<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-K
---------
Annual Report pursuant to Section 13 of The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
File No. 1-6963
ORIOLE HOMES CORP.
------------------
1690 South Congress Avenue, Suite 200, Delray Beach, Florida 33445
(407) 274-2000
<TABLE>
<S> <C>
Florida 59-1228702
------------------------ ----------------------
(State of Incorporation) (I.R.S. Employer I.D.)
Securities registered pursuant of Section 12(b) of
the act:
Name of Each Exchange on
Title of Each Class Which Registered
------------------------------------ ------------------------
Class A Common Stock, $.10 par Value American Stock Exchange
Class B Common Stock, $.10 par Value American Stock Exchange
12 1/2% Senior Notes due 2003
----------------------------------
</TABLE>
The Registrant (1) HAS filed all reports required to be filed by Section
13 of the Securities Exchange Act of 1934 during the preceding twelve months;
and (2) HAS been subject to the filing requirements for at least the past 90
days.
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 ].
As of March 11, 1996, the Company had outstanding 1,891,249 shares of its
Class A Common Stock and 2,734,275 shares of its Class B Common Stock.
The aggregate market value of voting stock held by non-affiliates of the
Registrant is $24,173,243 as of March 11, 1996.
Part II is partially incorporated by reference from the Registrant's
Annual Report to Shareholders for the year ended December 31, 1995, and Part
III is incorporated by reference from the Registrant's Proxy statement for the
1996 Annual Meeting.
<PAGE> 2
PART I
ITEMS 1 AND 2 BUSINESS AND PROPERTIES
Oriole Homes Corp. ("Oriole" or the "Company") has built and sold
single-family homes, patio homes, townhouses, villas, duplexes and low-and
mid-rise condominiums in planned communities in southeast Florida since 1963.
During each of the last five years, Oriole was the largest builder of
condominiums for active adults in Palm Beach County, both in dollar volume and
number of units sold. The Company's attributes have been, (i) construction of
quality homes within communities that offer a wide range of amenities, (ii)
satisfied customers who provide a continual source of referrals, (iii) offering
a wide selection of moderately priced housing, (iv) extensive knowledge of the
southeast Florida market, (v) effective cost control policies, and (vi) a land
acquisition and development strategy that reduces land costs per unit, permits
development and construction in phases, and ensures availability of
strategically located land for future development.
For the year ended December 31, 1995 Oriole posted a loss for only the
second time since becoming a public company in 1969. After reviewing the
Company's overall disappointing performance during the past year, the Company
is taking meaningful steps to return to profitability.
The Company will continue to stress most of its prior attributes but the
Company is now stressing an expansion of its geographic market into Bonita
Springs (southwest Florida) and the Ocala area. It is also reducing its
reliance on purchasing large tracts of land and building a large variety of
homes in a community. The combination of land carrying costs and a reduction
in the rate of price appreciation is making it prudent to purchase property
that is ready for immediate development. Going forward, greater emphasis will
be centered into taking advantage of opportunities in the market. The Company
will however continue to purchase large tracts for the development of
master-planned communities as the market demands.
Approximately 76 percent of Oriole's revenues are derived from sales in
communities designed exclusively for active adults (age 55 and over), the
fastest growing demographic segment in the United States. The Company alters
its product mix to meet changes in the housing preferences of this market,
which enjoys a high percentage of discretionary income. Home prices range from
$107,000 to $208,000 in the Company's active adult communities except for
Fairway Point, a luxury project where prices range from $370,000 to $530,000.
In 1995, approximately 61 percent of Oriole's sales of homes and condominiums
in communities designed for active adults were cash sales. The sales prices of
Oriole's residences averaged
1
<PAGE> 3
approximately $169,536 for condominiums and $192,567 for single-family homes
during the year ended December 31, 1995.
The Company was incorporated in the State of Florida in 1968 as the
successor to six corporations engaged in the construction and sale of
single-family homes since 1963. Unless the context otherwise requires, the
terms "Company" and "Oriole" refer to Oriole Homes Corp. and its consolidated
subsidiaries. The Company's principal executive offices are located at 1690
South Congress Avenue, Suite 200, Delray Beach, Florida 33445, and its
telephone number is (407) 274-2000.
HOME BUILDING DATA
The following table sets forth information concerning sales, new contracts
and backlog for each of the past five years for the Company's single-family
homes, patio homes, townhomes, villas, duplexes and low-and mid-rise
condominiums.
<TABLE>
Years Ended December 31,
-----------------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C>
Total Sales
Sales value $70,101 $89,423 $98,302 $110,116 $73,409
Number of homes 614 708 771 775 433
Total New Contracts
Sales value $74,260 $91,216 $108,180 $100,109 $79,410
Number of homes 629 743 788 661 483
Total Backlog (1)
Sales value $27,684 $29,477 $39,355 $29,348 $35,349
Number of homes 205 240 257 143 193
</TABLE>
______________________
(1) Backlog as of the end of the period.
The Company expects to fill substantially all backlog, both in number of
homes and dollar amount, within twelve months. It typically takes the Company
four to eight months after receipt of a sales contract to build and deliver the
completed home to the purchaser. The Company's backlog historically tends to
increase between January and May. These contracts are generally with active
adults who are planning their retirement and desire occupancy of their homes in
the months of October through December.
2
<PAGE> 4
OPERATING POLICIES
Quality Construction and Diverse Amenities. The Company is a developer of
moderately-priced residential housing and related amenities, which create a
total lifestyle unique to Oriole communities. The Company's communities
include extensive recreational facilities, which range from social clubhouses
and swimming pools in its single-family communities to multi-million dollar
clubhouses, with tennis courts, indoor and outdoor swimming pools, theaters for
the performing arts and health clubs/spas, in its active adult communities.
The development of planned communities and the construction of such
amenities require financial resources unavailable to many home builders,
thereby limiting the number of builders that might otherwise compete directly
with the Company. The Company believes that its planned communities appeal to
purchasers and permit the Company to offer its customers various housing
products in one location. The Company has built over 20,000 homes in southeast
Florida, and satisfied purchasers provide the Company with a continual source
of referrals.
Product Diversification. The Company's homes appeal to a wide variety of
buyers and lifestyles. Accordingly, the Company offers a diversity of home
styles and price ranges at various locations. The Company sells single-family
homes, patio homes, townhomes, villas, duplexes and low-and mid-rise
condominiums. Home designs are continually reviewed and refined to reflect
changing tastes. Sales prices presently range from approximately $70,000 to
$530,000, and the average sales price of homes delivered during 1995 was
approximately $169,500. See "Communities Currently Under Development or
Construction."
Florida Market. The Company's residential developments are all located in
the State of Florida and primarily in Southeast Florida (Broward, Palm Beach
and Martin Counties). The Company also has developments in Naples and Ocala,
Florida.
Cost Controls and Company Policies. The Company has attempted to control
costs by (i) acquiring large tracts of undeveloped land and developing the land
in phases (ii) developing planned communities, which permit the Company to take
advantage of certain economies of scale, (iii) generally beginning construction
only when homes are under contract, and (iv) acting as general contractor and
hiring subcontractors on a fixed-price or other cost-effective basis.
3
<PAGE> 5
The Company's general policy is not to begin construction of
single-family homes prior to the execution of a sales contract, which
minimizes the costs and risk of completed but unsold inventory. The Company
maintains a limited inventory of completed homes for sale. There were thirty six
single family homes completed and unsold in inventory (not including model
homes) at December 31, 1995. In many instances, the Company will begin
multi-family construction (duplex, townhouse, villa and multi-story complexes)
when sales contracts are in effect for a predetermined percentage of the units.
As of December 31, 1995, the Company's inventory included 81 unsold completed
units in multi-family projects.
Land Acquisition and Development. The Company selects locations for its
developments on the basis of accessibility to major highways and thoroughfares,
proximity to shopping areas, medical facilities and community cultural and
recreation centers. The Company generally acquires large tracts of land that
require site improvements prior to construction. The tracts of land are
separated into phases for both development and construction. The Company
typically acquires land on which construction can begin within three years.
The Company spends considerable effort in developing design and marketing
concepts for each of its communities. The design concepts determine the size,
style and price range of homes, the layout of streets and individual lots and
the overall community design. The product line offered in a particular
community depends upon many factors, including the housing generally available
in the area, the needs of the particular market and the cost of building lots.
After finalizing the design concepts, the Company undertakes development
activities that include site planning and engineering, construction of roads,
sewer, water and drainage facilities, recreational facilities and other
amenities.
4
<PAGE> 6
RESIDENTIAL PROJECTS AND PRODUCT LINES
The following table summarizes information as of December 31, 1995 with respect
to the Company's principal projects under development or construction during
1995.
<TABLE>
<CAPTION>
Units Sold
Name and Year Units Sold and and
Location of Development Total Units Delivered Thru Delivered in
Development Started Type Planned 1995 1995
- ---------------------------- ----------- ---- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Lakeshore at University Park 1981 Mixed 1,160 426(3) -
Miramar
Country Glen 1993 Single 300 27 27
Cooper City Family
Cypress Bend 1980 Mixed 1,583 1,549(4) 36
Pompano Beach
Sandpiper Landing 1995 Single 145 - -
Coconut Creek Family
Boca Springs 1990 Single 214 213 27
Boca Raton Family
Fairway Point 1993 Active 60 42 22
Boca Raton Adult
Coral Lakes 1992 Active 1,325 187 121
Delray Beach Adult
Huntington Pointe 1989 Active 1,096 1,096 11
Delray Beach Adult
Palm Isles 1991 Active 992 794 119
Boynton Beach Adult
Majestic Isles 1994 Active 450 4 4
Boynton Beach Adult
</TABLE>
<TABLE>
Units
Units Under Under Remaining
Construction(1) Contract Units(2)
--------------- -------- ---------
At December 31, 1995
--------------------------------------------------------
<S> <C> <C> <C>
Lakeshore at University Park - - 200
Miramar
Country Glen 22 32 241
Cooper City
Cypress Bend - 1 1
Pompano Beach
Sandpiper Landing 6 7 138
Coconut Creek Family
Boca Springs - - 1
Boca Raton
Fairway Point - 2 16
Boca Raton
Coral Lakes 117 45 1,093
Delray Beach
Huntington Pointe - - -
Delray Beach
Palm Isles 38 24 174
Boynton Beach
Majestic Isles 23 18 428
Boynton Beach
</TABLE>
5
<PAGE> 7
RESIDENTIAL PROJECTS AND PRODUCT LINES - Continued
<TABLE>
<CAPTION>
Units Sold
Name and Year Units Sold and and
Location of Development Total Units Delivered Thru Delivered in
Development Started Type Planned 1995 1995
- ----------------- ----------- ------ ----------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Palm Isles West 1995 Active 235 - -
Boynton Beach Adult
Cypress Woods 1989 Single 152 40 14
Lake Worth Family
Summer Chase 1989 Active 221 110 19
Lake Worth Adult
Whispering Sound 1991 Active 230 93 32
Palm City/Stuart Adult
Sandpiper Isles 1995 Mixed 140 1 1
Bonita Springs
Sandpiper Greens 1995 Mixed 60 - -
Bonita Springs
Stonecrest 1995 Active 124 - -
Ocala Adult
</TABLE>
<TABLE>
<CAPTION>
Units
Units Under Under Remaining
Construction(1) Contract Units(2)
--------------- ----------- ---------
At December 31, 1995
------------------------------------------------------
<S> <C> <C> <C>
Palm Isles West 25 22 213
Boynton Beach
Cypress Woods 6 8 104
Lake Worth
Summer Chase 9 7 104
Lake Worth
Whispering Sound - 10 127
Palm City/Stuart
Sandpiper Isles - 6 133
Bonita Springs
Sandpiper Greens - - 60
Bonita Springs
Stonecrest 4 11 113
Ocala
</TABLE>
(1) Includes model units.
(2) Includes model units and potential units to be constructed.
(3) Does not include 534 rental units.
(4) Does not include 32 rental units.
6
<PAGE> 8
COMMUNITIES CURRENTLY UNDER DEVELOPMENT OR CONSTRUCTION
COUNTRY GLEN is a community of single-family homes located in Cooper City,
Florida. The community consists of 300 units with recreational facilities and
is presently under development and construction. Prices range from $236,000 to
$330,000.
CYPRESS BEND is a complex of five-and nine story lakefront condominium
buildings located in Pompano Beach priced from $70,000 to $110,000. The
community features over $1 million of recreational amenities, including social
clubhouses with swimming pools, tennis and racquetball courts, and jogging and
exercise trails and was sold out in early 1996.
SANDPIPER LANDING is a 145 units single-family neighborhood of 3 and 4
bedroom, two-car garage residences within a 240 acre master planned private
gated community, priced from $130,000 to $150,000, located in Coconut Creek,
Florida.
BOCA SPRINGS is comprised of 214 single-family homes in west Boca Raton.
The community features one- and two-story homes with two-car garages.
Recreational facilities include a private park with a swimming pool and deck
area, basketball, tennis court and a play area for children. This neighborhood
has top-rated schools, parks and medical facilities and was sold out in early
1996.
FAIRWAY POINT consists of two, 30 unit 8-story buildings located in Boca
West, Boca Raton, Florida. Boca West is a luxury country club community.
Fairway Point is being built on the last available parcel of land in Boca West.
The units contain approximately 3,350 square feet of air-conditioned space and
800 square feet of balconies. They contain all luxury amenities. Prices range
from $370,000 to $530,000.
CORAL LAKES is an active adult community at Delray Beach. The community
of 1,325 units features condominiums in two- and four-story buildings, villas,
duplexes and a section of single-family residences with two-car garages.
Prices range from $120,000 to $187,000. This community will have a
multi-million dollar on-site clubhouse and spa, similar to but larger than the
completed facility at Palm Isles, and also feature satellite swimming pools.
HUNTINGTON POINTE is a community for active adults at Delray Beach. This
community of 1,096 units features a variety of homestyles, including
quadplexes, villas and duplexes, and lakefront four-story condominium
buildings. This community was sold out in 1995.
PALM ISLES is an active adult community of 992 residences at Boynton
Beach. Prices in this community range from $130,000 to $145,000, and home
styles include villas, duplexes,
7
<PAGE> 9
lakefront two-story condominiums and single-family residences. The community
has a multi-million dollar on-site clubhouse and spa with eight tennis courts.
The community also features satellite swimming pools.
MAJESTIC ISLES is an active adult community of 450 duplexes and
single-family residences located at Boynton Beach. Prices are from $148,000 to
$185,000. The community will feature an intimate, luxury clubhouse with
swimming pool and tennis courts.
PALM ISLES WEST , an active adult community at Boynton Beach, features 235
duplexes and single-family residences priced from $122,000 to $189,000.
Residents of this community will share Palm Isles multi-million dollar
clubhouse, spa, and tennis courts, plus enjoy the convenience of a satellite
swimming pool and sun deck within Palm Isles West.
CYPRESS WOODS is a single-family home community located at Lake Worth and
consists of 152 luxury single-family homes. Prices are from $150,000 to
$185,000. Recreational facilities include a private family park area with
basketball, tennis courts and a play area for children.
SUMMER CHASE is a community for active adults located at Lake Worth. The
community features 221 single-family residences with two-car garages. The
price range is from $142,000 to $176,000. A social clubhouse is available to
all residents along with tennis courts and pool.
WHISPERING SOUND is an active adult community of 230 duplex residences
located in Martin county at Palm City/Stuart. The residences range in price
from $110,000 to $117,000. The community includes natural preserved areas
offering backyard privacy for nearly every residence. The social clubhouse is
available to all residents along with tennis courts and pool.
SANDPIPER ISLES is a 140 home neighborhood of luxury 3 bedroom, 2 bath
coach homes surrounded by lakes and preserves, priced from the low $200's and
luxury 3 bedroom, 3 1/2 bath mid-rise condominiums, priced from the mid 200's,
all with private social clubhouse, lakeside pool and gated entry, located in
Bonita Springs, Florida.
SANDPIPER GREENS is a neighborhood of 60 3 bedroom, 2 bath garden mid-rise
residences near luxury country club clubhouse, priced from the low to mid
$200's, located in Bonita Springs, Florida.
ORIOLE AT STONECREST is an active adult community of 2 and 3 bedroom
single-family homes and villas, priced from $80,000 to $120,000, offering
championship golf, social recreational clubhouse with pool, located in Marion
County close to Ocala, Florida.
8
<PAGE> 10
CONSTRUCTION
The Company acts as the general contractor for the construction of its
developments except in the Bonita Springs projects. Company employees monitor
the construction of each project, participate in design and building decisions,
coordinate the activities of subcontractors and suppliers, maintain quality and
cost controls and monitor compliance with zoning and building codes.
Subcontractors typically are retained for a specified phase of development
pursuant to a contract that obligates the subcontractor to complete
construction at a fixed price. Agreements with the Company's subcontractors
are generally entered into after competitive bidding. The Company does not
have any long-term contractual commitments with any of its subcontractors.
The Company generally constructs single-family homes only after the
execution of a sales contract. The Company attempts to minimize cancellations
by requiring a down payment and qualifying its customers for mortgage approval
prior to commencement of construction.
The Company offers a variety of options for each of its homes. These
options permit buyers to customize their homes and permit the Company to offer
variations on standard models while maintaining the efficiencies of a
production builder. The Company believes the availability of these options
increases the appeal of the Company's homes and makes them suitable to the
needs of a wide variety of buyers.
At December 31, 1995, the Company employed approximately 76 people in the
construction operation. Most construction materials are obtained by
subcontractors and are readily available from numerous sources. The Company
has not experienced any material delays in construction due to shortages of
materials or labor, however, the fact that there has been a significant
increase in construction activities in Southeast Florida could result in the
Company or its subcontractors experiencing shortages in the labor market.
MARKETING AND SALES
The Company sells its homes through sales managers and independent
commissioned salespersons, who typically work in model sales centers or from
sales offices located in model homes and condominiums in the Company's
communities. The Company also cooperates with independent real estate brokers.
The Company trains sales personnel on the availability of financing,
construction schedules, marketing and advertising plans. The Company's sales
and marketing organization consists of approximately 49 Company employees and
sales personnel, all of whom are licensed real estate agents in the State of
Florida. The concentration of the Company's projects in southeast Florida
permits the Company to engage salespersons on a long-term, rather
9
<PAGE> 11
than a project-by-project basis, which management believes results in reduced
training costs and a more motivated sales force with extensive knowledge of the
Company's operating policies and housing products.
The Company advertises in newspapers and magazines, by direct mail and on
billboards. In fiscal 1995, the Company's aggregate advertising costs were
approximately $1.8 million. The Company maintains model homes and condominiums
in all its communities, and management believes that these model units play a
particularly important role in the Company's marketing efforts. The Company
expends a significant effort in creating an attractive atmosphere at its
models, where interior decorations are based upon the lifestyles of the target
buyers.
COMPETITION AND MARKET FACTORS
The development and sales of residential properties is highly competitive
and fragmented. The Company competes on the basis of a number of interrelated
factors, including location, reputation, amenities, design, quality and price,
with numerous large and small builders. Some of these competing builders have
nationwide operations and greater financial resources. The Company's
products must also compete with resales of existing homes and condominiums
and available rental housing. Management believes that the Company's primary
competitive strengths have been (i) satisfied customers who provide a continual
source of referrals, (ii) its ability to offer quality residences with certain
customized features at a wide range of prices, (iii) the location of its
communities, and (iv) its reputation for service, innovative design and value
pricing.
The Company maintains a strong position in the active adult community
marketed in southeast Florida and has been the leading builder of condominiums
in Palm Beach County in each of the last five years. The Company focuses on
providing a high-quality, active lifestyle for adults. The Company also
believes that the high capital costs required to develop a community with
substantial amenities effectively limits the number of competitors in the
active adult market.
The housing industry is cyclical and is affected by consumer confidence
levels, prevailing economic conditions and interest rates. A variety of other
factors affect the housing industry and the demand for new homes, including the
availability and increase in the cost of labor and materials, changes in costs
associated with home ownership, such as increases in property taxes and energy
cost, changes in consumer preferences, demographic trends and the availability
of mortgage financing programs.
10
<PAGE> 12
CUSTOMER FINANCING
The Company works with a number of mortgage lenders to provide home buyers
with a variety of conventional mortgage financing programs. By making
available a variety of attractive mortgage programs, the Company is able to
better coordinate and expedite the entire sales transaction by ensuring that
mortgage commitments are obtained and that closings take place on a timely and
efficient basis. In 1995, approximately 61 percent of Oriole's sales of homes
and condominiums were cash sales.
RENTAL APARTMENTS
The Company owns 480 rental units known as The Pier Club, in Miramar,
Florida. The Company also rents an additional 71 units in other developments.
The Company rents these apartments, typically under one-year leases. The
Company's future plans do not presently include the construction of any
additional rental communities.
JOINT VENTURE WITH REGENCY HOMES
As of December 31, 1995, Oriole had funded $5.6 million in a joint venture
with Regency Homes, Inc., a prominent builder of residential housing in South
Florida. The initial joint venture project, funded in 1993, involved the
development and construction of 108 single-family homes in southwest Broward
County in a development known as Silver Lakes and a second joint venture
approved for 1,100 units known as Regency Lakes was entered into in 1994.
Oriole Homes Corp. has purchased from the joint venture 145 sites for $3.3
million.
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS
In developing a community, the Company must obtain the approval of
numerous government authorities that regulate such matters as permitted land
uses, density levels, the installation of utilities such as water, drainage and
waste disposal, and the dedication of acreage for open space, parks, schools
and other community purposes. Several authorities in Florida including Broward
and Palm Beach counties, have imposed impact fees as a means of defraying the
costs of providing certain governmental services to developing areas. The
amount of these impact fees has increased significantly during recent years.
Building codes in these counties require the use of specific construction
material which increase the energy efficiency of homes. In addition, each
county in which the Company is building has imposed restrictive zoning and
density requirements in order to limit the number of persons who live and work
within their boundaries. Counties and cities within the State of Florida have
also, at times, declared moratoriums on the issuance of building permits and
imposed other restrictions in the areas where sewage treatment facilities and
other public facilities do not reach minimum standards.
11
<PAGE> 13
To date, restrictive zoning laws and imposition of moratoriums have not had a
material adverse effect on the Company's development activities. However,
there is no assurance that such restrictions will not adversely affect the
Company in the future.
The Company is also subject to a variety of federal, state and local
statutes, ordinances, rules and regulations concerning protection of the
environment. Environmental laws vary greatly according to the community's
location, the site's environmental conditions and the present and former uses
of the site. These environmental laws may result in delays, causing the
Company to incur substantial compliance and other costs, and prohibit or
severely restrict development. Prior to consummating the purchase of land, the
Company engages independent environmental engineers to evaluate such land for
the presence of hazardous or toxic materials, wastes, or substances. The
Company has not been adversely affected to date by the presence or potential
presence of such materials.
Certain permits and approvals will be required to complete the communities
currently being planned by the Company. The ability to obtain necessary
permits and approvals is often beyond the Company's control and could restrict
or prevent the development of otherwise desirable property. The length of time
necessary to obtain permits and approvals increases the carrying costs of
unimproved property. In addition, the continued effectiveness of permits
already granted is subject to factors such as changes in policies, and the
interpretation and application of rules and regulations.
The Florida Local Government Comprehensive Planning and Land Development
Regulation Act (the "Act") provides that public facilities, including, but not
limited to, sewer, solid waste, drainage, potable water, parks, roads and
recreation facilities, shall be available concurrently with the impact of land
development projects that would use such facilities. This requirement is known
as the "concurrency" requirement. Counties and cities are required to
implement concurrency by adopting local comprehensive plans and land
development regulations. These plans and regulations establish the guidelines
for concurrency review and the exemptions from the concurrency requirement.
All of the Company's development projects in Palm Beach County have been found
to satisfy concurrency requirements.
In recent years, regulation by federal and state authorities relating to
the sale and advertising of residential real estate has also become more
restrictive. In order to advertise and sell condominiums in many
jurisdictions, the Company has been required to prepare registration statements
or other disclosure documents and, in some cases, to file such materials with
designated regulatory agencies. The Company advertises its condominium units
in New York and New Jersey and prepares registration statements in connection
with sales in those states and in the State of Florida.
12
<PAGE> 14
The State of Florida requires that customer deposits be held in segregated
bank accounts. As of December 31, 1995, the Company has posted bonds of $5.0
million and had entered into an escrow agreement with a bank and the State of
Florida that allows the Company to use customer deposits. See Note J of Notes
to Consolidated Financial Statements.
EMPLOYEES
The Company employs approximately 235 persons, of whom approximately 44
are executive and supervisory personnel. The Company has had no major work
stoppages as a result of labor disputes and believes that relations with its
employees and its subcontractors are good.
CORPORATE HEADQUARTERS
The Company rents 22,500 square feet of space in a two-story office
building. The lease expires January 1, 1998. See Note O of Notes to
Consolidated Financial Statements.
ITEM 3 LEGAL PROCEEDINGS
The Company is a party to various lawsuits, all of which are of a routine
nature and are incidental to the Company's present business activities. These
proceedings are not material, nor would the adverse resolution thereof
materially affect the business or properties of the Company.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE BY SECURITY HOLDER
No matters were submitted to security holders during the 4th quarter. The
annual Meeting of Shareholders of the Registrant has been scheduled for May 16,
1996. The Company will file its definitive proxy material pursuant to
Regulation 14, prior to April 30, 1996.
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
Information required by this item is incorporated by reference to the
Registrant's 1995 Annual Report to Shareholders.
13
<PAGE> 15
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item is incorporated by reference to the
Registrant's 1995 Annual Report to Shareholders.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
General. The following table sets forth for the periods indicated certain
items of the Company's Consolidated Financial Statements expressed as a
percentage of the Company's total revenues:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Percentage of Total Revenues
Years Ended December 31,
- -----------------------------------------------------------------------
1993 1994 1995
-----------------------
<S> <C> <C> <C>
Sale of houses and condominiums 92.7% 91.8% 89.3%
Sale of land 0.8 1.6 2.0
Other operating revenues 3.4 2.8 3.7
Interest, rentals and other income 3.1 3.6 4.8
Gain on sale of property and land held for
investment, net - 0.2 0.2
Selling, general and administrative expenses 15.1 13.6 18.9
Net income (loss) 2.5 3.4 (14.3)
- -----------------------------------------------------------------------
</TABLE>
Backlog. The following table sets forth the Company's backlog at December
31, 1993, 1994 and 1995.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
December 31, Number of Units Aggregate Dollar Value
- -----------------------------------------------------------
<S> <C> <C>
1993 257 $39,355,000
1994 143 $29,348,000
1995 193 $35,349,000
- -----------------------------------------------------------
</TABLE>
The Company's backlog generally represents units under contract for which
a full deposit has been received, any statutory rescission right has expired,
and in the case of a borrower, such borrower has been qualified for a mortgage
loan. The Company generally fills all backlog within twelve months. The Company
estimates that the period between receipt of a sales contract and delivery of
the completed home to the purchaser is four to eight months. The Company's
backlog historically tends to increase between January and May. Trends in the
Company's backlog are subject to change from period to period for a number of
economic conditions including consumer confidence levels, interest rates and
the availability of mortgages.
14
<PAGE> 16
RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED
DECEMBER 31, 1994
The Company's revenues from home sales decreased $36.7 million (or 33.3%)
during the calendar year 1995 as compared to the same period in 1994. The
Company delivered 433 homes in 1995 compared to 775 in 1994, with an increase
of 19.3% in the average selling price of homes delivered (from $142,100 to
$169,500). The increase in the average selling price per home is primarily the
result of the Company's entry into an upscale condominium community where the
average selling price is $565,000 and a single family home community where the
average selling price is $272,000. The decrease in home sales is believed to
be the result of resistance to higher home prices that were precipitated by
increases in material costs and by new building codes requiring greater
hurricane protection. Also, resales were weak thoughout the country which
negatively affected the ability of the Company's prime customers, active
adults, to sell their present homes and use those funds to purchase retirement
homes in Florida.
The number of new contracts signed (483) and the aggregate dollar value of
these new contracts ($79.4 million) decreased in 1995 from 661 and $100.1
million in 1994.
The Company's backlog has increased from $29.3 million at December 31,
1994 to $35.3 million as of December 31, 1995. A decrease in interest rates
in the second half of 1995 contributed to a larger number of new sales
contracts received by the Company and this trend has continued in early 1996
and is expected to remain through 1996.
Other operating revenues decreased to $3.1 million during 1995 from $3.4
million in 1994 primarily as a result of higher vacancies in the rental units
project. Interest, rentals and other income decreased to $4.0 million from
$4.3 million in 1994.
Cost of home sales decreased to $62.2 million in 1995 from $91.8 million
in 1994 as a result of a decrease in the dollar volume of homes delivered. As
a percentage of home sales, cost of home sales increased to 84.8% from 83.4%
due to increased competition, the absorption of higher construction costs and
the impact of higher previously capitalized interest.
Selling, General and Administrative Expenses ("SG&A") decreased to $15.5
million in 1995 from $16.3 million in 1994, but as a percentage of total
revenues, these expenses increased to 18.9% from 13.6% in the same period of
1994. Interest costs incurred in 1995 increased to $10.7 million from $10.4
million in 1994.
The Company incurred a net loss for the year ended December 31, 1995 of $11.8
million or $2.54 per share, after a non-cash pre-tax write down of $13.9
million as of December
15
<PAGE> 17
31, 1995, pertaining to the carrying cost of certain land inventory. In
1994 the Company had a net income of $4.1 million or $.89 per share. The
write-down affects the carrying cost of land inventory for approximately 360
unsold housing units located in three developments originally purchased in 1989
and 1991. Land inventories are carried at cost, plus accumulated development
and construction costs, including capitalized interest and real estate taxes.
As these developments are among the Company's oldest and slower selling
projects, they have been materially affected by the accumulated cost
allocations. As a result, the accumulated cost of this inventory was in excess
of its net realizable value. Results for 1995 also include a reduction of
$686,744 in the Company's reserve for construction defects, which reflects
unused warranty reserve related to finished projects.
RESULTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED
DECEMBER 31, 1993
The Company's revenues from home sales increased $11.8 million (or 12.0%)
during the calendar year 1994 as compared to the same period in 1993. The
Company delivered 775 homes in 1994 compared to 771 in 1993, with an increase
of 11.5% in the average selling price of homes delivered (from $127,500 to
$142,100). The number of new contracts signed (661) and the aggregate dollar
value of those new contracts ($100.1 million) decreased in 1994 from 788 and
$108.2 million in 1993.
Other operating revenues decreased to $3.4 million during 1994 from $3.6
million in 1993 due to a larger vacancy rate on our rental apartments.
Interest, rentals and other income increased to $4.3 million in 1994 from $3.3
million in 1993 due to the return on investment in joint ventures.
Cost of home sales increased to $91.8 million in 1994 from $80.7 million
in 1993 as a result of an increase in the number of homes delivered. As a
percentage of home sales, cost of home sales increased to 83.4% from 82.1%.
Selling, General and Administrative expenses ("SG&A") increased to $16.3
million in 1994 from $16.0 million in 1993, but as a percentage of total
revenues, these expenses decreased to 13.6% from 15.1% in the same period of
1993. The Company's interest cost incurred in 1994 was $10.4 million as
compared to $10.2 million the same period in 1993.
Net income increased $1.5 million in 1994 or 56.6% over 1993. As a
percentage of total revenues, the 1994 net income increased to 3.4% as compared
to 2.5% in 1993, which reflected an extraordinary item in 1993 of $999,288 net
of taxes, from the write-off of unamortized debentures and loan costs.
16
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
The Company's financing needs depend primarily upon sales volume, asset
turnover, land acquisition and inventory balances. The Company has financed
its working capital needs through funds generated by operations, borrowings and
the periodic issuance of common stock.
On January 13, 1993, the Company issued $70.0 million of its 12 1/2%
Senior Notes ("Notes") due January 15, 2003. 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% on or after January 15, 2001. The indenture
under which the Notes were issued requires sinking fund payments of $17.5
million on January 15, 2001 and January 15, 2002. The indenture contains
provisions restricting the amount and type of indebtedness the Company may
incur, the purchase by the Company of its stock and the payment of dividends.
At December 31, 1995, dividend payments are restricted and will be restricted
until the Company posts cumulative net income in excess of $20.5 million.
The Company had, as of December 31, 1995, a $15.0 million revolving line
of credit of which $6.5 million was available at a rate of prime plus 1.5%,
which expires July 1, 1997. On January 12, 1996 this line was increased to
$20.0 million. This line is secured by assets aggregating not less than 2
times the amount of the line and in addition to typical restrictions and
covenants the Company must:
a) maintain a consolidated tangible net worth of not less than $60.0
million.
b) The issuance of additional debt is restricted by covenants in the
agreement.
This line can be used to finance ongoing development, construction of
residential real estate and other short-term capital needs.
The Company had outstanding an aggregate balance of approximately $15.0
million of purchase money mortgages at interest rates from 8.875% - 11.75%
which are collateralized by land and buildings. Of these mortgages, $.7
million is due in 1996 and $14.3 million are payable in 2003.
The Company as of February 29, 1996 has borrowed the maximum amounts
allowed under its line of credit ($20.0 million). While the Company does not
have any current commitments for capital expenditures, it may be necessary in
1996 to sell certain of the Company's assets to provide adequate cash flow to
finance its home building activities and meet its debt service. The Company
has entered into negotiations for the sale of certain assets which, if closed,
may result in aggregate sales of approximately
17
<PAGE> 19
$10.0 million on or prior to June 30, 1996. The Company is also anticipating
the receipt of an income tax refund of $1.4 million. The consummation of these
transactions will alleviate the current cash flow situation. Additional asset
sales may occur in the second half of 1996 which would also improve cash flow.
INFLATION
The Company, as well as the home building industry in general, may be
adversely affected during periods of high inflation, primarily because of
higher land and construction costs. In addition, higher mortgage interest
rates may significantly affect the affordability and availability of permanent
mortgage financing to prospective purchasers. Inflation also increases the
Company's cost of labor and materials. The Company attempts to pass through to
its customers any increases in its costs through increased selling prices.
During the last three years, the Company has experienced a reduction in gross
margins on the sale of homes. In some part, these reduced margins are the
result of the Company being unable to raise selling prices and pass on
increased construction costs. There is no assurance that inflation will not
have a material adverse impact on the Company's future results of operations.
ACCOUNTING METHODS
The Company will be required to apply the provisions of Statement of
Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
SFAS 121 establishes guidance for when to recognize and how to measure
impairment losses of long-lived assets and certain identifiable intangible
assets. The Company will be required to implement this standard in its fiscal
year 1996. Management does not expect the implementation of SFAS 121 to have a
material effect on the Company's financial position or results of operations.
The Company will also be required to apply the provisions of Statement of
Financial Accounting Standards No.123 ("SFAS No.123"), "Accounting for
Stock-Based Compensation." The Company will be required to present additional
disclosures regarding the fair value of stock options. The Company will be
required to implement this standard in fiscal year 1996. The Company does not
expect the implementation of SFAS No.123 to have a material effect on the
Company's financial position or results of operations.
18
<PAGE> 20
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
<TABLE>
<CAPTION>
ASSETS
1995 1994
------------ ------------
<S> <C> <C>
Cash and cash equivalents $ 3,275,615 $ 14,609,489
Receivables
Mortgage notes (Note B) 280,562 1,098,688
Due at closing 114,700 167,609
Income taxes (Note I) 1,660,846 -
------------ ------------
2,056,108 1,266,297
------------ ------------
Inventories (Notes A and C)
Land 103,435,218 112,721,638
Houses and condominiums completed or under
construction 48,306,006 40,497,339
Model houses and condominiums 3,386,194 2,199,908
------------ ------------
155,127,418 155,418,885
Less estimated costs of completion included
in inventories 23,699,916 28,592,120
------------ ------------
131,427,502 126,826,765
------------ ------------
Property and equipment (at cost) (Notes A, H and O)
Land 7,168,046 7,170,113
Buildings 22,283,655 22,473,045
Furniture, fixtures and equipment 5,445,387 5,432,784
------------ ------------
34,897,088 35,075,942
Less accumulated depreciation 10,892,078 10,447,207
------------ ------------
24,005,010 24,628,735
------------ ------------
Other
Prepaid expenses 2,378,932 1,990,535
Unamortized debt issuance costs 2,098,760 2,277,529
Investment in and advances to joint ventures (Note E) 5,625,000 7,000,000
Land held for investment (at cost) 3,001,783 2,996,901
Deferred income taxes (Note I) 458,375 -
Other assets 5,151,232 3,061,755
------------ ------------
18,714,082 17,326,720
------------ ------------
Total assets $179,478,317 $184,658,006
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
19
<PAGE> 21
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Liabilities
Line of credit (Note G) $ 8,500,000 $ -
Mortgage notes payable (Note H) 15,041,573 17,419,250
Accounts payable 7,328,804 6,464,417
Dividends payable - 993,409
Customer deposits (Note J) 6,072,046 4,975,199
Accrued expenses and other liabilities (Note K) 8,393,132 7,820,330
Deferred income taxes (Note I) - 1,104,706
Senior notes (Note L) 66,481,313 66,457,682
------------ ------------
Total liabilities 111,816,868 105,234,993
------------ ------------
Shareholders' equity (Notes L, M and N)
Class A common stock, $.10 par value
Authorized - 10,000,000 shares
Issued - 1,891,249 in 1995 and
1,893,349 in 1994 189,125 189,335
Class B common stock, $.10 par value
Authorized - 10,000,000 shares
Issued - 2,734,275 in 1995 and
2,732,175 in 1994 273,428 273,218
Additional paid-in capital 19,267,327 19,267,327
Retained earnings 47,931,569 59,693,133
------------ ------------
Total shareholders equity 67,661,449 79,423,013
------------ ------------
Total liabilities and shareholders' equity $179,478,317 $184,658,006
============ ============
</TABLE>
20
<PAGE> 22
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
Revenues
Sales of houses and condominiums $ 73,409,093 $ 10,116,572 $98,302,003
Sales of land 1,610,441 1,959,779 891,041
Other operating revenues 3,070,455 3,365,024 3,600,196
Gain on sales of property and land held for
investment, net 173,619 202,374 42,258
Interest, rentals and other income (Note O) 3,972,662 4,333,548 3,260,305
------------ ------------ -----------
82,236,270 119,977,297 106,095,803
------------ ------------ -----------
Costs and expenses
Cost of houses and condominiums sold 62,232,488 91,778,577 80,682,884
Non-recurring write-down of inventory (Note C) 13,917,02 - -
Cost of land sold 1,384,516 1,726,119 772,020
Costs relating to other operating revenues 3,180,214 2,804,767 2,517,756
Selling, general and administrative
expenses 15,532,512 16,313,685 16,001,923
Interest costs incurred 10,653,413 10,430,616 10,154,739
Interest capitalized (deduct) (9,898,999) (9,736,452) (9,997,908)
------------ ------------ -----------
97,001,169 113,317,312 100,131,414
------------ ------------ -----------
Income (loss) before provision for (benefit
from) income taxes and extraordinary
charge (14,764,899) 6,659,985 5,964,389
Provision for (benefit from) income taxes
(Note I) (3,003,335) 2,523,065 2,324,023
------------ ------------ -----------
Income (loss) before extra-
ordinary charge (11,761,564) 4,136,920 3,640,366
Extraordinary charge - loss on early retire-
ment of debt, net of income taxes - - (999,288)
------------ ------------ -----------
Net income (loss) $(11,761,564) $ 4,136,920 $ 2,641,078
============ ============ ===========
Net income (loss) per common share before
extraordinary charge $ (2.54) $ .89 $ .79
Extraordinary charge - - (.22)
------------ ------------ -----------
Net income (loss) per Class A and Class B
common share $ (2.54) $ .89 $ .57
============ =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
21
<PAGE> 23
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1995 1994 1993
------------- ----------- ------------
<S> <C> <C> <C>
Increase (decrease) in cash
Cash flows from operating activities
Net income (loss) $ (11,761,564) $ 4,136,920 $ 2,641,078
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities
Depreciation 1,258,516 1,234,118 1,265,836
Amortization 437,006 474,897 333,062
Deferred income taxes (1,563,081) 382,344 (11,748)
Gain on sales of property and equipment and
other assets (173,619) (202,374) (42,258)
Loss on early retirement of debt - 1,602,194
Changes in assets and liabilities
(Increase) decrease in receivables (789,811) 356,362 250,624
(Increase) decrease in inventories (4,596,546) 1,575,418 (10,058,507)
(Increase) in other assets (2,477,874) (2,512,938) (650,765)
Increase (decrease) in accounts payable 864,387 (43,474) 1,256,048
Increase (decrease) in customer deposits 1,096,847 (1,116,371) 1,110,379
Increase (decrease) in accrued expenses
and other liabilities 572,802 (113,292) 3,773,250
------------ ----------- ------------
Total adjustments (5,371,373) 34,690 (1,171,885)
------------ ----------- ------------
Net cash (used in) provided by
operating activities (17,132,937) 4,171,610 1,469,193
------------ ----------- ------------
Cash flows from investing activities
Return of (investment in) joint ventures 1,375,000 (3,500,000) (3,500,000)
Land held for investment (4,882) (205,451) -
Capital expenditures (1,212,533) (702,466) (416,120)
Proceeds from sales of property and equipment 747,170 780,966 152,771
------------ ----------- ------------
Net cash provided by (used in) investing
activities 904,755 (3,626,951) (3,763,349)
------------ ----------- ------------
Cash flows from financing activities
Proceeds from mortgage notes 345,508 3,444,962 -
Payment of mortgage notes (2,723,185) (425,191) (160)
Borrowings under line of credit agreement 20,500,000 9,500,000 196,317
Repayments under line of credit agreement (12,000,000) (9,596,317) (13,100,000)
Payment of term loan - - (22,000,000)
Repurchase of debentures - - (18,563,000)
Proceeds from issuance of 12 1/2% senior notes - - 68,069,400
Repurchase of senior notes (126,000) (1,910,000) -
Issuance costs (108,606) (75,000) (2,681,514)
Dividends paid (993,409) (1,524,156) (1,918,458)
------------ ----------- ------------
Net cash provided by (used in) financing
activities 4,894,308 (585,702) 10,002,585
------------ ----------- ------------
Net (decrease) increase in cash (11,333,874) (41,043) 7,708,429
Cash and cash equivalents at beginning of year 14,609,489 14,650,532 6,942,103
------------ ----------- ------------
Cash and cash equivalents at end of year $ 3,275,615 $14,609,489 $ 14,650,532
============ =========== ============
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest (net of amount capitalized) $ 610,777 $ 624,828 $ -
Income taxes $ 643,049 $ 3,268,315 $ 1,501,243
</TABLE>
The accompanying notes are an integral part of these statements.
22
<PAGE> 24
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
Common Stock
----------------------------------------
Class A Class B Additional
------------------- ------------------- Paid-in Retained
Shares Amount Shares Amount Capital Earnings
--------- -------- --------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,1993 1,895,564 $189,557 2,729,960 $272,996 $19,267,327 $57,351,158
Net income for 1993 - - - - - 2,641,078
Stock conversion (15) (2) 15 2 - -
Cash dividends
Class A common stock $.55
per share - - - - - (1,042,555)
Class B common stock $.60
per share - - - - - (1,637,981)
--------- -------- --------- -------- ----------- -----------
Balance at December 31,1993 1,895,549 189,555 2,729,975 272,998 19,267,327 57,311,700
Net income for 1994 - - - - - 4,136,920
Stock conversion (2,200) (220) 2,200 220 - -
Cash dividends
Class A common stock $.35
per share - - - - - (663,002)
Class B common stock $.40
per share - - - - - (1,092,485)
--------- -------- --------- -------- ----------- ------------
Balance at December 31, 1994 1,893,349 189,335 2,732,175 273,218 19,267,327 59,693,133
Net loss for 1995 - - - - - (11,761,564)
Stock conversion (2,100) (210) 2,100 210 - -
--------- -------- --------- -------- ----------- ------------
Balance at December 31, 1995 1,891,249 $189,125 2,734,275 $273,428 $19,267,327 $ 47,931,569
========= ======== ========= ======== =========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
23
<PAGE> 25
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER
INFORMATION
Principles of Consolidation
The accompanying Consolidated Financial Statements include the accounts of
Oriole Homes Corp. and all wholly-owned subsidiaries (the "Company").
Significant intercompany accounts and transactions have been eliminated in
consolidation.
Operations
The Company, a Florida corporation, is engaged principally in the design,
construction, marketing and sale of single and multi-family residential
homes (including condominiums) primarily in southeast (Palm Beach, Broward
and Martin Counties) Florida. The Company also has developments in Naples
and Ocala, Florida.
Revenue Recognition
The Company records revenues and profits from sales of real estate in
accordance with generally accepted accounting principles governing profit
recognition for real estate transactions.
Inventories
Inventories are carried at cost, plus accumulated development and
construction costs (including capitalized interest and real estate taxes).
House and condominium inventories which are completed and being held for
sale aggregate approximately $13,275,000 in 1995 and $12,152,000 in 1994.
The accumulated costs of land, houses and condominiums are not in excess of
estimated net realizable value. Estimated net realizable value is based upon
sales achieved and backlog in the normal course of business less estimated
cost to complete and dispose of the property. The Company's management, on
an on-going basis, reviews individual projects in inventory for impairment.
Interest Capitalization
The Company follows the practice of capitalizing certain interest costs
incurred on land under development and houses and condominiums under
construction. Such capitalized interest is included in cost of house and
condominium sales when the units are delivered. During the years 1995,
1994, and 1993 respectively, the Company capitalized interest in the
amount of $9,898,999, $9,736,452 and $9,997,908 and expensed as a component
of cost of goods sold $6,270,173, $9,313,121 and $10,036,456.
24
<PAGE> 26
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER
INFORMATION - Continued
Depreciation
The Company provides for depreciation of property and equipment by the
straight-line and accelerated methods over the following estimated useful
lives of the various classes of depreciable assets:
Buildings 25 to 27 years
Furniture, fixtures and equipment 5 to 7 years
Debt Issuance Costs and Unamortized Discount
Costs incurred in connection with obtaining debt have been deferred and are
being amortized by the interest method over the term of the debt.
Cash Equivalents
Cash equivalents consist of highly liquid investments with maturities of
three months or less when purchased.
Concentration of Credit Risk
The Company's cash and cash equivalents are placed mainly with one
institution with a high credit rating. The carrying amount approximates
fair value due to the short maturity of these instruments.
Net Income Per Share
Earnings (loss) per common share is computed by dividing net income (loss)
by the weighted average number of shares outstanding during each year:
4,625,524 shares in 1995, 1994 and 1993.
Advertising
The Company expenses advertising costs as incurred, except for sales
brochures and site plans which are accounted for in "Other Assets." Sales
brochures and site plans are expensed as the materials are used or
distributed to customers. Advertising expense for the years ended December
31, 1995, 1994 and 1993 was $1,411,412, $1,713,158 and $1,989,756,
respectively.
(continued)
25
<PAGE> 27
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER
INFORMATION - Continued
Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions (i.e.
estimated costs to complete for construction inventory or estimated net
realizable value) that affect the reported amounts and disclosures of assets
and liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Income Taxes
The Company accounts for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
Financial Statement Reclassification
Certain amounts reflected in the consolidated financial statements for the
year ended December 31, 1994 have been reclassified to conform to the
presentation for the year ended December 31, 1995.
NOTE B - MORTGAGE NOTES
First and second mortgage notes receivable bear interest at rates ranging
from 7% to 10%. The Company's receivables are primarily mortgages which are
collateralized by real estate. Minimum payments required on the first and
second mortgage notes in each of the five years subsequent to December 31,
1995 are: 1996 - $3,546; 1997 - $3,844; 1998 - $4,167; 1999 - $266,234 and
2000 - $2,771.
NOTE C - SPECIAL CHARGE
The Company recorded, in the fourth quarter, a non-recurring charge of
$13,917,025 ($11,079,381, net of tax benefit, or $2.40 per common share)
related to the write-down of certain land inventory to its estimated net
realizable value. The write-down pertains to land inventory for
approximately 360 unsold housing units located in three developments. These
three developments were originally purchased in 1989 and 1991.
26
<PAGE> 28
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE D - LIFE INSURANCE
The Company purchased life insurance on the lives of two of its officers and
their spouses (officers) who own significant shares of common stock of the
Company. An irrevocably designated trustee of the officers is the
beneficiary. The accumulated premiums on the above policies during the years
ended December 31, 1995 and 1994 were $641,352 and $427,568, respectively,
and are classified as other assets.
Upon the death of the officers or termination of the policies, the Company
shall receive an amount equal to the aggregated premiums paid less any
policy loans and unpaid interest or cash withdrawals received by the
Company.
In connection with the policies, the Company has an option with the officers
to acquire all or any part of the Class A or Class B common stock of the
Company owned by such individuals at the market price of such securities at
the time of their death.
NOTE E - INVESTMENT IN AND ADVANCES TO JOINT VENTURES
The Company entered into three joint venture agreements during 1995 and
1994. The first two joint ventures construct and sell homes. The third joint
venture provides mortgage financing for the Company's home sales. The joint
ventures are accounted for using the cost method. The Company's investment
and advances are as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Advances $ - $1,350,000
Investment 5,625,000 5,650,000
---------- ----------
$5,625,000 $7,000,000
========== ==========
</TABLE>
27
<PAGE> 29
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE F - MORTGAGE SUBSIDIARY
South Florida Residential Mortgage Company (SFRMC), a wholly-owned
subsidiary of the Company, provides mortgage financing services.
Summarized financial information for SFRMC is as follows:
<TABLE>
<CAPTION>
1995 1994
--------- --------
<S> <C> <C>
Assets
First mortgage notes receivable $ - $513,465
Other assets 43,058 20,645
Due from parent company 848,940 414,875
--------- --------
Total assets $ 891,998 $948,985
========= ========
Liabilities and shareholder's equity
Other liabilities $ 6,735 $ 29,787
Shareholder's equity 885,263 919,198
--------- --------
Total liabilities and shareholder's
equity $ 891,998 $948,985
========= ========
Revenues $ 50,138 $293,734
Expenses 104,547 264,720
--------- --------
Income (loss) before provision
for (benefit from) income taxes (54,409) 29,014
Provision for (benefit from) income taxes (20,474) 10,918
--------- --------
Net income (loss) $ (33,935) $ 18,096
========= ========
</TABLE>
NOTE G - LINE OF CREDIT
A revolving loan agreement (line of credit) with a bank, collateralized by
land, provides up to $15,000,000 of borrowings, of which $6,500,000 is
available at December 31, 1995, at an interest rate of prime plus 1.5%. On
January 12, 1996, the line of credit was increased to $20,000,000. The
agreement expires July 1, 1997.
The line of credit can be used to finance ongoing development and
construction of residential real estate and short-term capital needs and
will only require monthly interest payments. The credit agreement has no
compensating balance arrangements and contains typical restrictions and
covenants, the most restrictive of which include the following:
a. The Company shall maintain, at all times through the
life of the loan, its consolidated tangible net worth at not
less than $60,000,000.
b. The Company's ability to incur additional debt is
restricted by covenants in the agreement.
(continued)
28
<PAGE> 30
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE G - LINE OF CREDIT - Continued
Average interest rates and balances outstanding, for revolving lines of
credit payable to banks, based on a weighted average are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- -----------
<S> <C> <C> <C>
Daily average outstanding
borrowings $ 7,045,000 $1,805,944 $ 2,962,230
Average interest rate during the
period 8.2% 8.6% 6.2%
Interest rate at the end
of the period 10.0% 10.0% 7.5%
Maximum outstanding during the
year $12,500,000 $7,010,000 $35,000,000
</TABLE>
NOTE H - MORTGAGE NOTES PAYABLE
Mortgage notes payable at December 31, 1995 and 1994, are summarized as
follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Mortgage note, interest at 8.875%, requires
monthly interest payments of $51,031 with
principal balance due on February 1, 1996;
collateralized by land, buildings and
equipment (1) $6,900,000 $6,900,000
Mortgage note, interest at 9.2%, requires
monthly payments of $63,965, including
interest, matures on February 1, 1996;
collateralized by land, buildings, equipment
and rents (1) 7,446,065 7,499,304
Mortgage note, interest at 10%, requires
monthly payments of $25,766, including
interest, matured on July 1, 1995;
collateralized by land - 2,669,946
</TABLE>
(continued)
29
<PAGE> 31
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE H - MORTGAGE NOTES PAYABLE - Continued
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Mortgage note, interest at prime plus
3.25%, requires interest with principal
payments as land is sold, matures
May 31, 1996; collateralized by land $ 695,508 $ 350,000
----------- -----------
$15,041,573 $17,419,250
=========== ===========
</TABLE>
(1) On February 20, 1996, the Company consolidated and
refinanced the mortgage notes under the following terms:
maturity date of March 1, 2003; interest rate at 7.15%;
monthly principal and interest payment of $91,696.
NOTE I - INCOME TAXES
Deferred income taxes and benefits are provided for significant income and
expense items recognized in different years for tax and financial reporting
purposes. Temporary differences which give rise to significant deferred tax
assets (liabilities) follow:
<TABLE>
<CAPTION>
1995 1994
----------- ------------
<S> <C> <C>
State net operating loss carryforward $ 310,986 $ -
Inventory write-down adjustment 5,232,802 -
Warranties on houses and condominiums 770,245 925,592
Percentage of completion 174,878 342,490
Uniform cost capitalization 184,757 178,463
----------- ------------
Total deferred tax assets, before
valuation allowance 6,673,668 1,446,545
Less: valuation allowance 2,706,144 -
----------- ------------
Total deferred tax assets, net of
valuation allowance 3,967,524 1,446,545
----------- ------------
Installment sales - (13,990)
Deferred expenses (3,333,765) (2,315,641)
Accelerated depreciation (175,384) (221,620)
----------- ------------
Total deferred tax liabilities (3,509,149) (2,551,251)
----------- ------------
Net deferred tax asset (liability) $ 458,375 $ (1,104,706)
=========== ============
</TABLE>
(continued)
30
<PAGE> 32
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE I - INCOME TAXES - Continued
The Company files consolidated income tax returns. The components of the
provision for (benefit from) income taxes are as follows:
<TABLE>
<CAPTION>
Current Deferred Total
------------ ------------ -----------
<S> <C> <C> <C>
Year Ended December 31, 1995,
Federal $ (1,440,254) $ (1,582,344) $ (3,022,598)
State - 19,263 19,263
------------ ------------ ------------
$ (1,440,254) $ (1,563,081) $ (3,003,335)
============ ============ ============
Year Ended December 31, 1994,
Federal $ 1,848,612 $ 305,537 $ 2,154,149
State 292,109 76,807 368,916
------------ ------------ ------------
$ 2,140,721 $ 382,344 $ 2,523,065
============ ============ ============
Year Ended December 31, 1993,
Federal $ 1,478,474 $ (3,500) $ 1,474,974
State 254,391 (8,248) 246,143
------------ ------------ ------------
$ 1,732,865 $ (11,748) $ 1,721,117
============ ============ ============
</TABLE>
The reasons for the difference between the total tax expense and the amount
computed by applying the statutory federal income tax rate to income before
income taxes are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <S> <C> <C>
Provision for (benefit from) taxes
at statutory rates (34%) $ (5,020,066) $ 2,264,395 $ 1,483,147
State income taxes, net of federal
tax benefit (811,999) 241,644 158,193
Other 122,586 17,026 79,777
------------ ------------ ------------
Tax expense (benefit), before
valuation allowance (5,709,479) 2,523,065 1,721,117
Valuation allowance 2,706,144 - -
------------ ------------ ------------
Net tax expense (benefit) $ (3,003,335) $ 2,523,065 $ 1,721,117
============ ============ ============
</TABLE>
31
<PAGE> 33
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE I - INCOME TAXES - Continued
The Company has a Federal net operating loss carryback and a State net
operating loss carryforward of $4,236,558. The Federal net operating loss
will be carried back and fully absorbed in 1992. The State net operating
loss carryforward expires in the year 2010.
Deferred income tax provision results from temporary differences in the
recognition of revenues and expenses for tax and financial statement
purposes. The sources of these differences are as follows:
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------------
1995 1994 1993
----------- -------- ---------
<S> <C> <C> <C>
Net effect of inventory write-down
adjustment $(5,232,802) $ - $ -
Net effect of development and other
costs 1,018,124 589,052 (80,256)
Net profit realized, applicable to sales
reported on the installment basis for
tax purposes (13,990) (14,165) (10,938)
Net of State net operating loss carry-
forward (310,986) - -
Net effect of (increase) decrease in
reserve for warranties on houses and
condominiums 155,347 (73,756) (156,920)
Net effect of uniform cost capitalization
and percentage of completion 161,318 (61,254) 218,765
Net effect of depreciation (46,236) (57,533) 17,601
----------- --------- ---------
(4,269,225) 382,344 (11,748)
Less: valuation allowance 2,706,144 - -
----------- --------- ---------
$(1,563,081) $ 382,344 $ (11,748)
=========== ========= =========
</TABLE>
32
<PAGE> 34
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE J - CUSTOMER DEPOSITS
Certain customer deposits, pursuant to statutory regulations of the State of
Florida or by agreement between the buyer and seller, are held in segregated
bank accounts. At December 31, 1995 and 1994, cash in the amounts of
approximately $289,000 and $253,000, respectively, was so restricted.
The Company entered into an escrow agreement with a bank and the Division of
Florida Land Sales and Condominiums which allowed the Company to use
customer deposits which were previously maintained in an escrow account.
Deposits of up to $1,100,000 in 1995 and $1,900,000 in 1994, which could be
released to the Company, are guaranteed by performance bonds aggregating
$5,000,000 for 1995 and 1994.
NOTE K - ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities include the following:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Accrued interest $ 3,893,771 $ 3,899,765
Reserve for warranties on houses and
condominiums 1,983,202 2,419,218
Accrued real estate and property taxes 1,648,948 11,756
Income taxes payable - 296,904
Other accrued liabilities 867,211 1,192,687
----------- -----------
$ 8,393,132 $ 7,820,330
=========== ===========
<CAPTION>
NOTE L - SENIOR NOTES
Senior Notes are comprised as follows:
1995 1994
----------- -----------
<S> <C> <C>
12 1/2% senior notes due January 15,
2003 with an effective interest rate of
13.02% $70,000,000 $70,000,000
Repurchase of senior notes to be
used as part of sinking fund (2,036,000) (1,910,000)
Unamortized discount (1,482,687) (1,632,318)
----------- -----------
$66,481,313 $66,457,682
=========== ===========
</TABLE>
(continued)
33
<PAGE> 35
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE L - SENIOR NOTES - Continued
On January 13, 1993, the Company issued 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 $1,930,000. 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 senior notes were issued requires sinking fund
payments of $17,500,000 on January 15, 2001 and January 15, 2002. The
indenture, contains provisions restricting the amount and type of
indebtedness the Company may incur, the purchase by the Company of its stock
and the payment of cash dividends. At December 31, 1995, dividend payments
are restricted and will be restricted until the Company posts cumulative net
income in excess of $20,500,000.
NOTE M - STOCK OPTIONS
The Company adopted two stock option plans: one for employees and one for
nonemployee directors, both effective in 1994. Under the stock option plan
for employees (the "1994 Stock Option Plan"), 400,000 shares of Class B
common stock are reserved for issuance upon exercise of stock options. Under
the stock option plan for non-employee directors (the "1994 Stock Option
Plan for Nonemployee Directors"), 20,000 shares of class B common stock are
available for issuance. The stock option plans are accounted for under APB
Opinion 25 and related Interpretations. Statement of Financial Accounting
Standards No. 123 ("SFAS No.123"), "Accounting for Stock-Based
Compensation," effective for the Company in 1996, will require additional
disclosures regarding the fair value of options. The Company does not expect
the implementation of SFAS No.123 to have a material effect on the
Company's financial position or results of operations.
Both plans provide for the granting of incentive stock options on such
terms and at such prices as may be determined by the Board of Directors.
The per share exercise price of incentive stock options cannot be less than
the fair market value per share of the Class B common stock on the date of
the grant. Accordingly, no compensation cost has been recognized for the
plans. Each option is exercisable after the period or periods specified in
the option agreement, but no option may be exercised more than five years
after the date of the grant for the 1994 Stock Option Plan and no more than
ten years for the 1994 Stock Option Plan for Nonemployee Directors.
(continued)
34
<PAGE> 36
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE M - STOCK OPTIONS - Continued
The following table summarizes options granted and/or exercised during the
years ended December 31, 1995 and 1994. At December 31, 1995 and 1994,
1,800 and -0- options, respectively, were eligible for exercise under the
terms of the various option plans.
<TABLE>
<CAPTION>
1994 Stock
Option Plan
1994 for
Stock Nonemployee
Option Plan Directors
----------- -----------
<S> <C> <C>
Granted - 3,600(2)
Exercised - -
Forfeited - -
----------- -----------
Outstanding 12/31/94 - 3,600
Granted 38,000(1) 3,600(3)
Exercised - -
Forfeited - -
----------- -----------
Outstanding 12/31/95 38,000 7,200
=========== ===========
1) Exercise price $ 6.875
2) Exercise price $ 8.62
3) Exercise price $ 7.50
</TABLE>
NOTE N - COMMON STOCK
Class A common stock and Class B common stock have identical dividend rights
with the exception that the Class B common stock is entitled to a $.025 per
share additional dividend. Class A common stock is entitled to one vote per
share, while Class B common stock is entitled to one-tenth vote per share.
Holders of Class B common stock are entitled to elect 25% of the Board of
Directors as long as the number of outstanding shares of Class B common
stock is at least 10% of the number of outstanding shares of both classes of
common stock. At the option of the holder of record, each share of Class A
common stock may be converted at any time into one share of Class B common
stock.
35
<PAGE> 37
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE O - LEASING ARRANGEMENTS
Rental properties
In connection with certain housing developments, the Company leases
recreation facilities. The Company also leases rental units. These leases
are accounted for as operating leases.
The following schedule provides an analysis of the Company's property under
operating leases (included in property and equipment) by major classes as of
December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Land $ 7,168,046 $ 7,170,113
Buildings 22,283,655 22,473,045
Furniture, fixtures and
equipment 965,277 986,134
------------ -----------
30,416,978 30,629,292
Less accumulated depreciation 7,216,168 6,697,665
------------ -----------
$ 23,200,810 $23,931,627
============ ===========
</TABLE>
The following is a schedule of approximate future minimum
rental income required under these leases as of December
31, 1995:
1996 $ 2,368,000
1997 638,000
1998 638,000
1999 638,000
2000 638,000
Thereafter 54,007,000
-----------
$58,927,000
===========
(continued)
36
<PAGE> 38
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE O - LEASING ARRANGEMENTS - Continued
Offices and Warehouse
The Company leases its offices and warehouse under lease agreements
extending through 1997, with options to renew for up to five years,
accounted for as operating leases. The following is a schedule, by years,
of the approximate future minimum rental payments as of December 31, 1995:
1996 $167,000
1997 135,000
--------
$302,000
========
Total rent expense for each of the years ended December 31, 1995, 1994 and
1993 amounted to approximately $200,000.
NOTE P - DEFERRED COMPENSATION PLAN
The Company has a defined contribution plan established pursuant to Section
401(K) of the Internal Revenue Code. Employees contribute to the plan a
percentage of their salaries, subject to certain dollar limitations, and the
Company matches a portion of the employees' contributions. The Company's
contribution to the plan amounted to $63,121 in 1995, $63,685 in 1994 and
$60,851 in 1993.
NOTE Q - FINANCIAL INSTRUMENTS
The financial statements include various estimated fair value information as
of December 31, 1995 and 1994, as required by Statement of Financial
Accounting Standards 107, "Disclosures about Fair Value of Financial
Instruments". Such information, which pertains to the Company's financial
instruments, is based on the requirements set forth in that Statement and
does not purport to represent the aggregate net fair value of the Company.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate that value:
Cash and Cash Equivalents
The carrying amount approximates fair value because of the short maturity of
those instruments.
(continued)
37
<PAGE> 39
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE Q - FINANCIAL INSTRUMENTS - Continued
Receivables and Payables
The carrying amount approximates fair value because of the short maturity of
those instruments.
Notes Payable, Mortgage Notes Payable and Senior Notes
Quoted market prices offered to the Company for debt are used to estimate
the fair value of the Company's long-term debt. The carrying amounts of
notes and mortgage notes payable approximate fair value due to the length of
the maturities, the interest rates being tied to market indices and/or due
to the interest rates not being significantly different from the current
market rates available to the Company.
All of the Company's financial instruments are held for purposes other than
trading. The carrying amounts in the table below are the amounts at which
the financial instruments are reported in the financial statements.
The estimated fair values of the Corporation's financial instruments, at
December 31, where the carrying value does not approximate fair value, are
as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------ ------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
----------- ----------- ----------- -----------
<S> <C> <C> <C>
Senior notes $66,481,313 $55,730,000 $66,457,682 $59,919,000
</TABLE>
NOTE R - CONTINGENCIES
The Company is involved, from time to time, in litigation arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on the Company's consolidated financial position or results
of operations.
38
<PAGE> 40
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
Board of Directors
Oriole Homes Corp.
We have audited the accompanying consolidated balance sheets of Oriole Homes
Corp. and Subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1995. 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 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 audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Oriole
Homes Corp. and Subsidiaries at December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
Miami, Florida
February 16, 1996 (except for Note H, as
to which the date is February 20, 1996)
39
<PAGE> 41
ITEM 9 DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
This item is not applicable.
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item of this part is incorporated by
reference to Registrant's definitive proxy statement for the Annual Meeting of
Shareholders.
ITEM 11 EXECUTIVE COMPENSATION
The information required by this item of this part is incorporated by
reference to Registrant's definitive proxy statement for the Annual Meeting of
Shareholders.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item of this part is incorporated by
reference to Registrant's definitive proxy statement for the Annual Meeting of
Shareholders.
ITEM 13 CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
The information required by this item of this part is incorporated by
reference to Registrant's definitive proxy statement for the Annual Meeting of
Shareholders.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements of Oriole Homes
Corp. and subsidiaries are included in Part II of this annual
report and in the Company's 1995 Annual Report to Shareholders.
Consolidated balance sheets as of December 31, 1995 and 1994.
Consolidated statements of operations for the three years ended
December 31, 1995.
Consolidated statements of cash flows for the three years ended
December 31, 1995.
Consolidated statements of shareholders' equity for the three years
ended December 31, 1995.
Notes to consolidated financial statements.
40
<PAGE> 42
Report of independent certified public accountants.
Selected Quarterly Financial Data for the years ended December 31, 1995
and 1994 included in the Company's 1995 Annual Report to Shareholders
which is incorporated by reference as Part II of this annual report.
2. Financial Statement Schedules
The following financial statement schedules of Oriole Homes Corp.
and subsidiaries are included in Part IV of this report:
Report of independent certified public accountants.
All other schedules are omitted because they are not applicable or not
required or because the required information is included in the
consolidated financial statements or notes thereto.
3. Exhibits Page No.
(b)
3.1 Articles of Incorporation of Registrant *
3.2 By-Laws of Registrant *
4.2 Form of indenture between the Registrant and Sun
Bank National Association, Trustee. *
10.1 Lease Agreement, dated May 7, 1991 between Oriole
Homes Corp. and Arbors Associates, Ltd. *
10.6 Registrant's 401(k) Defined Contribution Benefit
Plan *
10.7 Joint Venture between the Company and Regency
Homes, Inc. dated December 31, 1993 as amended December
31, 1995. **
22.1 List of Registrant's Subsidiaries (Filed as
Exhibit 22 to the Company's Form 10-K for the fiscal year
ended December 31, 1990 and incorporated herein by
reference).
27 Financial Data Schedule (For SEC use only)
(*) Filed as exhibits to the Registration Statement
of the Registrant on Form S-2 declared effective on
January 13, 1993. (File No. 33-51680).
(**) Filed as an exhibit to the Registrant's Annual
Report on Form 10-K filed in March 1994.
(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months
ended December 31, 1995.
41
<PAGE> 43
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this Annual Report to be Signed on its
behalf by the undersigned, thereunto duly authorized.
ORIOLE HOMES CORP.
DATE 3-21-96 /s/ R.D. Levy
--------------- ---------------------------------
R.D. Levy, Chairman of the Board
Chief Executive Officer, Director
DATE 3-21-96 /s/ A. Nunez
--------------- ---------------------------------
A. Nunez, Senior Vice President,
Treasurer, Chief Financial Officer,
Chief Accounting Officer, Director
Pursuant to the requirements of the Securities Exchange Act of 1934 this
Annual Report has also been signed by the following persons on behalf of the
Registrant in the capacities indicated.
MEMBER OF THE BOARD OF DIRECTORS
DATE 3-22-96 /s/ Harry A. Levy
--------------- ---------------------------------
Harry A. Levy, Director
DATE 3-25-96 /s/ E. E. Hubshman
--------------- ---------------------------------
E.E. Hubshman, Director
DATE 3-21-96 /s/ Mark A. Levy
--------------- ---------------------------------
Mark A. Levy, Director
DATE 3-21-96 /s/ Eugene H. Berns
--------------- ---------------------------------
Eugene H. Berns, Director
DATE 3-25-96 /s/ Donald C. McClosky
--------------- ---------------------------------
Donald C. McClosky, Director
DATE 3-25-96 /s/ Paul R. Lehrer
--------------- ---------------------------------
Paul R. Lehrer, Director
42
<PAGE> 44
EXHIBIT "F"
REGENCY LAKES JOINT VENTURE AGREEMENT
Dated December 31, 1995
REPAYMENT OF CONTRIBUTED CAPITAL
Minimum Capital Repayment Schedule
Oriole shall receive $12,000 per closed unit starting with the 101st
closing until the acquisition and development loan in favor of Ohio Savings
Bank is retired. The Oriole capital account balance will then be repaid by
taking the total units closed by the Joint Venture to that date and subtracting
that from 450 units, that number is then divided into the outstanding capital
account balance of Oriole and the remaining capital account balance shall be
paid pro rata so that upon the 450th cumulative closing by the Joint Venture
the contributed capital account balance of Oriole is zero.
In witness whereof, this Exhibit is executed this 23 day of October, 1995.
Oriole Joint Venture Limited,
a Florida limited partnership
By: Oriole Limited, Inc., a
Florida corporation, its General
Partner
By: /s/ Richard D. Levy
------------------------
Richard D. Levy, C.E.O.
Regency Development II, Inc.
By: /s/ E.C. Jensen
------------------------
E.C. Jensen, President
<PAGE> 45
Exhibit "H"
TO REGENCY LAKES JOINT VENTURE AGREEMENT
Dated December 31, 1995
This Exhibit H to the Regency Lakes joint venture agreement dated December
31, 1993, replaces that certain Warrants and Stock Rights Agreement dated
December 31, 1993 and said Warrants and Stock Rights Agreement shall be deemed
null and void.
The parties hereto agree as follows:
1. In the event there is an outstanding capital account balance due Oriole
when Regency consummates a public or private offering for the sale of stock or
bonds resulting in cash proceeds (other than traditional joint venture
financing for a specific piece of property or project), then the lesser of
thirty-five (35%) of the net proceeds of said offering or the then existing
Oriole Capital Account balance multiplied by 1.333 will be paid to Oriole Joint
Venture Ltd. Twenty five percent (25%) of the total amount paid to Oriole
herein shall be paid as a bonus to Oriole, and the remaining seventy-five (75%)
percent shall be applied to reduce Oriole's Capital Account. The total bonus
paid to Oriole hereunder shall not exceed $1.4 million. When the remaining
capital account of Oriole has been paid in full the Joint Venture will be
terminated and Regency shall not be obligated to pay Oriole any further
payments as provided for in Sections 4, 9, and 10 of the Joint Venture
Agreement.
Example:
Offering raises $10,000,000.00
Net to Regency Equals $ 9,000,000.00
Amount paid to Oriole Joint Venture Ltd. $ 3,150,000.00
Payment to Oriole to be allocated as follows:
Reduction of Oriole capital account $ 2,362,500.00
Payment toward Oriole Bonus $ 787,500.00
2. Until the Joint Venture is terminated as per paragraph 1 above, all
other terms and conditions of the Joint Venture Agreement will remain in full
force and effect including the provisions of Section 4, 9, and 10.
3. The pending merger agreement between Royal Palm Beach Colony and
Regency Homes, Inc., provides for the assumption of all of the obligations of
Regency Homes, Inc. under this Joint Venture Agreement.
4. The parties hereto acknowledge that the shareholder loans of Benny L.
Martz to Regency Homes, Inc. will be capitalized in the merger referred to in
paragraph 3 above and will no longer be subordinated to Oriole Joint Venture
Limited.
<PAGE> 46
In witness whereof, this Exhibit is executed this 23 day of October, 1995.
Oriole Joint Venture Limited,
a Florida limited partnership
By: Oriole Limited, Inc., a
Florida corporation, its General
Partner
By: /s/ Richard D. Levy
--------------------
Richard D. Levy, C.E.O.
Regency Development II, Inc.
By: /s/ E.C. Jensen
--------------------
E.C. Jensen, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ORIOLE HOMES CORP. FOR THE YEAR ENDED DECEMBER 31,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,275,615
<SECURITIES> 0
<RECEIVABLES> 2,056,108
<ALLOWANCES> 0
<INVENTORY> 131,427,502
<CURRENT-ASSETS> 0
<PP&E> 34,897,088
<DEPRECIATION> 10,892,078
<TOTAL-ASSETS> 179,478,317
<CURRENT-LIABILITIES> 0
<BONDS> 90,022,886
0
0
<COMMON> 462,553
<OTHER-SE> 167,198,896
<TOTAL-LIABILITY-AND-EQUITY> 179,478,317
<SALES> 75,019,534
<TOTAL-REVENUES> 82,236,270
<CGS> 63,617,004
<TOTAL-COSTS> 80,714,243
<OTHER-EXPENSES> 16,286,926
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 904,045
<INCOME-PRETAX> (14,764,899)
<INCOME-TAX> (3,003,335)
<INCOME-CONTINUING> (11,761,564)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,761,564)
<EPS-PRIMARY> (2.54)
<EPS-DILUTED> 0
</TABLE>
