<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 26, 1993
Date of earliest event reported: October 15, 1993
J.M. PETERS COMPANY, INC.
(exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware File No. 0-15925 95-2956559
- - -------- ---------------- ----------
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
</TABLE>
3501 Jamboree Road, Suite 200, Newport Beach, California 92660
- - -------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 854-2500
<PAGE> 2
ITEM 2. Acquisition or Disposition of Assets.
On October 15, 1993, with an effective date of September 1, 1993, J.M.
Peters Company, Inc. ("JMP") purchased 100% of the outstanding capital stock
("Purchased Shares") of Durable Homes, Inc., a Nevada corporation ("Durable"),
by assuming the obligations of Capital Pacific Homes, Inc. ("CPH") under a
definitive purchase agreement (the "Purchase Agreement") executed by CPH and
Roger Nix ("Nix") on September 17, 1993. JMP's board of directors, by
unamimous vote of disinterested directors on September 23, 1993, approved the
terms of the Purchase Agreement and JMP's acquisition of Durable.
The consideration for the Purchased Shares was $1,300,000 in cash and 1,015,000
newly issued shares of common stock, par value $.10, of JMP representing 6.77%
of the outstanding shares of JMP. In addition, Durable issued a promissory note
to NIX in the amount of $400,000. The cash portion of the payment was provided
out of readily available funds of JMP and were not borrowed.
There are no material relationships between any officer or director of JMP and
NIX or Durable.
ITEM 7. Financial Statements, Proforma Financial Information and Exhibits.
The following Consolidated Financial Statements and Proforma Financial
Information are included under this item:
Consolidated Proforma Balance Sheet of J.M. Peters Company, Inc., and
Subdiaries as of August 31, 1993.
Consolidated Proforma Statements of Operations of J.M. Peters Company,
Inc. and Subsidiaries with Durable Homes, Inc. for the Year Ended
February 28, 1993, and for the Six Months Ended August 31, 1993.
Notes to Consolidated Proforma Financial Statements.
Balance Sheets of Durable Homes, Inc., as of June 30, 1993 and 1992.
Statements of Income and Retained Earnings of Durable Homes, Inc.,
for the Six Months Ended June 30, 1993 and 1992.
Statements of Cash Flows of Durable Homes, Inc. for the Six Months
Ended June 30, 1993 and 1992.
Notes to Financial Statements of June 30, 1993 and 1992.
Report of Independent Accountants.
Balance Sheets of Durable Homes, Inc., as of December 31, 1992 and
1991.
Statements of Income and Retained Earnings of Durable Homes, Inc.
for the Years Ended December 31, 1992 and 1991.
Statements of Cash Flows of Durable Homes, Inc. for the Years Ended
December 31, 1992 and 1991.
Notes to Financial Statements of December 31, 1992 and 1991.
EXHIBITS
The Purchase and Sale Agreement dated September 17, 1993 by and between CPH, NIX
and Durable and the Assignment and Assumption Agreement dated September 24,
1993, by and between Capital Pacific Homes, Inc., and J.M. Peters Company, Inc.
were previously filed as exhibits under Form 8-K/A with the Commission on
August 15, 1994.
<PAGE> 3
J.M. PETERS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEET
August 31, 1993
(UNAUDITED)
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
Purchase
Accounting Pro Forma
J.M. Peters Durable Adjustments Combined
----------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 9,304 $ 335 $(1,300)(A) $ 8,339
Restricted cash 1,733 - - 1,733
Accounts and notes receivable 1,727 - - 1,727
Residential inventory 115,170 15,800 855 (B) 131,825
Prepaid expenses and other assets 2,930 628 (161)(C) 3,397
-------- ------- ------- --------
$130,864 $16,763 $(606) $147,021
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $36,034 $ 6,523 - $ 42,557
Due to Capital Pacific Homes 850 - 150 (A) 1,000
Accounts payable and accrued
liabilities 18,240 3,262 718 (A) 22,220
Negative goodwill - - 726 (A)(C) 726
-------- ------- ----- -------
Total liabilities 55,124 9,785 1,594 66,503
-------- ------- ----- -------
Minority Interest in Joint
Ventures 31,233 2,114 - 33,347
Stockholders' equity:
Durable Homes Equity - 4,864 (4,864)(A) -
JMP Special stock, par
value $.01 per share; 5,000,000
shares authorized; none
outstanding
JMP Common stock, par value $.10
per share, 60,000,000
shares authorized; 13,980,000
issued and outstanding 1,398 - 102 (A) 1,500
Additional paid-in capital 207,824 - 2,562 (A) 210,386
Retained earnings (deficit) (164,715) - - (164,715)
---------- ------- ------ ---------
Total stockholders' equity 44,507 4,864 47,171
---------- ------- ------ ---------
$130,864 $16,763 $ (606) $147,021
========== ======= ====== ========
</TABLE>
<PAGE> 4
ITEM 7. Continued
J.M. PETERS COMPANY, INC. AND SUBSIDIARIES WITH DURABLE HOMES, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share data)
<TABLE>
<CAPTION>
J.M. PETERS DURABLE HOMES PURCHASE
SIX MONTHS SIX MONTHS ACCOUNTING PRO FORMA
AUGUST 31, 1993 AUGUST 31, 1993 ADJUSTMENTS COMBINED
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of homes and land $11,445 $21,178 - $32,623
Interest and other income 809 171 (16)(G) 964
-------------------------------------------------------------------
12,254 21,349 (16) 33,587
-------------------------------------------------------------------
Costs and expenses:
Cost of homes and land 11,509 16,788 101 (D) 28,398
Selling, general and
administrative 3,904 2,941 (88)(E)(F) 6,757
Minority interest in income -69 207 - 138
Interest 418 - - 418
-------------------------------------------------------------------
15,762 19,936 13 35,711
-------------------------------------------------------------------
Income (loss) before income
taxes (3,508) 1,413 29 (2,124)
Income tax benefit - - 224 (H) 224
-------------------------------------------------------------------
NET INCOME (LOSS) $(3,508) $1,413 $ (253) $(2,348)
===================================================================
Income (loss) per common share ($0.25) $(0.16)
Weighted average number of
common shares 13,980 1,015 (A) 14,995
</TABLE>
<PAGE> 5
ITEM 7. Continued
J.M. PETERS COMPANY, INC. AND SUBSIDIARIES WITH DURABLE HOMES, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
(In thousands except per share data)
<TABLE>
<CAPTION>
J.M. PETERS DURABLE HOMES PURCHASE
YEAR ENDED YEAR ENDED ACCOUNTING PRO FORMA
FEBRUARY 28, 1993 DECEMBER 31, 1992 ADJUSTMENTS COMBINED
(AUDITED) (AUDITED) (UNAUDITED) (UNAUDITED)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales of homes and land $72,148 $35,977 - $108,125
Interest and other income 3,554 207 (32)(G) 3,729
--------------------------------------------------------------------------
75,702 36,184 (32) 111,854
--------------------------------------------------------------------------
Costs and expenses:
Cost of homes and land 68,257 28,570 202 (D) 97,029
Selling, general and
administrative 9,764 5,082 (177)(E)(F) 14,669
Adjustments to carrying value of
real estate projects 75,476 - - 75,476
Interest 8,538 - - 8,538
--------------------------------------------------------------------------
162,035 33,652 25 195,712
--------------------------------------------------------------------------
Income (loss) before income
taxes (86,333) 2,532 57 (83,858)
Income tax benefit (1,792) - 254 (H) (1,538)
--------------------------------------------------------------------------
NET INCOME (LOSS) ($84,541) $2,532 ($311) ($82,320)
==========================================================================
Income (loss) per common share ($6.05) ($5.49)
Weighted average number of
common shares 13,980 1,015 (A) 14,995
</TABLE>
- - ------------
(A) To effect the purchase of Durable, the Company issued 1,015,000 shares of
its common stock (at a market value of $2.625 per share) and paid
$1,300,000 in cash. Additionally, Durable issued a note payable in the
amount of $400,000 and entered into a one year consulting agreement for
$218,000 with its prior shareholder. The Company also incurred an
estimated $250,000 in costs in connection with the acquisition, including a
fee payable to Capital Pacific Homes of $150,000. The total estimated fair
value of the net assets acquired exceeded the total purchase price,
resulting in negative goodwill of approximately $887,000. See (C) below.
(B) To adjust to fair value of residential inventories acquired.
(C) To reduce negative goodwill by fixed assets acquired of $161,000.
(D) Estimated increased cost of sales attributable to adjustment to fair value
of residential inventories acquired.
(E) Amortization of estimated negative goodwill.
(F) Reduction of depreciation expense attributable to negative goodwill
allocated to fixed assets.
(G) Loss of interest income on $1,300,000 cash payment.
(H) The income tax expense reflects C corporation taxes reduced by the
applicable net operating loss available from the Company to partially
offset such taxes.
The pro forma data has been prepared assuming that the acquisition had
occured on the pro forma balance sheet date or, for the pro forma statements of
operations, March 1, 1992. The pro forma adjustments are based upon
available information and certain assumptions that management believes are
reasonable. The pro forma financial information does not purport to represent
what the Company's financial position or results of operations would actually
have been had the acquisition in fact occurred on the assumed date or at the
beginning of the period indicated or to project the Company's financial
position or results of operations for any future date or period.
<PAGE> 6
DURABLE HOMES, INC.
BALANCE SHEET
JUNE 30, 1993 & 1992
ASSETS
<TABLE> June 30,
<CAPTION> 1993 1992
--------------------------
<S> <C> <C>
Assets:
Cash $ 390,000 $ 1,713,000
Receivables (Notes 2 and 9) 130,000 167,000
Inventories (Note 3) 18,132,000 11,845,000
Prepaid expenses and deposits 228,000 361,000
Property and equipment, net (Note 4) 252,000 343,000
Other assets 161,500 209,000
----------- -----------
Total assets $19,294,000 $14,638,000
=========== ===========
Liabilities and shareholder's equity
Borrowings (Note 5) $ 8,176,000 $ 6,216,000
Construction payables 3,472,000 2,462,000
Accounts payable and accrued expenses (Note 6) 463,000 378,000
---------- ----------
12,111,000 9,056,000
---------- ----------
Minority interest in ventures 2,089,000
---------- ----------
Shareholder's equity
Common stock, no par value;
2,000 shares authorized;
1,000 shares issued and outstanding 50,000 50,000
Retained earnings 5,044,000 5,532,000
----------- -----------
5,094,000 5,582,000
----------- -----------
$19,294,356 $14,638,000
=========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE> 7
DURABLE HOMES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1992 & 1993
<TABLE>
<CAPTION>
Six months ended June 30,
1993 1992
-------------------------
<S> <C> <C>
Revenues:
Sales $17,936,000 $17,334,000
Other 2,000 61,000
----------- -----------
17,938,000 17,395,000
----------- -----------
Costs and expenses:
Costs of sales 14,399,000 13,822,000
Developer fees (Note 7) 1,303,000 1,338,000
Selling, general and administrative 1,190,000 959,000
Depreciation 51,000 64,000
Minority interest in income 90,000 -
----------- -----------
17,033,000 16,183,000
----------- -----------
Net income 905,000 1,212,000
Retained earnings, beginning of period 5,555,000 5,734,000
Distributions to shareholder (1,416,000) (1,414,000)
----------- -----------
Retained earnings, end of period $ 5,044,000 $ 5,532,000
=========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE> 8
DURABLE HOMES, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1993 & 1992
<TABLE>
<CAPTION>
Six months ended June 30,
1993 1992
<S> <C> <C>
Cash flows from operating activities:
Net income $ 905,000 $1,212,000
Adjustments to reconcile net income to
net cash (used in) provided by
operating activities:
Depreciation 51,000 64,000
Change in assets and liabilities
(Increase) decrease in receivables 107,000 (21,000)
Increase in inventories (1,599,000) (486,000)
Increase (decrease) in prepaid expenses and deposits 160,000 (53,000)
Increase (decrease) in construction payables (119,000) 449,000
Decrease in accounts payable and accrued expenses (103,000) (200,000)
---------- --------
Net cash (used in) provided by operating
activities (598,000) 965,000
---------- --------
Cash flows from investing activities:
Purchase of property and equipment (63,000) (62,000)
---------- ---------
Net cash (used in) provided by investing activities (63,000) (62,000)
---------- ---------
Cash flows from financing activities:
Proceeds from borrowings 12,567,000 12,898,000
Repayment of borrowings (13,221,000) (12,746,000)
Distributions to shareholder (1,416,000) (1,414,000)
Proceeds from joint venture arrangements 2,089,000
------------ -----------
Net cash provided by (used in) financing
activities 19,000 (1,262,000)
------------ -----------
Net decrease in cash (642,000) (359,000)
Cash at beginning of period 1,032,000 2,072,000
----------- ------------
Cash at end of period $ 390,000 $ 1,713,000
=========== ============
</TABLE>
See accompanying notes to financial statements
<PAGE> 9
Durable Homes, Inc.
Notes to Financial Statements
June 30, 1993 & 1992
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Durable Homes, Inc. (the Company) is engaged in the development,
construction and sale of residential real estate. A summary of
significant accounting policies follows:
INVENTORIES
Inventories, comprising land held for development and single-family
homes and condominiums under construction, are stated at the lower of
cost or market.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost less accumulated
depreciation. Depreciation is determined using accelerated methods
over the useful lives of the assets which range from three to seven
years. Expenditures for maintenance and repairs are charged to
expense as incurred.
REVENUE RECOGNITION
Revenue from the sale of residential properties is recognized when
legal title passes to the purchaser at closing.
CAPITALIZED INTEREST
Interest on construction loans is capitalized in inventory during the
development and construction period. During the six month period
ending June 30, 1993 and 1992, total interest of $266,000 and
$453,000, respectively, was incurred and capitalized.
INCOME TAXES
The Company has elected to be taxed as an S-corporation whereby the
income tax effects of the Company's activities accrue directly to the
shareholder.
RECLASSIFICATIONS
Certain reclassifications have been made to the calendar 1991
financial statements to conform with the current year financial
statement format.
2. RECEIVABLES
Receivables comprise:
<TABLE>
<CAPTION>
June 30
1993 1992
<S> <C> <C>
Accounts receivable $ 28,000 $ 9,000
Notes receivable 48,000 118,000
Receivable from related party (See Note 9) 54,000 40,000
---------- ---------
$ 130,000 $167,000
========== =========
</TABLE>
The notes receivable are unsecured notes from corporations and
individuals that bear interest at rates that range from 6 to 10
percent and are payable upon demand.
<PAGE> 10
Durable Homes, Inc.
Notes to Financial Statements
June 30, 1993 & 1992
3. INVENTORIES
Inventories comprise:
<TABLE>
<CAPTION>
June 30
1993 1992
<S> <C> <C>
Land under development $ 7,989,000 $ 4,582,000
Single-family homes under construction 8,016,000 6,609,000
Condominiums under construction 2,127,000 654,000
------------- ------------
$ 18,132,000 $ 11,845,000
============= =============
</TABLE>
Inventories included approximately $230,000 and $325,000 of
capitalized interest at June 30, 1993 and 1992.
4. PROPERTY AND EQUIPMENT
Property and equipment comprise:
<TABLE>
<CAPTION>
June 30
1993 1992
<S> <C> <C>
Automobiles $ 189,000 $ 368,000
Office furniture and equipment 280,000 188,000
Model home furniture 122,000 74,000
---------- ----------
591,000 630,000
Less accumulated depreciation (339,000) (287,000)
---------- ----------
$ 252,000 $ 343,000
========== ==========
</TABLE>
<PAGE> 11
Durable Homes, Inc.
Notes to Financial Statements
June 30, 1993 & 1992
5. BORROWINGS
Borrowings comprise:
<TABLE>
<CAPTION>
June 30,
1993 1992
<S> <C> <C>
Construction loans payable to banks
and mortgage companies, interest at
prime plus 1.5 percent, maturing in
1993 and 1994, secured by certain
inventories $ 6,839,000 $ 5,976,000
Notes payable to corporations interest
from 9 percent to 20 percent, maturing
1993 and 1994, secured by certain inventories 1,016,000
Notes payable to a trust and an individual
interest at 10 percent, maturing 1994 and 1995 211,000
Notes payable to a bank, interest
from 12.02 percent to 12.75 percent,
monthly installments of $2,750, secured
by automobiles 59,000
Note payable to individual, interest
at 18 percent payable monthly, principal
due August 1993, unsecured 51,000 50,000
Note payable to a partnership, interest
at prime plus 3 percent, quarterly
principal installment of $5,200, secured
by partnership interest 16,000
------------ ------------
$ 8,176,000 $ 6,216,000
============ ============
</TABLE>
Substantially all construction loans have been guaranteed by the
shareholder of the Company.
<PAGE> 12
Durable Homes, Inc.
Notes to Financial Statement
June 30, 1993 & 1992
The following summarizes the scheduled maturities of all borrowings at
June 30, 1993.
Period ending June 30
<TABLE>
<S> <C>
1993 $ 2,187,000
1994 5,265,000
1995 656,000
1996 68,000
-------------
$ 8,176,000
=============
</TABLE>
6. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses comprise:
<TABLE>
<CAPTION> June 30
1993 1992
<S> <C> <C>
Accounts payable $ 40,000 $ 20,000
Accrued bonuses and profit sharing 283,000 311,000
Accrued developer fees 26,000 34,000
Other 114,000 13,000
---------- ----------
$ 463,000 $ 378,000
========== ==========
</TABLE>
7. DEVELOPER FEES
The Company has purchased certain undeveloped land from a corporation
in which a director of the Company is a shareholder. As partial
consideration for the purchase, the Company assigned to the
corporation an undivided interest in the net profits derived from the
sale of certain inventories. During the current year, the undivided
interest percentage decreased from 50 percent to 25 percent for
current and future projects. The corporation's share of net profits
for the six month period ending June 30, 1993 and 1992 was $100,000 and
$76,000, respectively, and is recorded as developer fees.
During 1991, the Company purchased the escrow position in certain
undeveloped land from a corporation in which the brother of the
shareholder of the Company is a shareholder. As partial
consideration, the Company assigned to the corporation an undivided 20
percent interest in the net profits derived from the sale of certain
inventories. The corporation's share of net profits for the years
ended June 30, 1992 was $56,000 and is recorded as developer fees.
<PAGE> 13
Durable Homes, Inc.
Notes to Financial Statements
June 30, 1993 & 1992
8. Profit Sharing Plan
The Company administers a defined contribution profit sharing plan for
eligible employees. Employees begin participating in the plan after
completing one year of service and attaining the age of 21. Under the
provisions of the plan, the Board of Directors determines the annual
contribution to the plan. Profit sharing expenses for the six months
ending June 30, 1993 was $57,186 and June 30, 1992 was $70,477.
9. Related Party Transactions
The shareholder of the Company is a minority shareholder of an
advertising agency. Advertising costs incurred for services rendered
by the advertising agency for the six months ending June 30, 1993 and
1992 were $124,000 and $110,000.
<PAGE> 14
Durable Homes, Inc.
Financial Statements
December 31, 1992
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS
February 25, 1993
To the Board of Directors and Shareholder
of Durable Homes, Inc.
In our opinion, the accompanying balance sheet and related statements of income
and retained earnings and of cash flows present fairly, in all material
respects, the financial position of Durable Homes, Inc. at December 31, 1992
and 1991, and the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Salt Lake City, Utah
February 25, 1993
Price Waterhouse
<PAGE> 16
DURABLE HOMES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
1992 1991
<S> <C> <C>
ASSETS
Cash $ 1,032,000 $ 2,072,000
Receivables (Notes 2 and 9) 237,000 146,000
Inventories (Note 3) 16,533,000 11,359,000
Prepaid expenses and deposits 388,000 308,000
Property and equipment, net (Note 4) 240,000 345,000
Other assets 162,000 209,000
----------- ------------
$18,592,000 $ 14,439,000
=========== ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Borrowings (Note 5) $ 8,830,000 $ 6,064,000
Construction payables 3,591,000 2,013,000
Accounts payable and accrued expenses (Note 6) 566,000 578,000
----------- ------------
12,987,000 8,655,000
----------- ------------
Shareholder's equity
Common stock, no par value - 2,000 shares
authorized; 1,000 shares issued and outstanding 50,000 50,000
Retained earnings 5,555,000 5,734,000
----------- ------------
5,605,000 5,784,000
----------- ------------
$18,592,000 $14,439,000
=========== ============
</TABLE>
See accompanying notes to financial statements
<PAGE> 17
DURABLE HOMES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1992 & 1991
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1992 1991
<S> <C> <C>
Revenues
Sales $ 35,977,000 $ 31,461,000
Other 207,000 34,000
36,184,000 31,495,000
----------- -----------
Costs and expenses
Cost of sales 28,395,000 24,121,000
Developer fees (Note 7) 175,000 234,000
Selling, general and administrative 4,955,000 4,494,000
Depreciation 127,000 93,000
---------- ----------
33,652,000 28,942,000
---------- ----------
Net income 2,532,000 2,553,000
Retained earnings at beginning of period 5,734,000 5,379,000
Distributions to shareholder (2,711,000) (2,198,000)
---------- -----------
Retained earnings at end of period $ 5,555,000 $ 5,734,000
=========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE> 18
DURABLE HOMES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1992 & 1991
<TABLE>
<CAPTION>
Year ended December 31,
1992 1991
<S> <C> <C>
Cash flows from operating activities
Cash received from customers $ 35,960,000 $ 31,398,000
Cash paid to contractors, suppliers and
employees (37,164,000) (28,185,000)
Interest received 41,000 82,000
----------- -----------
Net cash (used in) provided by operating
activities (1,163,000) 3,295,000
----------- -----------
Cash flows from investing activities
Purchase of property and equipment (138,000) (233,000)
Proceeds from sale of other assets 38,000 218,000
Purchase of other assets (38,000) (49,000)
Payments received on notes receivable 79,000
Issuance of notes receivable (24,000) (77,000)
------------ -----------
Net cash used in investing activities (162,000) (62,000)
------------ -----------
Cash flows from financing activities
Proceeds from borrowings 33,382,000 24,779,000
Repayment of borrowings (30,616,000) (26,186,000)
Distributions to shareholder (2,481,000) (2,198,000)
------------ -----------
Net cash provided by (used in) financing
activities 285,000 (3,605,000)
----------- ------------
Net decrease in cash (1,040,000) (372,000)
Cash at beginning of period 2,072,000 2,444,000
----------- -------------
Cash at end of period $ 1,032,000 $ 2,072,000
=========== =============
</TABLE>
(Continued)
See accompanying notes to financial statements
<PAGE> 19
DURABLE HOMES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1992 & 1991
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1992 1991
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
(USED IN) PROVIDED BY OPERATING ACTIVITIES
Net income $ 2,532,000 $ 2,553,000
Adjustments to reconcile net income to
net cash (used in) provided by operating
activities
Depreciation 127,000 93,000
Loss on sale of property and equipment 22,000
Gain on sale of other assets (29,000)
Change in assets and liabilities
(Increase) decrease in receivables (206,000) 14,000
(Increase) decrease in inventories (5,174,000) 1,588,000
(Increase) decrease in prepaid expenses and deposits (80,000) 36,000
Decrease in other assets 50,000
Increase (decrease) in construction payables 1,578,000 (581,000)
Decrease in accounts payable and accrued expenses (12,000) (379,000)
------------ -----------
Net cash (used in) provided by operating activities $ (1,163,000) $ 3,295,000
============ ===========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Distributions to the shareholder of the Company during the year ended December
31, 1992 include receivables of $139,000, other assets of $35,000 and property
and equipment of $56,000.
See accompanying notes to financial statements
<PAGE> 20
Durable Homes, Inc.
Notes to Financial Statements
December 31, 1992 & 1991
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Durable Homes, Inc. (the Company) is engaged in the development,
construction and sale of residential real estate. A summary of
significant accounting policies follows:
INVENTORIES
Inventories, comprising land held for development and single-family
homes and condominiums under construction, are stated at the lower of
cost or market.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost less accumulated
depreciation. Depreciation is determined using accelerated methods
over the useful lives of the assets which range from three to seven
years. Expenditures for maintenance and repairs are charged to
expense as incurred.
REVENUE RECOGNITION
Revenue from the sale of residential properties is recognized when
legal title passes to the purchaser at closing.
CAPITALIZED INTEREST
Interest on construction loans is capitalized in inventory during the
development and construction period. During the years ended December
31, 1992 and 1991, total interest of $592,000 and $906,000,
respectively, was incurred and capitalized.
INCOME TAXES
The Company has elected to be taxed as an S-corporation whereby the
income tax effects of the Company's activities accrue directly to the
shareholder.
RECLASSIFICATIONS
Certain reclassifications have been made to the calendar 1991
financial statements to conform with the current year financial
statement format.
2. RECEIVABLES
Receivables comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
1992 1991
<S> <C> <C>
Accounts receivable $ 41,000 $ 9,000
Notes receivable 62,000 77,000
Receivable from related party (See Note 9) 134,000 50,000
---------- ---------
$ 237,000 $146,000
========== =========
</TABLE>
The notes receivable are unsecured notes from corporations and
individuals that bear interest at rates that range from 6 to 10
percent and are payable upon demand.
<PAGE> 21
Durable Homes, Inc.
Notes to Financial Statements
December 31, 1992 & 1991
3. INVENTORIES
Inventories comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
1992 1991
<S> <C> <C>
Land under development $ 9,091,000 $ 5,932,000
Single-family homes under construction 5,714,000 4,038,000
Condominiums under construction 1,728,000 1,389,000
------------- ------------
$ 16,533,000 $ 11,359,000
============= =============
</TABLE>
Inventories included approximately $148,000 and $359,000 of
capitalized interest at December 31, 1992 and 1991.
4. PROPERTY AND EQUIPMENT
Property and equipment comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
1992 1991
<S> <C> <C>
Automobiles $ 189,000 $ 353,000
Office furniture and equipment 217,000 171,000
Model home furniture 122,000 44,000
---------- ----------
528,000 568,000
Less accumulated depreciation (288,000) (223,000)
---------- ----------
$ 240,000 $ 345,000
========== ==========
</TABLE>
<PAGE> 22
Durable Homes, Inc.
Notes to Financial Statements
December 31, 1992 & 1991
5. BORROWINGS
Borrowings comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
1992 1991
<S> <C> <C>
Construction loans payable to banks
and mortgage companies, interest at
prime plus 1.5 percent to 2 percent,
maturing in 1993, secured by certain
inventories $ 6,856,000 $ 5,797,000
Notes payable to corporations and
partnerships, interest from 9 percent
to 11 percent, maturing 1993, secured
by certain inventories 1,653,000
Construction loan payable to a bank,
interest at prime plus 1.5 percent,
maturing April 1, 1993, unsecured 200,000
Notes payable to a bank, interest
from 12.02 percent to 12.75 percent,
monthly instalments of $2,750, secured
by automobiles 71,000 196,000
Note payable to individual, interest
at 18 percent payable monthly, principal
due August 1993, unsecured 50,000 50,000
Note payable to a partnership, interest
at prime plus 3 percent, quarterly
principal instalment of $5,200, secured
by partnership interest ------------ 21,000
$ 8,830,000 $ 6,064,000
============ ============
</TABLE>
Substantially all construction loans have been guaranteed by the
shareholder of the Company.
<PAGE> 23
Durable Homes, Inc.
Notes to Financial Statements
December 31, 1992 & 1991
The following summarizes the scheduled maturities of all borrowings at
December 31, 1992:
YEAR ENDING DECEMBER 31,
<TABLE>
<S> <C>
1993 $ 8,785,000
1994 22,000
1995 20,000
1996 3,000
-------------
$ 8,830,000
===========
</TABLE>
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses comprise:
<TABLE>
<CAPTION> DECEMBER 31,
1992 1991
<S> <C> <C>
Accounts payable $ 40,000 $ 20,000
Accrued bonuses and profit sharing 407,000 448,000
Accrued developer fees 10,000 62,000
Other 109,000 48,000
---------- ----------
$ 566,000 $ 578,000
========== ==========
</TABLE>
7. DEVELOPER FEES
The Company has purchased certain undeveloped land from a corporation
in which a director of the Company is a shareholder. As partial
consideration for the purchase, the Company assigned to the
corporation an undivided interest in the net profits derived from the
sale of certain inventories. During the current year, the undivided
interest percentage decreased from 50 percent to 25 percent for
current and future projects. The corporation's share of net profits
for the years ended December 31, 1992 and 1991 was $115,000 and
$166,000, respectively, and is recorded as developer fees.
During 1991, the Company purchased the escrow position in certain
undeveloped land from a corporation in which the brother of the
shareholder of the Company is a shareholder. As partial
consideration, the Company assigned to the corporation an undivided 20
percent interest in the net profits derived from the sale of certain
inventories. The corporation's share of net profits for the years
ended December 31, 1992 and 1991 was $60,000 and $68,000, respectively,
and is recorded as developer fees.
<PAGE> 24
Durable Homes, Inc.
Notes to Financial Statements
December 31, 1992 & 1991
8. PROFIT SHARING PLAN
The Company administers a defined contribution profit sharing plan for
eligible employees. Employees begin participating in the plan after
completing one year of service and attaining the age of 21. Under the
provisions of the plan, the Board of Directors determines the annual
contribution to the plan. Profit sharing expense for each of the
years ended December 31, 1992 and 1991 was $125,000.
9. RELATED PARTY TRANSACTIONS
The shareholder of the Company is a minority shareholder of an
advertising agency. Advertising costs incurred for services rendered
by the advertising agency for the years ended December 31, 1992 and
1991 were $477,000 and $235,000.
The Company holds unsecured non-interest bearing receivables totalling
$134,000 from two corporations in which the shareholder of the Company
owns 50 percent and 51 percent interests. The receivables are
guaranteed by the shareholder of the Company and are payable on
demand.
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
J.M. PETERS COMPANY, INC.
Dated: September 1, 1994 By: /s/ GREGORY R. PETERSEN
-----------------------
Gregory R. Petersen
Vice President, Chief
Financial Officer and
Secretary
