UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
AMENDMENT NO. 2
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 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 0-17338
HOMEOWNERS GROUP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 65-0033743
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State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
400 SAWGRASS CORPORATE PARKWAY, SUNRISE, FLORIDA 33325
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (954) 845-9100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of Each Class on which registered
NONE NOT APPLICABLE
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Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(Title of Class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Based upon the closing market price of the registrant's common stock as of March
27, 1996 of $1.38, the aggregate market value of the voting stock held by
non-affiliates of the registrant is $6,326,818.
Number of shares of common stock outstanding as of March 27, 1996, is 5,558,350.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders are incorporated by reference as Part III of this Annual Report.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA IS AMENDED AS FOLLOWS:
The Company's consolidated balance sheets are amended to reflect accounts
payable as a separate caption, and to present the litigation settlement as a
separate caption, as follows:
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CONSOLIDATED BALANCE SHEETS
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DECEMBER 31, 1995 1994
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ASSETS:
Current assets:
Cash and cash equivalents $ 997,336 $ 5,875,844
Trading securities 9,250,349 8,244,409
Current portion of securities available for sale 1,811,624 17,506
Miscellaneous receivables 1,278,044 1,153,188
Deferred home warranty acquisition costs 5,666,899 5,677,322
Refundable income taxes 1,277,449 1,816,149
Deferred income taxes 6,769,294 4,880,781
Prepaid expenses and other current assets 1,080,458 1,281,693
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Total current assets $28,131,453 28,946,892
Restricted cash 3,160,000 1,407,851
Non-current portion of securities available for sale 1,834,981 4,078,966
Property and equipment - net 3,581,893 2,009,165
Other assets 432,327 1,177,026
Deferred income taxes - net of current portion 1,373,608 1,579,345
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TOTAL $38,514,262 $39,199,245
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 1,220,140 $ 1,763,718
Accrued expenses 5,208,761 8,533,095
Litigation settlement 5,156,022 -
Current maturities of long term debt 1,537,257 1,065,487
Deferred home warranty revenue 16,239,431 16,118,752
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Total current liabilities 29,361,611 27,481,052
Long term debt - net of current portion 2,591,929 3,316,845
Commitments and contingencies - See Note 10
Stockholders' equity:
Preferred stock - $0.01 par value; 5,000,000
shares authorized; none issued and outstanding - -
Common stock - $0.01 par value; 45,000,000 shares
authorized; 5,558,350 shares issued and outstanding
at December 31, 1995 and 1994 55,584 55,584
Additional paid-in capital 7,458,288 7,458,288
Retained earnings (accumulated deficit) (1,006,367) 902,289
Unrealized holding gain (loss) on securities available 53,217 (14,813)
for sale (net of taxes of $34,745 in 1995)
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Total stockholders' equity 6,560,722 8,401,348
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TOTAL $38,514,262 $39,199,245
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SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
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FOOTNOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, REVENUE AND EXPENSE
RECOGNITION, IS AMENDED TO READ AS FOLLOWS:
Revenue And Expense Recognition -- Home warranty contract revenue is recognized
over the life of the contract (generally one year) in proportion to historical
experience of repair costs. Direct costs incurred in acquiring the contracts are
recognized in the same manner. In the third quarter of 1993, the Company refined
its definition of direct acquisition costs to include certain additional
expenses, such as incentive bonuses paid to the Company's Members and
Affiliates, costs of personnel directly involved in acquiring the contracts, and
premium taxes. Such costs have been reclassified from amounts previously
reported according to this refinement. Repair costs under home warranty
contracts are expensed as mechanical breakdowns are reported to and repairs are
authorized by the Company. Initial and renewal membership fees are recognized
upon collection and enrollment of a new member or upon processing the renewal
application of a renewed member. E&O premium commissions are recognized upon
collection of the related premiums. All other revenues and expenses are
recognized upon delivery or receipt of the related products or services.
FOOTNOTE 7. INCOME TAXES, IS AMENDED AS FOLLOWS:
Paragraph five, relating to realization of the Company's deferred tax asset is
amended to read as follows:
Realization of the deferred tax asset is dependent on generating sufficient
taxable income during the carryforward periods. Although realization is not
assured, management believes it is more likely than not that all of the deferred
tax asset will be realized. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term, if estimates of future
taxable income during the carryforward period are reduced. In reaching this
determination, management reviewed the Company's historical performance, and
projections of future results, should the Company's performance continue at the
current level, exclusive of non-recurring events and transactions. These
projections provided positive evidence of future probable realization of the
full tax asset within the prescribed carryforward time frame. The projected
realization also considered the negative impact of charges which could result
from adverse resolution of certain outstanding contingencies; most notably the
Company's guarantee to CNA of a $5 million reinsurance recoverable, related to
the transfer of the POMG net assets. Negative evidence reviewed consisted of
several non-recurring charges incurred by the Company over the past three years.
As each of these charges was deemed to be unusual in nature, each of them
different from the other, and there was no expectation of future recurrences of
such items, the positive evidence was determined to outweigh the negative
evidence.
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SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
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HOMEOWNERS GROUP, INC.
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Date: November 27, 1996 /S/ CARL BUCCELLATO
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Carl Buccellato, Chairman of the Board
President and Chief Executive Officer
Date: November 27, 1996 /S/ C. GREGORY MORRIS
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C. Gregory Morris, Vice-President,
Treasurer and Chief Financial Officer
Date: November 27, 1996 /S/ KAREN CHILDRESS
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Karen Childress, Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934 this Annual
Report has also been signed by the following persons on behalf of the Registrant
in the capacities indicated:
MEMBERS OF THE BOARD OF DIRECTORS
Date: November 27, 1996 /S/ CARL BUCCELLATO
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Carl Buccellato, President, Chairman and
Chief Executive Officer
Date: November 27, 1996 /S/ DIANE M. GRUBER
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Diane M. Gruber, Director
Date: November 27, 1996 /S/ GARY D. LIPSON
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Gary D. Lipson, Director
Date: November 27, 1996 /S/ MICHAEL A. NOCERO, JR. MD.
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Michael A. Nocero, Jr. M.D., Director
Date: November 27, 1996 /S/ MELVIN STEWART
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Melvin Stewart, Director
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