<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1997
COMMISSION FILE NUMBER: 0-15925
CAPITAL PACIFIC HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 95-2956559
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
4100 MACARTHUR BLVD., SUITE 200
NEWPORT BEACH, CALIFORNIA 92660
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(714) 622-8400
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
COMMON STOCK $.10 PAR VALUE
(TITLE OF EACH CLASS)
THE AMERICAN STOCK EXCHANGE
(NAME OF EACH EXCHANGE ON WHICH REGISTERED)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No
At May 27, 1997, the aggregate market value of the voting stock held by
persons other than the directors, executive officers and principal shareholders
filing Schedules 13D of the Registrant was $5,548,463 as determined by the
closing price on the American Stock Exchange. The basis of this calculation does
not constitute a determination by the Registrant that all of its principal
shareholders, directors and executive officers are affiliates as defined in Rule
405 under the Securities Act of 1933.
At May 27, 1997, there were 14,995,000 shares of Common Stock outstanding.
Part III incorporates certain information by reference to the Registrant's
definitive proxy statement to be filed with the Commission no later than June
25, 1997.
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<PAGE> 2
CAPITAL PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
------------------------------------------
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.......................................... $ 3,649 $ 2,602 $ 3,522
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Extraordinary gain, net.......................... (3,075) -- --
Provision for litigation judgment................ 1,950 -- --
Depreciation and amortization.................... 794 1,390 1,876
Changes in Assets and Liabilities
Net of the Effects of the Purchase of Clark
Wilson, Inc. and Durable Homes, Inc.:
(Increase) decrease in accounts and notes
receivable................................ (2,168) (603) (380)
Increase in real estate projects............ (60,547) (57,109) (6,368)
(Increase) decrease in prepaid expenses and
other assets.............................. (470) (2,013) (1,131)
Increase in accounts payable and accrued
liabilities............................... 2,449 14,823 (5,123)
------- -------- ---------
Net cash provided by (used in) operating
activities.................................. (57,418) (40,910) (7,604)
------- -------- ---------
INVESTING ACTIVITIES:
Acquisition of Clark Wilson Homes, Inc.............. (3,631) -- --
Purchases of property and equipment................. (5,982) (1,269) (2,937)
(Decrease) increase in investments in
partnerships..................................... (1,949) 1,635 1,114
------- -------- ---------
Net cash provided by (used in) investing
activities.................................. (11,562) 366 (1,823)
------- -------- ---------
FINANCING ACTIVITIES:
Proceeds from senior unsecured notes payable, net... 95,834 -- --
Proceeds from notes payable......................... 59,406 131,572 143,596
Principal payments of notes payable................. (63,425) (98,949) (134,051)
Minority interest in joint ventures................. (10,435) (630) (2,534)
------- -------- ---------
Net cash provided by (used in) financing
activities.................................. 81,380 31,993 7,011
------- -------- ---------
Net increase (decrease) in cash and cash
equivalents......................................... 12,400 (8,551) (2,416)
Cash and cash equivalents, beginning of period........ 10,001 22,401 13,850
------- -------- ---------
Cash and cash equivalents, end of period.............. $ 22,401 $ 13,850 $ 11,434
======= ======== =========
SUPPLEMENTAL DISCLOSURE OF CASH AND NONCASH
ACTIVITIES:
Cash paid during the year for interest.............. $ 6,556 $ 17,939 21,983
Cash paid during the year for income taxes.......... 20 1,479 500
Residential inventory surrendered in exchange for
debt forgiveness................................. 1,048 -- --
Note payable and accrued interest reduced by debt
forgiveness...................................... 4,713 -- --
Promissory note payable issued to seller in
connection with the acquisition of Clark Wilson
Homes, Inc....................................... 2,500 -- --
Issuance of warrants in connection with offering of
senior unsecured notes payable................... 1,501 -- --
Land acquisition financed by purchase money trust
deeds............................................ 2,249 -- --
Debt assumed by consolidated partnership for land
contributed...................................... -- 1,915 --
</TABLE>
See accompanying notes to financial statements.
27
<PAGE> 3
CAPITAL PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. NOTES PAYABLE
Notes payable consist of the following at February 29, 1996 and February
28, 1997 (in thousands):
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Promissory notes collateralized by deeds of trust,
including interest varying from 9.5 percent to prime
plus one percent....................................... $ 3,661 $ 3,680
Notes payable to bank, at banks prime rate plus one
percent, maturing December 1996........................ 241 --
Notes payable to bank, including interest at prime plus
2.5 percent, maturing June 7, 1997..................... 1,915 --
Notes payable to banks, including interest varying from
prime plus one percent to prime plus two percent
maturing between May 31, 1997 and March 31, 1999
secured by certain real estate inventories on a
non-recourse basis..................................... 30,158 35,656
Notes payable to bank, including interest at prime plus
one percent with the term of the commitment reducing
commencing March 31, 1998 secured by certain real
estate inventories on a recourse basis................. 25,454 32,233
Contingent promissory note payable to previous owner of
Clark Wilson secured by Stock Pledge Agreement on a
non-recourse basis, under which the amounts due,
including interest at 8 percent, are fully dependent
upon the performance of the entity acquired............ 2,500 1,905
-------- --------
$ 63,929 $ 73,474
======== ========
</TABLE>
The Company is currently negotiating extensions of all bank notes payable
due within the next fiscal year.
At February 29, 1996 and February 28, 1997, the aggregate carrying value of
assets collateralizing the above notes was $122,498,000 and $179,941,002,
respectively.
As of February 28, 1997, the Company has in place three separate facilities
totalling $90 million (the "Facilities") with its principal bank lender (the
"Bank").
A commitment fee is payable annually on the Facilities. Availability of
funds under the Facilities is subject to, among other things, the Indenture,
specific loan-to-value factors, appraisal reports and the satisfactory
underwriting by the bank on a project basis. At February 28, 1997, the Company
had aggregate borrowings outstanding of $57.4 million under the Facilities.
The Facilities are secured by liens on various completed or under
construction homes and lots held by the Company. Pursuant to the Facilities, the
Company is subject to certain covenants, which require, among other things, the
maintenance of a consolidated liabilities to net worth ratio, minimum liquidity,
minimum net worth and loss limitations, all as defined in the documents that
evidence the Facilities. At February 28, 1997 the Company was in compliance with
these covenants. The Facilities also define certain events that constitute
events of default. As of February 28, 1997, no such event had occurred.
Durable and Clark Wilson also have secured non-recourse lines of credit to
facilitate construction activity. Clark Wilson has several non-recourse secured
lines of credit for a total of $37.5 million with maturity dates from May 31,
1997 to July 19, 1998. Subsequent to the end of fiscal year 1997, Durable
secured a $30.0 million non-recourse line of credit to replace its existing
$15.0 million non-recourse line and the Company's Arizona operations secured a
$10.0 million non-recourse line of credit.
During the years ended February 28, 1995, February 29, 1996 and February
28, 1997, the highest month-end balance on notes payable was $34,364,000,
$70,171,000 and $83,152,000, respectively, and the weighted average outstanding
balance was $19,880,000, $48,162,000 and $78,041,000, respectively. The weighted
33
<PAGE> 4
CAPITAL PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
CAPITAL
PACIFIC NON- TOTAL
HOLDINGS, INC. GUARANTORS(1) GUARANTORS(2) ELIMINATIONS(4) CONSOLIDATED
-------------- ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
Revenues:
Sales of homes and land..... $ 89,757 $ 38,374 $ 79,738 $ 207,869
Interest and other income,
net....................... 908 251 3,130 $ 4,287
Equity in income of partner-
ships and
subsidiaries(3)........... 316 (226) 0 168 259
-------------- ------------- ------------- --------------- -------------
Total Revenues....... 90,981 38,399 82,868 168 212,415
-------------- ------------- ------------- --------------- -------------
Cost of homes and land........ 72,293 35,399 66,450 174,142
Selling, general and
administrative.............. 15,926 5,848 12,630 34,404
Interest...................... 0 0 0 0
Minority interest............. (192) (192)
-------------- ------------- ------------- --------------- -------------
Income before provision for
income taxes................ 2,762 (2,848) 3,788 360 4,061
Provision (benefit) for income
taxes....................... 470 70 539
-------------- ------------- ------------- --------------- -------------
Net income (loss).... $ 2,292 $ (2,848) $ 3,718 $ 360 $ 3,522
============== ============== ============== ================ =============
STATEMENT OF CASH FLOWS
Net cash from (used in)
operating activities........ $ (8,172) $ (3,685) $ 1,719 $ 2,534 $ (7,604)
Net cash from (used in)
investing activities........ 998 (2,174) (647) 0 (1,823)
Net cash from (used in)
financing activities........ 8,899 4,267 (3,621) (2,534) 7,011
-------------- ------------- ------------- --------------- -------------
Net increase (decrease) in
cash........................ 1,725 (1,592) (2,549) 0 (2,416)
Cash -- beginning of period... 6,034 2,747 5,069 0 13,850
-------------- ------------- ------------- --------------- -------------
Cash -- end of period......... $ 7,759 $ 1,155 $ 2,520 $ 0 $ 11,434
============== ============== ============== ================ =============
</TABLE>
39
<PAGE> 5
CAPITAL PACIFIC HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
AS OF AND FOR THE TWELVE MONTHS ENDED FEBRUARY 28, 1995 (CONTINUED)
(IN THOUSANDS)
(UNAUDITED)
NOTES TO SUPPLEMENTAL GUARANTOR INFORMATION.
(1) Guarantors include Durable Homes, Inc., J.M.Peters Nevada, Inc., and Peters
Ranchland Company, Inc., all wholly-owned subsidiaries of Capital Pacific
Holdings, Inc.
(2) The non-guarantors include:
(a) The limited partnerships in which Peters Ranchland Company, Inc., is
general partner:
Ranchland Alicante Development, L.P.
Ranchland Montilla Development, L.P.
Ranchland Fairway Estates Development, L.P.
Ranchland Portola Development, L.P.
Grand Coto Estates, L.P.
(b) The limited partnership in which J.M. Peters Nevada, Inc. and Durable
Homes, Inc., are general partners:
Taos Estates, L.P.
(c) The wholly owned subsidiaries of Capital Pacific Holdings, Inc.:
Newport Design Center, Inc.
Capital Pacific Communities, Inc.
Capital Pacific Homes, Inc.
J.M. Peters, Arizona, Inc. (expected to become a guarantor in fiscal
year 1998)
J.M. Peters Homes of Arizona, Inc. (expected to become a guarantor in
fiscal year 1998)
Capital Pacific Mortgage, Inc. (expected to become a guarantor in
fiscal year 1998)
Clark Wilson Homes, Inc. (expected to become a guarantor in fiscal
year 1998)
Fairway Financial Corporation
Parkland Estates, Inc. (expected to become a guarantor in fiscal year
1998)
J.M. Peters California, Inc. (expected to become a guarantor in
fiscal year 1998)
(d) Fifty percent owned entities of Capital Pacific Holdings, Inc.:
Bay Hill Escrow, Inc.
J.M.P. Harbor View, L.P.
J.M.P. Canyon Estates, L.P.
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<PAGE> 6
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Newport
Beach, State of California, on May 29, 1997.
CAPITAL PACIFIC HOLDINGS, INC.
By /s/ HADI MAKARECHIAN
------------------------------------
Hadi Makarechian
Chairman of the Board
Date: May 29, 1997
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Hadi Makarechian and Marquis L. Cummings, and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for each person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments to
this report on Form 10-K, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully and to all intents and purposes as
such person might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue of the powers herein granted.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------------- -------------
<C> <S> <C>
/s/ HADI MAKARECHIAN Chairman of the Board May 29, 1997
- ---------------------------------------------
Hadi Makarechian
/s/ DALE DOWERS Director, President and Chief May 29, 1997
- --------------------------------------------- Executive Officer
Dale Dowers
/s/ MARQUIS L. CUMMINGS Vice President and Chief May 29, 1997
- --------------------------------------------- Financial Officer
Marquis L. Cummings
/s/ WILLIAM FUNK Director May 29, 1997
- ---------------------------------------------
William Funk
/s/ KARL KAISER Director May 29, 1997
- ---------------------------------------------
Karl Kaiser
/s/ ALLAN L. ACREE Director May 29, 1997
- ---------------------------------------------
Allan L. Acree
</TABLE>
47
