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1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(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 April 2, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 0-19292
PATTEN CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 03-0300793
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5295 TOWN CENTER ROAD, BOCA RATON, FLORIDA 33486
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 361-2700
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
- ---------------------------------------------------- -----------------------------------------------
Common Stock, $.01 par value . . . . . . . . . . . New York Stock Exchange, Pacific Stock Exchange
8.25% Convertible Subordinated Debentures
due 2012 . . . . . . . . . . . . . . . . . . . . New York Stock Exchange
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 (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
in the definitive proxy statement incorporated by reference into Part III of
this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant: $55,578,464 based upon the closing sale
price of the Company's Common Stock on the New York Stock Exchange on June 1,
1995 (or $3.375 per share). The market value of voting stock held by
non-affiliates excludes any shares issuable upon conversion of any 8.25%
Convertible Subordinated Debentures outstanding as of June 1, 1995 and held by
non-affiliates, which are converted at a rate of $8.65 per share. The
$55,578,464 includes 1,136,140 shares of Common Stock held by Franklin
Resources, Inc. or its wholly-owned subsidiaries ("Franklin"). Shares held by
Franklin represent holdings as reported on the most recent Form 13G filed with
the Securities and Exchange Commission, retroactively adjusted to reflect a 5%
stock dividend paid on March 30, 1995.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 19,513,797 shares
of Common Stock, $.01 par value, outstanding as of June 1, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Specifically identified portions of the Company's 1995 Annual Report
to Shareholders are incorporated by reference into Part II hereof and
specifically identified portions of the Company's definitive proxy statement to
be filed for its Special Meeting in Lieu of Annual Meeting of Shareholders to
be held on July 20, 1995 are incorporated by reference into Part III hereof.
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PATTEN CORPORATION
INDEX TO ANNUAL REPORT ON FORM 10-K
PART I PAGE
----
Item 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Acquisition of Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Marketing and Sale of Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Customer Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Loan Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Collection Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Sales of Loans/Pledging of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Loan Servicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Customer Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Executive Officers of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3
PART I
ITEM 1. BUSINESS.
SUMMARY
Patten Corporation, a Massachusetts corporation organized in 1985, together
with its subsidiaries (the "Company"), is the successor to a real estate
business that was formed as a sole proprietorship in 1966. The Company's real
estate operations are managed under three divisions. The Land Division
acquires large acreage tracts of real estate which are subdivided, improved and
sold, typically on a retail basis. The Resorts Division acquires and develops
timeshare properties to be sold in weekly intervals in fully-furnished vacation
units. The Communities Division is engaged in the sale of factory built and
on-site constructed primary residential homes together with land parcels in
certain markets.
The Land Division is segregated into two broad property types offered for sale
to prospective customers, (i) land intended for near-term residential use and
(ii) land intended for general recreational use. Land intended for near-term
residential use is fully improved which generally includes the provision for
water, electricity and telephone as well as the construction of access roads
leading to the subdivided lots. About half of the Company's residential
properties are situated in locations that lend to their use as primary
homesites while the remaining properties are proposed as vacation or secondary
homesite subdivisions. General recreational property is typically used for
hunting, fishing and camping or as a potential homesite in the longer-term.
The Company's Resorts Division, introduced in 1994, is currently responsible
for the development, marketing and sale of a multiphase timeshare property
located in Gatlinburg, Tennessee, which was acquired by the Company in fiscal
1994. Additional acreage was purchased in neighboring Pigeon Forge, Tennessee
in February, 1995. The Pigeon Forge property represents the second, in an
intended series, of timeshare properties to be located in regional vacation
destinations.
The Company has also vertically integrated by offering construction and sale of
homes in certain markets. The Company's Communities Division, introduced in
1994, offers a site-built housing product outside of Charlotte, North Carolina
and Houston, Texas. In addition, factory built manufactured home and lot
packages are being marketed near Colorado Springs, Colorado and Sanford, North
Carolina.
The Company's Land, Resorts and Communities divisions accounted for 79.0%
or $72.6 million, 6.4% or $5.9 million and 14.6% or $13.4 million, respectively,
of consolidated sales of real estate for fiscal 1995. The field operating
profit/(loss) attributable to the Land, Resorts and Communities divisions
accounted for 100.6% or $18.9 million, .7% or $138,000 and (1.3)% or
$(247,000), respectively, of the Company's consolidated field operating profit
for fiscal 1995. See Item 7 of Part II below.
Since 1989, all acquisitions of land have required the prior approval of the
Company's investment committee, which currently consists of executive officers
of the Company (the "Investment Committee"). The Company seeks to reduce its
cash outlay and risks by making small downpayments when contracting to acquire
properties and by completing as many preparations for resale as possible before
actually completing the purchase. Although the Company has historically
acquired substantially all of the inventory it has placed under contract, its
downpayment and any preliminary development costs are the only amounts at risk
if it fails to complete the purchase. See further discussion under
"Acquisition of Inventory."
The Company seeks external sources of capital to fund its property
acquisitions. Such sources generally consist of seller or bank financing. See
Item 7 of Part II below. During fiscal 1995, 1994 and 1993, the Company
financed $23.1 million or 32.3%, $12.8 million or 33.3% and $9.3 million or
36.6%, respectively, of its consolidated property inventory, including
acquisition and development costs.
The Company begins to market parcels in its Land Division as soon as
practicable, with the sale of acquired properties typically being completed
within nine to 24 months from closing of the acquisition. The holding period
may be extended in areas where the subdivision approval process is more
complex. Land Division sales were $72.6 million, $60.3 million and $53.3
million for fiscal 1995, 1994 and 1993, respectively.
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4
To minimize the risk associated with holding its timeshare inventory, the
Resorts Division sells timeshare intervals while construction is underway.
Marketing of the first timeshare resort commenced in fiscal 1995 and through
year end (April 2, 1995), the project generated $5.9 million in reportable
sales. An additional $891,000 of sales were pending recognition subject to
completion of unit construction. For further information on the Company's
revenue recognition policy, see Note 1 to the Consolidated Financial Statements
which are incorporated by reference into Item 8, Part II herein from the
Company's 1995 Annual Report to Shareholders.
The Company seeks to minimize market exposure for inventory held by the
Communities Division by limiting the number of homes that are constructed or
purchased on a speculative basis. The Company attempts to obtain contracts for
the sale of its homes prior to proceeding with development. During fiscal
1995, the Communities Division generated sales of $13.4 million, consisting of
$4.9 million from the sale of site-built homes and $8.5 million from the sale
of manufactured homes. During fiscal 1994, the Communities Division generated
sales of $3.1 million. See further discussion under "Marketing and Sale of
Inventory."
The Company offers financing of up to 90% of the purchase price of land real
estate sold to all purchasers who qualify for such financing. The Company also
offers financing of up to 90% of the purchase price to timeshare purchasers.
Communities Division sales are financed by third party lenders and accordingly,
the proceeds of such sales are received entirely in cash. The Company
structures its sales and financing activities so that the purchase money
mortgage loans (the "Receivables") arising from land sales and the contracts
for deed from timeshare sales may be pledged or sold in separate financing
transactions to provide liquidity for the Company. This liquidity allows the
Company to continue to provide financing for the sale of its real estate.
During fiscal 1995, 1994 and 1993, the Company received 23.5%, 34.1% and 43.7%,
respectively, of its aggregate sales of real estate which closed during the
period in the form of land and timeshare receivables and financed the remaining
amounts. See further discussion under "Customer Financing" and Item 7 of Part
II below.
The Receivables originated by the Company are typically packaged in portfolios
and sold, utilized as collateral in financing transactions, or combined in
pools that serve to support issuance of mortgage-backed securities (as either
debt or pass-through securities evidenced by interests in distributions from
such specific pools). In three instances, the Company has elected to have the
issuance of its mortgage-backed securities treated as Real Estate Mortgage
Investment Conduits ("REMICs"). This election permits favorable tax treatment
to investors who purchase securities collateralized by, or representing
undivided fractional interests in, mortgage obligations, which securities
generally have different maturity terms and payment priorities.
The Company's continued growth depends upon obtaining outside sources of
funding to finance new property purchases, fund operations, satisfy debt
obligations and provide loans to purchasers of parcels. In the past, the
Company has funded its activities through various sources, including borrowings
under secured and unsecured lines of credit, sales of Receivables and the sale
of debt and equity securities. These arrangements require the Company to
comply with certain covenants and retain certain contingent liabilities. As of
April 2, 1995, the Company had outstanding $34.7 million of 8.25% convertible
subordinated debentures, $19.5 million in mortgage-backed notes payable and
$20.4 million in lines of credit and notes payable, with an aggregate weighted
average interest rate on all such indebtedness of 9.3%. The Company
anticipates that it will continue to require external sources of funding. See
Item 7 under Part II below.
At April 2, 1995, the Company had 332 full-time and 35 part-time employees.
The Company's executive offices are located at 5295 Town Center Road, Boca
Raton, Florida 33486. Its telephone number at such address is (407) 361-2700.
The Company's common stock is listed on the New York Stock Exchange and on the
Pacific Stock Exchange under the symbol "PAT." The Company's 8.25% convertible
subordinated debentures due 2012 are also listed on the NYSE.
4
5
ACQUISITION OF INVENTORY
In order to provide centralized and uniform controls on the type, location and
amount of inventory that the Company acquires, since 1989, all inventory
acquisitions have required the approval of the Investment Committee. The
Investment Committee is presently comprised of George F. Donovan, President and
Chief Executive Officer, Alan L. Murray, Treasurer and Chief Financial Officer,
Daniel C. Koscher, Vice President, Chief Accounting Officer and Assistant
Secretary, and Patrick E. Rondeau, Vice President, Director of Legal Affairs
and Clerk/Secretary (all of whom served as members of the Investment Committee
during fiscal 1995). The Investment Committee reviews each proposed
acquisition to determine whether the property to be acquired meets certain
criteria. The Investment Committee considers such established criteria as the
economic conditions in the area in which the parcel is located, environmental
sensitivity, availability of financing, whether the property is consistent with
the Company's general policies and the anticipated ability of that property to
produce acceptable profit margins and cash flow. Since May 1990, sales of
property approved by the Investment Committee have resulted in average gross
margins in excess of 55%. No assurances can be given that future sales of
property approved by the Investment Committee will yield comparable gross
margins. Prior to the formation of the Investment Committee, the determination
of whether to buy most properties was typically made by the Company's regional
managers, together with one or more members of the Company's senior management.
Land Division
The Land Division, through the Company's regional offices, and subject to
Investment Committee review and approval, typically acquires inventory that (i)
is located within one to three hours of a major city, (ii) is suitable for
subdivision, (iii) maintains attractive topographical features and (iv) based
upon anticipated resale value, will result in an acceptable profit margin and
cash flow to the Company. Properties acquired by the Company in fiscal 1995
ranged in size from 22 to 20,000 acres. Properties are generally subdivided
for resale into parcels ranging in size from one to 35 acres. In fiscal 1995,
the Company acquired 46,021 acres in 35 separate transactions for a total
purchase price of $28.1 million, or $611 per acre. These figures include a
single purchase consisting of 20,000 acres for a total purchase price of $3.0
million, or $150 per acre. Seller or bank financing of $19.0 million, or 67.6%
of the total purchase price, was obtained.
The Land Division has several specialists who assist regional management in
locating inventory for acquisition. The Company has established contacts with
numerous land owners and real estate brokers in many of its market areas, and
because of such contacts and its long history of acquiring properties, the
Company is generally in a favorable position to learn of available inventory.
The Company's objective is to develop strong relationships with major property
owners and brokers. Regional offices regularly contact property owners, such
as timber companies, financial institutions and real estate brokers, by a
combination of telephone, mail and personal visits. In addition, the Company
occasionally places advertisements in local and national newspapers indicating
an interest in acquiring land. To date, the Company's regional offices have
been able to locate and acquire adequate quantities of inventory which meet the
criteria established by the Investment Committee to support their operational
activities.
Once an appropriate property is located, the Company begins performing due
diligence procedures and enters into a purchase agreement with the seller. It
is generally the Company's policy to advance only a small downpayment of
approximately 1% to 4% of the total purchase price, when signing a contract to
acquire inventory and to limit the liquidated damages associated with
properties under contract for purchase to the amount of its downpayment and any
preliminary development costs. In most cases, the Company is not required to
advance the full purchase price or enter into a note payable obligation until
all regulatory approvals for the subdivision and sale of land have been
obtained. While local approvals are being sought, the Company will, in certain
instances, engage in test marketing of the subdivided parcels and, with the
consent of the seller and the knowledge of prospective purchasers, occasionally
attempt to pre-sell parcels, subject to closing its purchase of the property.
When substantially all approvals have been received, the closing on the
property occurs and the Company obtains title. The time between execution of a
purchase agreement and closing on a property has generally been six to 12
months. Although the Company generally retains the right to cancel purchase
agreements without any loss beyond forfeiture of the downpayment and
preliminary development costs, few purchase agreements have been canceled.
5
6
By requiring, in most cases, that all regulatory approvals be obtained prior to
closing and by making small downpayments upon signing purchase agreements, the
Company is typically able to place a number of properties under contract
without expending significant amounts of cash. This strategy enables the
Company's Land Division to reduce (i) the time during which it actually owns
specific properties, (ii) the market risk associated with holding real estate
and (iii) the risk of acquiring property that may not be suitable for sale. It
also provides a source of available properties to meet customer demand. In
certain instances, however, the Company has acquired properties and then held
such properties until their prime marketing seasons.
As of April 2, 1995, the Land Division had aggregate downpayments of $290,000
associated with 9 properties under contract for purchase. Such properties
represent 15,771 acres with an aggregate purchase price of $14.2 million, or
$900 per acre.
Prior to closing on a purchase of inventory, the Company's policy is to
complete its own environmental assessment of the property. The purpose of the
Company's assessment is to evaluate the impact the proposed subdivision will
have on such items as flora and fauna, wetlands, endangered species, open
space, scenic vistas, recreation, transportation and community growth and
character. To obtain this information, the Company's acquisition specialists
typically consult with various groups and agencies including the appropriate
county and state planning agencies, environmental groups, state heritage
programs, soil conservation agencies and forestry groups. If the Company's
environmental assessment indicates that the proposed subdivision meets
environmental criteria and zoning, building, health and other laws, the Company
develops a formal land use plan, which forms a basis for determining an
appropriate acquisition price. The Company attempts, where possible, to
accommodate the existing topographical features of the land, such as streams,
hills, wooded areas, stone walls, farm buildings and roads. Prior to closing
on an acquisition, the Company will typically have the property surveyed by a
professional surveyor as well as have soil analyses conducted to determine the
suitability of the site for septic systems. At closing, the Company obtains
title insurance on the property.
Resorts Division
The Company's Resorts Division employs due diligence procedures similar to
those used by the Land Division in locating property for future timeshare
resorts. A full property review, including an environmental assessment, is
presented to the Investment Committee for approval prior to purchase. During
the review process, acquisition specialists analyze market, tourism and
demographic data as well as the quality and diversity of the location's
existing attractions to determine that there are a variety of recreational
opportunities available to prospective purchasers. While the Company's Land
Division inventory is expected to turn frequently, the Company anticipates that
its timeshare resorts will generally have a sell-out term in excess of five
years.
Communities Division
In fiscal 1994, the Company expanded its operations to include the construction
and sale of homes primarily as a means to accelerate lot sales in certain
slow-moving projects. The land supporting most of the residential subdivisions
was acquired by the Company in the late 1980's and is currently comprised of
certain properties in Colorado, North Carolina and Texas. In addition to
accelerating the sales of existing lots, the Company's future strategy for this
segment of operations is to seek to capitalize more on its land acquisition and
development expertise than on vertical home construction. Specifically, the
plan is to acquire and develop residential land to be sold to home builders.
Management views this business line as a low-cost, add-on operation which
complements its core retail land sales operation. The first property
introduced under this program consists of 60 acres located in Orlando, Florida.
The property is expected to be sold to a national home builder in fiscal 1996.
Although no assurances can be given, the Company believes that it can compete
effectively as a supplier of land to the home building industry in certain
markets and is actively seeking additional properties with similar demographics
in the southeast region of the United States.
6
7
The Company's net inventory as of April 2, 1995 and March 27, 1994 summarized
by division and classified by major geographic region is set forth in the
tables below.
APRIL 2, 1995
-----------------------------------------------------------------------------
GEOGRAPHIC REGION LAND COMMUNITIES (1) RESORTS TOTAL
- ----------------- ------------- --------------- ------------ -------------
Southwest . . . . . $ 16,658,079 (2) $ 1,115,914 $ --- $ 17,773,993
West . . . . . . . 9,356,508 (3) 433,933 --- 9,790,441
Midwest . . . . . . 7,777,934 (4) --- 5,240,911 13,018,845
Southeast . . . . . 2,781,785 11,575,971 --- 14,357,756
Northeast . . . . . 3,747,468 --- --- 3,747,468
Mid-Atlantic . . . 4,424,821 --- --- 4,424,821
Canada . . . . . . 273,348 --- --- 273,348
------------- ----------- ------------ -------------
Totals . . . . . . $ 45,019,943 $13,125,818 $ 5,240,911 $ 63,386,672
============= =========== ============ =============
MARCH 27, 1994
-----------------------------------------------------------------------------
GEOGRAPHIC REGION LAND COMMUNITIES (1) RESORTS TOTAL
- ----------------- ------------- --------------- ------------ -------------
Southwest . . . . . . $ 4,051,153 $ 1,134,688 $ --- $ 5,185,841
West . . . . . . . . 4,983,355 1,104,605 --- 6,087,960
Midwest . . . . . . . 5,106,059 --- 2,375,856 7,481,915
Southeast . . . . . . 6,808,053 4,394,360 --- 11,202,413
Northeast . . . . . . 4,587,051 --- --- 4,587,051
Mid-Atlantic . . . . 5,182,178 --- --- 5,182,178
Canada . . . . . . . 386,584 --- --- 386,584
------------- ------------ ------------ -------------
Totals . . . . . . . $ 31,104,433 $ 6,633,653 $ 2,375,856 $ 40,113,942
============= ============ ============ =============
_________________
(1) Communities Division inventory as of April 2, 1995, consists of land
inventory of $9.9 million and $3.2 million of housing unit
construction-in-progress. As of March 27, 1994, the Communities Division
had $5.4 million of land inventory and $1.2 million of housing unit
construction-in-progress. The increase in land inventory is attributable
to infrastructure development. The Company did not acquire any additional
land inventory intended to be marketed and sold as part of the Communities
Division during fiscal 1995.
(2) During fiscal 1995, the Company acquired two large tracts of land in the
Southwest consisting of 1,434 acres in Texas at a purchase price of
approximately $6.1 million and 4,700 acres in New Mexico for approximately
$3.8 million.
(3) During fiscal 1995, the Company acquired approximately 20,000 acres in a
single transaction in Colorado for $3.0 million.
(4) During fiscal 1995, the Company acquired 1,515 acres in a single
transaction in Missouri for $2.3 million.
In the event that the market for real estate or the economy in general
experiences a downturn in the Company's principal markets, the Company's ability
to sell inventory at current rates of sale could be materially adversely
affected. For further information on the Company's inventory holdings, see
"Uses of Capital" under Management's Discussion and Analysis of Financial
Condition and Results of Operations in Item 7 of Part II below.
MARKETING AND SALE OF INVENTORY
Land Division
In general, as soon as a property has been acquired and any appropriate
improvements have been completed, the Company establishes selling prices for
the individual parcels taking into account such matters as regional economic
conditions, quality as a building site, scenic views, road frontage and natural
features such as lakes, mountains, streams, ponds and wooded areas. The
Company also considers recent sales of comparable parcels in the area. Initial
decisions on pricing of parcels in a given area are made by the Company's
regional managers and, in all cases, are subject to approval by the Investment
Committee.
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8
The most widely used marketing technique is advertisement in major newspapers
in metropolitan areas located within a one to three hour drive from the
property, as well as local newspapers. A sales representative knowledgeable
about the property answers each call, discusses the property with the
prospective purchaser, attempts to ascertain the purchaser's needs and
determine whether the parcel would be suitable for that person, and arranges an
appointment for the purchaser to visit the property. Substantially all
prospective customers inspect a property before purchasing. The Land Division
also conducts direct mail campaigns to market property using brochures
describing available parcels, as well as television and radio advertising.
During fiscal 1995, the Land Division incurred $5.3 million in advertising
expense, or 7.2% of its sales of real estate.
The success of the Company's marketing efforts depends heavily on the knowledge
and experience of its sales personnel (substantially all of whom are employees
of the Company). The Company requires that prior to initiating the marketing
effort for a property, every sales representative walk the property and become
knowledgeable about each parcel and applicable zoning, subdivision and building
code requirements. Continued training programs are conducted, including
training with regional office sales managers, weekly sales meetings, and
frequent meetings with an executive officer of the Company. Additionally, the
sales staff is evaluated against performance standards established by the
executive officers of the Company. Substantially all of a sales
representative's compensation is commission-based.
The Company requires its sales staff to provide each customer with a written
disclosure statement regarding the real estate to be sold prior to the time the
customer signs a purchase agreement. Either a U.S. Department of Housing and
Urban Development ("HUD") lot information statement, where required, or a
Company generated "Vital Information Statement" sets forth relevant information
with respect to, and risks associated with, the property and is signed by every
purchaser. The Company believes that each information statement contains all
material and relevant information a customer requires to make an informed
decision as to whether or not to purchase, such as availability and estimated
cost of utilities, restrictions regarding property usage, status of access
roads and information regarding rescission rights.
After deciding to purchase a parcel, the buyer enters into a contract and pays
the Company a deposit of at least 10% of the purchase price. It is the
Company's policy to give all purchasers the right to cancel purchase agreements
within specified periods after execution in accordance with statutory
requirements. The closing of a land sale usually occurs two to eight weeks
after payment of the deposit. Upon closing of a land sale, the Company
delivers to the buyer a warranty deed and a recent survey of the property.
Title insurance is available at the purchaser's expense.
The following table sets forth certain information regarding sales of parcels
by the Land Division for the periods indicated.
YEARS ENDED
-----------------------------------------------------
APRIL 2, MARCH 27, MARCH 28,
1995 1994 1993
--------- --------- ---------
Number of parcels sold (1) . . . . . . 2,397 2,489 2,560
Average sales price per parcel (1) . . $ 30,969 $ 25,511 $ 21,368
Gross margins on Land Division sales . 57.2% 51.5% 46.7%
_________________
(1) Calculated by including sales of real estate deferred under the percentage
of completion method of accounting during the respective periods. The
average sales price per parcel, excluding the effects of deferred sales,
was $30,296, $25,468 and $20,839 for fiscal 1995, 1994 and 1993,
respectively.
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9
The table set forth below outlines the number of parcels sold and the average
sales price per parcel for the Company's Land Division by geographic region for
the fiscal years indicated.
YEARS ENDED
------------------------------------------------------------------------------------------
APRIL 2, 1995 MARCH 27, 1994 MARCH 28, 1993
----------------------------- ---------------------------- -----------------------------
AVERAGE AVERAGE AVERAGE
NUMBER OF SALES PRICE NUMBER OF SALES PRICE NUMBER OF SALES PRICE
GEOGRAPHIC REGION PARCELS SOLD PER PARCEL (1) PARCELS SOLD PER PARCEL (1) PARCELS SOLD PER PARCEL (1)
- ----------------- ------------ -------------- ------------ -------------- ------------ ---------------
Southwest . . . . . . . 1,107 $ 34,999 940 $ 27,140 740 $ 22,970
West . . . . . . . . . 339 32,033 242 34,180 292 26,785
Midwest . . . . . . . . 317 28,740 437 22,767 279 23,049
Southeast . . . . . . . 289 28,311 376 26,537 439 15,227
Northeast . . . . . . . 113 19,382 115 17,687 251 15,018
Mid-Atlantic . . . . . 215 23,136 367 20,700 545 23,538
Canada . . . . . . . . 17 10,160 12 13,037 14 12,101
----- -------- ----- --------- ------ ---------
Totals . . . . . . . . 2,397 $ 30,969 2,489 $ 25,511 2,560 $ 21,368
===== ===== =====
_________________
(1) Calculated by including sales of real estate deferred under the percentage
of completion method of accounting during the respective periods.
For further information on sales attributable to the Company's Land Division,
see "Results of Operations" under Management's Discussion and Analysis of
Financial Condition and Results of Operations in Item 7 of Part II below.
Resorts Division
In the marketing and sale of timeshare intervals, the Company generally targets
family households in the middle income bracket who prefer outdoor recreational
activities at destination locations. The division employs various programs to
reach its target market. The primary means of marketing existing timeshare
property is through direct mail mini-vacation offerings. The division
provides hotel accommodations to prospective purchasers at substantially
reduced prices in exchange for them touring the timeshare resort. Timeshare
resorts are staffed with, among others, sales representatives and an on-site
manager who oversees the day-to-day operations. Sales personnel are generally
experienced in resort sales and undergo ongoing Company sponsored training.
During fiscal 1995, total advertising expense for the division was $1.4 million
or 23.2% of the $5.9 million in reportable sales. An additional $891,000 in
sales have been deferred subject to completion of unit construction. In total,
952 interval sales were made under the Resorts Division. The Company delivers a
deed to timeshare purchasers when the purchase price has been paid in full.
Communities Division
The Company entered the housing industry primarily as a means to accelerate lot
sales in certain markets. During fiscal 1995, the Communities Division sold
110 manufactured homes and accompanying lots for an average sale price of
$77,244. In addition, 23 site-built homes were sold for an average sale price
of $213,640. Marketing of home and lot packages is accomplished primarily
through a combination of print media, supplemented by television advertising.
The Company assists its customers in obtaining conventional bank financing
through local institutions, and accordingly, all sales are received in cash.
The closing on a house sale typically occurs two to six months after payment of
the deposit. Upon closing of a sale, the Company delivers to the buyer a
warranty deed and a recent survey of the property. Title insurance is
available at the purchaser's expense.
Total Sales
During fiscal 1995, sales attributable to the Company's Land, Resorts and
Communities divisions comprised $72.6 million or 79.0%, $5.9 million or 6.4%
and $13.4 million or 14.6%, respectively, of total consolidated revenues
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from sales of real estate. The Company was not involved in resort operations
and the communities operation was not material for fiscal 1994 and 1993.
The table set forth below outlines the Company's consolidated sales for all
divisions by geographic region for the fiscal years indicated.
(DOLLARS IN THOUSANDS)
YEARS ENDED
-------------------------------------------------------------------------------
APRIL 2, 1995 MARCH 27, 1994 MARCH 28, 1993
---------------------- --------------------- ------------------------
GEOGRAPHIC REGION AMOUNT % AMOUNT % AMOUNT %
- ----------------- -------- ------- -------- ------- --------- --------
Southwest . . . . . . . . $ 40,612 44.2 % $ 24,244 38.2 % $ 16,015 30.0 %
West . . . . . . . . . . 14,381 15.7 8,432 13.3 7,710 14.5
Midwest . . . . . . . . . 14,184 15.4 10,645 16.8 6,222 11.7
Southeast . . . . . . . . 15,728 17.1 9,978 15.7 6,728 12.6
Northeast . . . . . . . . 2,190 2.4 2,034 3.2 3,794 7.1
Mid-Atlantic . . . . . . 4,654 5.0 7,899 12.5 12,710 23.8
Canada . . . . . . . . . 173 .2 157 .3 170 .3
-------- ----- -------- ----- --------- -----
Totals . . . . . . . . . $ 91,922 100.0 % $ 63,389 100.0 % $ 53,349 100.0 %
======== ===== ======== ===== ========= =====
CUSTOMER FINANCING
During fiscal 1995, 1994 and 1993, the Company received in cash 76.5%, 65.9%
and 56.3%, respectively, of the aggregate purchase price of its sales of real
estate that closed during these periods and financed the remaining amounts.
The decrease in the percentage of sales financed by the Company is attributable
to (i) the program commenced by the Company in 1992 directed at obtaining
increased downpayments on financed sales of land real estate, (ii) an increased
willingness on the part of local banks in certain regions to extend more direct
customer lot financing and (iii) expansion of the Company's product lines to
include the construction and sale of homes, the proceeds of which are received
entirely in cash. The Company believes its financing is attractive to
purchasers because buyers find it convenient to handle all facets of the
purchase of real estate through a single source and because downpayments
required by the Company are similar to those required by banks and mortgage
companies which offer this type of credit.
Land Division
The Company offers financing of up to 90% of the purchase price of land real
estate sold to all purchasers of its properties who qualify for such financing.
The term of repayment on the financing has historically ranged from five to 15
years although the Company, by offering reduced interest rates, has been
successful in encouraging customers during recent years to finance their
purchases over shorter terms and provide increased downpayments. Management
believes such strategy has improved the quality of its notes receivable in
recent years. A typical land mortgage currently underwritten by the Company
has a term of ten years, bears interest at a variable rate tied to the prime
lending rate and is secured by a first lien on the land. During fiscal 1995,
26% of land purchasers qualified for, and received, Company financing. Such
purchasers made an average downpayment of 22% of the purchase price.
Resorts Division
The Company also offers financing of up to 90% of the purchase price to its
timeshare purchasers. During fiscal 1995, almost all purchasers elected to
receive the Company's financing and provided an average downpayment of 17%.
The typical financing extended by the Company on a timeshare interval provides
for a term of seven years and a fixed interest rate. At the closing, the
Company delivers of a contract for deed to the purchaser. After the obligation
is paid in full, the Company delivers a deed to the purchaser.
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LOAN UNDERWRITING
Land Division
The Company has established loan underwriting criteria and procedures designed
to reduce credit losses on its loan portfolio. The loan underwriting process
includes reviewing the credit history and verifying employment of the
applicant, verifying income and calculating certain debt-to-income ratios. The
primary focus of the Company's underwriting is to determine the applicant's
ability to repay the loan in accordance with its terms. This assessment is
based on a number of factors, including the relationship of the applicant's
required monthly payment to disposable income. The Company also examines the
applicant's credit history through various credit reporting agencies. In order
to verify an applicant's employment status, the Company generally contacts the
applicant's employer and obtains current pay stubs and recent tax returns and
other tax forms. Loans by the Company are made solely to finance real estate
sold by the Company.
Customer financing on Land Division sales requires the submission of a
completed and signed credit application, purchase and sale agreement and
pre-authorized checking agreement accompanied by a voided check, if applicable,
to the credit department located at the Company's corporate headquarters where
all credit decisions are made. Loan amounts under $50,000 are approved by
designated personnel located in the Company's corporate headquarters. Loan
amounts of $50,000 or more require approval from a senior executive officer.
In addition, rejected applications and any material exceptions to the
underwriting policy are also reviewed by senior management. Customers are
notified of the reasons for credit rejection by mail.
The Company encourages customers to increase their downpayment and reduce the
loan term through the structure of its loan programs. Customers receive a
lower rate of interest as their downpayment increases and the loan term
shortens. Additionally, the Company encourages its customers to make timely
payments through a pre-authorized payment arrangement. Customers who do not
choose a pre-authorized payment plan are charged interest at a rate which is
one percent greater than the prevailing rate. During fiscal 1995,
approximately 93% of purchasers using the Company's financing participated in
the pre-authorized payment plan.
After the credit decision has been made, the credit department categorizes the
file as either approved, pending or declined. Upon receipt of a credit
approval, the regional office schedules the closing with the customer.
Closings are typically conducted at the office of the Company's local attorney
or settlement agent, although in some cases the closing may take place at the
sales site or by mail.
When the original closing documents are received from the closing agent, the
Company verifies that the loan closed under terms approved by the Company's
credit department. A complete quality control audit is performed to verify
that required documents have been received and have been prepared and executed
correctly. If any corrections are required, notification is sent to the
regional office.
A loan file typically includes a copy of the signed security instrument, the
mortgage note, a copy of the deed, Truth-in-Lending disclosure, purchase and
sale agreement, credit application, local counsel opinion, Vital Information
Statement or purchaser's acknowledgment of receipt of HUD lot information
statement, HUD settlement statement and a copy of the assignment of mortgage
and an original note endorsement from the Company's subsidiary originating the
sale and the loan to the Company (if applicable). After the initial closing
documents are received, the recorded mortgage and assignment and original title
insurance policy are obtained in order to complete the loan file.
Resorts Division
The Company also extends financing for timeshare sales. Timeshare financing is
not subject to the same loan underwriting criteria established for Land
Division loans. Customer financing on timeshare sales requires (i) receipt of
a minimum downpayment of 10% of the purchase price and (ii) a contract for deed
and other closing documents between the Company and the customer. See
"Collection Policies" below.
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COLLECTION POLICIES
Land Division
Collection efforts and delinquency information are managed at the Company's
corporate headquarters. Servicing of the mortgage portfolio is handled by a
staff of experienced collectors, assisted by an on-line mortgage collection
computer system. Unless circumstances otherwise dictate, collection efforts
are generally made by mail and telephone. Collection efforts begin when an
account is ten days past due, at which time the Company mails a reminder letter
and attempts are made to contact the borrower via telephone to determine the
reason for the delinquency and to attempt to bring the account current. The
determination of how to work a delinquent loan is based upon many factors,
including the borrower's payment history and the reason for the current
inability to make timely payments. If no agreement is made or the borrower
does not abide by the agreement, collection efforts continue until the account
is brought current or legal action is commenced. If not accelerated sooner, the
Company declares the loan in default when the loan becomes 60 days delinquent.
When the loan is 90 days past due, the accrual of interest is stopped (unless
the loan is considered an in- substance foreclosure loan, in which case all
accrued interest is reversed since the Company's means of recovery in such
cases is determined to be through resale of the underling collateral and not
through collection on the note) and the Credit/Collection Manager determines
the action to be taken. Typically, such loans are foreclosed upon or the
related property is deeded back to the Company.
Resorts Division
Timeshare loans are documented by contracts for deed and the Company retains
title to the unit until the obligation is paid in full. Accordingly, no
foreclosure process is required in the event of a default. In the event that a
contract for deed becomes delinquent 10-15 days, a reminder letter is mailed to
the customer and telephone contact commences. If the customer fails to bring
the account current, a second letter is mailed when the account is 16-21 days
delinquent. After an account is 45 days delinquent, the Company typically
sends a third letter advising the customer that they have 15 days within which
to bring the account current. Under the terms of the contract for deed, the
borrower is in default when the account becomes 60 days delinquent. At this
time a default letter is sent advising the borrower that they have 30 days to
bring the account current or lose their contract interest in the timeshare
unit. When the account becomes 90 days delinquent, the Company forwards a
final letter informing the purchaser that their contract for deed has been
terminated. At such time, the timeshare interval can be resold to a new
purchaser.
At April 2, 1995, 1.8% or $738,000 of the aggregate $41.9 million principal
amount of Company-originated loans (land and timeshare) which were held by the
Company or sold through programs under which the Company has a recourse
liability were more than 30 days past due compared to 3.3% or $1.6 million of
the aggregate $48.9 million principal amount of such loans as of March 27,
1994. In cases of default on lot sales, the Company may take title to the
parcel in lieu of foreclosure. If the Company is unable to obtain a deed in
lieu of foreclosure, the Company forecloses on the mortgage securing such note.
As indicated above, timeshare loans represent contracts for deed and,
accordingly, no foreclosure process is required. Following a default on a
timeshare note, the contract for deed can be terminated. The Company recorded
loan loss provisions of $792,000, $795,000 and $400,000 for fiscal 1995, 1994
and 1993, respectively. In fiscal 1995, the Company charged $642,000 against
its reserve for loan losses to reflect the difference between the unpaid
balance of non-performing notes receivable and the estimated net realizable
value of the reacquired inventory, compared to $797,000 charged in fiscal 1994.
SALES OF LOANS/PLEDGING OF LOANS
Since 1986, the Company has sold or pledged, through its wholly-owned special
purpose financing subsidiaries, substantially all of its mortgage loan
originations, generally retaining the right and obligation to service the
loans. Generally, the Company transfers the mortgage loans to its special
purpose financing subsidiaries, which in turn enter into institutional
financing transactions or securitizations. The loans are typically sold with
limited or no recourse. In the case of loans pledged, the Company generally
must repurchase or replace mortgage loans which are more than 60 to 90 days
delinquent. At April 2, 1995, the Company was subject to limited recourse
requirements on approximately $1.8 million of Receivables sold. The
delinquency on such loans was immaterial at April 2, 1995. See Item 7 of Part
II below.
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The Company completed three REMIC transactions in 1989, 1992 and 1994. Under
the terms of these transactions, the Receivables are sold to a REMIC trust and
the Company has no obligation to repurchase the Receivables due to default by
the borrowers. The Company does, however, have the obligation to repurchase
the Receivables in the event that there is any material defect in the loan
documentation and related representations and warranties as of the time of
sale. The securities offered by the Company in REMIC financings have not been
registered under federal or state securities laws and may not be resold in the
United States absent registration or an applicable exemption from registration
requirements. See Notes 8 and 9 to the Consolidated Financial Statements which
are incorporated by reference into Item 8, Part II herein from the Company's
1995 Annual Report to Shareholders.
LOAN SERVICING
Mortgage loan servicing includes collecting payments from borrowers and
remitting such funds to the owners of or investors in such loans, accounting
for loan principal and interest, making advances when required, contacting
delinquent borrowers, foreclosing in the event that defaults are not remedied
and performing other administrative duties. The Company's obligation to
provide mortgage loan servicing and its rights to collect fees are set forth in
a servicing agreement. The Company has the obligation and right to service all
the loans it originates and retains the obligation and right with respect to
substantially all the loans it sells. The Company typically receives a
servicing fee of approximately .5% of the outstanding scheduled principal
balance which is deducted from payments received on substantially all of the
Company's servicing portfolio. At April 2, 1995, the Company's loan servicing
portfolio totaled $118.7 million.
CUSTOMER SERVICE
The Company emphasizes customer satisfaction and maintains a full-time customer
service representative in its Boca Raton headquarters to respond to customer
inquiries. At closing, all purchasers are provided with a toll-free customer
service phone number to facilitate any additional information requests.
Customer service surveys are sent to each purchaser to measure customer
satisfaction and to alert the Company to problems, if any.
REGULATION
The real estate industry is subject to extensive regulation. The Company is
subject to compliance with various federal, state and local environmental,
zoning and other statutes and regulations regarding the acquisition,
subdivision and sale of real estate and timeshare interests and various aspects
of its financing operations. The Company believes that it is in compliance in
all material respects with such regulations.
The Company's Land and Communities divisions are subject to the Interstate Land
Sales Full Disclosure Act which establishes strict guidelines with respect to
the marketing and sale of land in interstate commerce. HUD has enforcement
powers with respect to this statute. In some instances, the Company has been
exempt from HUD registration requirements because of the size or number of the
subdivided parcels and the limited nature of its offerings. The Company, at
its discretion, may formally request an exemption advisory opinion from HUD to
confirm the exempt status of any particular offering. Several such exemption
requests have been submitted to and approved by HUD. In those cases where the
Company and its legal counsel determine parcels must be registered to be sold,
the Company files registration materials disclosing financial information
concerning the property, evidence of title and a description of the intended
manner of offering and advertising such property. The Company bears the cost
of such registration, which includes legal and filing fees. Many states also
have statutes and regulations governing the sale of real estate. Consequently,
the Company regularly consults with counsel for assistance in complying with
federal, state and local law. The Company must obtain the approval of numerous
governmental authorities for its acquisition and marketing activities and
changes in local circumstances or applicable laws may necessitate the
application for, or the modification of, existing approvals. The expansion of
such regulation in recent years has increased the average time period from
acquisition to sale of certain property and has imposed additional compliance
costs.
The Company's Resorts Division offers vacation ownership to customers through
the sale of weekly intervals in fully furnished vacation homes. Vacation
ownership is the process by which weekly intervals or undivided, fee simple
interests, are sold in the vacation homes. Many state and local authorities
have imposed restrictions and
13
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additional regulations on developers of vacation ownership intervals. The
Company's first resort in Gatlinburg, Tennessee was subject to various
regulatory requirements including state and local approvals. Although these
restrictions have generally increased the cost of selling vacation ownership
intervals, the Company has not experienced material difficulties in complying
with such regulations or operating within such restrictions. The Company
provides its timeshare purchasers with a public disclosure statement in
compliance with state laws which contains, among other things, detailed
information about the surrounding vacinity, the resort and the purchaser's
rights and obligations as an interval owner.
The Company's customer financing activities are also subject to extensive
regulation, including without limitation, Truth-in-Lending-Reg. Z, Fair Debt
Collection Practices Act, Equal Credit Opportunity Act-Reg. B, Electronic Funds
Transfer Act-Reg. E, Home Mortgage Disclosure Act-Reg. C, Unfair or Deceptive
Acts or Practices-Reg. AA and Right to Financial Privacy Act. The Company
believes that it is in compliance in all material respects with such
regulations.
In fiscal 1988, the Company established regional operations in Ontario, Canada.
The Company's operations in Canada are subject to compliance with all
applicable Canadian federal and provincial environmental, zoning, financing and
other statutes regarding the acquisition, subdivision, financing and sale of
real estate. During fiscal 1995, 1994 and 1993, the Company's operations in
Canada accounted for .2%, .3% and .3%, respectively, of the Company's total
real estate sales during those periods.
Management is currently not aware of any pending regulatory contingencies that
are expected to have a materially adverse impact on the Company.
COMPETITION
The real estate industry is highly competitive. In each of its markets, the
Company competes against numerous developers and others in the real estate
business, some of which are larger and have greater financial resources than
the Company. Competition may be generally smaller with respect to the
Company's lot sales in the more rural markets in which it operates. The
Company believes that it can compete on the basis of its reputation and the
price, location and quality of the products it offers for sale, as well as its
experience in land acquisition, development and sale. Although the Resorts
Division competes with various high profile and well established operators, the
Company believes that it can compete on the basis of its general reputation and
the price, location and quality of its timeshare resorts. In its customer
financing activities, the Company competes with banks, mortgage companies,
other financial institutions and governmental agencies offering financing of
real estate. The Company believes that, based on its interest rates and
repayment schedules, the financing packages it offers are competitive with
those of other institutions which offer such financing.
PERSONNEL
As of April 2, 1995, the Company had 332 full-time and 35 part-time employees,
70 of which are located at the Company's headquarters in Boca Raton, Florida
and 297 are located in regional offices throughout the United States and Canada
(the 297 field personnel include 5 divisional presidents, 14 regional and
district managers, 171 sales personnel, 9 acquisition specialists and 98
administrative and other support personnel). None of the Company's employees
are represented by a collective bargaining unit, and the Company believes that
relations with its employees generally are excellent.
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EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information regarding the executive
officers of the Company.
Name Age Position
---- --- --------
George F. Donovan 56 President and Chief Executive Officer
Alan L. Murray 48 Treasurer and Chief Financial Officer
Daniel C. Koscher 37 Vice President, Chief Accounting Officer and Assistant Secretary
Patrick E. Rondeau 48 Vice President, Director of Corporate Legal Affairs and Clerk/Secretary
GEORGE F. DONOVAN joined the Company as a Director in 1991 and was appointed
President and Chief Operating Officer in October 1993 and Chief Executive
Officer in December 1993. Mr. Donovan also has served as an officer of a
number of other recreational real estate corporations, including Leisure
Management International, of which he was President from 1991 to 1993. From
1989 to 1991, Mr. Donovan served as President and Chief Executive Officer of
Thousand Trails, and from 1988 to 1989 he formed and operated the Donovan
Companies.
ALAN L. MURRAY joined the Company in July 1990 and was elected Treasurer in
September 1990. Mr. Murray was elected Chief Financial Officer in May 1991.
Prior to joining the Company, Mr. Murray had previously held the position of
President of Mount Holly, Inc. and Northeast Country Properties, Inc.,
practiced as a certified public accountant in southern Vermont and western
Massachusetts, held the position of corporate controller of Felters Company and
practiced as a certified public accountant in the audit department of Coopers &
Lybrand.
DANIEL C. KOSCHER joined the Company in 1986. He served as Divisional
Controller of the Company and subsequently as Director of Accounting until he
became Vice President and Chief Accounting Officer in June 1990. Prior to his
employment with the Company, Mr. Koscher held various accounting positions with
the William Carter Company, a manufacturing company located in Needham,
Massachusetts, and Cipher Data Products, Inc., a computer peripheral
manufacturer located in San Diego, California. Mr. Koscher also held the
position of audit agent for the State of Nevada.
PATRICK E. RONDEAU joined the Company in July 1990 and was elected Vice
President and Director of Corporate Legal Affairs in September 1990 and
Clerk/Secretary in February 1993. For more than five years prior to his
employment with the Company, Mr. Rondeau was a senior partner of Freedmen,
DeRosa & Rondeau, located in North Adams, Massachusetts, which firm serves as
legal counsel to the Company on various matters.
The Company's By-Laws provide that, except as otherwise provided by law or the
charter and by-laws of the Company, the President, Treasurer and the Clerk hold
office until the first meeting of the Board of Directors following the next
annual meeting of shareholders and until their respective successors are chosen
and qualified and that all other officers hold office for the same period
unless a shorter time is specified in the vote appointing such officer or
officers.
ITEM 2. PROPERTIES.
The Company's principal executive office is located in Boca Raton, Florida in
approximately 14,000 square feet of leased space. On April 2, 1995, the
Company also maintained regional sales offices in the Northeastern,
Mid-Atlantic, Southeastern, Midwestern, Southwestern and Western regions of the
United States as well as the Province of Ontario, Canada.
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ITEM 3. LEGAL PROCEEDINGS.
In the ordinary course of its business, the Company from time to time becomes
subject to claims or proceedings relating to the purchase, subdivision, sale
and/or financing of real estate. Additionally, from time to time, the Company
becomes involved in disputes with existing and former employees, occasionally
involving charges of wrongful acts by the Company and its officers or other
employees. The Company believes that substantially all of the above are
incidental to its business. The Company is currently a party to certain
claims, proceedings or disputes, some of which are in the administrative stage
and have not yet resulted in civil lawsuits. Based upon the information
available to it, the Company believes that it has various defenses to all
pending or threatened matters and intends to vigorously defend each of the
claims. Although the final results of these claims cannot be predicted with
certainty, it is the present opinion of the Company, after consulting with
counsel, that they will not have a materially adverse effect on the Company's
operations. See Note 11 to the Consolidated Financial Statements which are
incorporated by reference into Item 8, Part II herein from the Company's 1995
Annual Report to Shareholders.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's Common Stock is listed on the NYSE and on the PSE under the
symbol "PAT." The Company's 8.25% Convertible Subordinated Debentures due 2012
are also listed on the NYSE. The following table sets forth, for the periods
indicated, the high and low sales price per share of Common Stock as reported
on the NYSE.
High Low
---- ---
Fiscal 1995 (1):
First Quarter . . . . . . . . . . . . . . . . . . $3 7/8 $3
Second Quarter . . . . . . . . . . . . . . . . . . 3 7/8 2 7/8
Third Quarter . . . . . . . . . . . . . . . . . . 3 5/8 3
Fourth Quarter . . . . . . . . . . . . . . . . . . 3 3/4 2 7/8
High Low
---- ---
Fiscal 1994 (1):
First Quarter . . . . . . . . . . . . . . . . . . $3 7/8 $2 5/8
Second Quarter . . . . . . . . . . . . . . . . . . 4 1/8 3 1/8
Third Quarter . . . . . . . . . . . . . . . . . . 5 3 1/8
Fourth Quarter . . . . . . . . . . . . . . . . . . 4 3 1/8
_________________
(1) Because the Common Stock dividends declared in April, 1994 and March, 1995
were not material in terms of number of shares issuable nor was the market
price materially affected, no adjustment to the high or low sales prices
has been made to the above table.
As of May 1, 1995, there were approximately 2,100 registered holders of record
of Common Stock and 5,000 holders of Common Stock in "street name."
No cash dividends have been declared on the Company's Common Stock since the
third quarter of fiscal 1990.
The registrar and transfer agent for the Company's Common Stock is Mellon
Securities Trust Company, c/o Mellon Securities Transfer Services of Ridgefield
Park, New Jersey 07660.
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ITEM 6. SELECTED FINANCIAL DATA.
The selected income statement data, operating data, balance sheet data and
asset quality ratios presented below for the fiscal years ended April 2, 1995,
March 27, 1994 and March 28, 1993 and as of April 2, 1995 and March 27, 1994
have been derived from the Company's Consolidated Financial Statements which
have been audited by Ernst and Young LLP, independent certified public
accountants, and which are incorporated by reference into Item 8, Part II
herein from the Company's 1995 Annual Report to Shareholders, together with its
report thereon, and such financial data are qualified by reference to such
financial statements. The selected data presented below for the years ended
March 29, 1992 and March 31, 1991 and as of March 28, 1993, March 29, 1992 and
March 31, 1991 are derived from the Company's audited consolidated financial
statements which are not included in Item 8, Part II herein.
The selected financial data set forth below should be read in conjunction with
the Consolidated Financial Statements, including the notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" which are incorporated by reference into Item 8 and Item 7,
respectively, Part II herein from the Company's 1995 Annual Report to
Shareholders.
PATTEN CORPORATION
SELECTED FINANCIAL DATA
(Amounts in thousands except for per share data)
APRIL 2, MARCH 27, MARCH 28, MARCH 29, MARCH 31,
1995 1994 1993 1992 1991(3)
--------- --------- --------- --------- ---------
INCOME STATEMENT DATA
- ---------------------
Sales of real estate . . . . $ 91,922 $ 63,389 $ 53,349 $ 45,100 $ 63,691
Interest income (1). . . . . 7,264 7,952 10,191 16,515 17,966
--------- --------- --------- --------- ---------
Total revenues . . . . . . . 99,186 71,341 63,540 61,615 81,657
Income (loss) from
operations . . . . . . . . 10,029 6,778 3,604 1,089 ( 49,253)
Net income (loss). . . . . . 6,137 4,931 3,457 1,368 ( 32,189)
Net income (loss) per
common share . . . . . . . .30 .24 .17 .07 ( 1.66)
OPERATING DATA
- --------------
Gross margin on sales of
real estate (2) . . . . . 50.9% 51.5% 46.7% 36.3% 30.2%
Average sales price per
period on parcels sold . . $ 30,296 $ 25,468 $ 20,839 $ 20,967 $ 24,217
Number of land parcels sold. 2,397 2,489 2,560 2,151 2,630
Number of timeshare
intervals sold . . . . . 952 --- --- --- ---
Average sales price per
period on interval sales . $ 7,119 $ --- $ --- $ --- $ ---
Number of homes sold . . . . 133 44 --- --- ---
Average sales price per
period on home sales . . . $ 100,866 $ 70,044 $ --- $ --- $ ---
Average yield earned on
notes receivable at
period end . . . . . . . . 12.4% 10.9% 11.0% 12.1% 13.9%
BALANCE SHEET DATA
- ------------------
Notes receivable, net. . . . $ 39,269 $ 42,882 $ 32,772 $ 102,693 $ 106,923
Inventory, net . . . . . . . 63,387 40,114 31,126 33,749 34,600
Total assets . . . . . . . . 152,222 139,617 122,853 182,193 198,799
Short-term debt. . . . . . . --- --- 6,500 --- ---
Current portion of lines
of credit, notes payable
and mortgage backed debt . 10,856 5,741 5,684 13,503 16,549
Long-term portion of
lines of credit, notes
payable and mortgage
backed debt. . . . . . . . 29,090 31,556 14,418 76,209 89,969
8.25% convertible
subordinated debentures. . . 34,739 34,739 34,739 34,739 34,739
Shareholders' equity . . . . 58,040 51,854 46,868 43,378 42,010
Book value per common share. $ 2.98 $ 2.91 $ 2.74 $ 2.54 $ 2.46
Shares outstanding at end
of year (000's) . . . . . 19,471 17,796 17,083 17,061 17,061
ASSET QUALITY RATIOS
- --------------------
Inventory valuation reserve
to gross inventory (3) . . 3.6% 10.2% 17.1% 29.6% 43.4%
Charge-offs, net of
recoveries, to
average loans. . . . . . . 1.5% 2.1% 2.1% 1.3% 1.5%
Reserve for loan losses
to period end loans. . . . 2.0% 1.5% 1.9% 2.1% 2.6%
_________________
17
18
(1) Interest income for fiscal 1995, 1994 and 1993 includes a $411,000 loss, a
$238,000 loss and a $695,000 gain, respectively, from transactions relating
to the private sales of REMIC certificates.
(2) Gross margin is computed as the difference between the sale price and the
related cost of inventory, including the cost of improvements and
amenities, divided by the sale price.
(3) During fiscal 1991, the Company experienced a continued downturn in the
market for real estate, particularly in the Northeast. Accordingly,
significant provisions for the write-down of inventory to estimated net
realizable value and estimated loan losses were recorded which contributed
to the substantial net loss for the fiscal year. The Company's operating
results improved subsequent to fiscal 1991 due, in part, to the gradual
improvement in the real estate market as well as the Company's program to
liquidate inventory in the Northeast in favor of greater geographic
diversification in markets less affected by adverse market conditions. The
inventory reserve to gross inventory ratio has decreased in connection with
the liquidation of the related inventory previously reserved for.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information provided under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 18 - 25 of
the Company's 1995 Annual Report to Shareholders is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Financial Statements of the Company and its subsidiaries and
the related notes thereto and the report of independent certified public
accountants on pages 26 - 40 of the Company's 1995 Annual Report to
Shareholders are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
18
19
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
For information with respect to the Company's Directors, see the information
provided under the headings "Proposals 1 and 2 - Fixing of Number of Directors
at Six and Election of Named Directors" and "Certain Transactions and Other
Information" in the Company's definitive proxy statement to be filed for its
Special Meeting in Lieu of Annual Meeting of Shareholders to be held on July
20, 1995 ("Proxy Statement"), which sections are incorporated herein by
reference. Information concerning the executive officers of the Company
appears in Part I of this Annual Report on Form 10-K.
The present members of the Board of Directors of the Company are:
Joseph C. Abeles, Trustee, Abel Associates Trust
George F. Donovan, President and Chief Executive Officer, Patten
Corporation
Ralph A. Foote, Esq., Senior Partner, Conley & Foote
Frederick M. Myers, Esq., Senior Partner, Cain, Hibbard, Myers & Cook
Stuart A. Shikiar, General Partner, Omega Advisors
Bradford T. Whitmore, General Partner, Grace Brothers, Ltd.
SECTION 16 COMPLIANCE
The information provided under the heading "Section 16 Compliance" in the
Company's Proxy Statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information provided under the headings "Proposals 1 and 2 - Fixing of
Number of Directors at Six and Election of Named Directors," "Board of
Directors and its Committees," "Executive Compensation" and "Certain
Transactions and Other Information" in the Company's Proxy Statement is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Security ownership of certain beneficial owners: The information
provided under the heading "Proposals 1 and 2 - Fixing of Number of
Directors at Six and Election of Named Directors" in the Company's
Proxy Statement is incorporated herein by reference.
(b) Security ownership of management: The information concerning
beneficial ownership of the Company's common stock by its Directors
and executive officers provided under the heading "Proposals 1 and 2 -
Fixing of Number of Directors at Six and Election of Named Directors"
in the Company's Proxy Statement is incorporated herein by reference.
(c) Changes in control: None. For information regarding the sale of the
beneficial holdings of the Company's Common Stock formerly held by
Harry S. Patten, see "Certain Transactions and Other Information" in
the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a) Transactions with management and others: The information provided
under the headings "Proposals 1 and 2 - Fixing of Number of Directors
at Six and Election of Named Directors," "Executive Compensation" and
"Certain Transactions and Other Information" in the Company's Proxy
Statement is incorporated herein by reference.
(b) Certain business relationships: The information concerning
relationships regarding Directors, or nominees for Director, that
exist or have existed during the Company's fiscal year ended April 2,
1995 provided
19
20
under the headings "Proposals 1 and 2 - Fixing of Number of Directors
at Six and Election of Named Directors" and "Certain Transactions and
Other Information" in the Company's Proxy Statement is incorporated
herein by reference.
(c) Indebtedness of management: The information provided under the
heading "Certain Transactions and Other Information" in the Company's
Proxy Statement is incorporated herein by reference.
(d) Transactions with promoters: None.
20
21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) AND (a)(2) LIST OF FINANCIAL STATEMENTS AND SCHEDULES.
1. The following Consolidated Financial Statements of the Company and its
subsidiaries and the report of independent certified public accountants
relating thereto, included in the Company's 1995 Annual Report to
Shareholders on the pages indicated, are incorporated by reference into Item
8 hereof:
Page
------
Report of Independent Certified Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . 26
Consolidated Balance Sheets as of April 2, 1995 and March 27, 1994 . . . . . . . . . . . . . . . . . 27
Consolidated Statements of Income for each of the three years in the period
ended April 2, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Consolidated Statements of Shareholders' Equity for each of the three years
in the period ended April 2, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Consolidated Statements of Cash Flows for each of the three years in the period
ended April 2, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 - 30
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 - 40
2. All financial statement schedules are omitted because they are not
applicable or the required information is presented in the Consolidated
Financial Statements or related notes.
(a)(3) LIST OF EXHIBITS.
The exhibits which are filed with this Annual Report on Form 10-K or which are
incorporated herein by reference are set forth in the Exhibit Index which
appears at pages 23 - 25 hereof, which Exhibit Index is incorporated herein by
reference.
(b) REPORTS ON FORM 8-K.
No reports of Form 8-K were filed during the last quarter of the period covered
by this report.
(c) EXHIBITS.
See (a)(3) above.
(d) FINANCIAL STATEMENT SCHEDULES.
None
21
22
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.
PATTEN CORPORATION
(Registrant)
Date: June 9, 1995 By /s/ GEORGE F. DONOVAN
-----------------------------------------------
George F. Donovan, President and Chief Executive
Officer
Date: June 9, 1995 By: /s/ ALAN L. MURRAY
-----------------------------------------------
Alan L. Murray, Treasurer and Chief Financial Officer
(Principal Financial Officer)
Date: June 9, 1995 By: /s/ DANIEL C. KOSCHER
-----------------------------------------------
Daniel C. Koscher, Chief Accounting Officer,
Vice President and Assistant Secretary
(Principal Accounting Officer)
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 indicated on the 9th day of June, 1995.
Signature Title
--------- -----
/s/ GEORGE F. DONOVAN President, Chief Executive Officer and Director
- ----------------------------------
George F. Donovan
/s/ ALAN L. MURRAY Treasurer and Chief Financial Officer
- ---------------------------------- (Principal Financial Officer)
Alan L. Murray
/s/ DANIEL C. KOSCHER Chief Accounting Officer, Vice President
- ---------------------------------- and Assistant Secretary
Daniel C. Koscher (Principal Accounting Officer)
/s/ JOSEPH C. ABELES Director
- ----------------------------------
Joseph C. Abeles
/s/ RALPH A. FOOTE Director
- ----------------------------------
Ralph A. Foote
/s/ FREDERICK M. MYERS Director
- ----------------------------------
Frederick M. Myers
/s/ BRADFORD T. WHITMORE Director
- ----------------------------------
Bradford T. Whitmore
/s/ STUART A. SHIKIAR Director
- ----------------------------------
Stuart A. Shikiar
22
23
PATTEN CORPORATION
ANNUAL REPORT ON FORM 10-K
EXHIBIT INDEX
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
3.1 Restated Articles of Organization as amended (incorporated by reference to exhibit of
same designation to Annual Report on Form 10-K for the fiscal year ended April 2, 1989).
3.2 By-laws of Registrant, as amended May 31, 1991 (incorporated by reference to exhibit
of same designation to Annual Report on Form 10-K for the fiscal year ended March 31, 1991).
3.3 By-laws of the Registrant, as proposed to be amended and effective as of the day
immediately following the Special Meeting in Lieu of Annual Meeting for 1995.
4.4 Specimen of Common Stock Certificate (incorporated by reference to exhibit of same
designation to Registration Statement on Form S-1, File No. 33-13076).
4.6 Form of Indenture dated as of May 15, 1987 relating to the Company's 8.25% Convertible
Subordinated Debentures Due 2012, including Form of Debenture (incorporated by reference to
exhibit of same designation to Registration Statement on Form S-1, File No. 33-13753).
10.17 Registrant's 1988 Outside Directors Stock Option Plan (incorporated by reference to exhibit
of same designation to Annual Report on Form 10-K for the fiscal year ended March 31, 1987).
10.24 Form of Agreement dated June 27, 1989 between Registrant and Peoples Heritage Savings Bank
relating to sale of mortgage notes receivable (incorporated by reference to exhibit of same
designation to Annual Report on Form 10-K for the fiscal year ended April 2, 1989).
10.27 Registrant's Second Amended and Restated 1985 Stock Option Plan (incorporated by reference
to exhibit of same designation to Registration Statement on Form S-1, File No. 3-13753).
10.47 Amended and Restated Loan and Security Agreement entered into as of January 9, 1990 by
Patten Receivables Finance Corporation VI, Greyhound Real Estate Finance Company and Patten
Corporation as Guarantor (incorporated by reference to exhibit of same designation to
Annual Report on Form 10-K for the fiscal year ended April 1, 1990).
10.53 Modification dated July 16, 1990 of Amended and Restated Loan and Security Agreement entered
into as of January 9, 1990 by Patten Receivables Finance Corporation VI, Greyhound Real Estate
Finance Company and Patten Corporation as Guarantor (incorporated by reference to exhibit
of same designation to Annual Report on Form 10-K for the fiscal year ended April 1, 1990).
10.58 Amendment to the Security Agreement entered into as of March 23, 1991, by Patten Receivables
Finance Corporation VI, Greyhound Real Estate Finance Company and Patten Corporation as
Guarantor (incorporated by reference to exhibit of same designation to Annual Report on
Form 10-K for the fiscal year ended March 31, 1991).
10.74 Waiver dated May 11, 1992 together with modification letter dated June 15, 1992 with respect
to the Amended Security Agreement entered into as of March 23,1991 by Patten Receivables
Finance Corporation VI, Greyhound Real Estate Finance Company and Patten Corporation as
guarantor (incorporated by reference to exhibit of same designation to Annual Report on
Form 10-K for the fiscal year ended March 29, 1992).
10.77 Registrant's Amended 1988 Outside Directors Stock Option Plan (incorporated by reference to
exhibit of same designation to Annual Report on Form 10-K for the fiscal year ended
March 29, 1992).
10.79 Registrant's Retirement Savings Plan (incorporated by reference to Registration Statement
on Form S-8, File No. 33-48075).
23
24
PATTEN CORPORATION
ANNUAL REPORT ON FORM 10-K
EXHIBIT INDEX
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
10.81 Pooling and Servicing Agreement dated June 30, 1992 among Patten Corporation REMIC Trust,
Series 1992-1, Patten Corporation, Patten Receivables Finance Corporation VIII and
First Trust National Association as Trustee (incorporated by reference to exhibit of same
designation to Quarterly Report on Form 10-Q for the period ended June 28, 1992).
10.82 Employment Agreement dated as of December 20, 1993 by and between Patten Corporation and
George F. Donovan (incorporated by reference to exhibit of same designation to Quarterly
Report on Form 10-Q for the period ended December 26, 1993).
10.84 Pooling and Servicing Agreement dated as of April 15, 1994, among Patten Receivables
Finance Corporation IX, Patten Corporation, Patten Corporation REMIC Trust, Series
1994-1 and First Trust National Association, as Trustee (incorporated by reference to
exhibit of same designation to Annual Report on Form 10-K for the fiscal year ended
March 27, 1994).
10.85 Loan and Security Agreement by and between Patten Corporation and Foothill Capital
Corporation dated as of October 29, 1993 (incorporated by reference to exhibit of same
designation to Annual Report on Form 10-K for the fiscal year ended March 27, 1994).
10.86 First Amendment dated December 23, 1993 to Loan and Security Agreement by and between
Patten Corporation and Foothill Capital Corporation dated as of October 29, 1993
(incorporated by reference to exhibit of same designation to Annual Report on Form 10-K
for the fiscal year ended March 27, 1994).
10.87 Loan and Security Agreement dated as of June 11, 1993 by and among Patten Receivables
Finance Corporation III, Patten Corporation and General Electric Capital Corporation
(incorporated by reference to exhibit of same designation to Annual Report on Form 10-K
for the fiscal year ended March 27, 1994).
10.88 Amendment dated May 12, 1993 to Amended and Restated Loan and Security Agreement entered
into as of January 9, 1990 by Patten Receivables Finance Corporation VI, Greyhound Real
Estate Finance Company and Patten Corporation as Guarantor (incorporated by reference to
exhibit of same designation to Annual Report on Form 10-K for the fiscal year ended
March 27, 1994).
10.89 Amendment dated February 18, 1994 to Amended and Restated Loan and Security Agreement
entered into as of January 9, 1990 by Patten Receivables Finance Corporation VI, Greyhound
Real Estate Finance Company and Patten Corporation as Guarantor (incorporated by reference
to exhibit of same designation to Annual Report on Form 10-K for the fiscal year ended
March 27, 1994).
10.90 Loan Agreement dated as of August 12, 1994 by and among Patten Homes, Inc., Patten
Corporation and Branch Banking and Trust Company (incorporated by reference to exhibit of
same designation to Quarterly Report on Form 10-Q for the period ended September 25, 1994).
10.91 Amendment dated June 29, 1994 to Amended and Restated Loan and Security Agreement entered
into as of January 9, 1990 by Patten Receivables Finance Corporation VI, Greyhound Financial
Corporation and Patten Corporation as Guarantor (incorporated by reference to exhibit of
same designation to Quarterly Report on Form 10-Q for the period ended September 25, 1994).
10.92 Loan Agreement dated as of June 29, 1994 by and between Greyhound Financial Corporation and
Properties of the Southwest, Inc. (incorporated by reference to exhibit of same designation
to Quarterly Report on Form 10-Q for the period ended September 25, 1994).
24
25
PATTEN CORPORATION
ANNUAL REPORT ON FORM 10-K
EXHIBIT INDEX
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
10.93 Stock Purchase Agreement dated as of November 22, 1994 by and among Harry S. Patten and the
Purchasers named therein (incorporated by reference to exhibit of same designation to
Current Report on Form 8-K dated November 22, 1994).
10.94 Amendment dated December 14, 1994 to Amended and Restated Loan and Security Agreement entered
into as of January 9, 1990 by Patten Receivables Finance Corporation VI, Greyhound Financial
Corporation and Patten Corporation as Guarantor.
10.95 Amended and Restated Loan and Security Agreement dated as of December 14, 1994, by and
between Greyhound Financial Corporation and Patten Corporation.
10.96 Registrant's 1995 Stock Incentive Plan.
11.1 Statement re: Computation of Earnings Per Share (such information is incorporated by reference
to the Statement of Income of the Consolidated Financial Statements appearing on page 24 of
the Company's 1995 Annual Report to Shareholders, which is an exhibit hereto).
13.1 1995 Annual Report to Shareholders (with the exception of the information incorporated by
reference included in Items 7 and 8, the 1995 Annual Report to Shareholders is not deemed
filed as part of this Annual Report on Form 10-K).
23 Consent of Ernst & Young LLP.
27 Financial Data Schedule.
25