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FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] AMENDMENT NO. 1 TO THE QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _____________________ to _____________________
Commission file number 0-20832
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DEGEORGE FINANCIAL CORPORATION
(formerly MILES HOMES, INC.)
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(Exact name of registrant as specified in its charter)
Delaware 41-1625724
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
99 Realty Drive, Cheshire, Connecticut 06410
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(Address of principal executive offices) (Zip Code)
(203) 699 - 3400
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(Registrant's telephone number, including area code)
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
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Shares of Common Stock outstanding as of August 19, 1997: 10,810,193
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DEGEORGE FINANCIAL CORPORATION
INDEX TO FORM 10-Q/A
DESCRIPTION OF AMENDMENT PAGE
PART I, ITEM 2, MANAGEMENT'S DISCUSSION AND ANALYSIS OF 3
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Section entitled, "Pending Action Against Former Employees"
was omitted from the original filing.
In section entitled, "Quarterly Results", second and third
paragraphs, explanation has been amended.
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QUARTERLY RESULTS
For the three months ended June 30, 1997, the Company reported
total income of $11.5 million as compared to $11.3 million in the
similar period in 1996, an increase of $200,000. The increase in
total income, which represents gross margin from business
activities, was offset by a net increase of $400,000 in selling,
general and administrative expenses, including $1.6 million in
infomercial advertising, and an increase of $2.8 million in other
expenses and distribution center closing costs, of which $2.4
million are non-recurring in nature.
During the second quarter of 1997, DeGeorge recorded 292 loan
closings as compared to 479 loan closings in the similar period
in 1996. The decrease in loan closings is directly attributable
to reduced order activity in the first quarter that occurred as a
result of the departure of a large number of the Company's most
productive sales representatives during the period from July 1996
to March 1997. Many of these sales representatives were
recruited to join a competing company set up by former employees
of DeGeorge (see "Pending Action Against Former Employees"
below). As a reaction to the significant disruption of its field
sales activity, the Company was compelled to step up its
recruitment of field sales representatives. Accordingly, the
Company implemented revisions to the field sales compensation
structure and recruitment processes in the latter part of 1996.
Since initiating these changes, DeGeorge has steadily rebuilt its
field sales force.
At June 30, 1997, the number of field sales representatives
increased to 187 from 132 at December 31, 1996, of which 50%
produced orders in June 1997. Gross orders for the second
quarter of 1997 were within 177 orders of the total for the
second quarter of 1996 (781 orders in 1997 versus 958 orders in
1996). At June 30, 1997, the inventory of active orders was 504
as compared to 1,041 at June 30, 1996. However, leads generated
in the second quarter of 1997 were up 31.3% over the same period
in 1996, continuing the strong pace set in the first quarter of
1997 (up 33.4%). The Company believes that the productivity of
the new sales force will increase as they gain experience and
more fully develop their prospect lists.
PENDING ACTION AGAINST FORMER EMPLOYEES
On August 20, 1996, the Company initiated a lawsuit in federal
court in Minnesota against three former executives of the
Company: Paul Vogel, David Gaither and Ray Parker, alleging that
these individuals conspired to form a competing business
utilizing misappropriated proprietary information and trade
secrets of the Company. The Company further alleged that the
defendants intentionally disrupted the Company's ongoing business
operations by falsely creating a grim view of the Company's
financial situation among employees and sales representatives to
convince them to leave the Company and join the defendants' new
venture. The Company also alleged that these defendants, which
included the Company's former national sales manager and a former
regional sales manager, while still employed by the Company,
encouraged members of the Company's independent sales force to
curtail or redirect sales activity. This action is still in the
discovery phase.
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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.
DEGEORGE FINANCIAL CORPORATION
(Registrant)
Dated: October 28, 1997
By: /s/ SALVATORE A. BUCCI
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Salvatore A. Bucci
Senior Vice President and
Chief Financial Officer
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