<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, 1999
File No. 1-6963
ORIOLE HOMES CORP.
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1690 South Congress Avenue, Suite 200, Delray Beach, Florida 33445
(561) 274-2000
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
------------------
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 15, 2000, the Company had outstanding 1,863,649 shares of
its Class A Common Stock and 2,761,875 shares of its Class B Common Stock.
The aggregate market value of voting stock held by non-affiliates of
the Registrant is $10,761,063 as of March 15, 2000.
Part III of this Report is incorporated by reference to the
Registrant's Proxy Statement which will be filed for the 2000 Annual Meeting, to
be held on May 10, 2000.
<PAGE> 2
ORIOLE HOMES CORP.
FORM 10-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Part I
<S> <C> <C>
Item 1. Business ............................................................................................. 1
Item 2. Properties ........................................................................................... 14
Item 3. Legal Proceedings .................................................................................... 14
Item 4. Submission of Matters to a Vote of Security-Holders .................................................. 14
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters ................................ 15
Item 6. Selected Financial Data .............................................................................. 16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ................ 17
Item 8. Financial Statements and Supplementary Data .......................................................... 23
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ................. 43
Part III
Item 10. Directors and Executive Officers of the Registrant ................................................... 43
Item 11. Executive Compensation ............................................................................... 43
Item 12. Security Ownership of Certain Beneficial Owners and Management ....................................... 43
Item 13. Certain Relationships and Related Transactions ....................................................... 43
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ...................................... 44
Signatures ...................................................................................................... 46
Exhibit Index .......................................................................................................... 47
</TABLE>
<PAGE> 3
PART I
ITEM 1 BUSINESS
GENERAL
Oriole Homes Corp. (together with its consolidated subsidiaries, the
"Company" or "Oriole") builds and sells single-family homes, patio homes,
townhomes, villas, duplexes and low and mid-rise condominiums, principally in
southeast Florida. Oriole was incorporated in the State of Florida in 1968 as
the successor to six corporations that had engaged in the construction and sale
of single-family homes in Florida since 1963.
The Company's executive office is located at 1690 South Congress
Avenue, Suite 200, Delray Beach, Florida 33445, and its telephone number is
(561) 274-2000.
The Company is a leader in the "active adult" (age 55 and over) market
in south Florida. In 1999, approximately 86% of the Company's revenues were
derived from sales of homes in communities designed exclusively for active
adults. According to various market studies conducted on behalf of the Company,
during each of the last five years Oriole was the largest builder of
condominiums for active adults in Palm Beach County, measured by dollar volume
and number of units sold.
Oriole designs its product mix in response to the preferences of active
adults, a demographic group which, according to U.S. Census reports, enjoys a
high percentage of discretionary income in this marketplace and is the fastest
growing segment of the population in the United States. In 1999, homes in the
Company's active adult communities sold at prices that ranged from $100,000 to
$195,000. Approximately 54% of these sales were for cash.
During the year ended December 31, 1999, the average sales price for
housing units sold by the Company was $154,600.
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HOME BUILDING DATA (IN 000's)
The following table sets forth information concerning sales, new
contracts and backlog for each of the past five years for the Company's homes:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS)
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Sales
Sales value $77,454 $82,737 $106,788 $100,661 $73,409
Number of homes 501 522 676 597 433
Total New Contracts
Sales value $73,082 $75,876 $102,392 $110,122 $79,410
Number of homes 463 491 653 670 483
Total Backlog
Sales value $29,181 $33,553 $ 40,414 $44,810 $35,349
Number of homes 174 212 243 266 193
</TABLE>
The Company anticipates delivering substantially all backlog, both in
number of homes and dollar amount, within a twelve month period. It generally
takes eight months after receipt of a contract to deliver a home.
OPERATING STRATEGIES
The Company has attempted to maximize its financial return by (i)
acquiring tracts of developed and undeveloped land and marketing this land in
phases, (ii) developing planned communities, which permit the Company to take
advantage of certain economies of scale, (iii) generally beginning construction
only after a home is contracted for, and (iv) acting as general contractor and
hiring subcontractors on a fixed-price or other negotiated cost-effective basis.
In 1999, Oriole implemented certain strategic initiatives to help enhance profit
margins, including the installation of a new information technology system. This
system provided the infrastructure to support the evaluation, modification and
automation of certain business processes in order to reduce home delivery time,
enhance the quality of home construction and standardize options.
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<PAGE> 5
Market-driven attributes which have contributed to Oriole's success
include, (i) construction of quality homes within communities that offer a
significant range of amenities, and therefore satisfy customers who have
provided a continual source of referrals, (ii) the offering of a wide selection
of competitively priced housing, which includes a substantial product mix, (iii)
extensive knowledge of the Florida market, and (iv) a land acquisition and
development strategy that both permits development and construction in phases
and ensures availability of strategically located land for future marketing.
The Company will continue to adhere to most of its current operating
strategies but will also adopt new strategies as it deems appropriate to meet
evolving and increasingly competitive market conditions. In this regard, the
Company continues to extend its geographic market into the central Florida area
to take advantage of accelerated demand in those areas. It has also reduced
reliance on the purchase of larger tracts of land outright with the use of
"rolling" options and strategic alliances. The typical "rolling" option allows
the Company an exclusive right to the future purchase of a predetermined
quantity of land in a development at a price fixed at the original contract
date, thereby allowing the Company to reduce its market risk by adjusting its
level of investment. A typical strategic alliance allows for shared resources
and risk between homebuilders and/or vendors in the purchase, development and
marketing of large parcels of land. These alliances may take various forms; i.e.
direct investment, joint ventures, etc.
FLORIDA MARKET. The Company's residential developments are all located
in the State of Florida and primarily in southeast and central Florida (Broward,
Palm Beach, Osceola and Marion Counties).
QUALITY CONSTRUCTION AND DIVERSE AMENITIES. The Company creates a total
lifestyle experience for the active adult. The communities usually include
extensive product mix and recreational facilities, which range from intimate
social clubhouses and swimming pools to multi-million dollar clubhouse
environments which include tennis courts, indoor and outdoor swimming pools,
theaters for the performing arts, health clubs/spas and other amenities.
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<PAGE> 6
PRODUCT DIVERSIFICATION AND MERCHANDISING. The Company spends
considerable effort in developing design, marketing and merchandising concepts
for each of its communities. The design concepts determine the size, style and
price range of homes, the layout of common areas and individual lots and the
overall community presentation. The product line offered depends upon many
factors, including the housing generally available in the area and the needs of
a particular target market. After establishing design concepts and a marketing
plan, the Company undertakes development activities which can include site
planning and engineering and the construction of roads, sewer, water and
drainage facilities and recreational facilities.
Oriole seeks to appeal to a wide variety of buyers in different
geographic locations with different individual risk profiles and lifestyle
preferences and, accordingly, the Company offers a diversity of home styles and
price ranges including single family, patio, townhomes, villas, duplexes and low
and mid-rise condominiums. Sales prices range from $100,000 to $450,000, with an
average price of $154,600 for homes delivered during 1999. See "COMMUNITIES
CURRENTLY UNDER DEVELOPMENT OR CONSTRUCTION", at page 6.
The Company offers a variety of options for each of its homes. Options
permit buyers some flexibility to customize their homes on a design fee basis.
Options also provide the Company with higher margins while allowing the Company
to maintain the efficiencies of a production builder. The Company believes the
availability of options increases the appeal of its homes and makes them
desirable to a wide variety of buyers.
LAND ACQUISITION AND DEVELOPMENT. The Company selects locations for its
developments on the basis of accessibility to infrastructure such as major
highways and thoroughfares, shopping areas, medical facilities and community
cultural and recreation centers. The land is then separated into development
phases and concepts, with actual construction typically beginning within one (1)
year from the land acquisition date. The Company generally develops tracts of
land that require site improvements prior to construction. This work sometimes
requires that the Company maintain Performance Bonds with the appropriate
regulatory authorities.
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<PAGE> 7
Oriole'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 will, however, begin
multi-family construction (duplex, townhouse, villa and multi-story complexes)
when (a) sales contracts are executed for a predetermined percentage of the
total units available and (b) profit can be enhanced by matching production
schedule to deliveries.
LAND SALES. In the normal course of its business, the Company has and
may sell land which either can be sold at an advantageous price due to market
conditions or because it no longer meets the Company's marketing needs. Sales of
this land may also be made because it is located in areas where the Company
considers its inventory to be excessive or because the land has been zoned for
commercial use.
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<PAGE> 8
COMMUNITIES CURRENTLY UNDER DEVELOPMENT OR CONSTRUCTION
The following table summarizes information as of December 31, 1999 with
respect to the Company's principal projects under development or construction
during 1999.
<TABLE>
<CAPTION>
UNITS SOLD
NAME AND YEAR AND UNITS SOLD
LOCATION OF DEVELOPMENT TOTAL UNITS DELIVERED AND DELIVERED
DEVELOPMENT STARTED TYPE PLANNED THRU 1999 IN 1999
- ------------------------------------------------------------------------- -----------------
<S> <C> <C> <C> <C> <C>
Country Glen 1993 Single 300 154 18
Cooper City Family
Sandpiper Landing 1995 Single 145 145 29
Coconut Creek Family
Coral Lakes 1992 Active 1,372(3) 789 137
Delray Beach Adult
Palm Isles 1991 Active 992 992 18
Boynton Beach Adult
Palm Isles West 1995 Active 235 189 46
Boynton Beach Adult
Majestic Isles 1994 Active 450 382 86
Boynton Beach Adult
Addison Green 1998 Active 130 4 4
Boynton Beach Adult
</TABLE>
<TABLE>
<CAPTION>
NAME AND
LOCATION OF UNITS UNDER UNITS UNDER REMAINING
DEVELOPMENT CONSTRUCTION(1) CONTRACT UNITS(2)
- ----------------------------------------------------------------- -------------------
AT DECEMBER 31, 1999
----------------------------------------------------------
<S> <C> <C> <C>
Country Glen 9 10 136
Cooper City
Sandpiper Landing -- -- --
Coconut Creek
Coral Lakes 86 67 516
Delray Beach
Palm Isles -- -- --
Boynton Beach
Palm Isles West 14 15 31
Boynton Beach
Majestic Isles 20 9 59
Boynton Beach
Addison Green 12 11 115
Boynton Beach
</TABLE>
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<PAGE> 9
COMMUNITIES CURRENTLY UNDER DEVELOPMENT OR CONSTRUCTION - Continued
<TABLE>
<CAPTION>
UNITS SOLD
NAME AND YEAR AND UNITS SOLD
LOCATION OF DEVELOPMENT TOTAL UNITS DELIVERED AND DELIVERED
DEVELOPMENT STARTED TYPE PLANNED THRU 1999 IN 1999
---------------------------------------------------------------------------------- ----------------
<S> <C> <C> <C> <C> <C>
Summer Chase 1989 Active 221 210 42
Lake Worth Adult
Whispering Sound 1991 Active 230 230 24
Palm City/Stuart Adult
Sandpiper Isles 1995 Mixed 70 (3) 70 11
Bonita Springs
Sandpiper Greens 1995 Mixed 30 (3) 30 16
Bonita Springs
Stonecrest 1995 Active 715 (4) 274 70
Ocala Adult
Terrace Homes 1999 Mixed 99 -- --
Celebration
</TABLE>
<TABLE>
<CAPTION>
NAME AND
LOCATION OF UNITS UNDER UNITS UNDER REMAINING
DEVELOPMENT CONSTRUCTION(1) CONTRACT UNITS(2)
---------------------------------------------------------------------- -------------------
AT DECEMBER 31, 1999
----------------------------------------------------------
<S> <C> <C> <C>
Summer Chase 11 2 9
Lake Worth
Whispering Sound -- -- --
Palm City/Stuart
Sandpiper Isles -- -- --
Bonita Springs
Sandpiper Greens -- -- --
Bonita Springs
Stonecrest 59 60 381
Ocala
Terrace Homes -- -- 99
Celebration
</TABLE>
(1) Includes model units.
(2) Includes model units and potential units to be constructed.
(3) Reduction in original number of units purchased.
(4) Includes purchase of additional land.
7
<PAGE> 10
COUNTRY GLEN is a community of single-family homes located in Cooper
City. The community consists of 300 units with recreational facilities under
development and construction. Prices range from $298,000 to $400,000.
SANDPIPER LANDING is in a 240 acre master planned private-gated
community consisting of 145 three and four bedroom, two-car garage residences,
located in Coconut Creek. Prices range from $129,000 to $160,000. This community
was sold out in 1999.
CORAL LAKES is an active adult community in Boynton Beach with a
multi-million dollar on-site clubhouse with substantial amenities. The community
of 1,372 units features condominiums in four-story buildings, coach homes and
sections of single-family residences including the newly introduced enclave of
Tuscany. Prices range from under $98,000 to $174,000.
PALM ISLES is an active adult community of 992 residences in Boynton
Beach. Prices in this community range from $129,000 to $140,000, and home styles
include villas, duplexes, lakefront two-story condominiums and single-family
residences. The community has a multi-million dollar on-site clubhouse and spa
with eight tennis courts and satellite swimming pools. This community was sold
out in 1999.
PALM ISLES WEST, an active adult community in Boynton Beach, features
235 duplexes and single-family residences priced from $120,000 to $186,000.
Residents of this community share Palm Isles' amenities, plus enjoy the
convenience of a satellite swimming pool and sun deck within Palm Isles West.
MAJESTIC ISLES is an active adult community of 450 duplexes and
single-family residences located in Boynton Beach. Prices range from $128,000 to
$183,000. The community features an intimate, luxury clubhouse with swimming
pool and tennis courts.
ADDISON GREEN is a gated community with a private recreation area in a
section of the Aberdeen Golf and Country Club located in Boynton Beach. Aberdeen
with its Tennis and Fitness Center overlooks an 18-hole golf course. Oriole's
130 single-family residences, with two-car garages, are priced from $160,000 to
$184,000.
SUMMER CHASE is a community for active adults located in Lake Worth.
The community features 221 single-family residences with two-car garages. The
price range is $145,000 to $169,000. A social clubhouse is available to all
residents along with tennis courts and pool.
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<PAGE> 11
WHISPERING SOUND is an active adult community of 230 duplex residences
located in Martin County in Palm City/Stuart. The residences range in price from
$114,000 to $124,000. 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. This community was sold out
in 1999.
SANDPIPER ISLES, located in Bonita Springs, is a 70 home neighborhood
of luxury 3 bedroom, 2 bath coach homes surrounded by lakes and preserves,
priced from $167,000 and luxury 3 bedroom, 3 1/2 bath mid-rise condominiums,
priced from $232,000. Included is a private social clubhouse, lakeside pool and
gated entry. This community was sold out in 1999.
SANDPIPER GREENS is a neighborhood of sixty 3 bedroom, 2 bath garden
mid-rise residences adjoining a country club with a championship 18-hole golf
course, priced from $148,000 to the mid $200's, located in Bonita Springs.
Residents have the option of becoming members of the country club. This
community was sold out in 1999.
STONECREST is an active adult community consisting of 715 single-family
homes priced from $90,000 to $160,000, offering championship golf and a social
recreational clubhouse with pool, located in Marion County.
TERRACE HOMES at Celebration, located in Disney's planned community,
will feature multi-family condominium residences. Construction is planned for
Summer, 2000.
CONSTRUCTION
Oriole is the general contractor for the construction of its
developments. 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
construction at a fixed price. Agreements with subcontractors are generally
subject to competitive bidding, with the Company continuously negotiating prices
and other significant terms with its subcontractors. The Company does not have
any commitment beyond one (1) year with any subcontractor.
At December 31, 1999, the Company employed approximately 38 people in
the construction operation. Most materials are obtained by subcontractors and
are readily available from numerous sources at commercially reasonable prices.
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<PAGE> 12
The Company has not experienced any material delays in construction due to
shortages of materials or labor, but has experienced cost increases due to
shortages of certain types of experienced labor. There has been a significant
increase in construction activity in Florida which has resulted in material
shortages for some competitors and could, but has not yet, affected the
Company's supply of labor and materials.
MARKETING AND SALES
The Company sells its homes primarily through commissioned employees
who typically work in model sales centers or from offices located in model homes
in the communities. The Company may also sell through independent brokers.
Oriole's sales and marketing organization consists of approximately 42
employees, many of whom are licensed real estate agents in Florida.
The Company advertises in newspapers and magazines, by direct mail, on
billboards and by electronic media. In fiscal 1999, the Company's aggregate
advertising cost was about $1.6 million. Oriole maintains model homes in most of
its communities and management believes that these units play a particularly
important role in the Company's marketing and merchandising efforts.
COMPETITION AND MARKET INFLUENCES
The business of developing and selling residential properties and
planned communities is highly competitive and fragmented. The Company competes
with numerous large and small builders on the basis of a number of interrelated
factors, including location, reputation, amenities, design, quality and price.
Some competing builders have nationwide operations and substantially greater
financial resources. The Company's products must also compete with resales of
existing homes and available rental housing. As discussed, management believes
that the Company's primary competitive strengths have been location, reputation,
price, design, value engineering, amenities and over 24,000 satisfied customers
who provide Oriole with a continuous source of referrals.
In general, the housing industry is cyclical and is affected by
consumer confidence levels, prevailing economic conditions and interest rates. A
variety of factors affect the demand for new homes, including the availability
and cost of labor and materials, changes in costs associated with home
ownership, changes in consumer preferences, demographic trends and the
availability of mortgage financing.
10
<PAGE> 13
The Company has enjoyed doing business in a geographic area with
relatively positive market demand factors for a number of years including higher
than U.S. average population growth, employment growth and household and per
capita income. In addition, market demographics is strongly weighted in favor of
the Company's primary customer base, namely older segments of the population
with an average head of household age of 54 + years. There is no guarantee,
however, that these positive trends will continue.
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 have imposed impact
fees as a means of defraying the costs of providing certain governmental
services to developing areas. The amount of these fees has increased
significantly during recent years. Building codes generally require the use of
specific construction materials which increases 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 certain boundaries. Counties and cities within
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. Certain
permits and approvals will be required to complete the communities under
development and currently being planned by Oriole. To date, restrictive zoning
laws, impact fees, 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 depending on 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 the land for the presence of
hazardous or toxic materials, wastes, or substances. Oriole has not been
11
<PAGE> 14
adversely affected to date by the presence or potential presence of such
materials, but there is no assurance that environmental issues will not
adversely affect the Company in the future.
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 and 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 projects have been found to satisfy
concurrency requirements.
The Company must also comply with regulations by federal and state
authorities relating to the sale and advertising of residential real estate,
including the preparation of registration statements or other disclosure type
documents to be filed with designated regulatory agencies.
CUSTOMER FINANCING AND SERVICES
The Company arranges title insurance for, and provides closing services
to, buyers of the Company's homes and other outside customers. Oriole also works
with mortgage lenders to provide buyers with conventional financing programs. By
making available a variety of attractive programs, the Company is able to more
efficiently expedite the entire sales transaction by assuring that necessary
mortgage commitments and other necessary conditions of sales are obtained.
The State of Florida requires that certain customer deposits be held in
segregated bank accounts. As of December 31, 1999, the Company has posted bonds
of $1.0 million and had entered into an escrow agreement with a bank and the
State of Florida which allows the Company to use customer deposits under certain
circumstances.
RENTAL ARRANGEMENTS
The Company currently owns 39 rental units in Miramar, Florida known as
Lakeshore at University Park. The Company leases these apartments through an
independent management company, typically for one year. In addition, in
connection with certain housing developments, the Company leases recreation
facilities.
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<PAGE> 15
JOINT VENTURES
Oriole is a participant in a joint venture to construct and sell homes
with another builder of residential housing in southeastern Florida. The project
is for 1,000 units and is known as Regency Lakes. Oriole invested $5.1 million
in 1994 and has received $2.5 million from the sale of lots in addition to
guaranteed returns ranging from 10% to 15%. There were no advances to the joint
venture in 1999. In January, 2000, the Company received $1.2 million from the
sale of the joint venture's remaining lots. The balance of the Company's
investment of $1.4 million is unrecoverable and has been written off as of
December 31, 1999.
EMPLOYEES
The Company employs approximately 123 persons, 6 of whom are senior
executives and 26 of whom are management 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. There are no collective
bargaining agreements with employees.
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<PAGE> 16
ITEM 2 PROPERTIES
The Company leases 19,700 square feet of space in a two-story office
building in Delray Beach as its principal business office. The lease expires
December 31, 2002 and can be renewed, at the Company's option, for an additional
five year period.
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 HOLDERS
No matters were submitted to security holders during the 4th quarter.
The Annual Meeting of Shareholders of the Registrant has been scheduled for May
10, 2000. The Company will file its definitive proxy materials pursuant to
Regulation 14A on or prior to April 28, 2000.
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<PAGE> 17
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY
The Company has two classes of common stock, Class A Common Stock and
Class B Common Stock, which, at December 31, 1999, were held by approximately
233 and 194 shareholders of record, respectively. Both the Class A Common Stock
and the Class B Common Stock are traded on the American Stock Exchange under the
symbols OHC.A and OHC.B. The following sets forth the range of high and low sale
prices:
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------- ------------------
QUARTER 1999 HIGH LOW HIGH LOW
------------ ---- --- ---- ---
<S> <C> <C> <C> <C>
First 2.69 2.00 2.50 1.81
Second 2.00 1.50 2.00 1.50
Third 2.75 1.88 2.81 1.06
Fourth 2.38 1.50 1.50 .88
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------- ------------------
QUARTER 1998 HIGH LOW HIGH LOW
------------ ---- --- ---- ---
<S> <C> <C> <C> <C>
First 5.25 4.38 5.00 4.00
Second 5.25 4.63 5.19 4.63
Third 5.00 3.94 4.88 3.63
Fourth 3.75 2.25 3.75 2.13
</TABLE>
On March 15, 2000, the last reported sales prices of the Class A Common
Stock and Class B Common Stock were $2.65 and $2.13 per share, respectively. On
the same date, there were 230 shareholders of record of Class A Common Stock and
193 shareholders of record of Class B Common Stock.
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<PAGE> 18
The Company currently intends to retain its future earnings to finance
the development of its business. In addition, the Company is currently
restricted from the payment of cash dividends on its Common Stock under the
terms of the Senior Notes. Accordingly, the Company does not anticipate paying
any cash dividends on its Common Stock in the foreseeable future. The payment of
any future dividends will be at the discretion of the Company's Board of
Directors and will depend upon, among other things, future earnings, the success
of the Company's development activities, capital requirements, restrictions in
financing arrangements, the general financial condition of the Company and
general business conditions.
ITEM 6 SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the Company
and its consolidated subsidiaries and should be read in conjunction with the
financial statements included elsewhere in this Form 10-K. The data set forth
below as of and for the years ended December 31, 1999, 1998, 1997, 1996 and 1995
have been derived from the Company's audited consolidated financial statements.
<TABLE>
<CAPTION>
IN THOUSANDS (EXCEPT PER SHARE DATA) 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues .................................. 87,936 91,065 116,190 111,619 82,236
Net Income (loss) ......................... (5,042) 82 (20,850) 85 (11,762)
Shareholders' Equity ...................... 41,937 46,979 46,897 67,747 67,661
Average Shareholders' Return on Equity .... (12.02%) .17% (44.46%) .13% (17.38%)
Total Assets .............................. 102,041 135,226 145,060 175,546 179,478
Net Income (loss) per Share (Class A and B) (1.09) .02 (4.51) .02 (2.54)
Dividends- Class A ........................ -- -- -- -- --
Dividends- Class B ........................ -- -- -- -- --
Average Shares Outstanding ................ 4,626 4,626 4,626 4,626 4,626
</TABLE>
16
<PAGE> 19
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
REVENUES. The following table sets forth for the periods indicated
certain components of the revenues expressed as a percentage of total revenues.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PERCENTAGE OF TOTAL REVENUES
YEARS ENDED DECEMBER 31,
- --------------------------------------------------------------------------------------------------------------------
1999 1998 1997
-----------------------------------------------------
<S> <C> <C> <C>
Sale of homes 88.1% 90.9% 91.9%
Sales of land -- -- .1
Other operating revenues 2.3 4.2 2.9
Interest, rentals and other income 2.7 3.5 2.8
Gain on sales of property and equipment
and land held for investment, net 6.9 1.4 2.3
Selling, general and administrative expenses 16.0 16.6 15.4
Net income (loss) (5.7) .1 (17.9)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
BACKLOG. The following table sets forth the Company's backlog at
December 31, 1999, 1998 and 1997.
Backlog generally represents units under a standard contract for which
a full deposit has been received and any statutory rescission right has expired.
The Company generally fills backlog within twelve months and estimates that the
period between receipt of a sales contract and delivery of the completed home to
be eight months. Trends in the Company's backlog are subject to change from
period to period corresponding to changes in certain economic conditions
including consumer confidence levels and the availability and cost of financing.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER AGGREGATE
OF VALUE
DECEMBER 31 UNITS (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1999 174 29.2
1998 212 33.6
1997 243 40.4
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 20
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
Revenues from home sales decreased $5.3 million (6.4%) during the
fiscal year 1999 as compared to 1998 primarily as a result of a reduction in the
number of homes delivered. Oriole delivered 501 homes in 1999 compared to 522 in
1998, with a slight decrease in the average selling price of deliveries from
$158,500 to $154,600. The number of new contracts signed and the aggregate
dollar value of those contracts decreased to 463 and $73.1 million in 1999 from
491 and $75.9 million, respectively, in 1998. The average selling price of homes
under new contracts in 1999 was approximately the same as in 1998.
Non-homebuilding revenues increased $3.0 million in 1999 as compared to
the same period in 1998 due to the sale of certain property and equipment and
land held for investment.
Interest, rentals and other income decreased $0.8 million in 1999
compared to the same period in 1998 primarily as the result of a decrease in
rental income due to one of the property sales noted above.
Cost of home sales decreased by $1.1 million (1.5%) to $70.3 million in
1999 as compared to 1998. As a percentage of home sales, cost of sales actually
increased in 1999 to 90.8% from 86.3% in 1998 due to the impact of higher
previously capitalized interest.
Selling, general and administrative expenses decreased $1.0 million
(6.8%). This improvement was the result of reductions in advertising, promotion
and sales commission expense associated with a workforce reduction program.
The Company incurred a net loss in 1999 of $5.0 million, or $1.09 per
share, as compared to net income of $0.1 million, or $0.02 per share in 1998.
Included in this net loss are non-cash pre-tax charges of $4.9 million
representing an inventory valuation adjustment affecting the value of land
inventory for approximately 250 unsold housing units located in four
developments and a write-down of $1.4 million of an investment in a joint
venture.
EBITDA, inclusive of the 1999 non-cash valuation adjustments, increased
$0.5 million to $9.8 million in 1999 from $9.3 million in 1998 primarily due to
the increase in non-homebuilding revenues. EBITDA was also affected by the
factors influencing net income discussed above.
18
<PAGE> 21
RESULT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Revenues from home sales decreased $24.1 million (22.5%) during the
fiscal year 1998 as compared to 1997 primarily as a result of a reduction in the
number of homes delivered. Oriole delivered 522 homes in 1998 compared to 676 in
1997, with a slight increase in the average selling price of deliveries from
$158,000 to $158,500. The number of new contracts signed and the aggregate
dollar value of those new contracts decreased to 491 and $75.9 million in 1998
from 653 and $102.4 million, respectively, in 1997. The average selling price of
homes under new contracts in 1998 was approximately the same as in 1997.
The reduction in the level of activity was the result of a lag in
deliveries due to an operational strategies to introduce new redesigned product
and to balance sales deliveries with construction cycle time.
Other operating revenues and interest, rentals and other income
increased to $7.0 million in 1998 as compared to $6.7 million in 1997 due to
sales of recreation facility leases and a lower vacancy rate in the Company's
rental property.
Cost of home sales decreased by 24.8% to $71.4 million from $95.0
million in 1997 as a result of a decrease in the number of homes delivered. As a
percentage of home sales, cost of sales decreased to 86.3% in 1998 from 88.0% in
1997 due to the positive impact of the prior year 1997 inventory valuation
adjustment and the execution of a strategy to better match construction delivery
schedules with sales pace.
Selling, general and administrative expenses, exclusive of the $0.2
million amortization associated with the purchase of $11.0 million of the
Company's Senior Notes, decreased by $3.0 million, or 15.6% to $15.1 million in
1998 compared to 1997. This improvement was the result of the implementation of
strategic initiatives designed to enhance operating efficiencies, which included
a workforce reduction program, a centralized purchasing initiative, the redesign
of the sales incentive compensation program and functional outsourcing.
During the year ended December 31, 1997, the Company had a net loss of
$20.8 million ($4.51 per share) primarily because of the write-down in value of
certain land inventory and write-down of the cost of a rental apartment project
to estimated fair market value less cost to sell. These write-downs resulted in
non-cash, pre-tax charges of $17.1 million and $4.5 million, respectively. The
net loss for 1997 calculated without giving effect to these write-offs and
before related 1997 income tax benefits was $1.4 million ($0.31 per share)
compared to a net income of $0.1 million ($0.02 per share) in 1998.
19
<PAGE> 22
FINANCIAL POSITION. The following table sets forth selected balance sheet items
of the Company at December 31, 1999 and 1998.
- --------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1999 1998
---------------------------------
Cash $ 18.7 $ 10.6
Inventories 73.0 97.1
Senior Notes, at face value 43.1 56.3
Other Liabilities 17.0 31.9
- -------------------------------------------------------------------------------
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.
In addition, the Company has a revolving line of credit in the amount of $10.0
million (the "Revolving Line of Credit") available for general cash
requirements. As of December 31, 1999, the Company had approximately $18.7
million in cash and cash equivalents and substantially the entire amount of the
Revolving Line of Credit was available. The Company believes that these
resources are sufficient to provide for its cash requirements during 2000.
In 1999 the Company purchased land for development purposes totaling
approximately $3.6 million, using approximately $2.6 million in cash and
approximately $1.0 million in financing secured by a promissory note on certain
real property. In addition, the Company used available cash to repurchase $13.2
million of the Company's 12 1/2% Senior Notes due January 15, 2003 (the "Senior
Notes") and retire an existing $12.2 million mortgage on a rental property.
As of December 31, 1999 Senior Notes having a face value of $43.1
million were outstanding. Under the terms of the Senior Notes indenture (the
"Indenture"), the Company may redeem the Senior Notes at 105% of their principal
amount on or after January 15, 1998 and thereafter at prices declining to 100%
of their principal amount on January 15, 2001.
20
<PAGE> 23
The Indenture requires the Company to meet sinking fund payments on the
original $70.0 million issue of $17.5 million on January 15, 2001 and 2002. In
addition, the Indenture restricts the amount and type of additional indebtedness
that the Company may incur and restricts the purchase by the Company of its
common stock and the payment of cash dividends until the Company has achieved
cumulative net income in excess of $72.2 million. As of December 31, 1999, the
Company was not permitted to purchase common stock or pay cash dividends.
Borrowings under the Revolving Line of Credit are secured by a mortgage
on certain real property of the Company. Under the terms of the Revolving Line
of Credit, the Company is subject to customary covenants and restrictions,
including those relating to maintenance of consolidated tangible net worth and
the issuance of certain types of additional debt. Oriole believes that it will
be able to further extend the Revolving Line of Credit beyond its scheduled
expiration date or obtain a replacement credit facility if necessary, but there
can be no assurance that it will be able to extend its existing facility or
obtain a replacement credit facility.
Oriole has a mortgage on certain property with an outstanding principal
balance of $3.3 million. The interest rate on the loan is adjusted monthly to a
Libor market rate index plus .275% or the bank's prime rate, at the Company's
option.
In addition at December 31, 1999, Oriole had a promissory note of $1.0
million bearing interest at 8.00% per annum, collateralized by land. The
principal and accrued interest were due and paid in January, 2000.
As of December 31, 1999, the Company had no firm commitments for
capital expenditures.
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.
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
21
<PAGE> 24
regulatory environment particularly as relates to zoning and land use,
competitive pricing pressures, the general state of the economy, both nationally
and in the Company's market, unseasonable weather trends, and the effect on the
Company, its subcontractors and suppliers, disruptions caused by deficiencies in
the ability of computer hardware and software to process information with dates
or date ranges spanning the year 2000 and beyond.
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
affect the affordability and availability of permanent mortgage financing to
prospective purchasers.
Inflation also increases the 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 due in part to the
inability to pass on increased construction costs. There is no assurance that
inflation will not have an adverse impact on the future results of operations of
the Company.
INTEREST RATES
Overall housing demand is adversely affected by increases in interest
costs. If mortgage interest rates increase significantly, this may negatively
impact the ability of a homebuyer to secure adequate financing. Although about
54% of the Company's current sales are for cash, there is no guarantee that
future sales will be made on such terms in comparable amounts. As such, higher
interest rates may adversely affect the Company's revenues, gross margins and/or
net income.
22
<PAGE> 25
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PAGE
----
Consolidated Balance Sheets as of
December 31, 1999 and 1998 ........................................ 24
Consolidated Statements of Operations for the Years Ended
December 31, 1999, 1998 and 1997 .................................. 26
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1999, 1998 and 1997 .................................. 27
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997 .................................. 28
Notes to Consolidated Financial Statements ........................ 29
Management's Responsibility for Financial Statements .............. 41
Report of Independent Accountants ................................. 42
23
<PAGE> 26
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
ASSETS
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Cash and cash equivalents ...................................... $ 18,708,081 $ 10,557,772
------------ ------------
Receivables
Mortgage notes ............................................ 262,240 953,284
------------ ------------
Inventories
Land ...................................................... 49,170,778 59,059,535
Homes completed or under construction ..................... 27,562,235 42,763,798
Model homes ............................................... 3,856,810 4,360,514
------------ ------------
80,589,823 106,183,847
Less estimated costs of completion included
in inventories .......................................... 7,574,038 9,080,857
------------ ------------
73,015,785 97,102,990
------------ ------------
Property and equipment, at cost
Land ...................................................... 152,448 517,554
Buildings ................................................. 2,671,438 3,505,343
Furniture, fixtures and equipment ......................... 2,595,802 3,445,563
------------ ------------
5,419,688 7,468,460
Less accumulated depreciation .................................. 2,978,526 4,070,613
------------ ------------
2,441,162 3,397,847
------------ ------------
Property and equipment held for sale, at cost .................. -- 11,956,165
------------ ------------
Investments in and advances to joint ventures .................. 1,242,240 3,288,596
------------ ------------
Land held for investment, at cost .............................. 1,857,300 2,127,009
------------ ------------
Other
Prepaid expenses .......................................... 1,075,934 1,719,517
Unamortized debt issuance costs ........................... 661,429 1,111,696
Other assets .............................................. 2,776,732 3,011,589
------------ ------------
4,514,095 5,842,802
------------ ------------
Total assets ................................. $102,040,903 $135,226,465
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
24
<PAGE> 27
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
DECEMBER 31,
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Liabilities
Line of credit ............................................ $ 10,000 $ 10,000
Mortgage notes payable .................................... 4,306,372 15,970,385
Accounts payable and accrued liabilities .................. 8,555,721 11,664,858
Customer deposits ......................................... 4,583,143 5,095,182
Senior notes .............................................. 42,648,760 55,507,312
------------ ------------
Total liabilities ............................ 60,103,996 88,247,737
------------ ------------
Shareholders' equity
Class A common stock, $.10 par value
Authorized - 10,000,000 shares
issued and outstanding - 1,863,649
in 1999 and 1,864,149 in 1998 ....................... 186,365 186,415
Class B common stock, $.10 par value
Authorized - 10,000,000 shares
issued and outstanding - 2,761,875
in 1999 and 2,761,375 in 1998 ....................... 276,188 276,138
Additional paid-in capital ................................ 19,267,327 19,267,327
Retained earnings ......................................... 22,207,027 27,248,848
------------ ------------
Total shareholders' equity ................... 41,936,907 46,978,728
------------ ------------
Total liabilities and shareholders'
equity ...................................... $102,040,903 $135,226,465
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
25
<PAGE> 28
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1999 1998 1997
---------------- --------------- ----------------
<S> <C> <C> <C>
Revenues
Sales of homes $ 77,454,410 $ 82,736,768 $ 106,787,968
Sales of land -- 8,500 56,500
Other operating revenues 2,003,522 3,873,699 3,426,228
Gain on sale of property and equipment, net 3,745,618 -- --
Gain on sales of land held for investment and
other assets, net 2,305,603 1,225,190 2,633,761
Interest, rentals and other income 2,426,739 3,221,183 3,286,038
---------------- --------------- ----------------
87,935,892 91,065,340 116,190,495
---------------- --------------- ----------------
Costs and expenses
Cost of homes 70,308,875 71,420,904 94,981,000
Inventory valuation adjustment 4,860,636 -- 17,050,000
Fixed asset valuation adjustment -- -- 4,525,000
Cost of land sold -- 2,097 14,638
Loss on joint venture investment 1,430,083 -- --
Costs relating to other operating revenues 1,892,866 3,289,012 3,983,745
Selling, general and administrative expenses 14,074,117 15,095,165 17,878,373
Interest costs incurred 6,888,691 8,764,448 9,910,964
Interest capitalized (deduct) (6,477,555) (7,588,039) (9,150,552)
----------------- --------------- ----------------
92,977,713 90,983,587 139,193,168
---------------- --------------- ----------------
Income (loss) before benefit from income taxes (5,041,821) 81,753 (23,002,673)
Income tax benefit
Current -- -- (765,437)
Deferred -- -- (1,387,473)
---------------- --------------- -----------------
-- -- (2,152,910)
---------------- --------------- -----------------
Net income (loss) $ (5,041,821) $ 81,753 $ (20,849,763)
================= =============== =================
Net income (loss) per Class A and Class B
common share available for common
stockholders - Basic and Diluted $ (1.09) $ .02 $ (4.51)
================ =============== ================
Weighted average number of common stock
outstanding - Basic 4,625,524 4,625,524 4,625,524
================ =============== ================
- Diluted 4,625,524 4,625,549 4,625,524
================ =============== ================
</TABLE>
The accompanying notes are an integral part of these statements.
26
<PAGE> 29
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
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,
1997 1,874,949 $ 187,495 2,750,575 $ 275,058 $ 19,267,327 $ 48,016,858
Net loss for 1997 -- -- -- -- -- (20,849,763)
Stock conversion (10,800) (1,080) 10,800 1,080 -- --
------------ ------------ ------------ ------------ ------------ ------------
Balance at December 31,
1997 1,864,149 186,415 2,761,375 276,138 19,267,327 27,167,095
Net income for 1998 -- -- -- -- -- 81,753
------------ ------------ ------------ ------------ ------------ ------------
Balance at December 31,
1998 1,864,149 186,415 2,761,375 276,138 19,267,327 27,248,848
Net loss for 1999 -- -- -- -- -- (5,041,821)
Stock conversion (500) (50) 500 50 -- --
------------ ------------ ------------ ------------ ------------ ------------
Balance at December 31,
1999 1,863,649 $ 186,365 2,761,875 $ 276,188 $ 19,267,327 $ 22,207,027
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
27
<PAGE> 30
ORIOLE HOMES CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------- ------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ (5,041,821) $ 81,753 $(20,849,763)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Depreciation 892,446 1,320,976 1,377,780
Amortization 759,715 785,769 503,648
Deferred income taxes -- -- (1,387,473)
Gain on sales of property and equipment
and land held for investment, net (6,051,221) (1,225,190) (2,633,761)
Inventory valuation adjustment 4,860,636 -- 17,050,000
Fixed asset valuation adjustment -- -- 4,525,000
Loss on joint venture investment 1,430,083 -- --
(Increase) decrease in operating assets
Receivables 691,044 (685,961) 9,882
Income taxes receivable -- 765,437 1,633,477
Inventories 17,601,052 (3,651,987) 15,654,771
Other assets 878,440 1,121,158 (708,715)
Increase (decrease) in operating liabilities
Accounts payable and accrued liabilities (3,109,137) (1,476,633) (4,189,180)
Customer deposits (512,039) (1,293,963) (1,194,426)
------------ ------------ ------------
Total adjustments 17,441,019 (4,340,394) 30,641,003
------------ ------------ ------------
Net cash provided by (used in) operating activities 12,399,198 (4,258,641) 9,791,240
------------ ------------ ------------
Cash flows from investing activities
Return from joint ventures 616,273 1,206,404 2,036,000
Capital expenditures (694,787) (1,084,857) (398,051)
Sales of property and equipment and land held
for investment 20,661,638 2,354,403 9,102,514
------------ ------------ ------------
Net cash provided by investing activities 20,583,124 2,475,950 10,740,463
------------ ------------ ------------
Cash flows from financing activities
Proceeds from mortgage notes 1,575,101 3,750,000 --
Payment of mortgage notes (13,239,114) (218,060) (203,056)
Borrowings under line of credit agreement -- -- 15,100,000
Repayments under line of credit agreement -- -- (17,790,000)
Repurchase of senior notes (13,168,000) (11,022,000) (150,000)
Issuance costs -- -- (67,500)
------------ ------------ ------------
Net cash (used in) financing activities (24,832,013) (7,490,060) (3,110,556)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 8,150,309 (9,272,751) 17,421,147
Cash and cash equivalents at beginning of year 10,557,772 19,830,523 2,409,376
------------ ------------ ------------
Cash and cash equivalents at end of year $ 18,708,081 $ 10,557,772 $ 19,830,523
============ ============ ============
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest (net of amount capitalized) $ 820,159 $ 1,620,812 $ 590,868
Income taxes $ -- $ 2,627 $ --
</TABLE>
The accompanying notes are an integral part of these statements.
28
<PAGE> 31
ORIOLE HOMES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER
INFORMATION
BASIS OF PRESENTATION AND BUSINESS
The consolidated financial statements include the accounts of Oriole Homes
Corp. and all wholly-owned subsidiaries (the "Company"). Significant
intercompany accounts and transactions, if any, have been eliminated in
consolidation.
The Company, a Florida corporation, is engaged principally in the design,
construction, marketing and sale of single-family homes, patio homes,
townhomes, villas, duplexes and low and mid-rise condominiums in Palm
Beach, Broward, Martin, Lee, Marion and Osceola counties in Florida.
REVENUE RECOGNITION
The Company records sales of real estate in accordance with generally
accepted accounting principles governing profit recognition for real estate
transactions.
INVENTORIES
Inventories are carried at land cost, plus accumulated development and
construction costs (including capitalized interest and real estate taxes).
Homes which are completed and being held for sale aggregate approximately
$10,200,000 in 1999 and $23,000,000 in 1998. The accumulated costs of land
and homes is not in excess of estimated fair value less cost to sell.
Estimated fair value less cost to sell is based upon sales and backlog in
the normal course of business less estimated cost to complete and dispose
of the property. The Company's management, on a continuous basis, reviews
individual projects in inventory for potential adjustments in net
realizable value.
The Company capitalizes certain interest costs incurred on land under
development and homes under construction. Such capitalized interest is
included in cost of home sales when the units are delivered.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. The Company provides for
depreciation of property and equipment by the straight-line method over the
following estimated useful lives of the various classes of depreciable
assets:
Buildings 25 to 31.5 years
Furniture, fixtures and equipment 5 to 7 years
SENIOR NOTE ISSUANCE COSTS AND UNAMORTIZED DISCOUNT
Costs incurred in connection with the Senior Notes have been deferred and
are being amortized by using the interest method over the term of the debt.
29
<PAGE> 32
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER
INFORMATION - Continued
CASH EQUIVALENTS
Cash equivalents consist of highly liquid investments with maturities of
one month or less when purchased.
NET INCOME (LOSS) PER SHARE
Net income (loss) per common share is computed by dividing net income
(loss) by the weighted average shares outstanding during each year. The
computation of diluted net income (loss) per share includes all dilutive
common stock equivalents in the weighted average shares outstanding during
each year.
ADVERTISING
The Company expenses advertising costs as incurred. Advertising expense for
the years ended December 31, 1999, 1998 and 1997 was $1,584,483, $2,079,033
and $1,868,236, respectively.
ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions 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 these estimates.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109").
This statement requires an asset and liability approach to account for
income taxes. The Company provides deferred income taxes for temporary
differences that will result in taxable or deductible amounts in future
years based on the reporting of certain costs in different periods for
financial statement and income tax purposes. A valuation allowance is
established for deferred tax assets when it is more likely than not that a
tax benefit will not be realized.
NOTE B - MORTGAGE NOTES
First and second mortgage notes receivable bear interest at rates ranging
from 7.75% to 10.0%. The Company's receivables are primarily mortgages,
which are collateralized by real estate. The amounts are due in year 2000.
30
<PAGE> 33
NOTE C - INVENTORIES
Information related to the interest component capitalized in the Company's
inventories is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1999 1998 1997
----- ----- ----
<S> <C> <C> <C>
Interest capitalized in inventories, beginning of
period $ 14,221,491 $ 12,626,682 $ 21,241,460
Interest capitalized 6,477,555 7,588,039 9,150,552
Interest expensed to cost of sales - operations (6,480,654) (5,993,230) (6,420,951)
Interest expensed - valuation adjustment (3,624,686) -- (11,344,379)
------------- ------------- -------------
Interest capitalized in inventories, end of
period $ 10,593,706 $ 14,221,491 $ 12,626,682
============= ============= =============
</TABLE>
NOTE D - INVENTORY AND FIXED ASSET VALUATION ADJUSTMENTS
The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 121, which requires that long-lived assets held and used by an entity
be reviewed for impairment whenever events or changes indicate that the net
book value of the asset may not be recoverable. An impairment loss is
recognized if the sum of the undiscounted expected future cash flows from
the use of the asset is less than the net book value of the asset. The
Company periodically reviews the carrying value of its assets and, if such
reviews indicate a lack of recovery of the net book value, adjusts the
assets accordingly.
In this regard, the Company recorded in the second and fourth quarters of
1999, non-cash valuation adjustments totaling $2,480,695 and $2,379,941
respectively (or $.54 and $.42 per common share, respectively). These
adjustments reduced certain inventory to estimated fair value less cost to
sell. The inventory adjustments pertained to land inventory for
approximately 344 unsold housing units located in four developments.
The Company recorded in the first and second quarters of 1997, non-cash
inventory and fixed asset valuation adjustments totaling $17,050,000 and
$4,525,000, respectively. These adjustments reduced certain inventory to
estimated fair value less cost to sell. The inventory adjustment pertained
to land inventory for approximately 2,200 unsold housing units located in
five developments. The fixed asset adjustment pertained to rental property
which management had decided to sell, and, as such, the Company had reduced
the rental property's carrying amount to its fair value less cost to sell.
NOTE E - LIFE INSURANCE
The Company has purchased life insurance on the lives of two of its
officers and their spouses who own significant shares of common stock of
the Company. An irrevocably designated trustee of the officers is the
beneficiary. 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. The accumulated premiums paid by the
31
<PAGE> 34
NOTE E - LIFE INSURANCE - Continued
Company on the above policies through the years ended December 31, 1999 and
1998 were $1,007,713 and $893,786, respectively, and are classified as
other assets.
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 F - INVESTMENT IN JOINT VENTURE
The Company had one investment in a joint venture in 1999 and 1998,
respectively. The joint venture constructs and sells homes. During the
years ended December 31, 1999 and 1998, there were no advances from the
Company to the joint venture. In January, 2000, the Company received
$1,242,240 from the sale of its remaining lots. The balance of the
Company's investment of $1,430,183 is unrecoverable and has been written
off as of December 31, 1999.
NOTE G - LINES 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 December 31, 1999, $9,990,000
was available under this line of credit. 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, among other things, restricts the Company from incurring
additional debt and requires a consolidated tangible net worth (as amended)
of not less than $41,000,000. The loan agreement expires June 30, 2000.
The average interest rate and balance outstanding for the revolving line of
credit payable to the bank, based on a weighted average, is as follows:
<TABLE>
<CAPTION>
1999 1998
---------------- ---------------
<S> <C> <C>
Daily average outstanding
borrowings $ 10,000 $ 10,000
Average interest rate during the
period 9.6% 9.6%
Interest rate at the end
of the period 10% 9.25%
Maximum outstanding during the
year $ 10,000 $ 10,000
</TABLE>
The Company also may draw up to $200,000 under the Letter of Credit (see
Note H). Amounts advanced under the Letter of Credit bear interest at the
bank's prime rate plus 2.0%. Principal and interest are due and payable on
demand. At December 31, 1999, the Company has not drawn on the Letter of
Credit.
32
<PAGE> 35
NOTE H - MORTGAGE NOTES PAYABLE
Mortgage notes payable at December 31, 1999 and 1998, are as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Mortgage note, interest at 7.15%, requires monthly payments of
$91,696 including interest; paid in full June 30, 1999. $ -- $12,220,385
Acquisition loan/mortgage note, interest at the specified Libor Market
Rate Index plus 0.275% or the prime rate of the bank as selected each
month by the Company. At December 31, 1999, interest was 8.50%; secured
by certain land and improvements; accrued interest paid monthly and
partial payments of principal to be made upon the closing of homes.
Principal must be paid in full at maturity on December 22, 2000, unless
extended for one year under certain circumstances. 3,306,372 3,750,000
Promissory note, dated July 21, 1999, interest at 8.0%. Principal and
accrued interest due January 21, 2000. Promissory note of $1,000,000
was paid in full on January 21, 2000. 1,000,000 --
------------- -----------
$ 4,306,372 $15,970,385
============= ===========
</TABLE>
On December 22, 1998, the Company entered into a Construction Loan Agreement
with a bank providing for a loan totaling $6,750,000 (the "Loan") and a
letter of credit facility in the amount of $200,000 in connection with the
Company's acquisition of certain real property (the "Land") and the
construction of single family residential homes thereon (the "Homes"). The
Loan is comprised of a $3,750,000 acquisition loan (the "Acquisition Loan")
relating to the purchase of the Land and a revolving credit facility in an
amount of up to $3,000,000 outstanding at any time to be used to finance
construction of the Homes (the "Revolving Loan").
Outstanding amounts borrowed under the Loan bear interest at the specified
LIBOR Market Rate Index plus 0.275% or the prime rate of the bank as
selected each month by the Company. The Loan is secured by a mortgage on the
Land and the Homes to be constructed thereon. Interest accrued on the Loan
must be paid monthly and partial payments of principal shall be made from
time to time upon the closing of the sale of Homes. The principal must be
paid in full at maturity on December 22, 2000, unless extended for one year
under certain circumstances.
33
<PAGE> 36
NOTE I - INCOME TAXES
Deferred tax assets and liabilities reflect the future income tax effects
of temporary differences between the consolidated financial statement
amounts and liabilities and their respective tax bases.
As of December 31, 1999 and 1998, the significant components of the
Company's deferred tax assets and liabilities were:
1999 1998
------------ ------------
AMT credit carryover $ 113,877 $ 113,877
Federal net operating loss carryforward 7,261,430 3,749,382
State net operating loss carryforward 1,962,063 1,393,938
Inventory valuation adjustment 3,019,334 6,557,409
Reserve for warranties 572,170 593,450
Percentage of completion 89,663 80,768
Inventory capitalization 134,073 115,172
------------ ------------
Total deferred tax asset, before
valuation allowance 13,152,610 12,603,996
Less valuation allowance 11,045,277 8,962,909
------------ ------------
Total deferred tax assets, net of
valuation allowance 2,107,333 3,641,087
------------ ------------
Deferred expenses (2,068,124) (3,571,379)
Accelerated depreciation (39,209) (69,708)
------------ ------------
Total deferred tax liabilities (2,107,333) (3,641,087)
------------ ------------
Net deferred tax (liability) asset $ -- $ --
============ ============
The net change in the valuation allowance for the years ended December 31,
1999 and 1998 were increases of $2,082,368 and $55,657, respectively.
The principal reasons for the difference between the total tax expense and
the amount computed by applying the statutory federal income tax rate to
income (loss) before income taxes is the valuation allowance and the
effects of state income taxes.
At December 31, 1999, the Company has federal and state net operating loss
carryforwards (NOLs) of $21,357,147 and $35,673,881, respectively. Of this
amount, $6,128,138 of the federal NOLs expire in 2012 and $15,229,009 will
begin to expire in 2018. The Company's state NOLs expire principally in the
years 2012 through 2014. The complete realization of the value of the NOLs
is dependent on various factors, including future profitability.
NOTE J - CUSTOMER DEPOSITS
Certain customer deposits, pursuant to statutory regulations of the State
of Florida or by agreement between the customer and the Company, are held
in segregated bank accounts. At December 31, 1999 and 1998, cash in the
amounts of approximately $416,000 and $1,650,000, respectively, was so
restricted.
34
<PAGE> 37
NOTE J - CUSTOMER DEPOSITS - Continued
The Company entered into an escrow agreement with a certain bank and the
Division of Florida Land Sales and Condominiums which allows the Company to
use customer deposits which were previously maintained in an escrow
account. Deposits of up to $357,000 in 1999 and $557,000 in 1998, which
could be released to the Company, are guaranteed by performance bonds
aggregating $1,000,000 for 1999 and 1998.
NOTE K - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities include the following:
1999 1998
----------- -----------
Accounts payable $ 3,903,935 $ 6,080,030
Accrued interest 2,506,592 3,225,063
Accrued warranties on homes 1,480,016 1,536,565
Other accrued liabilities 665,178 823,200
----------- -----------
$ 8,555,721 $11,664,858
=========== ===========
NOTE L - SENIOR NOTES
Senior notes consist of the following:
1999 1998
------------ ------------
12 1/2% senior notes due January 15, 2003 at par
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 (26,876,000) (13,708,000)
Unamortized discount (475,240) (784,688)
------------ ------------
$ 42,648,760 $ 55,507,312
============ ============
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 December 31,
1999, the payment of cash dividends is prohibited and will be restricted
until the Company posts cumulative net income in excess of $72,200,000.
During the first quarter of year 2000, the Company repurchased $1,234,000
of Senior Notes to be used to partially satisfy its sinking fund
obligation.
35
<PAGE> 38
NOTE M - EARNINGS (LOSS) PER SHARE
Included in diluted earnings per share are common stock equivalents
relating to options of 71,300, 61,000 and 81,300 for 1999, 1998 and 1997,
respectively. Options to purchase 58,600 shares of common stock at prices
ranging from $4.50 to $8.62 per share, which were outstanding during 1998,
were not included in the computation of diluted per share data because the
exercise prices were greater than the average market price of the common
shares during such period.
NOTE N - STOCK OPTIONS
The Company has two stock option plans accounted for under APB Opinion 25
and related interpretations. The plans allow the Company to grant options
to employees for the purchase of up to 400,000 shares of Class B common
stock and non-employee Directors for the purchase of up to 20,000 shares of
Class B common stock. The options have terms of five years for employees
and ten years for non-employee Directors when issued. The stock options for
employee's vest at the end of the second year, and stock options for
non-employee Directors vest 50% after each of the first and second year of
service on the Board.
The exercise price of each option equals the market price of the Company's
Class B Common stock on the date of grant.
Accordingly, no compensation cost has been recognized for the plans. Had
compensation cost for the plans been determined based on the fair value of
the options at the grant dates consistent with the method of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), the Company's net income (loss) and earnings
(loss) per share would have been reduced to the proforma amounts indicated
below.
<TABLE>
<CAPTION>
1999 1998 1997
---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net income (loss) As reported $ (5,041,821) $ 81,753 $ (20,849,763)
Pro forma $ (5,047,666) $ 70,936 $ (20,935,861)
Primary earnings (loss)
per share As reported $ (1.09) $ .02 $ (4.51)
Pro forma $ (1.09) $ .02 $ (4.51)
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the binomial options-pricing model with the following weighted-average
assumptions used for grants in 1999, 1998 and 1997, respectively: expected
volatility of 37.59, 36.52 and 36.68 percent; risk-free interest rate of
5.91, 6.91 and 6.92 percent; and expected life of 6.3, 5.8 and 5.5 years.
36
<PAGE> 39
NOTE N - STOCK OPTIONS - Continued
A summary of the status of the Company's stock option plans as of December
31, 1999, 1998, and 1997, and changes during the years ending on those
dates is presented below:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------------- ---------------------------- --------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE SHARES EXERCISE SHARES EXERCISE
(000) PRICE (000) PRICE (000) PRICE
--------------- -------------- --------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of
year 61.0 $ 7.06 92.3 $ 7.34 88.7 $ 7.34
Granted 19.0 2.06 2.4 4.50 3.6 7.38
Exercised -- -- -- -- -- --
Forfeited 8.7 7.37 33.7 5.37 -- --
----------- ----------- ----------- ----------- ----------- -----------
Outstanding
at end of year 71.3 $ 5.99 61.0 $ 7.17 92.3 $ 7.34
Options
Exercisable
at year
end 52.3 $ 7.28 57.4 $ 7.28 46.4 $ 7.08
Weighted-
average fair
value of
options
granted
during
the year -- $ 1.20 -- $ 2.49 -- $ 4.41
</TABLE>
The following information applies to options outstanding at December 31, 1999:
<TABLE>
<CAPTION>
<S> <C>
Number outstanding 71,300
Range of exercise prices $1.5 to $8.62
Weighted-average exercise price $5.99
Weighted-average remaining contractual life 2.48
</TABLE>
NOTE O - COMMON STOCK
Class A 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.
37
<PAGE> 40
NOTE P - LEASING ARRANGEMENTS
RENTAL PROPERTIES
In connection with certain developments, the Company leases recreation
facilities. The Company also leases rental units on a one-year basis. 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, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
<S> <C> <C>
Land $ 152,448 $ 2,324,844
Buildings 2,671,438 19,063,378
Furniture, fixtures and equipment -- 1,431,649
----------------- -----------------
2,823,886 22,819,871
Less accumulated depreciation 1,478,276 8,691,757
----------------- -----------------
$ 1,345,610 $ 14,128,114
================= =================
</TABLE>
On June 30, 1999, the Company sold a 480 rental apartment complex for $19.0
million, which resulted in a gain on sale of property and equipment in the
amount of $3.75 million.
The following is a schedule of approximate future minimum rental income
(assuming non-renewal of one-year leases of the Company's units) expected
under these leases as of December 31, 1999:
2000 $ 200,208
2001 165,953
2002 165,293
2003 165,293
2004 165,293
Thereafter 10,386,866
----------
$11,248,906
==========
OFFICE AND WAREHOUSE
The Company leases its headquarters office and a warehouse under lease
agreements extending through 2002, with options to renew for up to five
years, accounted for as operating leases. The approximate future minimum
rental payments as of December 31, 1999 are as follows:
2000 $ 205,862
2001 216,155
2002 226,962
---------
$ 648,979
=========
Total rent expense, including common area maintenance expenses, for each of
the years ended December 31, 1999, 1998 and 1997 amounted to approximately
$384,000, $366,000 and $308,000, respectively.
38
<PAGE> 41
NOTE Q - DEFERRED COMPENSATION PLAN
The Company has a defined contribution plan (the "Plan") established
pursuant to Section 401(k) of the Internal Revenue Code. Participant
employees may elect to contribute up to 15% of pretax annual compensation
as defined in the Plan, subject to certain limitations. The Company will
match 25% of the participant's contributions, not to exceed 6% of the
participant's annual compensation. The Company's contributions to the Plan
amounted to $47,925 in 1999, $44,688 in 1998 and $75,450 in 1997.
NOTE R - FINANCIAL INSTRUMENTS
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.
MORTGAGE NOTES RECEIVABLES
The carrying amount approximates fair value due to interest rates currently
offered for loans with similar terms to borrowers of similar credit quality
not being significantly different.
LINE OF CREDIT
The carrying amount of the line of credit approximates fair value due to
the length of the maturity and interest rate being tied to market indices.
MORTGAGE NOTE PAYABLE
The carrying amount of the mortgage note payable approximates fair value
due to the interest rate not being significantly different from the current
market rates available to the Company.
SENIOR NOTES
The Senior Notes are not listed on any exchange. Prices offered to the
Company by individual holders and dealers in the Senior Notes are used to
estimate fair value of the Company's Senior Notes. The estimated fair value
of the Senior Notes at December 31, 1999 and 1998 is $41,399,040 and
$49,536,960, respectively.
NOTE S - SEGMENT INFORMATION
The Company has the following two reportable segments: home building and
rental operations. The home building segment develops and sells residential
properties and planned communities. The rental operations segment consists
of 529 units in two separate properties. On June 30, 1999 the Company sold
a 480 rental apartment complex.
The accounting policies used to develop segment information correspond to
those described in the summary of significant accounting policies and other
information. Segment net income or loss is based on income or loss from
operations before income taxes, the cumulative effect of changes in
accounting principles, and the allocation of selling, general or
administrative costs.
39
<PAGE> 42
NOTE S - SEGMENT INFORMATION - Continued
The following information about the two segments is for the years ended
December 31, 1999, 1998 and 1997, in thousands (000).
<TABLE>
<CAPTION>
HOME RENTAL
BUILDING OPERATIONS OTHER TOTAL
-------- ---------- ----- -----
<S> <C> <C> <C> <C>
DECEMBER 31, 1999:
Revenues $81,613 $2,003 $4,320 $87,936
Interest expense 6,892 -- -- 6,892
Depreciation and amortization 1,251 450 1 1,702
Segment net income (loss) (9,195) 111 4,042 (5,042)
Segment assets 99,876 1,734 431 102,041
Expenditures for segment assets 695 -- -- 695
DECEMBER 31, 1998
Revenues $ 86,610 $ 3,874 $ 581 $ 91,065
Interest expense 7,170 -- -- 7,170
Depreciation and amortization 1,313 792 2 2,107
Segment net income (loss) (740) 585 237 82
Segment assets 119,669 14,779 778 135,226
Expenditures for segment assets 689 396 -- 1,085
DECEMBER 31, 1997:
Revenues $ 112,074 $ 3,426 $ 690 $ 116,190
Interest expense 7,181 -- -- 7,181
Depreciation and amortization 1,136 743 2 1,881
Segment net income (loss) (18,182) (5,083) 262 (23,003)
Segment assets 129,088 15,076 896 145,060
Expenditures for segment assets 329 68 1 398
</TABLE>
During 1997, the Company recorded valuation adjustments to its homebuilding
and rental operations segments of $17,050,000 and $4,525,000 respectively.
During 1999, the Company recorded valuation adjustments to its homebuilding
segment in the amount of $6,290,719.
NOTE T - 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 and customary obligations
associated with entering into contracts for the purchase, development and
sale of real estate in the routine conduct of its business.
40
<PAGE> 43
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
Management is responsible for the preparation of the Company's
consolidated financial statements and related information appearing in this
annual report. Management believes that the consolidated financial
statements reasonably present the Company's financial position and results
of operations in conformity with generally accepted accounting principles.
Management also has included in the Company's financial statement amounts
that are based on estimates and judgments which it believes are reasonable
under the circumstances.
The independent accountants audit the Company's financial statements
in accordance with generally accepted auditing standards and provide an
objective, independent review of the fairness of reported operating results
and financial position.
The Board of Directors of the Company has an Audit Committee composed
of two non-management independent Directors. The committee meets
periodically with financial management and the independent accountants to
review accounting, control, auditing and financial reporting matters.
41
<PAGE> 44
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, 1999 and 1998, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1999. 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, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1999, in conformity with generally accepted accounting
principles.
Grant Thornton LLP
Miami, Florida
February 18, 2000
42
<PAGE> 45
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 Item 10 is incorporated herein by reference
to Registrant's definitive proxy statement to be filed pursuant to Regulation
14A, in conjunction with the Company's Annual Meeting of Shareholders.
ITEM 11 EXECUTIVE COMPENSATION
The information required by the Item 11 is incorporated herein by
reference to Registrant's definitive proxy statement to be filed pursuant to
Regulation 14A, in conjunction with the Company's Annual Meeting of Shareholders
scheduled to be held on May 10, 2000.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 12 is incorporated herein by
reference to Registrant's definitive proxy statement to be filed pursuant to
Regulation 14A, in conjunction with the Company's Annual Meeting of Shareholders
scheduled to be held on May 10, 2000.
ITEM 13 CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
The information required by this Item 13 is incorporated herein by
reference to Registrant's definitive proxy statement to be filed pursuant to
Regulation 14A, in conjunction with the Company's Annual Meeting of Shareholders
scheduled to be held on May 10, 2000.
43
<PAGE> 46
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements
See Item 8
(b) Reports on Form 8-K
There were no reports on Form 8-K for the three months ended
December 31, 1999
(c) Exhibits
EXHIBIT
NUMBER
-------
3.1 Articles of Incorporation, as amended, of Registrant.
3.2 Composite By-Laws of Registrant.
4.1 Form of 12-1/2% Senior Note.
4.2 Form of Indenture between the Registrant and Sun Bank
National Association, Trustee.
10.1 Lease Agreement, dated May 7, 1991 between the Registrant
and Arbors Associates, Ltd.
10.2 First Amendment to Lease Agreement dated as of April 30,
1998, between Registrant and Arbors Associates, Ltd.
10.3 Revolving Loan Agreement dated July 13, 1993, between Ohio
Savings Bank, F.S.B. and the Registrant.
10.4 First Amendment to Revolving Loan Agreement.
10.5 Second Amendment to Revolving Loan Agreement.
10.6 Mortgage and Security Agreement dated as of July 13, 1993.
10.7 Mortgage, Assignment and Financing Statement Spreader
Agreement dated May 31, 1995.
10.8 Future Advance, Mortgage, Assignment and Financing Statement
Extension, Modification and Spreader Agreement dated August
23, 1995.
10.9 Future Advance, Mortgage, Assignment and Financing Statement
Extension, Modification and Spreader Agreement dated January
12, 1996.
10.10 Mortgage and Loan Modification and Extension Agreement dated
July 1, 1997.
10.11 Mortgage and Loan Modification and Extension Agreement dated
October 15, 1998.
10.12 Second Amendment to Revolving Loan Agreement dated July 1,
1997.
44
<PAGE> 47
10.13 Construction Loan Agreement dated December 22, 1998 between
First Union National Bank and the Registrant.
10.14 Mortgage and Security Agreement dated December 22, 1998
between First Union National Bank and the Registrant.
10.15 Stock Option Agreement with Richard D. Levy dated February
22, 1995.
10.16 Stock Option Agreement with Richard D. Levy dated May 14,
1996.
10.17 Stock Option Agreement with Harry A. Levy dated February 22,
1995.
10.18 Stock Option Agreement with Harry A. Levy dated May 14,
1996.
10.19 Stock Option Agreement with Mark A. Levy dated February 22,
1995.
10.20 Stock Option Agreement with Mark A. Levy dated May 14, 1996.
10.21 Stock Option Agreement with George Richards dated May 22,
1997.
10.22 Stock Option Agreement with George Richards dated May 20,
1998.
10.23 Stock Option Agreement with Paul Lehrer dated May 4, 1994.
10.24 Stock Option Agreement with Paul Lehrer dated May 15, 1995.
10.25 Stock Option Agreement with Paul Lehrer dated May 16, 1996.
10.26 Stock Option Agreement with Paul Lehrer dated May 22, 1997.
10.27 Stock Option Agreement with Paul Lehrer dated May 20, 1998.
10.28 Stock Option Agreement with Joseph Pivinski dated December
14, 1998.
10.29 Joint Venture Agreement between the Company and Regency
Homes, Inc. dated December 31, 1993.
10.30 Registrant's 401(k) Defined Contribution Benefit Plan.
10.31 Registrant's 1994 Stock Option Plan for Employees (filed as
Exhibit A to the proxy statement dated April 5, 1994 for the
Company's Annual Meeting of Shareholders held on May 9,
1994).
10.32 Registrant's 1994 Stock Option Plan for Non-Employee
Directors (filed as Exhibit B to the proxy statement dated
April 5, 1994 for the Company's Annual Meeting of
Shareholders held on May 9, 1994).
10.33 Stock Option Agreement with Paul Lehrer dated May 12, 1999.
10.34 Stock Option Agreement with George Richards dated
May 12, 1999.
10.35 Stock Option Agreement with Michael Rich dated
October 4, 1999.
22.1 List of Registrant's Subsidiaries.
23.1 Consent of Grant Thornton LLP.
27.0 Summary Financial Information.
45
<PAGE> 48
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 MARCH 23, 2000 /s/ R.D. LEVY
------------------------ ---------------------------------------
R.D. Levy, Chairman of the Board,
Chief Executive Officer, Director
DATE MARCH 23, 2000 /s/ J. PIVINSKI
------------------------ --------------------------------------
J. Pivinski, Vice President - Finance,
Treasurer, Chief Financial Officer
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.
MEMBERS OF THE BOARD OF DIRECTORS
DATE MARCH 23, 2000 /s/ R.D. LEVY
------------------------ -----------------------------------------
R.D. Levy, Chairman of the Board,
Chief Executive Officer, Director
DATE MARCH 23, 2000 /s/ HARRY A. LEVY
------------------------ -----------------------------------------
Harry A. Levy, Director
DATE MARCH 23, 2000 /s/ MARK LEVY
------------------------ -----------------------------------------
Mark Levy, Chief Operating Officer,
Director
DATE MARCH 23, 2000 /s/ PAUL R. LEHRER
------------------------ -----------------------------------------
Paul R. Lehrer, Director
DATE MARCH 23, 2000 /s/ GEORGE R. RICHARDS
------------------------ -----------------------------------------
George R. Richards, Director
46
<PAGE> 49
EXHIBIT INDEX
EXHIBIT
NUMBER
3.1 Articles of Incorporation, as amended, of Registrant. (6)
3.2 Composite By-Laws of Registrant. (7)
4.1 Form of 12-1/2% Senior Note. (1)
4.2 Form of Indenture between the Registrant and Sun Bank
National Association, Trustee. (2)
10.1 Lease Agreement, dated May 7, 1991 between the Registrant
and Arbors Associates, Ltd. (3)
10.2 First Amendment to Lease Agreement dated as of April 30,
1998, between Registrant and Arbors Associates, Ltd. (8)
10.3 Revolving Loan Agreement dated July 13, 1993, between Ohio
Savings Bank, F.S.B. and the Registrant. (9)
10.4 First Amendment to Revolving Loan Agreement. (10)
10.5 Second Amendment to Revolving Loan Agreement. (11)
10.6 Mortgage and Security Agreement dated as of July 13, 1993.
(12)
10.7 Mortgage, Assignment and Financing Statement Spreader
Agreement dated May 31, 1995. (13)
10.8 Future Advance, Mortgage, Assignment and Financing Statement
Extension, Modification and Spreader Agreement dated August
23, 1995. (14)
10.9 Future Advance, Mortgage, Assignment and Financing Statement
Extension, Modification and Spreader Agreement dated January
12, 1996. (15)
10.10 Mortgage and Loan Modification and Extension Agreement dated
July 1, 1997. (16)
10.11 Mortgage and Loan Modification and Extension Agreement dated
October 15, 1998. (17)
10.12 Second Amendment to Revolving Loan Agreement dated July 1,
1997. (18)
10.13 Construction Loan Agreement dated December 22, 1998 between
First Union National Bank and the Registrant. (19)
10.14 Mortgage and Security Agreement dated December 22, 1998
between First Union National Bank and the Registrant. (20)
10.15 Stock Option Agreement with Richard D. Levy dated February
22, 1995. (21)
10.16 Stock Option Agreement with Richard D. Levy dated May 14,
1996. (22)
10.17 Stock Option Agreement with Harry A. Levy dated February 22,
1995. (23)
10.18 Stock Option Agreement with Harry A. Levy dated May 14,
1996. (24)
47
<PAGE> 50
10.19 Stock Option Agreement with Mark A. Levy dated February 22,
1995. (25)
10.20 Stock Option Agreement with Mark A. Levy dated May 14,
1996. (26)
10.21 Stock Option Agreement with George Richards dated May 22,
1997. (27)
10.22 Stock Option Agreement with George Richards dated May 20,
1998. (28)
10.23 Stock Option Agreement with Paul Lehrer dated May 4,
1994. (29)
10.24 Stock Option Agreement with Paul Lehrer dated May 15,
1995. (30)
10.25 Stock Option Agreement with Paul Lehrer dated May 16,
1996. (31)
10.26 Stock Option Agreement with Paul Lehrer dated May 22,
1997. (32)
10.27 Stock Option Agreement with Paul Lehrer dated May 20,
1998. (33)
10.28 Stock Option Agreement with Joseph Pivinski dated December
14, 1998. (34)
10.29 Joint Venture Agreement between the Company and Regency
Homes, Inc. dated December 31, 1993. (4)
10.30 Registrant's 401(k) Defined Contribution Benefit Plan. (5)
10.31 Registrant's 1994 Stock Option Plan for Employees (filed as
Exhibit A to the proxy statement dated April 5, 1994 for the
Company's Annual Meeting of Shareholders held on May 9,
1994). (35)
10.32 Registrant's 1994 Stock Option Plan for Non-Employee
Directors (filed as Exhibit B to the proxy statement dated
April 5, 1994 for the Company's Annual Meeting of
Shareholders held on May 9, 1994). (36)
10.33 Stock Option Agreement with Paul Lehrer dated May 12, 1999.
10.34 Stock Option Agreement with George Richards dated
May 12, 1999.
10.35 Stock Option Agreement with Michael Rich dated
October 4, 1999.
22.1 List of Registrant's Subsidiaries. (37)
23.1 Consent of Grant Thornton LLP.
27.0 Summary Financial Information.
-----------------
(1) Filed as Exhibit 4.1 to the Company's registration statement on
Form S-2 (no. 33-51680).
(2) Filed as Exhibit 4.2 to the Company's registration statement on
Form S-2 (no. 33-51680).
(3) Filed as Exhibit 10.1 to the Company's registration statement on
Form S-2 (no. 33-51680).
(4) Filed as Exhibit 10.7 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1993.
(5) Filed as Exhibit 10.6 to the Company's registration statement on
Form S-2 (no. 33-46123).
48
<PAGE> 51
(6) Filed as Exhibit 3.1 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
(7) Filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
(8) Filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
(9) Filed as Exhibit 10.3 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
(10) Filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
(11) Filed as Exhibit 10.5 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
(12) Filed as Exhibit 10.6 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
(13) Filed as Exhibit 10.7 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
(14) Filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
(15) Filed as Exhibit 10.9 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
(16) Filed as Exhibit 10.10 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(17) Filed as Exhibit 10.11 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(18) Filed as Exhibit 10.12 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(19) Filed as Exhibit 10.13 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(20) Filed as Exhibit 10.14 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(21) Filed as Exhibit 10.15 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(22) Filed as Exhibit 10.16 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(23) Filed as Exhibit 10.17 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(24) Filed as Exhibit 10.18 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(25) Filed as Exhibit 10.19 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(26) Filed as Exhibit 10.20 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(27) Filed as Exhibit 10.21 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(28) Filed as Exhibit 10.22 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
49
<PAGE> 52
(29) Filed as Exhibit 10.23 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(30) Filed as Exhibit 10.24 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(31) Filed as Exhibit 10.25 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(32) Filed as Exhibit 10.26 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(33) Filed as Exhibit 10.27 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(34) Filed as Exhibit 10.28 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(35) Filed as Exhibit 10.31 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(36) Filed as Exhibit 10.32 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998.
(37) Filed as Exhibit 22.1 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
50
<PAGE> 1
Exhibit 10.33
STOCK OPTION AGREEMENT
FOR
NONEMPLOYEE DIRECTORS
AGREEMENT dated this 12th day of May, 1999, between Oriole Homes Corp.,
a Florida corporation (hereinafter called the "Company"), and Paul R. Lehrer
(hereinafter called the "Eligible Director").
W I T N E S S E T H:
WHEREAS, the Company's shareholders approved (on May 9, 1994) the
adoption of the 1994 Stock Option Plan for Nonemployee Directors (the "Plan")
pursuant to which each Eligible Director is entitled to receive a grant to
purchase 1,200 Shares per year, up to a maximum of 6,000 Shares:
WHEREAS, the Company's Board of Directors approved (on May 12, 1999)
the adjustment of the maximum Shares pursuant to Article 7 of the 1994 Stock
Option Plan for Nonemployee Directors (the "Plan") each Eligible Director is now
entitled to a maximun of 12,000 Shares:
WHEREAS, the Executive Committee of the Board of Directors of the
Company (the "Committee") has this day granted to each Eligible Director an
option to purchase 1,200 shares of Class B Common Stock, par value $.10 per
share, (the "Shares") of the Company, and at the option price, all as
hereinafter stated, such option to be exercisable not more than ten (10) years
after the date hereof; and
WHEREAS, the Eligible Director is willing to accept said option and to
be bound by the terms and conditions thereof; and
WHEREAS, the execution and delivery of this Agreement has been duly
authorized by the Board of Directors of the Company;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained and other good and valuable considerations, the
receipt whereof is hereby acknowledged, the parties hereto, including to be
legally bound hereby, agree as follows:
GRANT OF OPTION: ADJUSTMENT
OF SHARES COVERED BY OPTION
1.1 The Company hereby grants to the Eligible Director an option to
purchase from the Company, upon the terms and conditions hereinafter set forth,
1,200 shares of Class B Common Stock, par value $.10 per share (the "Shares"),
for a cash consideration of $1.9375 per share.
1.2 The number of Shares above stated, and the purchase price thereof,
may be subject to adjustment from time to time as provided herein.
VESTING
2.1 This option shall vest and become nonforfeitable on the day of the
Annual Meeting following the date hereof if the Eligible Director continues to
serve as a Director.
<PAGE> 2
PAYMENTS FOR SHARES
3.1 The option price of the shares to be purchased pursuant to each
exercise of the within option shall be paid to the Company by the Eligible
Director in full in cash or by bank certified, cashier's or personal check at
the time of exercise of the option.
EXERCISE OF OPTION
4.1 The within option may be exercised according to the following
schedule:
4.1.1 Fifty (50%) percent of the options granted become exercisable
on the date of the first Annual Meeting after the date hereof.
4.1.2 The remaining fifty (50%) percent of the options granted
become exercisable on the date of the second Annual Meeting after the date
hereof.
TERM OF OPTION
5.1 The options granted shall expire ten years from the date hereof,
but are subject to earlier termination as follows:
5.1.1 In the event of the termination of the optionee's service as
a Director, other than by reason of retirement, total and permanent disability,
or death, the options granted herein that have not been exercised shall
automatically expire on the effective date of termination.
5.1.2 In the event of termination of the optionee by reason of
retirement or total and permanent disability, all vested options shall become
exercisable to the full extent of the number of Shares remaining then
outstanding, regardless of whether such options were previously exercisable and
each such option shall expire four years after the date of such termination or
on the stated grant expiration date whichever is earlier.
5.1.3 In the event of the death of the optionee while he is still a
Director, vested options as per Section 2.1 hereof shall become exercisable, to
the full extent of Shares remaining covered by such options, regardless of
whether such options were previously exercisable and each such option shall
expire four years after the date of death of such optionee or on the stated
grant expiration, whichever is earlier.
RESTRICTIONS ON EXERCISE OF OPTION
AND SALE OF STOCK BY ELIGIBLE DIRECTOR
6.1 The within option shall not be exercisable if:
(a) The exercise thereof will involve a violation of any applicable
federal or state securities law; or
(b) The exercise thereof will require registration under the
Securities Act of 1933, as amended, of the shares of stock or other securities
of the Company to be purchased by the Eligible Director pursuant to such
exercise.
6.2 The Company hereby agrees to make such reasonable efforts to comply
with any applicable state securities law as the Committee of the Company shall
determine are reasonably necessary but such efforts shall not subject the
Company to unreasonable expense or hardship.
6.3 At the time of any exercise of the within option, the Eligible
Director shall represent to and agree with the Company in writing that he is
acquiring the shares in respect of which the option is being exercised for the
purpose of investment and not with a view of distribution.
2
<PAGE> 3
6.4 The Eligible Director agrees that he will not sell or otherwise
dispose of any shares of stock or other securities of the Company purchased by
him pursuant to the exercise of all or any portion of the within option at any
time unless there is an effective Registration Statement in respect of such
shares or other securities under the provisions of the Securities Act of 1933,
as amended, or counsel for the Company is reasonably satisfied that an exemption
from such registration provisions is available to the Company and the Eligible
Director.
MISCELLANEOUS
7.1 This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and the Eligible Director and his executors,
administrators or personal representatives provided that the within option shall
be non-transferable by the Eligible Director otherwise than by will or by the
laws of descent and distribution, and during the lifetime of the Eligible
Director the option shall be exercisable only by him.
7.2 In the event there are any changes in the capitalization of the
Company through merger, consolidation, recapitalization, stock dividend or other
change in the corporate or capital structure of the Company, appropriate
adjustments, as may seem equitable to the Committee shall be made in the number
of shares and the exercise price per share of the options to prevent dilution of
the rights granted hereunder.
7.3 This Agreement shall be deemed to be made under and shall be
construed in accordance with the laws of the State of Florida.
7.4 This Agreement shall become effective as of the date hereof and,
unless sooner terminated, shall remain in effect for a period of ten (10) years
from the date hereof. This Agreement may be terminated at any time by mutual
consent of the parties hereto, but no modification or amendment of this
Agreement shall become effective until such modification or amendment shall have
been approved by the Committee.
IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement
to be executed by its President or Vice President and the Eligible Director has
executed this Agreement, the day and year first above written.
ORIOLE HOMES CORP.
/s/ Richard D. Levy
------------------------------------
Richard D. Levy
Chief Executive Officer
/s/ Paul R. Lehrer
------------------------------------
Paul R. Lehrer, Director
3
<PAGE> 1
Exhibit 10.34
STOCK OPTION AGREEMENT
FOR
NONEMPLOYEE DIRECTORS
AGREEMENT dated this 12th day of May, 1999, between Oriole Homes Corp.,
a Florida corporation (hereinafter called the "Company"), and George R. Richards
(hereinafter called the "Eligible Director").
W I T N E S S E T H:
WHEREAS, the Company's shareholders approved (on May 9, 1994) the
adoption of the 1994 Stock Option Plan for Nonemployee Directors (the "Plan")
pursuant to which each Eligible Director is entitled to receive a grant to
purchase 1,200 Shares per year, up to a maximum of 6,000 Shares:
WHEREAS, the Company's Board of Directors approved (on May 12, 1999)
the adjustment of the maximum Shares pursuant to Article 7 of the 1994 Stock
Option Plan for Nonemployee Directors (the "Plan") each Eligible Director is now
entitled to a maximun of 12,000 Shares:
WHEREAS, the Executive Committee of the Board of Directors of the
Company (the "Committee") has this day granted to each Eligible Director an
option to purchase 1,200 shares of Class B Common Stock, par value $.10 per
share, (the "Shares") of the Company, and at the option price, all as
hereinafter stated, such option to be exercisable not more than ten (10) years
after the date hereof; and
WHEREAS, the Eligible Director is willing to accept said option and to
be bound by the terms and conditions thereof; and
WHEREAS, the execution and delivery of this Agreement has been duly
authorized by the Board of Directors of the Company;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained and other good and valuable considerations, the
receipt whereof is hereby acknowledged, the parties hereto, including to be
legally bound hereby, agree as follows:
GRANT OF OPTION: ADJUSTMENT
OF SHARES COVERED BY OPTION
1.1 The Company hereby grants to the Eligible Director an option to
purchase from the Company, upon the terms and conditions hereinafter set forth,
1,200 shares of Class B Common Stock, par value $.10 per share (the "Shares"),
for a cash consideration of $1.9375 per share.
1.2 The number of Shares above stated, and the purchase price thereof,
may be subject to adjustment from time to time as provided herein.
VESTING
2.1 This option shall vest and become nonforfeitable on the day of the
Annual Meeting following the date hereof if the Eligible Director continues to
serve as a Director.
<PAGE> 2
PAYMENTS FOR SHARES
3.1 The option price of the shares to be purchased pursuant to each
exercise of the within option shall be paid to the Company by the Eligible
Director in full in cash or by bank certified, cashier's or personal check at
the time of exercise of the option.
EXERCISE OF OPTION
4.1 The within option may be exercised according to the following
schedule:
4.1.1 Fifty (50%) percent of the options granted become exercisable
on the date of the first Annual Meeting after the date hereof.
4.1.2 The remaining fifty (50%) percent of the options granted
become exercisable on the date of the second Annual Meeting after the date
hereof.
TERM OF OPTION
5.1 The options granted shall expire ten years from the date hereof,
but are subject to earlier termination as follows:
5.1.1 In the event of the termination of the optionee's service as
a Director, other than by reason of retirement, total and permanent disability,
or death, the options granted herein that have not been exercised shall
automatically expire on the effective date of termination.
5.1.2 In the event of termination of the optionee by reason of
retirement or total and permanent disability, all vested options shall become
exercisable to the full extent of the number of Shares remaining then
outstanding, regardless of whether such options were previously exercisable and
each such option shall expire four years after the date of such termination or
on the stated grant expiration date whichever is earlier.
5.1.3 In the event of the death of the optionee while he is still a
Director, vested options as per Section 2.1 hereof shall become exercisable, to
the full extent of Shares remaining covered by such options, regardless of
whether such options were previously exercisable and each such option shall
expire four years after the date of death of such optionee or on the stated
grant expiration, whichever is earlier.
RESTRICTIONS ON EXERCISE OF OPTION
AND SALE OF STOCK BY ELIGIBLE DIRECTOR
6.1 The within option shall not be exercisable if:
(a) The exercise thereof will involve a violation of any applicable
federal or state securities law; or
(b) The exercise thereof will require registration under the
Securities Act of 1933, as amended, of the shares of stock or other securities
of the Company to be purchased by the Eligible Director pursuant to such
exercise.
6.2 The Company hereby agrees to make such reasonable efforts to comply
with any applicable state securities law as the Committee of the Company shall
determine are reasonably necessary but such efforts shall not subject the
Company to unreasonable expense or hardship.
6.3 At the time of any exercise of the within option, the Eligible
Director shall represent to and agree with the Company in writing that he is
acquiring the shares in respect of which the option is being exercised for the
purpose of investment and not with a view of distribution.
2
<PAGE> 3
6.4 The Eligible Director agrees that he will not sell or otherwise
dispose of any shares of stock or other securities of the Company purchased by
him pursuant to the exercise of all or any portion of the within option at any
time unless there is an effective Registration Statement in respect of such
shares or other securities under the provisions of the Securities Act of 1933,
as amended, or counsel for the Company is reasonably satisfied that an exemption
from such registration provisions is available to the Company and the Eligible
Director.
MISCELLANEOUS
7.1 This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and the Eligible Director and his executors,
administrators or personal representatives provided that the within option shall
be non-transferable by the Eligible Director otherwise than by will or by the
laws of descent and distribution, and during the lifetime of the Eligible
Director the option shall be exercisable only by him.
7.2 In the event there are any changes in the capitalization of the
Company through merger, consolidation, recapitalization, stock dividend or other
change in the corporate or capital structure of the Company, appropriate
adjustments, as may seem equitable to the Committee shall be made in the number
of shares and the exercise price per share of the options to prevent dilution of
the rights granted hereunder.
7.3 This Agreement shall be deemed to be made under and shall be
construed in accordance with the laws of the State of Florida.
7.4 This Agreement shall become effective as of the date hereof and,
unless sooner terminated, shall remain in effect for a period of ten (10) years
from the date hereof. This Agreement may be terminated at any time by mutual
consent of the parties hereto, but no modification or amendment of this
Agreement shall become effective until such modification or amendment shall have
been approved by the Committee.
IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement
to be executed by its President or Vice President and the Eligible Director has
executed this Agreement, the day and year first above written.
ORIOLE HOMES CORP.
/s/ Richard D. Levy
------------------------------------
Richard D. Levy
Chief Executive Officer
/s/ George R. Richards
------------------------------------
George R. Richards, Director
3
<PAGE> 1
EXHIBIT 10.35
INCENTIVE STOCK OPTION AGREEMENT
OF
ORIOLE HOMES CORP.
AGREEMENT dated this 4th day of October, 1999, between Oriole Homes
Corp., a Florida corporation (hereinafter called the "Company"), and Michael A.
Rich (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to grant Employee a proprietary interest
in the Company in order to increase his/her efforts on its behalf; and
WHEREAS, the Company has this day granted to the Employee an option to
purchase the number of shares of Class B Common Stock, par value $.10 per share,
of the Company, and at the option price, all as hereinafter stated, such option
to be exercisable not more than five (5) years after the date hereof; and
WHEREAS, the Employee is willing to accept said option and to be bound
by the terms and conditions thereof; and
WHEREAS, the execution and delivery of this Agreement has been duly
authorized by the Board of Directors of the Company;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained and other good and valuable considerations, the
receipt whereof is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
GRANT OF OPTION; ADJUSTMENT
OF SHARES COVERED BY OPTION
1.1 The Company hereby grants to the Employee an option to
purchase from the Company, upon the terms and conditions hereinafter set forth,
***10,000*** shares of Class B Common Stock, par value $.10 per share, of the
Company, for a consideration of $1.50 per share.
<PAGE> 2
1.2 The number of shares of Common Stock above stated, and the
purchase price thereof, shall be subject to adjustment from time to time as
provided herein.
PAYMENT FOR SHARES
2.1 The option price of the shares to be purchased pursuant to
each exercise of the within option shall be paid to the Company by the Employee
in full, in cash or check or in whole or in part by:
a. transfer to the Company of shares of Class A or Class B
Common Stock having a Fair Market Value equal to the option exercise price at
the time of such exercise; or
b. delivery of instructions to the Company to withhold from
the option shares that would otherwise be issued on the exercise that number of
option shares having a Fair Market Value equal to the option exercise price at
the time of such exercise. If the Fair Market Value of the number of whole
shares transferred or the number of whole option shares surrendered is less than
the total exercise price of the option, the shortfall must be made up in cash or
check.
EXERCISE OF OPTION
3.1 The within option may be exercised during the lifetime of the
Employee and in whole or in part at any time after October 4, 2001 and
thereafter until on or before October 4, 2004.
3.2 At least twenty days prior to the date upon which all or any
portion of the within option is to be exercised, the person entitled to exercise
the option shall deliver to the Company written notice of his/her election to
exercise all or part of the option, which notice shall specify the date and time
for the exercise of the option and the number of shares in respect to which the
option is to be exercised. The date specified in such notice shall be a business
day and the time specified shall be during the regular business hours of the
Company.
3.3 The person entitled to exercise the option shall, at the date
and time specified in such notice, pay to the Company the consideration set
forth in Section 2 hereof at the principal office of the Company, the option
price of the shares in respect of which the option is being exercised, and
contemporaneously, or as soon thereafter as is practical, the Company shall
2
<PAGE> 3
deliver to the person entitled to exercise the option, registered in the name of
such person, certificates representing the number of shares of stock or other
securities in respect of which the option is being exercised.
EMPLOYMENT OF EMPLOYEE
4.1 If the services of Employee are terminated for any reason on
or prior to October 4, 2004, the Company has the right to redeem the shares that
have been acquired at the exercise price. If such right of redemption is not
exercised within THIRTY (30) days from the termination date, the Company's
rights of redemption shall have no further force or effect.
RESTRICTIONS ON EXERCISE OF OPTION
AND SALE OF STOCK BY EMPLOYEE
5.1 Unless the option and shares acquired upon the exercise of the
option are registered under the Securities Act of 1933, as amended (the
"Securities Act"), the Employee hereby represents and warrants to the Company
that any and all shares of Class B Common Stock which shall be acquired pursuant
to the exercise of the option shall be acquired for the Employee's own account
and not for the account or beneficial interest of any other person or entity,
that such shares of Class B Common Stock shall be acquired for the Employee's
own investment and that the shares of Class B Common Stock shall not be acquired
with a view to or for resale in connection with the distribution of all or any
part thereof. Furthermore, the Employee agrees that any shares of Class B Common
Stock so acquired will bear an appropriate legend to signify their restriction
under the applicable securities laws and that "stop-transfer" instructions will
be given to the Company's transfer agent.
The Employee agrees to be subject to and bound by any other
restrictions imposed by, or which the Company believes to be necessary or
advisable to comply with, any Federal or State securities laws, including but
not limited to restrictions governing the time and circumstances or disposition
of the shares being acquired by exercise of such option.
NO RIGHTS AS SHAREHOLDER
OR TO CONTINUED EMPLOYMENT
6.1 The Employee shall not have any rights as a shareholder of the
Company with respect to any shares of Class B Common Stock prior to the date of
issuance to the Employee of the certificate or certificates for such shares and
3
<PAGE> 4
the grant of the option does not confer to the Employee any right to be employed
by the Company and will not interfere in any way with the right of the Company
to terminate the employment of the Employee.
NO SECURITIES ACT
REGISTRATION OBLIGATION
7.1 The Company shall have no obligation to the Employee to
register the Common Stock under the Securities Act.
MISCELLANEOUS
8.1 This Agreement shall be binding upon and inure to the benefit
of the Company and its successors and the Employee and his executors and/or
administrators, provided that the within option shall be nontransferable by the
Employee otherwise than by will or by the laws of descent and distribution, and
during the lifetime of the Employee the option shall be exercisable only by him.
8.2 In the event there are any changes in the Class B Common Stock
of the Company through merger, consolidation, recapitalization, stock dividend
or other change in the corporate or capital structure of the Company,
appropriate adjustments, as may seem equitable to the Board of Directors of the
Company, shall be made in the number of shares and the exercise price per share
of the options to prevent dilution of the rights granted hereunder.
8.3 For the purposes of this Agreement, a transfer of the Employee
from the Company to a subsidiary, or vice versa, or from one subsidiary to
another, shall not be deemed a termination of employment.
8.4 This Agreement shall be deemed to be made under and shall be
construed in accordance with the laws of the State of Florida.
8.5 This Agreement shall become effective as of the date hereof
and, unless sooner terminated, shall remain in effect for a period of five (5)
years from the date hereof. This Agreement may be terminated at any time by
mutual consent of the parties hereto, but no modification or amendment of this
Agreement shall become effective until such modification or amendment shall have
been approved by the Board of Directors of the Company.
4
<PAGE> 5
8.6 The terms and conditions of the 1994 Stock Option Plan of
Oriole Homes Corp., as approved by Shareholders on April 5, 1994 (the "Plan")
are hereby incorporated herein by reference and if there is any conflict between
this Agreement and the Plan the provisions of the Plan shall govern.
IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement
to be executed by its President or Vice President and the Employee has executed
this Agreement, the day and year first above written.
ORIOLE HOMES CORP.
/s/ RICHARD D. LEVY
-----------------------------------------------
Richard D. Levy, Chief Executive Officer
/s/ MICHAEL A. RICH
-----------------------------------------------
Michael A. Rich, Vice President-Sales & Marketing
5
<PAGE> 1
EXHIBIT 23.1
Consent of Grant Thornton LLP
Grant Thornton LLP
Certified Public Accountants
777 Brickell Avenue
Suite 1200
Miami, FL 33131
We have issued our report dated February 18, 2000, accompanying the consolidated
financial statements and schedules incorporated by reference in the Annual
Report of Oriole Homes Corp. on Form 10-K for the years ended December 31, 1999
and 1998. We hereby consent to the incorporation by reference of said report in
the Registration Statement of Oriole Homes Corp. on Form S-8 (File No.
333-27321).
/s/ GRANT THORNTON LLP
- ---------------------------------
Grant Thornton LLP
Miami, Florida
February 18, 2000
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<FISCAL-YEAR-END> DEC-31-1999
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