- ---------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-K/A
---------------
AMENDMENT NO. 1 TO
ANNUAL REPORT ON FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED MARCH 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM to
Commission File Number 0-13800
INTERNATIONAL AMERICAN HOMES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2472608
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6001 MONTROSE ROAD, ROCKVILLE, MARYLAND 20852
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 231-8745
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12 (g) of the Act:
TITLE OF CLASS
COMMON STOCK, $.01 PAR VALUE
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<PAGE>
Page 2
This Amendment No. 1 amends the Annual Report on Form 10-K of International
American Homes, Inc. (the "Company") for the fiscal year ended March 31, 1995
(the "Form 10-K"). The consolidated balance sheets of the Company included
under Item 14(a) of the Form 10-K at page F-3 contains the following error:
the authorized number of shares of common stock of the Company as of March 31,
1995 was 10,000,000 shares, not 3,000,000 shares as indicated under the caption
"Common Stock" in the balance sheets. This Amendment No. 1 amends and restates
Item 14 in its entirety as follows:
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENTS. The following consolidated financial statements are
filed as part of this Annual Report on Form 10-K to Stockholders. (All other
schedules are omitted as the required information is inapplicable, or the
information is presented in the financial statements and related notes
thereto):
PAGE
INTERNATIONAL AMERICAN HOMES, INC. AND SUBSIDIARIES
Report of Independent Public Accountants ......................F-1
Consolidated Balance Sheets as of March 31, 1995 and 1994......F-2
Consolidated Statements of Operations for the years ended
March 31, 1995 and 1994, the period August 13, 1992
through March 31, 1993, and the period April 1, 1992
through August 12, 1992........................................F-4
Consolidated Statements of Changes in Stockholders' Equity
for the years ended March 31, 1995 and 1994, the period
August 13, 1992 through March 31, 1993, and the period April
1, 1992 through August 12, 1992 ...............................F-5
Consolidated Statements of Cash Flows for the years ended
March 31, 1995 and 1994, the period August 13, 1992 through
March 31, 1993, and the period April 1, 1992 through
August 12, 1992................................................F-6
Notes to Consolidated Financial Statements.....................F-7
(b)REPORTS ON FORM 8-K. No reports on Form 8-K were filed by the Company
during the last quarter of the fiscal year ended March 31, 1995. On May 31,
1995 the registrant filed a Current Report on Form 8-K with respect to Item 5
(other events).
<PAGE>
Page 3
(c) EXHIBITS. The following exhibits are filed as part of this Annual Report:
EXHIBIT
NUMBER
2.1 - Second Amended Disclosure Statement dated as of June 29, 1992 and Third
Amended Joint Plan of Reorganization dated June 29, 1992 (incorporated
by reference to Exhibit 2.4 to Annual Report on Form 10-K for the fiscal
year ended March 31, 1993).
2.2 - Fourth Amended Joint Plan of Reorganization dated November 17, 1992
(incorporated by reference to Exhibit 2.5 to Annual Report on Form 10-K
for the fiscal year ended March 31, 1993).
3.1(a)-Restated Certificate of Incorporation of Registrant (incorporated by
reference to Exhibit 4 to Quarterly Report on Form 10-Q for the quarter
ended September 30, 1989).
3.1(b)-Certificate of Amendment to the Restated Certificate of Incorporation of
Registrant dated September 8, 1994 (filed herewith).
3.1(c)-Certificate of Amendment to the Restated Certificate of Incorporation of
Registrant dated May 22, 1995 (filed herewith).
3.2 - By-laws of Registrant (incorporated by reference to Exhibit 3.2 to
Annual Report on Form 10-K for the fiscal year ended March 31, 1989).
10.1 - Key Employee Agreement dated August 12, 1992 of Robert J. Suarez
(incorporated by reference to Exhibit 10.17 to Annual Report on Form 10-
K for the fiscal year ended March 31, 1993).
10.2 - Key Employee Agreement dated August 12, 1992 of Ronald I. Garshag
(incorporated by reference to Exhibit 10.18 to Annual Report on Form 10-
K for the fiscal year ended March 31, 1993).
10.3 - Non-Qualified Stock Option Agreement dated August 12, 1992 between
Robert J. Suarez and the Registrant (incorporated by reference to
Exhibit 10.19 to Annual Report on Form 10-K for the fiscal year ended
March 31, 1993).
10.4 - Guaranty dated as of January 20, 1993 by Robert J. Suarez to First
Florida Bank, N.A. (incorporated by reference to Exhibit 10.23 to Annual
Report on Form 10-K for the fiscal year ended March 31, 1993).
10.5 - Indemnity Agreement dated as of January 20, 1993 by Suarez Housing
Corporation, the Registrant, and Robert J. Suarez to and for the benefit
of First Florida Bank, N.A. (incorporated by reference to Exhibit 10.24
to Annual Report on Form 10-K for the fiscal year ended March 31, 1993).
<PAGE>
Page 4
10.6 - Mortgage Modification Agreement dated as of October 7, 1994 by and
between Barnett Bank of Tampa and Suarez Housing Corporation (filed
herewith).
10.7 - Consulting Agreement dated as of November 1, 1993 between Peter Davis
and the Registrant (incorporated by reference to Exhibit 10.1 to
Quarterly Report on Form 10-Q for the quarter ended December 31, 1993).
10.8 - Master Loan Agreement dated as of November 15, 1994 between Nations Bank
of Florida, N.A. and Suarez Housing Corporation (filed herewith).
21 - List of subsidiaries of the registrant (incorporated by reference to
Exhibit 21 to Annual Report on Form 10-K for the fiscal year ended March
31, 1994).
27 - Financial Data Schedule (filed herewith).
<PAGE>
Page 5
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to
Annual Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: July 27, 1995 INTERNATIONAL AMERICAN HOMES, INC.
By:/s/ Michael P. Villa
------------------------------
Michael P. Villa
Vice President, Treasurer, and
Chief Financial Officer
<PAGE>
Page F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To International American Homes, Inc.:
We have audited the accompanying consolidated balance sheets of
International American Homes, Inc. (a Delaware corporation) and
subsidiaries as of March 31, 1995 and 1994, and the related
consolidated statements of operations and stockholders' equity and
cash flow for the years ended March 31, 1995 and 1994, the period
April 1, 1992 to August 12, 1992, and the period August 13, 1992 to
March 31, 1993. 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 financial
position of International American Homes, Inc. and subsidiaries as
of March 31, 1995 and 1994, and the results of their operations and
their cash flows for the years ended March 31, 1995 and 1994, the
period April 1, 1992 to August 12, 1992, and the period August 13,
1992 to March 31, 1993 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
June 2, 1995
<PAGE>
Page F-2
Item 14(a) Financial Statements
FRESH START REPORTING USING THE PRINCIPLES OF PURCHASE ACCOUNTING
WAS USED TO RECORD THE FAIR VALUE OF ASSETS AND ASSUMED LIABILITIES
OF THE REORGANIZED COMPANY AT AUGUST 12, 1992. ACCORDINGLY, THE
ACCOMPANYING BALANCE SHEETS AND RELATED FINANCIAL STATEMENTS AS OF
MARCH 31, 1995 AND 1994 ARE NOT COMPARABLE TO SUCH BALANCE SHEET
AND RELATED FINANCIAL STATEMENTS AS OF ANY DATE PRIOR TO AUGUST 12,
1992.
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
March 31, March 31,
1995 1994
------------ ---------
<S> <C> <C>
$ 1,938 $ 3,353
CASH AND SHORT-TERM INVESTMENTS
($457 and $1,532 restricted)
RECEIVABLES 444 431
REAL ESTATE INVENTORY (Notes 2 and 6) 16,997 11,177
COLLATERAL FOR BONDS PAYABLE (Note 12) 7,620 9,666
PROPERTY AND EQUIPMENT - less accumulated depreciation of 106 120
$162 and $81 (Note 2)
OTHER ASSETS 583 648
-------- --------
$ 27,688 $ 25,395
TOTAL ASSETS ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
<PAGE>
Page F-3
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
MORTGAGE NOTES AND LOANS PAYABLE (Note 8)
Construction and mortgage notes secured by real estate $ 9,664 $ 5,959
inventory
Other secured notes payable 60 157
-------- --------
9,724 6,116
BONDS PAYABLE (Note 12) 7,362 9,337
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 4,908 5,319
(Notes 2, 7, and 9)
CUSTOMER DEPOSITS 183 199
-------- --------
Total Liabilities 22,177 20,971
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY (Notes 2, 3, and 11)
PREFERRED STOCK - $.01 par value, 4,000,000 shares - -
authorized, none issued
COMMON STOCK - $.01 par value, 10,000,000 shares authorized, 29 289
2,894,343 shares issued, including 112,263 shares to be
issued to creditors, as of March 31, 1995; $.01 par
value, 30,000,000 shares authorized, 28,943,432 shares
issued, including 20,432,961 shares to be issued to
creditors, as of March 31, 1994 (Note 11)
ADDITIONAL PAID-IN CAPITAL 2,348 2,103
RETAINED EARNINGS 3,136 2,049
TREASURY STOCK, 169,948 shares as of March 31, 1995 and (2) (17)
1,699,484 as of March 31, 1994 (Note 11) -------- --------
Total Stockholders' Equity 5,511 4,424
-------- --------
TOTAL LIABILITIES AND $ 27,688 $ 25,395
STOCKHOLDERS' EQUITY ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
<PAGE>
Page F-4
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended March 31, Period Period
-------------------- August 13, April 1, 1992
1992 through through
March 31, August 12,
1995 1994 1993 1992
------------ ----------- ------------- ---------------
<S> <C> <C> <C> <C>
REVENUES
Home sales $ 50,347 $ 34,356 $ 19,618 $ 11,569
Land sales - - 28 32
Interest and other income 878 1,277 1,116 949
--------- -------- --------- --------
51,225 35,633 20,762 12,550
--------- -------- --------- --------
COSTS AND EXPENSES
Cost of home sales 43,455 28,764 16,476 9,898
Cost of land sales - - 28 33
Charge to write down real estate - 50 - 240
inventory
Selling, general and administrative 5,673 4,560 2,252 1,973
Interest 857 1,239 1,077 647
Depreciation 81 64 25 11
------- -------- -------- --------
50,066 34,677 19,858 12,802
------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES AND 1,159 956 904 (252)
EXTRAORDINARY ITEM ------- -------- -------- --------
PROVISION (BENEFIT) FOR INCOME TAXES 72 (124) (65) (18)
------- -------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 1,087 1,080 969 (234)
EXTRAORDINARY ITEM - - - 16,303
Effect of Plan of Reorganization (Note ------- -------- -------- --------
3)
NET INCOME $ 1,087 $ 1,080 $ 969 $ 16,069
PER SHARE DATA (Primary and Fully Diluted, ======= ======== ======== ========
as adjusted for the Reverse Stock Split)
Income (loss) before extraordinary item $ .40 $ .40 $ .36 $ (.34)
Extraordinary item - - - 23.93
------- -------- --------- -----------
Net income $ .40 $ .40 $ .36 $ 23.59
========= ========= ========= ===========
WEIGHTED AVERAGE NUMBER OF SHARES 2,724,395 2,724,395 2,724,395 681,099
OUTSTANDING ========= ========= ========= ===========
Primary and fully diluted, as adjusted
for the Reverse Stock Split
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
Page F-5
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
Common Stock
-----------------------------
Shares Issued Additional
and Paid-In Retained Treasury
Outstanding Amount Capital Earnings Stock Total
------------- ------ ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1992 6,810,987 $ 85 $ 24,228 $(33,949) $(3,282) $(12,918)
Net income - - - 16,069 - 16,069
Adjustments to 20,432,961 204 (204) - - -
record the effects of
the Plan of
Reorganization
Adjustments to - - (21,921) 17,880 3,265 (776)
record Fresh Start ----------- ------ --------- --------- -------- ---------
Reporting
Balance, August 12, 27,243,948 $ 289 $ 2,103 $ - $ (17) $ 2,375
1992 ========== ===== ======== ========= ======= =========
Balance, August 12, 27,243,948 $ 289 $ 2,103 $ - $ (17) $ 2,375
1992
Net income - - - 969 - 969
---------- ----- -------- -------- -------- ---------
Balance, March 31, 1993 27,243,948 289 2,103 969 (17) 3,344
Net income - - - 1,080 - 1,080
---------- ----- -------- -------- -------- ---------
Balance, March 31, 1994 27,243,948 289 2,103 2,049 (17) 4,424
Reverse stock split (24,519,553) (260) 245 - 15 -
Net income - - - 1,087 - 1,087
----------- ----- -------- -------- -------- ---------
Balance, March 31, 1995 2,724,395 $ 29 $ 2,348 $ 3,136 $ (2) $ 5,511
=========== ===== ======== ======== ======== =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
Page F-6
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Period
Period April 1,
Year Year August 13, 1992
Ended Ended 1992 through through
March 31, March 31, March 31, August 12,
1995 1994 1993 1992
---------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,087 $ 1,080 $ 969 $ 16,069
Adjustments to reconcile net income to
net cash provided by operating activities:
Extraordinary gain - effect of Plan of - - (16,303)
Reorganization
Charge to write down real estate - 50 - 240
inventory
Depreciation 81 64 25 11
Deferred income taxes - (3) (124) -
Changes in operating assets and
liabilities:
(Increase) decrease in receivables (13) 14 (241) 4,029
(Increase) decrease in real estate (5,820) (2,084) (253) 1,411
inventory
Decrease in collateral for bonds 2,046 4,504 2,867 2,057
payable
(Decrease) increase in accounts (411) 444 (2,940) (713)
payable and accrued liabilities
(Decrease) increase in customer (16) 41 (149) 249
deposits
Other 65 (227) 249 (43)
------- ----- ------ -----
Net cash (used in) provided by operating (2,981) 3,883 403 7,007
activities ------- ----- ------ -----
Cash flows used in investing activities:
Property and equipment, net (67) (85) (39) (12)
------- ---- ---- ----
Cash flows from financing activities:
Proceeds from mortgage notes and loans 30,521 18,895 11,419 5,103
payable
Payments of mortgage notes and loans (26,913) (18,782) (12,389) (7,905)
payable
Repayments of bonds payable - finance (1,975) (4,362) (2,794) (2,026)
subsidiaries
------- ------- ------- -------
Net cash provided by (used in) financing 1,633 (4,249) (3,764) (4,828)
activities ------- ------- ------- -------
Net (decrease) increase in cash and (1,415) (451) (3,400) 2,167
equivalents
Cash and equivalents at beginning of period 3,353 3,804 7,204 5,037
--------- -------- -------- --------
Cash and equivalents at end of period $ 1,938 $ 3,353 $ 3,804 $ 7,204
========= ======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
Page F-7
INTERNATIONAL AMERICAN HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
International American Homes, Inc. (the "Company") was incorporated
under the laws of the State of Delaware on April 27, 1983. The
Company, through its subsidiaries, designs, builds, and sells
single-family homes and townhomes. The Company currently conducts
its building activities in Metropolitan Washington, D.C. and
Greater Tampa, Florida.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of International American Homes, Inc. and all wholly-owned
subsidiaries. All significant intercompany transactions and
balances have been eliminated.
Revenue Recognition
Revenues from sales are recognized at the time of closing, i.e.,
when a sufficient down payment has been made; financing has been
arranged with a third party lender; title, possession and other
attributes of ownership have been transferred to the buyer; and the
Company is not obligated to perform significant additional
activities after the sale.
Real Estate Inventory
Real estate inventory is carried at the lower of cost or net
realizable value. Net realizable value is defined as the estimated
proceeds upon disposition less all future costs to complete and
expected costs to sell. Construction costs are accumulated during
the period of construction and charged to cost of sales under
specific identification methods. Land and land development costs
are charged to cost of sales under specific identification methods
or are amortized based upon the number of homes to be constructed
in each community.
Interest costs related to projects in progress are capitalized
during the construction period and charged to cost of sales as the
related inventories are sold (see Note 8).
Land option costs are capitalized when incurred and either
included as part of the purchase price when the land is acquired or
charged to operations to the extent of any unrecoverable amount
when the Company determines it will not exercise the option.
<PAGE>
Page F-8
Income Taxes
Deferred income taxes are provided for temporary differences
between book and tax accounting.
Depreciation
Depreciation is computed on the straight-line method for all
depreciable assets. Estimated useful lives range from two to five
years. Maintenance and repairs are charged to expense as incurred.
Major renewals and improvements are capitalized and depreciated.
Per Share Data
Net income (loss) per share is based upon the weighted average
number of common shares outstanding during each period, as adjusted
for the Reverse Stock Split. Common stock equivalents are not
included in the computations because the effect is not material.
The shares to be issued to creditors pursuant to the Plan of
Reorganization (see Note 3) are considered as if they had been
issued on August 12, 1992.
Statements of Cash Flows
For purposes of the statements of cash flows, the Company
generally considers all highly liquid instruments purchased with an
original maturity of three months or less to be cash equivalents.
The Company paid interest and paid (recovered) income taxes as
follows (in thousands):
Income
Period Interest Taxes
- ------------------------------------ ------------- ---------
Year Ended March 31, 1995 $ 1,981 $ 67
Year Ended March 31, 1994 1,782 (239)
August 13, 1992 through March 31, 1993 1,379 (1)
April 1, 1992 through August 12, 1992 999 (3,518)
Reclassifications
Certain amounts in the prior periods' consolidated financial statements
have been reclassified to conform with the current year presentation.
<PAGE>
Page F-9
NOTE 3 - REORGANIZATION UNDER CHAPTER 11
On April 16, 1990, the Company and certain of its wholly-owned
subsidiaries filed voluntary petitions (the "Bankruptcy Petitions")
for relief under Chapter 11, Title 11 of the United States
Bankruptcy Code (the "Code"), in the United States Bankruptcy Court
for the District of New Jersey (the "Bankruptcy Court"). Certain
related partnerships filed similar petitions in the same Court in
1990 and 1991. Under the bankruptcy proceeding, substantially all
claims against the Company as of the date of the filing of the
Bankruptcy Petitions were stayed while the Company continued
operations as a debtor-in-possession.
A Third Amended Joint Plan of Reorganization dated June 29, 1992
was filed with the Bankruptcy Court. A Second Amended Disclosure
Statement with respect to the Third Amended Joint Plan of
Reorganization and exhibits thereto was approved by Bankruptcy
Court Order dated June 29, 1992. On August 12, 1992, the
Bankruptcy Court entered an order confirming the Third Amended
Joint Plan of Reorganization. On October 29, 1992, the Bankruptcy
Court approved certain technical modifications to the Third Amended
Joint Plan of Reorganization to be effective as of August 12, 1992.
A Fourth Amended Joint Plan of Reorganization dated November 17,
1992, containing those technical modifications, was filed with the
Bankruptcy Court.
The Plan provides for an initial cash distribution to creditors of
approximately $4,700,000 less administrative expenses. The Plan
further provides for subsequent distributions equal to 50 percent
of future cash flows (as defined in the Plan), if any, for the
periods ending June 30, 1993 through June 30, 1998. The Plan also
provides for the issuance of 2,043,296 shares of the Company's
common stock to the creditors resulting in the dilution of existing
shareholders to 25 percent of the common stock outstanding after
issuance of the additional shares to creditors.
The Company has made partial initial distributions to the creditors
amounting to $3,741,000 through March 31, 1995, of which $701,000
was made during the year ended March 31, 1995. On June 10, 1994
the Company issued 1,931,033 shares of the Company's common stock
to the creditors. The Company anticipates that the remainder of
the initial cash distribution amounting to approximately $260,000
and the remaining 112,263 shares of stock will be distributed to
creditors once certain remaining disputed claims are resolved.
The Company has calculated the cash flow (as defined in the Plan)
for the period ended June 30, 1994 and has determined that there
was no excess cash flow (as defined in the Plan) for that period
and accordingly no distribution to creditors was required. Based
on the Company's projections, it is anticipated that there will be
no excess cash flow (as defined in the Plan) for the period ending
June 30, 1995 and accordingly no distribution to creditors is
expected to be required.
The accompanying financial statements reflect the estimated effect
of the reorganization, including the settlement of liabilities and
other claims, the estimated present value of future cash
distributions to creditors of $1,322,000 and the issuance of
112,263 additional shares of common stock.
<PAGE>
Page F-10
The Company's Plan of Reorganization does not permit the
subsidiaries of the Company to pay any dividends to the parent
company. The Plan further restricts the Company and its
subsidiaries from acquiring debt securities from or loaning or
advancing any monies to any other party except in the ordinary
course of business. The net assets at March 31, 1995 of the
Company's two subsidiaries are as follows (in thousands):
Net Assets
at
March 31,
1995
(Unaudited)
-----------
Porten Sullivan Corporation $ 2,715
Suarez Housing Corporation 2,086
NOTE 4 - FRESH START REPORTING
The American Institute of Certified Public Accountants has issued
Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" ("SOP 90-7"). Pursuant
to the guidance provided by SOP 90-7, the Company adopted fresh
start reporting as of August 12, 1992. Under fresh start
reporting, all assets and liabilities are restated to reflect their
reorganization value which approximates their fair value at the
date of reorganization.
The company calculated that the fresh start reporting equity value
was $2,375,000. Factors considered by management included current
value of assets and assumed liabilities, the $1,250,000 retention
of cash for working capital and the estimated future cash flows.
Under fresh start reporting, the final consolidated balance sheet
as of August 12, 1992 became the beginning consolidated balance
sheet of the emerging Company. Since fresh start reporting was
reflected in the consolidated balance sheet as of August 12, 1992,
the consolidated balance sheets and related financial statements as
of March 31, 1995 and March 31, 1994 are not comparable in all
material respects to any such statement as of any date prior to
August 12, 1992.
NOTE 5 - REORGANIZATION ITEMS
Professional fees and other related expenses associated with the Chapter
11 filing were $562,000 for the period April 1, 1992 through August 12,
1992.
Interest earned on cash balances accumulated during the Chapter 11 proceedings
amounted to $312,000 for the period April 1, 1992 through August 12, 1992.
<PAGE>
Page F-11
NOTE 6 - REAL ESTATE INVENTORY
Real estate inventory consists of the following (in thousands):
March 31, 1995 March 31, 1994
-------------- --------------
Accumulated costs of construction
completed and in progress $ 9,121 $ 5,361
Land and land development costs 6,833 4,987
Land options and deposits 1,043 829
-------- --------
$ 16,997 $ 11,177
======== ========
From time to time as part of the normal operations of the business,
the subsidiaries of the Company have bought lots which the other
subsidiary of the Company was obligated to buy from a third party
seller or which the other subsidiary of the Company owned. Such
transactions were at prices approximating fair market value and
were not significant.
NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following
(in thousands):
March 31, 1995 March 31, 1994
-------------- --------------
Accounts payable - trade $ 2,033 $ 2,718
Accrued liabilities 1,553 1,279
Accrued estimated future cash
distribution to creditors 1,322 1,322
-------- --------
$ 4,908 $ 5,319
======== ========
Accounts payable and accrued liabilities of as of March 31, 1995
and March 31, 1994, include liabilities of approximately $294,000
and $1,050,000, respectively, which represent cash to be
distributed to the creditors pursuant to the Plan of Reorganization
and accrued professional fees related to the bankruptcy. The
accrued estimated future cash distribution to creditors is an
estimate of future cash distributions to creditors as defined by
the Plan of Reorganization. The balance of accounts payable and
accrued liabilities represents liabilities that were incurred
and/or accrued subsequent to the filing of the Bankruptcy
petitions.
<PAGE>
Page F-12
NOTE 8 - MORTGAGE NOTES AND LOANS PAYABLE
Mortgage notes and loans payable consist of the following (in thousands):
March 31, 1995 March 31, 1994
-------------- --------------
Construction loans payable secured
by real estate inventory,
with interest at 1% to 2%
above prime $ 9,664 $ 5,959
Notes payable principally secured
by mortgage notes receivable
with interest at 1% above prime 60 157
-------- --------
$ 9,724 $ 6,116
======== ========
Construction loans payable at March 31, 1995 are due as follows (in
thousands):
1996 $9,195
1997 469
The construction loans payable are principally payable from sales
proceeds, generally provide for extensions, and are all secured by
real estate inventory. As of March 31, 1995, the Company had
$13,167,000 of undrawn commitments for additional construction and
land acquisition financing.
Interest costs incurred and the amount capitalized to inventories
are as follows (in thousands):
<TABLE>
<CAPTION>
Incurred Capitalized (a) Capitalized and Total Expensed
Expensed (b)
----------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Year Ended March 31, 1995 $ 1,978 $ 1,121 $ 1,066 $ 1,923
Year Ended March 31, 1994 1,848 609 955 2,194
Period August 13, 1992 1,507 372 795 1,930
through March 31, 1993
Period April 1, 1992 through
August 12, 1992:
as reported 932 261 530 1,201
at contractual rates 1,041 291 530 1,280
</TABLE>
(a) Interest incurred that was capitalized.
(b) Interest capitalized previously and charged to cost of sales.
<PAGE>
Page F-13
NOTE 9 - INCOME TAXES
In connection with implementing fresh start reporting as of August 12, 1992,
the Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109). SFAS 109 is an asset and liability
approach that requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in
the Company's financial statements or tax returns. In estimating future tax
consequences, SFAS 109 generally considers all expected future events other
than enactments of changes in the tax law or rates.
Income tax expense consisted of the following (in thousands):
<TABLE>
<CAPTION>
Period Period
Year Ended Year August 13, April 1, 1992
March 31, 1995 Ended 1992 through through
March 31, March 31, August 12,
1994 1993 1992
--------------- --------- ------------- ---------------
<S> <C> <C> <C> <C>
Current
Federal $ - $ 69 $ - $ -
State 72 (190) 59 -
------ ---------- ----------- ----------
72 (121) 59 -
------ ---------- ----------- ----------
Deferred
Federal - (3) (121) -
State - - (3) (18)
------ ----------- ----------- ---------
- (3) (124) (18)
------ ----------- ----------- ---------
Provision (Benefit) for $ 72 $ (124) $ (65) $ (18)
income taxes ====== =========== =========== =========
</TABLE>
<PAGE>
Page F-14
The provision for income taxes differs from that computed at Federal statutory
corporate tax rate as follows (in thousands):
<TABLE>
<CAPTION>
Period Period
Year Ended Year August 13, April 1, 1992
March 31, 1995 Ended 1992 through through
March 31, March 31, August 12,
1994 1993 1992
--------------- --------- ------------- -------------
<C> <C> <C> <C>
Tax (benefit) at 34% $ 394 $ 325 $ 307 $ (86)
statutory rate
State income tax benefit 48 (125) 39 (18)
net of Federal benefit
Taxes applicable to loss (280) (325) (411) -
carryforwards
Change in the valuation (76) - - -
allowance
Other (14) 1 - 86
------- ----------- ---------- ---------
$ 72 $ (124) $ (65) $ (18)
======= =========== ========== =========
</TABLE>
Temporary differences and carryforwards which give rise to a significant
portion of deferred tax (assets) and liabilities for March 31, 1995 and 1994
are as follows (in thousands):
<TABLE>
<CAPTION>
Deferred Expense
March 31, 1994 (Benefit) March 31, 1995
-------------- ----------------- --------------
<S> <C> <C> <C>
Differences in the tax basis and
the book basis of -
Partnerships $ (438) $ 427 $ (11)
Inventory (141) 51 (90)
Installment sales 461 (103) 358
Other (209) (19) (228)
Loss carryforwards (705) (280) (985)
Valuation allowance 1,032 (76) 956
--------- ---------- ---------
Net Deferred Tax Liability $ - $ - $ -
========= ========== =========
</TABLE>
At March 31, 1995, the Company had Federal income tax loss carryforwards of
approximately $2,900,000 which includes approximately $2,025,000 of
carryforwards that become available at approximately $150,000 per year through
2008. The Company has provided a valuation allowance on the net deferred tax
assets which primarily results from the restricted use of net operating loss
carryforwards.
<PAGE>
Page F-15
NOTE 10 - COMMITMENTS AND CONTINGENCIES
A. At March 31, 1995 the Company had commitments to purchase 901 finished
building lots, providing for an aggregate purchase price of approximately
$28,709,000, over a four year period. Substantial deposits will be forfeited
if the Company is unable to satisfy these commitments.
B. Suarez Housing Corporation, a subsidiary of the Company, has an employment
agreement with the Company's Chairman and President expiring August 12, 1995
currently providing for compensation of $264,710 per annum.
C. Porten Sullivan Corporation, a subsidiary of the Company, has an employment
agreement with the Company's former Executive Vice President who retired on May
12, 1995. The agreement provides for compensation and benefits of
approximately $150,000 to be paid through February 1996 in exchange for
consulting services.
D. At March 31, 1995 the Company had open letters of credit and guarantees
totalling approximately $103,000 to secure performance obligations.
E. The Company currently occupies office space and leases model home furniture
under operating lease agreements expiring at various dates through 1996. The
Company also leases storage space on a month to month basis. The combined
rental expense incurred under these leases was $215,000, $131,000, $76,000, and
$66,000 for the years ended March 31, 1995, and 1994, the period August 13,
1992 through March 31, 1993, and the period April 1, 1992 through August 12,
1992, respectively. The future minimum rental payments under these operating
leases as of March 31, 1995 are as follows:
1996 $159,000
1997 $ 60,000
1998 $ 0
F. At March 31, 1995, restricted cash and short term investments of
approximately $457,000 includes $294,000 to be paid out to creditors as a part
of the initial distribution and accrued professional fees related to the
bankruptcy.
G. 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 financial position or the results of
operations.
<PAGE>
Page F-16
NOTE 11 - COMMON STOCK AND STOCK OPTIONS
At the 1994 Annual Meeting of Stockholders, which was held on September 13,
1994, the stockholders approved a proposal to adopt certain amendments to the
Company's Restated Certificate of Incorporation (i) to effect a 1-for-10
reverse stock split of the Company's issued and outstanding common stock and
(ii) to change the number of authorized shares of common stock from 30 million
to 10 million. The Amendments did not change the par value of the common stock
which remained at $.01 per share. The Amendments became effective on May 31,
1995 with the filing of a Certificate of Amendment with the Secretary of State
of Delaware on May 31, 1995. The effect of the Reverse Stock Split has been
retroactively reflected in the statements for all periods presented.
Under the Plan of Reorganization, 2,043,296 shares of common stock, as adjusted
for the Reverse Stock Split, were to be issued pro rata to creditors which
would represent 75% of the outstanding common stock after issuance of those
shares. 1,931,033 of those shares were issued on June 10, 1994. The remaining
112,263 shares will be distributed to the creditors once certain remaining
disputed claims are resolved.
Under the Company's Plan of Reorganization, the payment of dividends is not
permitted during the six year period beginning August 13, 1992. The Plan also
provides that after August 12, 1998, the Company may not pay any cash dividends
to stockholders until it has first paid an additional $1,250,000 to the
creditors.
On August 12, 1992, an option for 50,000 shares of common stock at a purchase
price of $.50 per share, as adjusted for the Reverse Stock Split, was granted
to the Chairman and President of the Company. The option is exercisable 50%
currently and the remainder after August 11, 1995. All shares must be
purchased by August 11, 1996.
On February 9, 1993 certain key employees of the Company were granted options
to purchase 11,000 shares of common stock at a price of $.50 per share, as
adjusted for the Reverse Stock Split. The options are exercisable 30%
currently, an additional 30% on or after February 9, 1996, an additional 40% on
or after February 9, 1997 and all of the shares must be purchased by February
9, 1998.
On November 9, 1993 the Company's former Executive Vice President, who retired
on May 12, 1995, was granted options to purchase 10,000 shares of common stock
at a price of $.60 per share, as adjusted for the Reverse Stock Split. The
options are exercisable in full at any time until May 12, 1996.
<PAGE>
Page F-17
NOTE 12 - CONDENSED FINANCIAL STATEMENTS OF CONSOLIDATED FINANCE SUBSIDIARIES
The Company's wholly-owned finance subsidiaries were established to sell
collateralized mortgage obligations through participation in various
multi-builder bond programs. In these sales, which last occurred in 1987, the
Company originated and pooled mortgage loans which were then pledged as
collateral for bonds payable. The interest rates on the mortgage loans which
comprise the collateral for bonds payable, roughly equate with the interest
rates on the related bonds payable.
Condensed financial information is as follows (in thousands):
Condensed Balance Sheets
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994
-------------------- --------------------
<S> <C> <C>
Assets:
Collateral for bonds payable $ 7,620 $ 9,666
Other assets 9 29
-------- -------
$ 7,629 $ 9,695
======== =======
Liabilities and Equity:
Bonds payable $ 7,362 $ 9,337
Equity and intercompany advances 267 358
-------- -------
$ 7,629 $ 9,695
======== =======
</TABLE>
Condensed Statements of Income
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------- Period August Period
13, 1992 April 1, 1992
through through
March 31, August 12,
1995 1994 1993 1992
------- -------- ----------- --------------
<S> <C> <C> <C> <C>
Revenues $ 791 $ 1,119 $ 973 $ 623
====== ======== ========= =========
Income before income taxes $ 22 $ 58 $ 34 $ 9
====== ======== ========= =========
</TABLE>
<PAGE>
Page F-18
NOTE 13 - RELATED PARTY TRANSACTIONS
A. The Company's Chairman and President has personally guaranteed bank loans in
the aggregate maximum amount of $19,250,000 for Suarez Housing Corporation, a
subsidiary of the Company, at a fee of one percent of the amount guaranteed,
not to exceed $80,000 per year. At March 31, 1995 the outstanding principal
amount of loans guaranteed by the Company's Chairman and President was
$6,358,000. The Company has agreed to indemnify the President and Chairman in
the event that this personal guarantee is called.
B. The Chairman and President of the Company is a one third partner in a
partnership from which the Company bought 20 finished building lots during the
year ended March 31, 1995 for $470,000, a price which approximates fair market
value.
C. A member of the Board of Directors, is Vice President and a Director of a
company which during the year ended March 31, 1995 sold building material
products in the amount of approximately $3,367,000 to Suarez Housing
Corporation. That company is a creditor of Suarez Housing Corporation under
the Chapter 11 filing, and is subject to the terms of settlement under the Plan
of Reorganization. In addition, an employee of that company is the Chairwoman
of the Official Creditors Committee in the Reorganization Cases of
International American Homes, Inc., Inland Pacific Communities, Inc., Porten
Sullivan Corporation of Florida, Suarez Housing Corporation, Beacon Hill Farm
Associates II, and Lakeview Professional Park (the "IAH Creditors Committee").
The IAH Creditors Committee's primary remaining function is to oversee the
terms of settlement under the approved Plan of Reorganization.
D. Another member of the Board of Directors, is Executive Vice President of a
company which during the year ended March 31, 1995 sold heating, ventilating
and air conditioning systems in the amount of approximately $441,000 to Porten
Sullivan Corporation, a subsidiary of the Company. That company is a creditor
of Porten Sullivan Corporation under the Chapter 11 filing, and is subject to
the terms of settlement under the Plan of Reorganization. This director is
also a member of the Official Creditors Committee in the Reorganization Cases
of Porten Sullivan Corporation and J&S Development Associates (the "Porten
Sullivan Creditors Committee"). The Porten Sullivan Creditors Committee's
primary remaining function is to oversee the terms of settlement under the
approved Plan of Reorganization.
E. Another member of the Board of Directors, is the Chief Executive Officer and
owner of a company which during the year ended March 31, 1995 sold engineered
fireplaces and other specialty building products in the amount of approximately
$175,000 to Porten Sullivan Corporation. That company is a creditor of Porten
Sullivan Corporation under the Chapter 11 filing, and is subject to the terms
of settlement under the Plan of Reorganization.
