<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: March 31, 2000 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: (561) 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 May 1, 2000
----- --------------------------
Common Stock, Class A, par value $.10 1,863,649
Common Stock, Class B, par value $.10 2,761,875
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
Cash and cash equivalents $ 19,325,808 $ 18,708,081
------------ ------------
Receivables
Mortgage notes 365 262,240
Inventories
Land 47,421,480 49,170,778
Homes completed or under construction 25,341,679 27,562,235
Model homes 4,886,560 3,856,810
------------ ------------
77,649,719 80,589,823
Less estimated costs of completion
included in inventories 6,809,572 7,574,038
------------ ------------
70,840,147 73,015,785
------------ ------------
Property and equipment, at cost
Land 81,709 152,448
Buildings 1,872,635 2,671,438
Furniture, fixtures and equipment 3,265,930 2,595,802
------------ ------------
5,220,274 5,419,688
Less accumulated depreciation 2,728,093 2,978,526
------------ ------------
2,492,181 2,441,162
------------ ------------
Investments in and advances to joint ventures -- 1,242,240
Land held for investment, at cost 1,857,300 1,857,300
Other
Prepaid expenses 1,354,707 1,075,934
Unamortized debt issuance costs 588,894 661,429
Other assets 2,306,437 2,776,732
------------ ------------
4,250,038 4,514,095
------------ ------------
Total assets $ 98,765,839 $102,040,903
============ ============
</TABLE>
See notes to the consolidated financial statements
-1-
<PAGE> 3
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
Liabilities
Line of credit $ 10,000 $ 10,000
Mortgage notes payable 3,130,449 4,306,372
Accounts payable and accrued liabilities 7,712,076 8,555,721
Customer deposits 5,617,548 4,583,143
Senior notes 41,151,631 42,648,760
------------ ------------
Total liabilities 57,621,704 60,103,996
Shareholders' equity
Class A common stock, $.10 par value
Authorized - 10,000,000 shares,
issued and outstanding -
1,863,649 in 2000 and in 1999 186,365 186,365
Class B common stock, $.10 par value
Authorized - 10,000,000 shares,
issued and outstanding -
2,761,875 in 2000 and in 1999 276,188 276,188
Additional paid-in capital 19,267,327 19,267,327
Retained earnings 21,414,255 22,207,027
------------ ------------
Total shareholders' equity 41,144,135 41,936,907
------------ ------------
Total liabilities and shareholders' equity $ 98,765,839 $102,040,903
============ ============
</TABLE>
See notes to the consolidated financial statements
-2-
<PAGE> 4
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Revenues
Sales of homes $ 16,076,626 $ 24,616,408
Other operating revenues 36,277 934,056
Gain on sales of property and equipment
and land held for investment, net 527,139 1,867,391
Interest, rentals and other income 561,694 1,043,657
------------ ------------
17,201,736 28,461,512
------------ ------------
Costs and expenses
Cost of homes sold 14,125,361 22,435,393
Costs relating to other operating revenues 75,184 803,015
Selling, general and administrative expenses 3,753,733 3,996,647
Interest costs incurred 1,437,278 2,049,027
Interest capitalized (deduct) (1,397,048) (1,902,027)
------------ ------------
17,994,508 27,382,055
------------ ------------
Income (loss) before provision for (benefit from) income taxes (792,772) 1,079,457
Provision for (benefit from) income taxes -- --
------------ ------------
Net income (loss) $ (792,772) $ 1,079,457
============ ============
Net income (loss) per Class A and B common share
available for common stockholders - Basic and Diluted $ (.17) $ .23
============ ============
Weighted average number of common stock
outstanding - Basic and Diluted 4,625,524 4,625,524
============ ============
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE> 5
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ (792,772) $ 1,079,457
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation 122,146 312,902
Amortization 120,406 187,295
Gain on sales of property and equipment
and land held for investment, net (527,139) (1,867,391)
(Increase) decrease in operating assets
Receivables 261,875 689,003
Inventories 2,214,929 6,047,638
Other assets 191,522 315,906
Increase (decrease) in operating liabilities
Accounts payable and accrued liabilities (843,645) (2,655,513)
Customer deposits 1,034,405 (1,188,249)
------------ ------------
Total adjustments 2,574,499 1,841,591
------------ ------------
Net cash provided by operating activities 1,781,727 2,921,048
------------ ------------
Cash flows from investing activities
Return on investment in joint ventures 1,242,240 --
Capital expenditures (778,316) (233,890)
Proceeds from the sale of property and equipment 1,092,999 4,463,719
------------ ------------
Net cash provided by investing activities 1,556,923 4,229,829
------------ ------------
Cash flows (used in) financing activities
Payment of mortgage notes (1,570,166) (745,388)
Proceeds of mortgage notes 394,243 --
Repurchase of senior notes (1,545,000) (2,700,000)
------------ ------------
Net cash (used in) financing activities (2,720,923) (3,445,388)
------------ ------------
Net increase in cash and cash equivalents 617,727 3,705,489
Cash and cash equivalents at beginning of period 18,708,081 10,557,772
------------ ------------
Cash and cash equivalents at end of period $ 19,325,808 $ 14,263,261
============ ============
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of amount capitalized) $ 1,432,045 $ 1,894,242
Income taxes $ -- $ --
</TABLE>
See notes to consolidated financial statements
-4-
<PAGE> 6
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated balance sheet as of March 31, 2000 and the related
statements of operations and cash flows for the three months ended
March 31, 2000 and 1999 of Oriole Homes Corp. (together with its
consolidated subsidiaries, the "Company") have been prepared by the
Company without audit. In the opinion of 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, 1999 annual report
on Form 10K.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
2. The results of operations for the three months ended March 31, 2000 are
not necessarily indicative of the results for the entire year.
3. Backlog of contracts for sales of homes:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
---------------------------- ----------------------------
Units Amounts Units Amounts
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Single-family 130 $25,005,435 122 $21,888,567
Multi-family 140 18,408,593 52 7,292,293
----------- ----------- ----------- -----------
Total 270 $43,414,028 174 $29,180,860
=========== =========== =========== ===========
</TABLE>
4. Senior notes
On January 13, 1993, the Company issued 12 1/2% senior notes ("Senior
Notes"), due January 15, 2003. The Senior Notes have a face value of
$70,000,000 and were issued at a discount of $1,930,600. The Senior
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.
Under the terms of the indenture ("Indenture"), the Company must make
Senior Notes sinking fund payments of $17,500,000 by January 15, 2001
and January 15, 2002. The Indenture also 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 March 31, 2000, the payment of cash dividends is
prohibited and will be restricted until the Company posts cumulative
net income in excess of $73,800,000.
The Company has satisfied the sinking fund requirement of January 15,
2001 through prior year purchases and retirement of Senior Notes.
During the three months ended March 31, 2000, the Company repurchased
$1,545,000 of Senior Notes to be used as part of the January 15, 2002
sinking fund requirement and has accumulated $10,921,000 toward the
$17,500,000 payment due January 15, 2002.
-5-
<PAGE> 7
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Line of credit
The Company may borrow up to $10,000,000 at an interest rate of prime
plus 1.5% under a revolving loan agreement (line of credit) with a
bank, secured by a mortgage on certain real property. At March 31,
2000, $9,990,000 was available under this line of credit. The loan
agreement expires July 1, 2001.
The line of credit can be used to finance ongoing development and
construction of residential real estate and short-term capital needs
and only requires monthly interest payments. The loan agreement
contains typical restrictions and covenants, the most restrictive of
which are:
a. the Company shall maintain, at all times through the life of
the loan, a consolidated tangible net worth of not less than
$39,000,000, and;
b. the Company's ability to incur additional debt is restricted.
6. Income taxes
At March 31, 2000, the Company has no deferred tax benefit related to
its net operating loss as the Company's ability to realize these
benefits is not "more likely than not" as defined by SFAS Statement No.
109 "Accounting for Income Taxes".
7. Segment information
The Company has the following two reportable segments: home building
and rental operations. The homebuilding segment develops and sells
residential properties and planned communities. The rental operations
segment consists of 32 units at March 31, 2000 and 529 units at March
31, 1999. Selected segment information is set forth below (in
thousands):
<TABLE>
<CAPTION>
Home Rental
Building Operations Other Total
-------- ---------- ----- -----
MARCH 31, 2000:
<S> <C> <C> <C> <C>
Revenues $ 17,060 $ 36 $ 106 $ 17,202
Segment net income (loss) (799) (39) 45 (793)
MARCH 31, 1999:
Revenues 27,347 934 181 28,462
Segment net income (loss) 844 131 104 1,079
</TABLE>
8. Commitments and 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.
The Company is also subject to the normal obligations associated with
entering into contracts for the purchase, development and sale of real
estate in the routine conduct of its business.
-6-
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
The Company's revenues from home sales decreased $8.5 million (34.7%)
to $16.1 million during the first quarter of 2000 as compared to the comparable
quarter of 1999 primarily as a result of a reduction in the number of homes
delivered. Oriole delivered 97 homes in the 2000 first quarter compared to 164
in the same period in 1999. The average selling price of homes delivered
increased from $150,100 to $165,700. The number of contracts signed at 193 and
the aggregate dollar value of those contracts at $30.3 million increased in the
2000 first quarter from 142 and $20.9 million, respectively, from the same
period in 1999.
Non-homebuilding revenues decreased by $2.2 million to $0.6 million
during the quarter ended March 31, 2000 compared to the same period in 1999.
This was primarily due to the sale of certain properties in 1999 which had been
held for investment and a reduction in rental revenue as a result of the latter
sale of a 480 unit apartment complex.
Interest, rentals and other income decreased by $0.5 million during the
first quarter of 2000 compared to the same period in 1999 primarily as the
result of a greater gain on the repurchase of senior notes in 1999.
Cost of home sales decreased to $14.1 million (37.9%) from $22.4
million in 1999 as a result of a decrease in the number of homes delivered. As a
percentage of home sales, cost of sales decreased to 87.9% in the first quarter
of 2000 from 91.1% in the first quarter of 1999. This reduction was due to the
positive impact of the prior year inventory valuation adjustment recorded in the
fourth quarter of 1999.
Selling, general and administrative expenses decreased $243,000 in
dollar value but increased as a percentage of revenues to 22.0% from 14.0% as
compared to the same period in 1999 due to the $11.3 million decrease in
revenues.
The Company incurred a net loss for the quarter ended March 31, 2000 of
$0.8 million or $0.17 per share compared to net income of $1.1 million or $0.23
per share during the same period in 1999. Earnings before interest, taxes,
depreciation and amortization (EBITDA) decreased $3.5 million to $0.7 million in
the first quarter of 2000 as compared to the same period in 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements vary from period to period depending
upon changes in inventory, land acquisition and development requirements,
construction in progress and, to a lesser extent, the Company's current net
income. The Company obtains funds for its cash requirements from operations, the
sale of investment property and borrowings. In connection with land acquisitions
and development, the Company may borrow money secured by land and improvements.
During the first quarter of 2000, the Company used a portion of
available cash provided by operations to purchase $1.5 million of senior notes
and to pay down $1.6 million of mortgage notes. At March 31, 2000, the Company
had approximately $19.3 million in cash and cash equivalents and the
availability of substantially all of it's $10.0 million revolving line of
credit. The Company believes that these resources are sufficient to provide for
its cash requirements through March 31, 2001.
FORWARD LOOKING STATEMENTS
Certain statements made in this document, including certain statements
made in Management's Discussion and Analysis, contain "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
regarding the expectations of management with respect to revenues,
profitability, marketplace conditions, adequacy of funds from operations and
regulatory conditions applicable to the Company, among other things.
-7-
<PAGE> 9
Management cautions that these statements are qualified by their terms
and/or important factors, many of which are outside the control of the Company,
that could cause actual results and events to differ materially from the
statements made herein, including, but not limited to the following: changes in
consumer preferences, increases in interest rates, a reduction in labor
availability, increases in the cost of labor and materials, changes in the
regulatory environment particularly as relates to zoning and land use,
competitive pricing pressures and the general state of the economy, both
nationally and in the Company's market and unseasonable weather trends.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits and Reports on Form 8K
(a) Exhibits
Exhibit 10.36 - Employment Agreement with Michael Rich dated
August 29, 1999
Exhibit 27 - Financial Data Schedule
(b) There were no reports on Form 8-K filed for the three months ended
March 31, 2000.
-8-
<PAGE> 10
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: May 8, 2000 /s/ R.D. Levy
--------------------------------------
R.D. Levy,
Chairman of the Board,
Chief Executive Officer,
Director
DATE: May 8, 2000 /s/ J. Pivinski
--------------------------------------
J. Pivinski, Vice President - Finance,
Treasurer, Chief Financial Officer
-9-
<PAGE> 1
EXHIBIT 10.36 Employment Agreement with Michael Rich Dated August 29, 1999
August 26, 1999
Michael Rich
2825 S.W. 132 Way
Davie, FL 33330
Dear Michael:
We at Oriole Homes ("Oriole") are pleased to extend you an offer and confirm
your acceptance of employment as our Vice President of Sales and Marketing for
Oriole at our Delray Beach Corporate Headquarters. This letter outlines the
principal terms of our relationship. Please verify that all issues have been
addressed to your satisfaction so that an announcement may be made (handwritten)
(as soon as appropriate).
START DATE: October 4, 1999
BASE SALARY: An annualized base salary of $175,000 for the period
of October 4, 1999 to October 3, 2000. Effective
October 4, 2000, your annualized base salary will be
reduced to $150,000. Salary is paid every other week
and is subject to the customary withholding.
BONUS: Assuming that you are an employee in good standing,
on October 4, 2000 you will receive a $25,000 bonus.
Thereafter, you will be eligible to receive an annual
bonus based upon the achievement of objective
targeted performance goals (the "Target Goals")
determined each calendar year by the President of
Oriole in consultation with you. The Target Goals may
be comprised of fixed financial criteria and
subjective non-financial criteria.
STOCK OPTIONS: Upon starting, you will be granted 10,000 options
pursuant to the Employee Stock Option Plan ("The
Plan") to purchase Oriole Homes stock. The option
price of the stock options will be the market price
on October 4, 1999. These options will vest provided
that you are an employee in good standing on October
5, 2001. An additional 10,000 stock options may be
earned through the achievement of mutually agreed
upon goals. Should there be a change in control as
defined in Paragraph 8(b) of The Plan, prior to
October 5, 2001, and you are an employee in good
standing at the time, the stock options will
immediately vest. Thereafter, the stock options will
vest only in accordance with their terms.
TERM: Nothing in this Agreement shall be deemed to prohibit
Oriole from terminating your employment at any time
with or without notice for any reason whatsoever,
provided however, if Oriole should terminate your
employment for any reason other than Cause (as
defined below) prior to October 3, 2001, Oriole Homes
will pay
<PAGE> 2
Michael Rich
August 26, 1999
you one times your then current annual base salary.
Subject to your signing a release and cooperation
agreement with Oriole. For "Cause", is defined as (A)
willful acts or willful failures to act constituting
gross neglect or material insubordination regarding
your duties, responsibilities and limitations; (B)
your conviction of a felony; (C) a good faith finding
by the Board of Directors of Oriole of any act of
fraud or malicious action by you; (D) any other
material breach of your duties and responsibilities,
but only if, such breach has not been cured or
effectively commenced, in Oriole's discretion, within
15 days of written notice to you or (E) failure on
your part to initially pass drug testing and to
comply with Oriole's drug and alcohol free workplace
policy.
BENEFITS: You will receive a $500 per month car allowance, a
$100 per month cell phone allowance and two weeks
vacation. Oriole will pay your COBRA costs for
insurance until you are eligible to enroll in
Oriole's plan. All other benefits information will be
provided to you upon starting and will be on the same
basis and subject to the same qualifications as other
employees of Oriole.
If you have any questions, please do not hesitate to call. We would appreciate
it if after reading this document you would execute the attached, indicating
your agreement with the terms and conditions stated herein and return it in the
enclosed envelope. There is an original enclosed for your records as well.
Sincerely,
/s/ Mark levy
- -------------------------
Mark Levy
President
Agreed:
/s/ Michael Rich
- -------------------------
Michael Rich
Date: 08/29/99
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 19,325,808
<SECURITIES> 0
<RECEIVABLES> 365
<ALLOWANCES> 0
<INVENTORY> 70,840,147
<CURRENT-ASSETS> 0
<PP&E> 5,220,274
<DEPRECIATION> 2,728,093
<TOTAL-ASSETS> 98,765,839
<CURRENT-LIABILITIES> 0
<BONDS> 41,151,631
0
0
<COMMON> 462,553
<OTHER-SE> 40,681,582
<TOTAL-LIABILITY-AND-EQUITY> 98,765,839
<SALES> 16,076,626
<TOTAL-REVENUES> 17,201,736
<CGS> 14,125,361
<TOTAL-COSTS> 14,200,545
<OTHER-EXPENSES> 3,753,733
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,230
<INCOME-PRETAX> (792,772)
<INCOME-TAX> 0
<INCOME-CONTINUING> (792,772)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (792,772)
<EPS-BASIC> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
