SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Quarterly Period Ended: December 31, 1997
Commission File Number: 0-21900
SUNDANCE HOMES, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-3111764
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
1375 East Woodfield Road, Suite 600, Schaumburg, Illinois 60173
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 255-5555
Indicate by check mark whether the registrant 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).
Yes X No
Indicate by check mark whether the registrant has been subject to
such filing requirements for the past 90 days.
Yes X No
At February 17, 1998, there were 7,807,000 shares outstanding of
the registrant's Common Stock ($0.01 par value).
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
This amendment is being filed solely to correct the Consolidated Statements
of Cash Flows, changing Other accrued expenses from 32 to 311 for the three
months ended December 31, 1997.
<TABLE>
SUNDANCE HOMES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<CAPTION>
December 31, September 30,
1997 1997
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 3,768 $ 4,615
Real estate inventories 92,143 80,787
Prepaid expenses and other assets 2,311 1,566
Property and equipment, net 3,305 3,289
Deferred project start-up costs 3,462 3,726
Income tax receivable 160 565
Total assets $ 105,149 $ 94,548
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued construction liabilities $ 19,555 $ 23,711
Other accrued expenses 2,291 1,976
Customer deposits 2,094 2,116
Notes and mortgages payable 48,056 33,087
Deferred income taxes payable 1,394 1,604
Subordinated notes payable to Principal Shareholder 4,193 4,193
Total liabilities 77,583 66,687
Minority interest (186) (182)
Shareholders' equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized,
none issued or outstanding - -
Common stock, $0.01 par value, 20,000,000 shares authorized,
7,807,000 shares issued and outstanding 78 78
Additional paid-in capital 26,977 26,977
Retained earnings 697 988
Total shareholders' equity 27,752 28,043
Total liabilities and shareholders' equity $ 105,149 $ 94,548
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
<CAPTION>
Three months ended
December 31,
1997 1996
<S> <C> <C>
Residential sales $ 19,633 $ 22,712
Cost of sales 17,141 20,962
Gross profit 2,492 1,750
Selling expenses 1,853 1,810
General and administrative expenses 1,124 898
Income (loss) before provision (benefit)
for income taxes (485) (958)
Provision (benefit) for income taxes (194) (383)
Net income (loss) $ (291) $ (575)
Net income (loss) per share ($0.04) ($0.07)
Weighted average number
of shares outstanding 7,807 7,807
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<CAPTION>
Three months ended
December 31,
1997 1996
<S> <C> <C>
Operating activities:
Net loss $ (291) $ (575)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 334 392
Deferred income taxes (210) (112)
Changes in operating assets and liabilities:
Real estate inventories (11,356) 3,370
Prepaid expenses and other assets (745) (655)
Income tax receivables 405 -
Deferred project start up costs 264 (449)
Accounts payable and accrued construction liabilities (4,156) (10,899)
Other accrued expenses 311 (1,631)
Customer deposits (22) (40)
Net cash provided by (used for) operating activities (15,466) (10,599)
Investing activities - Property and equipment, net (350) (295)
Financing activities:
Borrowings under line of credit 32,099 34,300
Repayments of line of credit (17,067) (23,571)
Repayments of notes payable (63) (1,792)
Distributions to minority interest - (111)
Net cash provided by (used for) financing activities 14,969 8,826
Net decrease in cash and cash equivalents (847) (2,068)
Cash and cash equivalents:
Beginning of period 4,615 4,501
End of period $ 3,768 $ 2,433
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
SUNDANCE HOMES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - PRINCIPLES OF CONSOLIDATION
The accompanying interim consolidated financial statements
include the accounts of Sundance Homes, Inc. and its
subsidiaries ("the Company"). These financial statements are
unaudited, but in the opinion of management contain all
adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial condition and
results of operations of the Company.
The interim consolidated financial statements should be read
in conjunction with the consolidated financial statements and
notes thereto for the year ended September 30, 1997 included
in the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission on December 23, 1997.
The results of operations for the three months ended December
31, 1997 are not necessarily indicative of the results to be
expected for the entire fiscal year.
NOTE 2 - REAL ESTATE INVENTORIES
<TABLE>
Real estate inventories are summarized as follows (in thousands):
<CAPTION>
December 31, September 30,
1997 1997
<S> <C> <C>
Work-in-process:
Land and development $ 42,518 $ 38,337
Construction inventory 40,498 33,948
Completed homes:
Models 6,898 7,590
Speculative homes 2,229 912
$ 92,143 $ 80,787
</TABLE>
Model homes are constructed to help market a development and
include allocations of land and development and other
allocable costs. Speculative homes represent non-model homes
which are substantially complete and are not subject to a
sales contract.
Capitalized interest included in real estate inventories at
December 31, 1997 and September 30, 1997 aggregated $6.8
million and $6.6 million, respectively.
<PAGE>
NOTE 3 - PROPERTY AND EQUIPMENT
<TABLE>
Property and equipment are summarized as follows (in thousands):
<CAPTION>
December 31, September 30,
1997 1997
<S> <C> <C>
Model home upgrades and furnishings $ 4,617 $ 4,307
Equipment and furniture 3,170 3,147
Vehicles 393 379
Leasehold improvements 54 52
8,234 7,885
Accumulated depreciation 4,929 4,596
$ 3,305 $ 3,289
</TABLE>
NOTE 4 - NOTES PAYABLE
<TABLE>
Notes and mortgages payable are summarized as follows (in thousands):
<CAPTION>
December 31, September 30,
1997 1997
<S> <C> <C>
Revolving line of credit $ 45,850 $ 30,818
Notes payable to land sellers 2,206 2,269
$ 48,056 $ 33,087
</TABLE>
On February 7, 1997 the Company entered into an Amended and
Restated Revolving Credit Loan Agreement (the "Loan Agreement"),
with two banks that replaced the previous financing arrangements
with the banks. The Loan Agreement provides a $60.0 million line
of credit. The borrowings are secured by the real estate assets
of the Company, with certain exceptions. Borrowings under the
Loan Agreement bear interest at LIBOR plus 275 basis points for
borrowings up to $40 million, and prime plus .5% for borrowings in
excess of $40 million, plus certain customary fees. The Loan
Agreement is scheduled to mature on February 1, 1999. Available
borrowings under the Loan Agreement are reduced by the amount of
letters of credit outstanding. The Loan Agreement includes
certain customary representations and covenants, including
restrictions on the Company's ability to pay dividends and
maintenance of certain financial ratios. As of December 31,
1997, the Company had violated certain covenants as set forth in
the Loan Agreement, including those related to the Company's
projects exceeding three stories, and certain financial
covenants, specifically, those related to net worth and net
income. The Company believes that it will be able to either cure
these defaults and events of default or revise the terms of the
Loan Agreement or negotiate a replacement facility, but there can
be no assurance of such cure, revised agreement or replacement
facility. Failure by the Company to cure these defaults, revise
the terms of the Loan Agreement or negotiate a replacement
facility on a timely basis could have a material adverse effect
on the Company's operations. The subordinated notes payable to
the Principal Shareholder, as well as any interest thereto, are
not allowed to be repaid until all defaults are cured and certain
minimum net worth levels are maintained. As of February 13,
1998, the Company was negotiating with its banks in order to
provide adequate funding for the expansion of its Chicago Urban
Division including the construction of a 24-story high rise which
would include 5 floors of parking and 17 floors of residential
condominium apartments. There can be no assurance that the
Company will be able to secure such financing on acceptable
terms.
<PAGE>
Notes payable to land sellers are non-interest bearing and are
repaid through application of agreed upon amounts from the
proceeds of individual home sale closings.
NOTE 5 - SHAREHOLDER NOTES PAYABLE
As part of the public offering and recapitalization of the
Company on July 9, 1993, the Company issued promissory notes to
the Principal Shareholder. The notes are subordinate to the
Company's bank indebtedness, bear interest at 7 1/2% per annum,
compounded daily, and originally matured in two equal annual
installments on the first and second anniversaries of the
offering. On September 30, 1997, the maturity date of the notes
was extended to September 30, 1998. Payment of the outstanding
principal balances are subject to certain restrictions under the
Loan Agreement (Note 4).
NOTE 6 - CONTINGENCIES
The Company is frequently required, in connection with the
development of its projects, to obtain performance or other
maintenance bonds or letters of credit in lieu thereof. The
amount of such obligations outstanding at any time varies in
connection with the Company's pending development activities.
These obligations are typically extinguished through the
Company's completion of specified subdivision improvements and
infrastructure. In the event any such obligations are drawn
upon, the Company would be obligated to reimburse the issuing
surety company or bank. There have been no such draws during the
three months ended December 31, 1997 or the year ended September
30, 1997.
The Company currently leases 25,000 square feet of office space
under a lease which terminates on March 31, 1998. A new
renewable five year lease for 15,500 square feet which begins
April 1, 1998 has been entered into. Certain equipment is also
currently leased under non-cancelable operating leases.
Additionally, the Company is involved in various routine legal
proceedings incidental to the conduct of its business.
<PAGE>
SIGNATURE PAGE
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 thereunto duly authorized.
SUNDANCE HOMES, INC.
By: /S/ Joseph R. Atkin Date: February 25, 1998
Joseph R. Atkin, Vice President
and Chief Financial Officer
