ITEM 1. BUSINESS
(a) General Business
The majority of revenues for the 1996, 1995, and 1994 years were derived from the water and garbage operations of two subsidiaries. Presently the management of Holiday-Gulf Homes, Inc. believes these subsidiaries will continue to provide a majority of the revenue.
(b) Narrative Description of Business
The Company has two utility company subsidiaries and a land development subsidiary. The utility subsidiaries represent the operating source of revenue. These companies bill customers on a monthly basis for water and garbage charges. The utility companies are operated by an outside contractor. The rates charged by the utility companies are set by the Florida Public Service Commission.
Patents, etc.
There are no patents, licenses, franchises or concessions held by the Company which it deems important and material for an understanding of its business.
Research and Development
No money was spent by the Company during the years ended December 31, 1996, 1995, and 1994 on research activities.
Federal, State, and Local Regulations
The utility subsidiaries are subject to the Florida Public Service Commission regulations. There are no material estimated capital expenditures for the current or succeeding years. All reports required by the Florida Public Service Commission have been filed.
Personnel
The Company as of December 31, 1996, employed one person full time. The Company's employee is not represented by a union.
Seasonal Factors
The Company's operations as a whole are not significantly affected by seasonal factors.
Competitive Conditions
The utility subsidiaries are regulated by a public authority, therefore there are no competitive conditions.
ITEM 2.
ITEM 2. PROPERTIES
The Company's activities are presently conducted primarily in Pasco County, Florida. All of the Company's facilities are well maintained and believed to be in good condition.
The following is a description of the location and general character of property owned by the Company and its subsidiaries.
(a) The land development subsidiary owns a warehouse and office complex located in New Port Richey, Florida for which they receive rent on a monthly basis. The annual rents totaled $36,213 for 1996 and $34,990 for 1995.
(b) The Company owns five well lots where Crestridge Utility Corporation is located. These lots house the pumping station and wells.
(c) The Company owns two well lots where Holiday Gardens Utilities, Inc. is located. These lots house the pumping station and wells.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Annual meeting of stockholders was held June 29, 1996 for the December 31, 1995 year.
(b) Elected directors and executive officers for the upcoming 1997 year were:
Linda Emerick - Director and President Thomas L. Burkett - Director and Vice President Ronnie L. Mohr - Director and Secretary Eileen M. Falla - Treasurer
(c) Other matters voted upon and the number of affirmative votes and negative votes cast with respect to each such matter.
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Holiday-Gulf Homes, Inc.'s Common stock is traded on the over the counter market. Generally, excluding limited or sporadic quotations, there is no market for such stock. The number of record holders of Holiday-Gulf Homes, Inc. Common Stock at December 31, 1996 was 471.
The Company distributed dividends of $95,193 in April, 1995, $95,192 in April, 1993, $95,192 in October, 1990, $95,192 in December, 1989 and $95,192 in March, 1988. For the ten years prior to the 1988 dividend the Company had not made any distributions.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
YEARS ENDED DECEMBER 31,
1996 1995 1994
Utility Revenues $ 277,670 $ 270,772 $ 265,500
Net Income $ 58,110 $ 54,661 $ 51,308
Net Income Per Common Share $ .030 $ .029 $ .027
Total Assets $ 275,789 $ 214,183 $ 256,155
Long-Term Debt $ -0- $ -0- $ -0-
Cash Dividends Declared Per Share $ -0- $ .05 $ -0-
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(a) Liquidity and Capital Resources
The Company maintains 66% of its assets in cash and other current assets. At present there are no plans for expansion and no material repairs are anticipated for the utility companies. The Company has been maintaining the water lines and meters on a regular basis.
(b) Results of Operations
The majority of the revenues are generated by the utility companies. These completed a rate increase audit with the Public Service Commission in 1992. The new rates became effective in 1993.
The rates increased again in 1996 and 1995 due to indexing.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Utility operating revenues increased 2.55% in 1996 to $277,670, up $6,898 over 1995 and increased 4.58% in 1996, up $12,170 over 1994. The increase in revenues is due primarily to rate increases in water revenues.
The gross profit percentages for the years 1996, 1995 and 1994 of 50.55%, 50.16% and 49.18%, respectively, were maintained due to the stability in the number of customers.
General and administrative expenses have increased as a percentage of utility revenues compared to 1995 and 1994 as a result of increased expenditures for insurance, stock agent fees, wages and related taxes and office supplies. General and administrative expenses as a percentage of utility revenues were approximately 29.20% in 1996 as compared to 28.83% and 28.95% for 1995 and 1994.
Income from other operations increased 6.48% in 1996 to $40,467, up $2,463 over 1995 and increased 10.53% in 1996, up $3,855 over 1994. The increase in revenues is due primarily to increases in rental income.
General and administrative expenses from other operations have decreased as a percentage of income from other operations compared to 1995, and 1994 as a result of management controlling operating costs. General and administrative expenses from other operations as a percentage of income from other operations were approximately 75.51 % in 1996 as compared to 80.11% and 80.38% for 1995 and 1994.
Net income increased 6.31% in 1996 to $58,110, up $3,449 over 1995 and increased 13.26% in 1996, up $6,802 over 1994. The improvements to net income are the result of improved water revenues, rental income and management controlling costs.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of Holiday-Gulf Homes, Inc., included in the annual report to shareholders are incorporated herein by reference:
Consolidated Balance Sheets - December 31, 1996 and 1995
Consolidated Statements of Operations - Years ended December 31, 1996, 1995, and 1994
Consolidated Statements of Shareholders' Equity - Years ended December 31, 1996, 1995, and 1994
Consolidated Statements of Cash Flows - Years ended December 31, 1996, 1995, and 1994
Notes to Consolidated Financial Statements - December 31, 1996
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
NAME AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
Linda Emerick 51 Director and President of Holiday-Gulf Homes, Inc. since June 23, 1987. Mrs. Emerick was the Secretary - Treasurer of Hillrow, Inc. July, 1966 through June, 1989. She is currently operating a bookkeeping and management service.
Thomas L. Burkett 59 Director and Vice President of Holiday- Gulf Homes, Inc. since June 23, 1987. Mr. Burkett is the District Sales Manager of the Gehl Company which manufactures Agricultural Equipment. Mr. Burkett has been their employee for the past 30 years.
Ronnie L. Mohr 48 Director and Secretary of Holiday-Gulf Homes, Inc. since December 30, 1992. He has been engaged in farming for 32 years.He has been a Director and Board Chairman of R & S Mohr Family Farms, Inc. since 1981; he is Director of Ag- One Coop, Inc. and Central Indiana Power.
Eileen M. Falla 50 Treasurer of Holiday-Gulf Homes, Inc. since June 23, 1987. Mrs. Falla has been employed by Holiday-Gulf Homes, Inc. since October, 1983.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
No executive officer of the Company received cash compensation in excess of $20,000.
The Company has no annuity, pension or retirement plans. There are no life, health, hospitalization or medical reimbursement plans other than group plans which are available generally to all salaried employees.
There are no remuneration payments proposed to the officers or directors to be made in the future directly or indirectly by the Company or any of its subsidiaries pursuant to any existing plan or agreement.
Each director is reimbursed for travel and other expenses related to attendance at directors' meetings. The directors receive a fee ranging from $3,600 to $20,000 per year.
There were no stock appreciation rights or options to purchase securities from the Company granted to, exercised by, or realized by an officer or director of the Company during the fiscal years ended December 31, 1996 and 1995.
There were no loans from directors as of December 31, 1996 and 1995.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of December 31, 1996, with respect to the ownership of Common Stock by all shareholders known by the Company to be the beneficial owners of more than 5% of its outstanding Common Stock, all directors, and all directors and officers of the Company as a group. The percentages stated are based upon 1,903,853 issued shares of Common Stock.
AMOUNT OF BENEFICIAL PERCENTAGE OWNERSHIP OF TOTAL NAME AND ADDRESS (NUMBER OF SHARES) SHARES
Anita Jane Duckworth 260,000 13.66% 3242 W Old Franklin Rd Shelbyville, Indiana
Fred W. Garver 154,000 8.09% 3831 N London Rd Fairland, Indiana
Linda & Wray Emerick 40,450 2.12% 8318 W 600 South Edinburgh, Indiana (Linda - Director & Officer)
Donald R. Pence 220,500 11.58% 6598 W 1150 S Edinburgh, Indiana
E.J. Terpstra 110,000 5.78% 4681 N State Rd 9 Shelbyville, Indiana
Ronnie & Sarah Mohr 202,000 10.61% 5200 E 600 N Greenfield, Indiana (Ronnie - Director & Officer)
Thomas L. Burkett 50,000 2.63% 1609 N Fort Wayne Rd Rushville, Indiana (Director & Officer)
All Directors and Officers as a group (3) 292,450 15.36%
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits and financial statement schedules
1. Financial Statements
Among responses to this ITEM 14 are the following financial statements which are incorporated herein by reference in ITEM 8 above:
( i) Consolidated Balance Sheets - December 31, 1996 and 1995.
( ii) Consolidated Statements of Operations - Years ended December 31, 1996, 1995, and 1994.
(iii) Consolidated Statements of Shareholders' Equity - Years ended December 31, 1996, 1995, and 1994.
( iv) Consolidated Statements of Cash Flows - Years ended December 31, 1996, 1995, and 1994.
( v) Notes to Consolidated Financial Statements - December 31, 1996.
2. Supplementary Data and Financial Statement Schedules
( i) Schedule I - Holiday-Gulf Builders, Inc., Detail Statement of Non-Utility Operations as of and for the years ended December 31, 1996 and 1995.
3. Exhibits required by Item 601 of Regulation S-K.
( 22) Subsidiaries of the Company.
PERCENTAGE OF SECURITIES JURISDICTION OF DIRECTLY OR INDIRECTLY NAME INCORPORATION OWNED BY THE COMPANY
Holiday-Gulf Builders, Inc. Florida 100%
Crestridge Utility Corporation Florida 100%
Holiday Gardens Utilities, Inc. Florida 100%
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HOLIDAY-GULF HOMES, INC. (Registrant)
By: (Signature and Title)
Date: March 11, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
(Signature and Title) Linda Emerick, President and Director
Date:
(Signature and Title) Thomas L. Burkett, Vice President and Director
Date:
(Signature and Title) Ronnie L. Mohr, Secretary and Director
Date:
(Signature and Title) Eileen M. Falla, Treasurer
Date:
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors Holiday-Gulf Homes, Inc. and Subsidiaries Holiday, Florida
We have audited the accompanying consolidated balance sheets of HOLIDAY- GULF HOMES, INC. (a Minnesota corporation) AND SUBSIDIARIES as of December 31, 1996 and 1995, and the related consolidated statements of income, shareholders' equity, and cash flows for the years ended December 31, 1996, 1995 and 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Holiday-Gulf Homes, Inc. and Subsidiaries, as of December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for the years ended December 31, 1996, 1995 and 1994 in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on page 23 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
ARNOLD AND CO., P.A.
January 8, 1997
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation--
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Recognition of Income from Utility Operations--
The majority of the Company's revenues are generated by two Utility Companies. These Companies recognize revenues on a monthly basis. The use is based on actual meter readings by an outside independent contractor. The independent contractor also provides services for other utility companys in the area. The independent contractors fees are based on a set amount per customer plus any additional repairs.
Depreciation--
Depreciation included in the accompanying financial statements has been provided by the straight-line method at rates calculated to amortize the cost of the assets over their estimated useful lives as follows:
YEARS Utility Plant and Equipment 5 - 40 Building and Improvements 5 - 30
Maintenance and repairs of property and equipment are charged to expense as incurred, whereas renewals and betterments are capitalized. When properties are replaced, retired, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts. Any gain or loss, is credited or charged to operations in the year of disposal.
Amortization--
The Contribution in Aide of Construction (CIAC) costs are being amortized over a period of sixteen years using the straight-line method.
CIAC represents $1,325 received in 1995 from a utility customer to help pay for the cost of the new asset.
Cash--
For the purpose of the statement of cash flows, cash includes cash on hand, cash in checking and money market accounts, and Certificates of Deposit.
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes--
The Company and its subsidiaries file consolidated Federal and State Income Tax Returns.
Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" (FAS 109). Under the provisions of FAS 109, an entity recognizes deferred tax assets and liabilities for future tax consequences of events that have been previously recognized in the Company's financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on provisions of the enacted tax law; the effect of the future changes in tax laws or rates are not considered.
Earnings Per Share--
Earnings per share of Common Stock is computed based upon weighted average number of shares outstanding for the year (1,903,853 shares in 1996 and 1995).
(2) - LONG-TERM DEBT:
There was no debt at the end of 1996 or 1995.
(3) - STOCK OPTION PLAN:
The Company has adopted a qualified stock option plan whereby options may be granted to key employees to purchase a maximum 50,000 shares of the Company's common stock at not less than 10% of the fair market value of the shares at date of grant. The options are exercisable in installments of not more than 20% of the shares covered thereby during any one-year period, subject to the right of cumulation. The options expire five years from the date of grant. No options have been granted under this plan.
(4) - PROPERTY AND EQUIPMENT:
The property and equipment accounts consisted of the following at December 31, 1996 and December 31, 1995: 1996 1995 Land, Buildings, Office Equipment and Furniture $ 72,883 $ 66,311 Water, Plant and Equipment 292,991 290,742 ------------ ------------ Total Property and Equipment $ 365,874 $ 357,053 Less: Accumulated Depreciation (272,836) (261,673) ------------ ------------- Net Property and Equipment $ 93,038 $ 95,380 ============ =============
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) - RELATED PARTY TRANSACTIONS:
There were no related party transactions during the 1996 and 1995 years.
(6) - LEASE:
The Company is leasing office space in Knollwood Plaza under a three- year lease expiring in October, 1999. The lease is $450 per month.
The following is a schedule of future minimum lease payments:
December 31, 1997 $ 5,400 December 31, 1998 5,400 December 31, 1999 4,500 -------- Total $ 15,300 ========
(7) - INCOME TAXES:
Pretax income from continuing operations for the years ended December 31, was as follows:
1996 1995 1994
$ 58,110 $ 54,661 $ 51,308
Significant components of the provision for income taxes attributable to continuing operations are as follows:
1996 1995 1994
Current: Federal $ 9,040 $ 8,557 $ 7,589 State 2,978 2,865 2,654 ------------ ------------ ------------ Total Current 12,018 11,422 10,243
Deferred: Federal - - - State - - - ------------ ------------ ------------ Total Provision $ 12,018 $ 11,422 $ 10,243 ============ ============ ============
HOLIDAY-GULF HOMES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(7) - INCOME TAXES: (CONTINUED)
There are no deferred tax assets and liabilities as of December 31, 1996, 1995 and 1994, due to management not expecting to realize any reduction of taxes when the operating losses originated in 1983 and 1984.
The reconciliation of income tax computed at the U.S. federal statutory tax rates (34%) to income tax expense is:
1996 1995 1994 AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
Tax at U.S. Statutory rates $ 19,757 34.00 $ 18,585 34.00 $ 17,445 34.00 Surtax exemption (10,055) (17.30) (9,881) (18.07) (9,613) (18.73) State income tax- net of federal tax benefits 1,966 3.38 1,891 3.46 1,752 3.41 Non-deductible expenses 350 .60 827 1.51 659 1.28 -------- ----- -------- ----- -------- ----- $ 12,018 20.68 $ 11,422 20.90 $ 10,243 19.96 ======== ===== ======== ===== ======== =====
Operating Loss Carryforwards--
The Company has loss carryforwards totaling $302,152 that may be offset against future taxable income. If not used, the carryforward will expire as follows:
Year Year Originated Expired
1983 1998 $ 102,843 1984 1999 171,592 1991 2006 27,717 --------- $ 302,152 =========