<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-K
Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act
of 1934
For the Year Ended December 31, 1997
Commission File Number 0-7205
HOLIDAY-GULF HOMES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0916277
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4804 Mile Stretch Drive, Holiday, Florida 34690
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (813) 937-3293
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
The number of shares outstanding of each of the issuer's classes of common
stock as of December 31, 1997.
Common Stock, $.01 Par Value - 1,903,853 shares
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 31, 1997.
Common Stock, $.01 Par Value - $ 242,963
<PAGE>
PART I
ITEM 1. BUSINESS
(a) General Business
The majority of revenues for the 1997, 1996, and 1995 years were derived
from the water and garbage operations of two subsidiaries. Presently the
management of Holiday-Gulf Homes, Inc. believes these subsidiaries will
continue to provide a majority of the revenue.
(b) Narrative Description of Business
The Company has two utility company subsidiaries and a land development
subsidiary. The utility subsidiaries represent the operating source of
revenue. These companies bill customers on a monthly basis for water and
garbage charges. The utility companies are operated by an outside contractor.
The rates charged by the utility companies are set by the Florida Public
Service Commission.
Patents, etc.
There are no patents, licenses, franchises or concessions held by the
Company which it deems important and material for an understanding of its
business.
Research and Development
No money was spent by the Company during the years ended December 31,
1997, 1996, and 1995 on research activities.
Federal, State, and Local Regulations
The utility subsidiaries are subject to the Florida Public Service
Commission regulations. There are no material estimated capital expenditures
for the current or succeeding years. All reports required by the Florida
Public Service Commission have been filed.
Personnel
The Company as of December 31, 1997, employed one person full time. The
Company's employee is not represented by a union.
Seasonal Factors
The Company's operations as a whole are not significantly affected by
seasonal factors.
<PAGE>
ITEM 1. BUSINESS (CONTINUED)
Competitive Conditions
The utility subsidiaries are regulated by a public authority, therefore
there are no competitive conditions.
ITEM 2. PROPERTIES
The Company's activities are presently conducted primarily in Pasco
County, Florida. All of the Company's facilities are well maintained and
believed to be in good condition.
The following is a description of the location and general character of
property owned by the Company and its subsidiaries.
(a) The land development subsidiary owns a warehouse and office complex
located in New Port Richey, Florida for which they receive rent on
a monthly basis. The annual rents and late fees totaled $38,303
for 1997, $36,213 for 1996, and $34,990 for 1995.
(b) The Company owns five well lots where Crestridge Utility Corporation
is located. These lots house the pumping station and wells.
(c) The Company owns two well lots where Holiday Gardens Utilities, Inc.
is located. These lots house the pumping station and wells.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Annual meeting of stockholders was held June 28, 1997 for the
December 31, 1996 year.
(b) Elected directors and executive officers for the upcoming 1998 year
were:
Linda Emerick - Director and President
Thomas L. Burkett - Director and Vice President
Ronnie L. Mohr - Director and Secretary
Eileen M. Falla - Treasurer
(c) Other matters voted upon and the number of affirmative votes and
negative votes cast with respect to each such matter.
None.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Holiday-Gulf Homes, Inc.'s Common stock is traded on the over the counter
market. Generally, excluding limited or sporadic quotations, there is no
market for such stock. The number of record holders of Holiday-Gulf Homes,
Inc. Common Stock at December 31, 1997 was 469.
The Company distributed dividends of $95,193 in January 1997, $95,193 in
April, 1995, $95,192 in April, 1993, $95,192 in October, 1990, $95,192 in
December, 1989 and $95,192 in March, 1988. For the ten years prior to the 1988
dividend the Company had not made any distributions.
ITEM 6. SELECTED FINANCIAL DATA
YEARS ENDED DECEMBER 31,
RESTATED RESTATED
1997 1996 1995
Utility Revenues $ 280,803 $ 277,670 $ 270,772
Net Income Before Provision For
Income Taxes $ 57,137 $ 58,110 $ 54,661
Net Income Per Common Share
Before Provision For Income Taxes $ .030 $ .031 $ .029
Net Income $ 45,237 $ 46,092 $ 43,239
Net Income Per Common Share $ .024 $ .024 $ .023
Total Assets $ 262,781 $ 312,488 $ 262,817
Long-Term Debt $ -0- $ -0- $ -0-
Cash Dividends Declared Per Share $ .05 $ -0- $ .05
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(a) Liquidity and Capital Resources
The Company maintains 58% of its assets in cash and other current assets.
At present there are no plans for expansion and no material repairs are
anticipated for the utility companies. the Company has been maintaining the
water lines and meters on a regular basis.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
(b) Results of Operations
The majority of the revenues are generated by the utility companies. The
companies completed a rate increase audit with the Public Service Commission
in 1992. The new rates became effective in 1993.
The rates increased again in 1997, 1996 and 1995 due to indexing.
Utility operating revenues increased 1.13% in 1997 to $280,803, up $3,133
over 1996 and increased 3.70% in 1997, up $10,031 over 1995. The increase in
revenues is due primarily to rate increases in water revenues.
The gross profit percentages for the years 1997, 1996 and 1995 of 51.16%,
50.55% and 50.16%, respectively, were maintained due to the stability in the
number of customers.
General and administrative expenses have increased as a percentage of
utility revenues in 1997 compared to 1996 and 1995 as a result of increased
expenditures for insurance, stock agent fees, wages and related taxes and
office supplies. General and administrative expenses as a percentage of
utility revenues were approximately 30.52% in 1997 as compared to 29.20% and
28.83% for 1996 and 1995.
Income from other operations increased 3.00% in 1997 to $41,682, up
$1,215 over 1996 and increased 9.68% in 1997, up $3,678 over 1995. The
increase in revenues is due primarily to increases in rental income.
General and administrative expenses from other operations have decreased
as a percentage of income from other operations in 1997 compared to 1996, and
1995 as a result of management controlling operating costs. General and
administrative expenses from other operations as a percentage of income from
other operations were approximately 75.12 % in 1997 as compared to 75.51% and
80.11% for 1996 and 1995.
Net income decreased 1.85% in 1997 to $45,237, down $ 855 from 1996 and
increased 4.62% in 1997, up $1,998 from 1995.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of Holiday-Gulf Homes, Inc., included
in the annual report to shareholders are incorporated herein by reference:
Consolidated Balance Sheets - December 31, 1997 and 1996
Consolidated Statements of Operations - Years ended December 31,
1997, 1996, and 1995
Consolidated Statements of Shareholders' Equity - Years ended
December 31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows - Years ended December 31,
1997, 1996, and 1995
Notes to Consolidated Financial Statements - December 31, 1997
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
NAME AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
Linda Emerick 52 Director and President of Holiday-Gulf
Homes, Inc. since June 23, 1987. Mrs.
Emerick was the Secretary - Treasurer of
Hillrow, Inc. July, 1966 through June,
1989. She is currently operating a
bookkeeping and management service.
Thomas L. Burkett 60 Director and Vice President of Holiday-
Gulf Homes, Inc. since June 23, 1987. Mr.
Burkett is the District Sales Manager of
the Gehl Company which Manufactures
Agricultural Equipment. Mr. Burkett has
been their employee for the past 31 years.
Ronnie L. Mohr 49 Director and Secretary of Holiday-Gulf
Homes, Inc. since December 29, 1992. Mr.
Mohr has been engaged in farming for 33
years. He has been a Director and Board
Chairman of R & S Mohr Family Farms, Inc.
since 1981. He is on the Board of
Directors of Ag - One Coop, Inc., Central
Indiana Power, and Country Mark Coop.
Eileen M. Falla 51 Treasurer of Holiday-Gulf Homes, Inc.
since June 23, 1987. Mrs. Falla has been
employed by Holiday-Gulf Homes,Inc. since
October, 1983.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
No executive officer of the Company received cash compensation in excess
of $20,000.
The Company has no annuity, pension or retirement plans. There are no
life, health, hospitalization or medical reimbursement plans other than group
plans which are available generally to all salaried employees.
There are no remuneration payments proposed to the officers or directors
to be made in the future directly or indirectly by the Company or any of its
subsidiaries pursuant to any existing plan or agreement.
Each director is reimbursed for travel and other expenses related to
attendance at directors' meetings. The directors receive a fee ranging from
$3,600 to $20,000 per year.
There were no stock appreciation rights or options to purchase securities
from the Company granted to, exercised by, or realized by an officer or
director of the Company during the fiscal years ended December 31, 1997, 1996
and 1995.
There were no loans from directors as of December 31, 1997 and 1996.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of December 31, 1997, with
respect to the ownership of Common Stock by all shareholders known by the
Company to be the beneficial owners of more than 5% of its outstanding Common
Stock, all directors, and all directors and officers of the Company as a
group. The percentages stated are based upon 1,903,853 issued shares of
Common Stock.
AMOUNT OF BENEFICIAL PERCENTAGE
OWNERSHIP OF TOTAL
NAME AND ADDRESS (NUMBER OF SHARES) SHARES
Anita Jane Duckworth 260,000 13.66%
3242 W Old Franklin Rd
Shelbyville, Indiana
Fred W. Garver 154,000 8.09%
3831 N London Rd
Fairland, Indiana
Linda & Wray Emerick 40,450 2.12%
8318 W 600 South
Edinburgh, Indiana
(Linda - Director & Officer)
Donald R. Pence 220,500 11.58%
6598 W 1150 S
Edinburgh, Indiana
E.J. Terpstra 110,000 5.78%
4681 N State Rd 9
Shelbyville, Indiana
Ronnie & Sarah Mohr 202,000 10.61%
5200 E 600 N
Greenfield, Indiana
(Ronnie - Director & Officer)
Thomas L. Burkett 50,000 2.63%
1609 N Fort Wayne Rd
Rushville, Indiana
(Director & Officer)
All Directors and Officers as a group (3) 292,450 15.36%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits and financial statement schedules
1. Financial Statements
Among responses to this ITEM 14 are the following financial statements
which are incorporated herein by reference in ITEM 8 above:
( i) Consolidated Balance Sheets - December 31, 1997 and 1996.
( ii) Consolidated Statements of Operations - Years ended
December 31, 1997, 1996, and 1995.
(iii) Consolidated Statements of Shareholders' Equity - Years
ended December 31, 1997, 1996, and 1995.
( iv) Consolidated Statements of Cash Flows - Years ended
December 31, 1997, 1996, and 1995.
( v) Notes to Consolidated Financial Statements - December 31,
1997.
2. Supplementary Data and Financial Statement Schedules
( i) None.
3. Exhibits required by Item 601 of Regulation S-K.
( 22) Subsidiaries of the Company.
PERCENTAGE OF SECURITIES
JURISDICTION OF DIRECTLY OR INDIRECTLY
NAME INCORPORATION OWNED BY THE COMPANY
Holiday-Gulf Builders, Inc. Florida 100%
Crestridge Utility Corporation Florida 100%
Holiday Gardens Utilities, Inc. Florida 100%
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.
<PAGE>
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.
HOLIDAY-GULF HOMES, INC.
(Registrant)
By: (Signature and Title)
Date: April 14, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
(Signature and Title)
Linda Emerick, President and Director
Date:
(Signature and Title)
Thomas L. Burkett, Vice President and Director
Date:
(Signature and Title)
Ronnie L. Mohr, Secretary and Director
Date:
(Signature and Title)
Eileen M. Falla, Treasurer
Date:
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
Holiday-Gulf Homes, Inc. and Subsidiaries
Holiday, Florida
We have audited the accompanying consolidated balance sheets of HOLIDAY-
GULF HOMES, INC. (a Minnesota corporation) AND SUBSIDIARIES as of December 31,
1997 and 1996, and the related consolidated statements of operations,
shareholders' equity, and cash flows for the years ended December 31, 1997,
1996 and 1995. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated 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 consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated 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 Holiday-Gulf Homes, Inc. and Subsidiaries, as of December 31, 1997 and
1996, and the consolidated results of their operations and their cash flows
for the years ended December 31, 1997, 1996 and 1995 in conformity with
generally accepted accounting principles.
As described in Note 8 to the financial statements, the Company changed
the method of accounting for income taxes.
ARNOLD AND CO., P.A.
January 9, 1998
</AUDIT-REPORT>
<TABLE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<CAPTION>
ASSETS
RESTATED
1997 1996
<S> <C> <C>
WATER, PLANT AND EQUIPMENT
Water Plant & Equipment, at Original Costs $ 302,023 $ 292,991
Less: Accumulated Depreciation (234,404) (226,837)
Less: CIAC, Net of Amortization of $207 in
1997 and $124 in 1996 (1,118) (1,201)
------------ ------------
Net Water Plant & Equipment $ 66,501 $ 64,953
------------ ------------
OTHER PROPERTY AND INVESTMENTS
Non-Utility Property less Accumulated
Depreciation of $49,700 in 1997 and
$45,999 in 1996 $ 24,164 $ 26,884
------------ ------------
Net Other Property & Investments $ 24,164 $ 26,884
------------ ------------
CURRENT ASSETS
Cash and Certificates of Deposits $ 129,478 $ 168,031
Accounts Receivable 4,778 5,932
Prepaids 4,089 3,038
Other Receivables 4,549 3,715
Deferred Tax Benefit 10,000 10,000
------------ ------------
Total Current Assets $ 152,894 $ 190,716
------------ ------------
OTHER ASSETS
Prepaids $ 1,187 -0-
Deposits 2,035 2,035
Deferred Tax Benefit 16,000 27,900
------------ ------------
Total Other Assets $ 19,222 $ 29,935
------------ ------------
TOTAL ASSETS $ 262,781 $ 312,488
============ ============
<FN>
See accompanying notes and independent auditors' report
</FN>
</TABLE>
<TABLE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<CAPTION>
SHAREHOLDERS' EQUITY AND LIABILITIES
RESTATED
1997 1996
<S> <C> <C>
SHAREHOLDERS' EQUITY
Capital Stock, 5,000,000 shares authorized
and 1,903,853 shares issued and
outstanding in 1997 and 1996 $ 19,039 $ 19,039
Paid-In-Capital 164,396 214,352
Retained Earnings (of which $10,102 as of
December 31, 1997 and 1996 was appropriated
for unclaimed 1995, 1993, 1990, 1989 and 1988
dividends.) 59,528 59,528
------------ ------------
Total Shareholders' Equity $ 242,963 $ 292,919
------------ ------------
CURRENT LIABILITIES
Accounts Payable $ 18,232 $ 16,770
Accrued Liabilities - 1,250
Deferred Income 1,586 1,549
------------ ------------
Total Current Liabilities $ 19,818 $ 19,569
------------ ------------
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES $ 262,781 $ 312,488
============ ============
<FN>
See accompanying notes and independent auditors' report.
</FN>
</TABLE>
<TABLE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
CAPTION
RESTATED RESTATED
1997 1996 1995
<S> <C> <C> <C>
OPERATING REVENUES
Water $ 136,401 $ 133,874 $ 126,801
Garbage 107,503 107,345 107,164
Streetlights 34,799 34,816 34,797
Transfer & Reconnect Fees 2,100 1,635 2,010
----------- ---------- ----------
Total Operating Revenues $ 280,803 $ 277,670 $ 270,772
----------- ---------- ----------
COST OF SALES
Garbage $ 83,680 $ 83,680 $ 82,092
Electric 5,898 5,876 5,275
Streetlights 14,429 14,409 14,345
Other Costs 33,143 33,349 33,235
----------- ---------- ----------
Total Cost of Sales $ 137,150 $ 137,314 $ 134,947
----------- ---------- ----------
Gross Profit $ 143,653 $ 140,356 $ 135,825
OPERATING EXPENSES
Depreciation & Amortization $ 8,119 $ 7,842 $ 7,616
General & Administration 85,700 81,077 78,052
----------- ---------- ----------
Total Operating Expenses $ 93,819 $ 88,919 $ 85,668
----------- ---------- ----------
Operating Income $ 49,834 $ 51,437 $ 50,157
OTHER INCOME
Rental and Late Fees $ 38,303 $ 36,213 $ 34,990
Interest 3,379 4,254 3,014
----------- ---------- ----------
Total Other Income $ 41,682 $ 40,467 $ 38,004
----------- ---------- ----------
<FN>
See accompanying notes and independent auditors' report.
</FN>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
RESTATED RESTATED
1997 1996 1995
OTHER OPERATING EXPENSES
General and Administrative $ 31,313 $ 30,555 $ 30,445
Depreciation 3,066 3,239 3,055
----------- ---------- ----------
Total Other Operating Expenses $ 34,379 $ 33,794 $ 33,500
----------- ---------- ----------
Other Net Income, on Non-Utility $ 7,303 $ 6,673 $ 4,504
----------- ---------- ----------
Net Income Before Provision
For Income Taxes $ 57,137 $ 58,110 $ 54,661
PROVISION FOR INCOME TAXES $ 11,900 $ 12,018 $ 11,422
----------- ---------- ----------
NET INCOME $ 45,237 $ 46,092 $ 43,239
=========== ========== ==========
EARNINGS PER SHARE $ .024 $ .024 $ .023
=========== ========== ==========
<FN>
See accompanying notes and independent auditors' report.
</FN>
</TABLE>
<TABLE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
APPROPRIATED UNAPPROPRIATED TOTAL
COMMON STOCK PAID IN RETAINED RETAINED SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EARNINGS EQUITY
<S> <C> <C> <C> <C> <C> <C>
December 31, 1994 1,903,853 $ 19,039 $ 266,306 $ 8,007 $ (58,006) $ 235,346
--------- -------- --------- -------- --------- ---------
Prior Period
Adjustment (Note 8) - - - - 61,340 61,340
Payment of 1995
Dividends (.05 Per
Share) - - (51,954) - (43,239) (95,193)
Payment of Unclaimed
Prior Dividends - - - (125) - (125)
Net Income (Restated) - - - - 43,239 43,239
--------- -------- --------- -------- --------- ---------
Restated
December 31, 1995 1,903,853 $ 19,039 $ 214,352 $ 7,882 $ 3,334 $ 244,607
--------- -------- --------- -------- --------- ---------
Return of Unclaimed
1995 Dividends - - - 2,220 - 2,220
Net Income (Restated) - - - - 46,092 46,092
--------- -------- --------- -------- --------- ---------
Restated
December 31, 1996 1,903,853 $ 19,039 $ 214,352 $ 10,102 $ 49,426 $ 292,919
--------- -------- --------- -------- --------- ---------
Payment of 1997
Dividends (.05 Per
Share) - - (49,956) - (45,237) (95,193)
Net Income - - - - 45,237 45,237
--------- -------- --------- -------- --------- ---------
December 31, 1997 1,903,853 $ 19,039 $ 164,396 $ 10,102 $ 49,426 $ 242,963
========= ======== ========= ======== ========= =========
<FN>
See accompanying notes and independent auditors' report.
</FN>
</TABLE>
<TABLE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<CAPTION>
RESTATED RESTATED
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities
Net Income $ 45,237 $ 46,092 $ 43,239
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and Amortization 11,185 11,080 10,673
Change in assets and liabilities
(Increase) decrease in
Receivables 320 (6,349) 2,221
Other Assets -0- -0- 1,015
Prepaid Assets (2,238) (237) 554
Deferred Tax Benefit (Note 8) 11,900 12,018 11,422
Increase (decrease) in
Accounts Payable 1,462 776 (2,860)
Accrued Expenses & Deferred Income (1,213) 583 261
---------- ---------- ----------
Net cash provided by operating activities $ 66,653 $ 63,963 $ 66,525
---------- ---------- ----------
Cash flows from investing activities
Improvements to Utility Company Equipment $ (9,032) $ (2,249) $ (7,820)
Office Complex Improvements (981) (6,572) (3,080)
CIAC -0- -0- 1,325
---------- ---------- ----------
Net cash used in investing activities $ (10,013) $ (8,821) $ (9,575)
---------- ---------- ----------
Cash flows from financing activities
Payment of Dividends $ (95,193) $ -0- $ (95,318)
Return of Unpaid Dividends -0- 2,220 -0-
---------- ---------- ----------
Net cash provided by (used in) financing
activities $ (95,193) $ 2,220 $ (95,318)
---------- ---------- ----------
Net increase (decrease) in cash $ (38,553) $ 57,362 $ (38,368)
Cash at beginning of year $ 168,031 $ 110,669 $ 149,037
---------- ---------- ----------
Cash at end of year $ 129,478 $ 168,031 $ 110,669
========== ========== ==========
Supplementary Disclosures of Cash Flow Information
Interest Paid $ -0- $ -0- $ -0-
Income Tax Paid $ -0- $ -0- $ -0-
<FN>
See accompanying notes and independent auditors' report.
</FN>
</TABLE>
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization--
The Company consists of two utility companies and a land development
company. These companies are located in Pasco County, Florida. The utility
companies generate revenues by selling water, garbage and streetlight
services. These companies bill customers on a monthly basis for these
services. The utility companies contract with outside parties to provide the
garbage services. The rates charged by the utility companies are set by the
Florida Public Service Commission.
The land development company owns an office building/warehouse rental
operation. There are no plans in the future to develope anything.
Principles of Consolidation--
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
Recognition of Income from Utility Operations--
The majority of the Company's revenues are generated by two Utility
Companies. These Companies recognize revenues on a monthly basis. The use is
based on actual meter readings by an outside independent contractor. The
independent contractor also provides services for other utility companies in
the area. The independent contractors fees are based on a set amount per
customer plus any additional repairs. Since the meter reading is not done on
the last day of the month, there is some unbilled revenue not recorded.
Depreciation--
Depreciation included in the accompanying financial statements has been
provided by the straight-line method at rates calculated to amortize the cost
of the assets over their estimated useful lives as follows:
YEARS
Utility Plant and Equipment 5 - 40
Building and Improvements 5 - 30
Maintenance and repairs of property and equipment are charged to expense
as incurred, whereas renewals and betterments are capitalized. When
properties are replaced, retired, or otherwise disposed of, the cost and
related accumulated depreciation are removed from the accounts. Any gain or
loss, is credited or charged to operations in the year of disposal.
<PAGE>
HOLIDAY-GULF HOMES, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Amortization--
The Contribution in Aide of Construction (CIAC) costs are being amortized
over a period of sixteen years using the straight-line method.
CIAC represents $1,325 received in 1995 from a utility customer to help
pay for the cost of the new asset.
Cash and Cash Equivalents--
For the purpose of the statement of cash flows, cash includes cash on
hand, cash in checking and money market accounts, and Certificates of Deposit.
The company considers all certificates of deposit with a maturity of one year
or less as a current cash or cash equivalent.
Accounts Receivable--
The accounts receivable represent amounts due from customers for monthly
streetlight, garbage and water service. Based on managements review of
accounts receivable, no allowance for doubtful accounts is considered
necessary.
Concentration of Credit Risk--
Management does not believe a credit risk for accounts receivable exists
because the amounts are due from a large number of customers for very small
amounts, and past performance has shown the accounts receivable will be
collected.
Deferred Income--
Deferred Income represents monies prepaid by customers which have not
been earned.
Allocation of Dividends--
To the extent dividends were paid in excess of current years earnings and
profits, they have been allocated against paid in capital.
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Income Taxes--
The Company and its subsidiaries file consolidated Federal and State
Income Tax Returns.
Deferred income taxes are provided on temporary differences between book
and tax income, arising primarily from the use of different methods of
depreciation, valuing inventory and providing an allowance for doubtful
accounts and notes receivable for financial statement purposes. Deferred
income tax benefits are recognized for operating losses, if available, to
offset future federal income taxes. An allowance is provided if it is more
likely than not that the Company will not realize the benefits of a deferred
tax asset.
Earnings Per Share--
Earnings per share of Common Stock is computed based upon weighted
average number of shares outstanding for the year (1,903,853 shares in 1997,
1996 and 1995).
Reclassifications--
Certain amounts in the 1996 and 1995 financial statements have been
reclassified to conform with the 1997 presentation. Such reclassifications had
no effect on reported net income.
(2) - LONG-TERM DEBT:
There was no debt at the end of 1997 or 1996.
(3) - STOCK OPTION PLAN:
The Company has adopted a qualified stock option plan whereby options may
be granted to key employees to purchase a maximum 50,000 shares of the
Company's common stock at not less than 10% of the fair market value of the
shares at date of grant. The options are exercisable in installments of not
more than 20% of the shares covered thereby during any one-year period,
subject to the right of cumulation. The options expire five years from the
date of grant. No options have been granted under this plan.
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) - PROPERTY AND EQUIPMENT:
The property and equipment accounts consisted of the following at
December 31, 1997 and December 31, 1996:
RESTATED
1997 1996
Land, Buildings, Office
Equipment and Furniture $ 73,864 $ 72,883
Water, Plant and Equipment 302,023 292,991
CIAC, Net of Amortization (1,118) (1,201)
------------ ------------
Total Property and Equipment $ 374,769 $ 364,673
Less: Accumulated Depreciation (284,104) (272,836)
------------ ------------
Net Property and Equipment $ 90,665 $ 91,837
============ ============
(5) - RELATED PARTY TRANSACTIONS:
There were no related party transactions during the 1997 and 1996 years.
(6) - LEASES AND LEASE COMMITMENTS:
The Company is leasing office space in Knollwood Plaza under a three-year
lease expiring in October, 1999. The lease is $450 per month. The rent paid
in 1997, 1996 and in 1995 was $5,400, respectively.
The following is a schedule of future minimum lease payments:
December 31, 1998 $ 5,400
December 31, 1999 4,500
--------
Total $ 9,900
========
The Company owns an office/warehouse rental facility consisting of three
tenants. Two have month to month leases. The other lease is a five year lease
which was renewed in June, 1995.
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) - LEASES AND LEASE COMMITMENTS: (CONTINUED)
The minimum payments under this lease are as follows as of December 31,
1997:
1998 $ 34,051
1999 35,420
2000 18,060
2001 -0-
2002 and thereafter -0-
--------
Total Due $ 87,531
========
The rental real estate held for lease is located in New Port Richey,
Florida. The company's investment in this rental property is as follows at
December 31, 1997:
Warehouse and Office Building $ 29,323
Improvements 41,014
--------
$ 70,337
Less: Accumulated Depreciation (48,536)
--------
$ 21,801
========
(7) - INCOME TAXES:
Deferred income taxes (benefits) are provided for certain income and
expenses which are recognized in different periods for tax and financial
reporting purposes. Sources of temporary differences and the resulting tax
assets and liabilities are as follows:
1997 1996 1995
Net Operating Loss Carryforwards $ 243,831 $ 302,151 $ 361,103
--------- --------- ---------
Applicable Tax Rate
(15% Federal, 5.5% State) $ 49,700 $ 61,600 $ 73,618
Valuation Allowance (23,700) (23,700) (23,700)
--------- --------- ---------
Amount Per Balance Sheet $ 26,000 $ 37,900 $ 49,918
========= ========= =========
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(7) - INCOME TAXES: (CONTINUED)
The provision (benefit) for income taxes consist of the following:
RESTATED RESTATED
1997 1996 1995
Current -0- -0- -0-
Deferred $ 11,900 $ 12,018 $ 11,422
Income Tax Expense Consisted of the following:
RESTATED RESTATED
1997 1996 1995
Provision for income taxes:
Federal Income Tax $ 9,000 $ 9,040 $ 8,557
State Income Tax 2,900 2,978 2,865
-------- -------- --------
$ 11,900 $ 12,018 $ 11,422
======== ======== ========
The reconciliation of income computed at the U.S. federal statutory tax
rates (34%) to income tax expense is:
RESTATED RESTATED
1997 1996 1995
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
Tax at U.S.
Statutory rates $ 19,427 34.00 $ 19,757 34.00 $ 18,585 34.00
Surtax exemption (10,829) (18.95) (10,055) (17.30) (9,881) (18.07)
State income tax-
net of federal
tax benefits 2,900 5.08 1,966 3.38 1,891 3.46
Permanent
differencies
and other 402 .70 350 .60 827 1.51
-------- ----- -------- ----- -------- -----
$ 11,900 20.83 $ 12,018 20.68 $ 11,422 20.90
======== ===== ======== ===== ======== =====
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(7) - INCOME TAXES: (CONTINUED)
Operating Loss Carryforwards--
The Company has loss carryforwards totaling $243,831 that may be offset
against future taxable income. If not used, the carryforward will expire as
follows:
Year Year
Originated Expired
1983 1998 $ 44,522
1984 1999 171,592
1991 2006 27,717
---------
$ 243,831
=========
(8) - PRIOR PERIODS ADJUSTMENT FOR CHANGE IN ACCOUNTING FOR INCOME TAXES:
1996 1995
Net Income as Previously
Reported $ 58,110 $ 54,661
Adjustment for Deferred Tax
Benefit (12,018) (11,422)
-------- --------
Net Income as Adjusted $ 46,092 $ 43,239
======== ========
Earnings Per Share Amounts:
As Previously Reported .031 .029
Effect of Retroactive Change (.007) (.006)
-------- --------
As Adjusted .024 .023
======== ========
<PAGE>
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(8) - PRIOR PERIODS ADJUSTMENT FOR CHANGE IN ACCOUNTING FOR INCOME
TAXES: (CONTINUED)
Total Shareholders' Equity at
December 31, 1994 $ 235,346
Net Income as Previously
Reported 54,661
Payment of 1995 Dividends (95,193)
Payment of Unclaimed Dividends (125)
---------
Shareholders' Equity as
Previously Stated $ 194,689
Adjustment For Recognition of
Deferred Tax Benefit 61,340
Adjustment to Net Income 1995 (11,422)
---------
Shareholders' Equity as Restated,
December 31, 1995 $ 244,607
=========
(9) - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying value of cash and cash equivalents approximate fair values.
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 66,501
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<LONG-TERM-DEBT-NET> 0
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