year
presentation.
2. The results of operations for the three and six months ended June 30,
1994 are not necessarily indicative of the results for the entire
year.
3. Affiliated Companies.
The Company does not have investments in affiliated companies.
- 5 -
<PAGE> 7
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Backlog of Contracts for Sales of Houses and Condominiums
<TABLE>
<CAPTION>
June 30, 1994 December 31, 1993
------------------------ ---------------------------
Units Amounts Units Amounts
----- ----------- ----- -----------
<S> <C> <C> <C> <C>
Single-Family Homes 115 $21,091,358 81 $14,068,923
Multi-Family 314 49,449,528 176 25,286,538
----- ----------- ----- -----------
Total 429 $70,540,886 257 $39,355,461
===== =========== ===== ===========
</TABLE>
5. Following is a computation of earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -------------------------------
June 30, 1994 June 30, 1993 June 30, 1994 June 30, 1993
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Income before extraordinary item $ 93,028 $ 377,129 $ 267,968 $ 890,473
Extraordinary item - - - (999,288)
----------- ----------- ------------- -----------
Net Income (Loss) $ 93,028 $ 377,129 $ 267,968 $ (108,815)
=========== =========== ============= ===========
Weighted average number of
common shares outstanding 4,625,524 4,625,524 4,625,524 4,625,524
=========== =========== ============= ===========
Earnings per share before
extraordinary item $ .02 $ .09 $ .06 $ .20
Extraordinary item - - - (.22)
----------- ----------- ------------- -----------
Total earnings (loss) per share $ .02 $ .09 $ .06 $ (.02)
=========== =========== ============= ===========
</TABLE>
6. Credit Commitments
On January 13, 1993, the Company issued its 12 1/2% Senior Notes ("Notes"), due
January 15, 2003. The Notes have a face value of $70,000,000 and were issued at
a discount of $1,930,600. The Notes are senior unsecured obligations of the
Company subject to redemption at the Company's option on or after January 15,
1998, at 105% of the principal amount and thereafter at prices declining
annually to 100% of the principal amount on or after January 15, 2001.
The indenture under which the Notes were issued requires sinking fund payments
of $17,500,000 on January 15, 2001 and January 15, 2002.
The indenture contains certain covenants that, among other things, limit the
ability of the Company to incur additional indebtedness, pay dividends or make
certain other distributions, repurchases or issuances of capital stock or
subordinated indebtedness.
A portion of the proceeds of the Notes offering was used to repay all debt
outstanding under the Company's bank credit agreement, and the redemption at
par of the Company's outstanding 12 7/8% Subordinated Debentures due July 15,
2000. The balance of the proceeds were added to the Company's working capital.
On July 13, 1993, the Company entered into a secured revolving loan agreement
with a bank which provides up to $10,000,000 in short-term financing at an
interest rate of prime plus 1 1/2%. As of June 30, 1994, the outstanding loan
balance was $10,000.
-6-
<PAGE> 8
Suite 1100
Broward Financial Centre
500 East Broward Boulevard
Ft. Lauderdale, FL 33394-3095
305-764-1235
FAX 305-764-1293
Grant Thornton (LOGO)
Accountants and
Management Consultants
Board of Directors The U.S. Member Firm of
Oriole Homes Corp. Grant Thornton International
We have reviewed the accompanying consolidated balance sheet of Oriole Homes
Corp. and Subsidiaries as of June 30, 1994, and the related consolidated
statements of income and cash flows for the three-month and six-month periods
then ended. These financial statements are the responsibility of the company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data, and making inquires of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1993, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the year then ended (not presented herein) and in our report dated February
4, 1994, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 1993, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
/s/ Grant Thornton
Miami, Florida
July 22, 1994
- 7 -
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL POSITION
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1994, COMPARED TO THREE MONTHS ENDED JUNE 30, 1993
The Company's revenues from home sales decreased $1.6 million (or 8.9%) during
the second quarter of 1994 as compared to the same period in 1993. The Company
delivered 123 homes in the 1994 quarter compared to 150 in the same period of
1993. The average selling price of homes delivered increased 11.1% (from
$118,903 to $132,090). The Company entered into 198 new contracts with an
aggregate dollar value of $29.7 million in the second quarter of 1994 compared
to 221 new contracts with an aggregate dollar amount of $30.0 million in the
1993 period The Company attributes its drop in revenues largely to the
preference of its customers to take delivery of their homes closer to the end
of the calendar year. Therefore, the Company anticipates sales will rebound in
the third and fourth quarters of this year.
Interest, rentals and other income increased from $.9 million from $.7 million
in the same period of 1993 mainly due to interest generated from the Company's
investment in a joint venture.
Cost of home sales decreased to $13.9 million in 1994 from $14.5 million in
1993 mainly as a result of the decrease in the number and dollar amount of
homes delivered. As a percentage of home sales, cost of homes sold increased
to 85.8% from 81.5%. Gross margins during the second quarter of 1994 were
adversely affected due to increases in construction costs and the inability of
the Company, due to market conditions, to immediately pass those increases on
to customers.
Selling, general and administrative expenses decreased to $3.4 million in 1994
from $3.7 million in 1993, but as a percentage of total revenues, these
expenses remained at approximately the same level.
Net income in the 1994 second quarter decreased to $.09 million from $.4
million in the comparable period of 1993. The decrease is attributed mainly to
lower margins on sales of houses and condominiums.
SIX MONTHS ENDED JUNE 30, 1994, COMPARED TO SIX MONTHS ENDED JUNE 30, 1993
The Company's revenues from home sales increased $.9 million (or 2.6%). The
Company delivered 277 homes in the first six months of 1994 as compared to 295
homes in 1993. The average selling price of homes delivered increased 9% from
$121,421 to $132,717. New contracts signed (449) in 1994 and the amount of
these new contracts ($67.9 million) increased from 465 new contracts
representing $60.4 million in 1993.
Other operating revenues decreased from $1.9 million in 1993 to $1.7 million in
1994 as a result of a refund in 1993 of previously paid real estate taxes.
Interest, rentals and other income increased from $1.6 million in 1993 to $1.7
million in 1994 mainly due to interest generated from the Company's investment
in a joint venture.
Cost of sales increased from $29.2 million in 1993 to $31.4 million in 1994.
As a percentage of sales, cost of sales increased from 81.4% in 1993 to 85.5%
in 1994.
Selling, general and administrative expenses decreased from $7.3 million in
1993 to $7.2 million in 1994, and as a percentage of total revenues, decreased
to 17.4% in 1994 from 18.5% in 1993.
Net income increased from a loss of $0.1 million in the first six months of
1993 to a gain of $0.3 million in the comparable period of 1994. Net income
for the first six months of 1993 was affected by a nonrecurring
- 8 -
<PAGE> 10
extraordinary expense in the amount of $999,288 net of income taxes, or $.22
per share in connection with the early redemption of the Company's Subordinated
Debentures and the early repayment of a bank credit agreement.
The dollar amount of the Company's backlog, which reflects new sales contracts
that have yet to close, increased 30% to $70,540,886 (representing 429 units)
as of June 30, 1994 from $54,094,315 (representing 410 units) as of June 30,
1993. The average per unit value of the Company's backlog now stands at
$164,431, representing an increase of 25% over the $131,937 recorded at the end
of 1993's second quarter. Included in this year's backlog are 29 units from
the upscale project Fairway Point valued at a total of $14,129,340, or an
average of $487,219 per unit. If the Fairway Point units are eliminated, the
backlog as of June 30, 1994 would have consisted of 400 units with a value of
$56,411,546, or an average of $141,029 per unit as compared to 245 units with a
value of $33,965,511, or $138,635 per unit as of December 31, 1993.
FINANCIAL CONDITION AND LIQUIDITY
The Company's financing needs depend primarily upon sales volume, asset
turnover, land acquisition and inventory balances. The Company has historically
financed its working capital needs through funds generated from operations,
borrowings and the issuance of common stock.
As of June 30, 1994, the Company had outstanding borrowings of approximately
$82.8 million, including $68.3 of Senior Notes due 2003 (the "Senior Notes")
and available cash and short term investments of approximately $4.6 million.
At June 30, 1994 the Company also had available funds of approximately $10
million pursuant to available but unused credit facilities. The Company
believes that the funds generated from operations and its borrowing
availability under credit facilities will be sufficient to fund the Company's
foreseeable working capital requirements, with the possible exception of land
acquisitions.
As of June 30, 1994, the Company had invested $7 million in two Joint Ventures
with a reputable South Florida building company. The joint venture agreements
provide that the Company is to receive (1) a 10% return plus $4,000 as each of
112 units are sold; (2) a 15% return, plus $2,800 as each developed lot or
dwelling unit is sold and 5% of the gross sales price on land sales. The
Company's investment and its return are guaranteed by the other Joint Venturer
and by the principal shareholder of the Joint Venturer.
- 9 -
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 4 - RESULTS OF VOTES OF SHAREHOLDERS
(a) On May 9, 1994, a regular Annual Shareholders Meeting was held at the
Company's headquarters located at 1690 South Congress Avenue, Delray
Beach, FL 33445.
(b) Not applicable.
(c) The following matters were submitted to Shareholders:
(1) ELECTION OF DIRECTORS, CLASS A
<TABLE>
<CAPTION>
BROKERS
FOR AGAINST ABSTENTION NON-VOTE
--- ------- ---------- --------
<S> <C> <C> <C> <C>
R. D. Levy 1,404,878 - 0 - 10,523 283,417
H. A. Levy 1,404,778 100 10,523 283,417
E. E. Hubshman 1,404,878 - 0 - 10,523 283,417
A. Nunez 1,404,878 - 0 - 10,523 283,417
E. H. Berns 1,404,878 - 0 - 10,523 283,417
ELECTION OF DIRECTORS, CLASS B
<CAPTION>
BROKERS
FOR AGAINST ABSTENTION NON-VOTE
--- ------- ---------- --------
<S> <C> <C> <C> <C>
R. E. Deems 1,548,796 - 0 - 5,249 413,524
D. C. McClosky 1,548,796 - 0 - 5,249 413,524
P. R. Lehrer 1,548,796 - 0 - 5,249 413,524
(2) ADOPTION OF THE COMPANY'S 1994 STOCK OPTION PLAN FOR EMPLOYEES
<CAPTION>
BROKERS
FOR AGAINST ABSTENTION NON-VOTE
--- ------- ---------- --------
<S> <C> <C> <C>
1,290,715 36,140 19,134 516,356
(3) ADOPTION OF THE COMPANY'S 1994 STOCK OPTION PLAN FOR NON-EMPLOYEE
DIRECTORS
<CAPTION>
BROKERS
FOR AGAINST ABSTENTION NON-VOTE
--- ------- ---------- --------
<S> <C> <C> <C>
1,323,030 30,524 19,234 492,356
</TABLE>
- 10 -
<PAGE> 12
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
The June 30, 1994 unaudited Financial Statements included in this Form 10-Q
have been reviewed by Grant Thornton in accordance with established
professional standards and procedures for such a review.
There were no reports on Form 8-K for the six months ended June 30, 1994.
- 11 -
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13, of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ORIOLE HOMES CORP
-----------------
(Registrant)
Date: July 29, 1994
- - --------------------------
/s/ R. D. Levy
-------------------------
R. D. Levy,
Chief Executive Officer,
Date: July 29, 1994
- - --------------------------
/s/ A. Nunez
-------------------------
A. Nunez
Chief Financial Officer,
- 12 -
