SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended February 28, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file no. 1-8846
CALTON, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-2433361
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 Craig Road
Manalapan, New Jersey 07726-8790
(Addresses of principal executive offices) Zip Code
Registrant's telephone number,
including area code: (732) 780-1800
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 whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
As of March 31, 1999, 21,731,000 shares of Common Stock were outstanding.
CALTON, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet at
February 28, 1999 and November 30, 1998. . . . . . . . . . . . 3
Consolidated Statement of Operations for the
Three Months Ended February 28, 1999 and 1998. . . . . . . . . 4
Consolidated Statement of Cash Flows for the
Three Months Ended February 28, 1999 and 1998. . . . . . . . . 5
Consolidated Statement of Changes in Shareholders'
Equity for the Three Months Ended February 28, 1999 . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . 10-11
PART II. Other Information
Item 2.Changes in Securities. . . . . . . . . . . . . . . . . . . .11
Item 4.Submission of Matters to a Vote of Securityholders. . . . . .12
Item 6. Exhibits and reports on Form 8-K . . . . . . . . . . . . . .12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
- - ------------------------------------------------------------------------------
Certain information included in this report and other Company filings
(collectively, "SEC filings") under the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended (as well as information
communicated orally or in writing between the dates of such SEC filings)
contains or may contain forward looking information that is subject to certain
risks, trends and uncertainties that could cause actual results to differ
materially from expected results. Among these risks, trends and uncertainties
are matters related to post-closing adjustments to be made in connection with
the Company's sale of Calton Homes, Inc., national and local economic
conditions and the effect of governmental regulation on the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
- - -----------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
------------------------------
Item 1. FINANCIAL STATEMENTS.
CALTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
February 28, November 30,
1999 1998
----------- -----------
(Unaudited)
Assets
Current Assets
Cash and cash equivalents. . . . . . . . . . $40,461,000 $ 85,000
Prepaid expenses and other assets. . . . . . 778,000 1,041,000
----------- -----------
Total current assets. . . . . . . . . . . . 41,239,000 1,126,000
Holdback receivable. . . . . . . . . . . . . . 5,176,000 --
Stock warrant. . . . . . . . . . . . . . . . . 100,000 105,000
Net assets of discontinued operations. . . . . -- 38,851,000
----------- -----------
Total assets . . . . . . . . . . . . . . . . $46,515,000 $40,082,000
=========== ===========
Liabilities and Shareholders' Equity
Accounts payable, accrued expenses and
other liabilities. . . . . . . . . . . . . . $ 1,429,000 $ 1,861,000
Net liabilities of discontinued operations. . 528,000 --
----------- -----------
Total liabilities. . . . . . . . . . . . . . 1,957,000 1,861,000
----------- -----------
Commitments and contingencies
Shareholders' equity
Common stock. . . . . . . . . . . . . . . . . 272,000 267,000
Paid in capital . . . . . . . . . . . . . . . 31,415,000 27,957,000
Retained earnings . . . . . . . . . . . . . . 14,249,000 10,112,000
Less cost of shares held in treasury. . . . . (1,378,000) (115,000)
----------- -----------
Total shareholders' equity . . . . . . . . . 44,558,000 38,221,000
----------- -----------
Total liabilities and shareholders' equity . $46,515,000 $40,082,000
=========== ===========
3
See accompanying notes to consolidated financial statements.
CALTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended February 28, 1999 and 1998
(Unaudited)
1999 1998
----------- -----------
Revenues . . . . . . . . . . . . . . . . . . . $ 574,000 $ --
----------- -----------
Costs and expenses
Cost of revenues. . . . . . . . . . . . . . . -- --
Selling, general and administrative . . . . . 310,000 532,000
----------- -----------
310,000 532,000
----------- -----------
Income (loss) from operations. . . . . . . . . 264,000 (532,000)
Interest expense, net. . . . . . . . . . . . . -- 16,000
----------- -----------
Income (loss) before income taxes. . . . . . . 264,000 (548,000)
Provision (benefit) for income taxes . . . . . 105,000 (247,000)
----------- -----------
Income (loss) from continuing operations . . . 159,000 (301,000)
Income from the sale of Calton Homes, Inc.,
net of a provision in lieu of
taxes of $2,591,000 . . . . . . . . . . . . . 3,886,000 --
Income (loss) from discontinued operations,
net of a provision (benefit) for income
taxes of $62,000 in 1999 and
($193,000) in 1998. . . . . . . . . . . . . . 92,000 (236,000)
----------- -----------
Net income (loss). . . . . . . . . . . . . . . $ 4,137,000 $ (537,000)
=========== ===========
Earnings per share
Basic:
Income (loss) from continuing operations . . $ .01 $ (.01)
Income from the sale of
Calton Homes, Inc., net . . . . . . . . . . .15 --
Loss from discontinued
operations, net . . . . . . . . . . . . . . -- (.01)
----------- -----------
Net income (loss). . . . . . . . . . . . . . $ .16 $ (.02)
=========== ===========
Diluted:
Income (loss) from continuing operations . . $ .01 $ (.01)
Income from the sale of
Calton Homes, Inc., net . . . . . . . . . . .14 --
Loss from discontinued
operations, net . . . . . . . . . . . . . . -- (.01)
----------- -----------
Net income (loss). . . . . . . . . . . . . . $ .15 $ (.02)
=========== ===========
Weighted average number of shares outstanding
Basic . . . . . . . . . . . . . . . . . . . . 25,855,000 26,627,000
=========== ===========
Diluted . . . . . . . . . . . . . . . . . . . 27,599,000 26,627,000
=========== ===========
4
See accompanying notes to consolidated financial statements.
CALTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended February 28, 1999 and 1998
(Unaudited)
1999 1998
----------- -----------
Operating Activities
Net income (loss) . . . . . . . . . . . . . . $ 4,137,000 $ (537,000)
Adjustments to reconcile net income (loss)
to net cash used by operating activities
Income (loss) from discontinued
operations . . . . . . . . . . . . . . . . (92,000) 236,000
Income from sale of Calton Homes, Inc.. . . (3,886,000) --
Provision (benefit) in lieu of
income taxes . . . . . . . . . . . . . . . 105,000 (247,000)
Change in net assets/liabilities of
discontinued operations. . . . . . . . . . 320,000 1,057,000
Depreciation and amortization . . . . . . . -- 43,000
Issuance of stock under 401(k) Plan
and other. . . . . . . . . . . . . . . . . -- 33,000
Increase (decrease) in accounts payable,
accrued expenses and other liabilities . . (432,000) (68,000)
(Decrease) increase in prepaid expenses
and other assets . . . . . . . . . . . . . 260,000 (509,000)
----------- -----------
412,000 8,000
----------- -----------
Investing Activities
Net proceeds from sale of Calton Homes, Inc.. 41,048,000 --
----------- -----------
41,048,000 --
----------- -----------
Financing Activities
Stock repurchase. . . . . . . . . . . . . . . (1,263,000) --
Stock options exercised . . . . . . . . . . . 179,000 --
----------- -----------
(1,084,000) --
----------- -----------
Net increase in cash and cash equivalents. . . 40,376,000 8,000
Cash and cash equivalents at
beginning of period . . . . . . . . . . . . . 85,000 17,000
----------- -----------
Cash and cash equivalents at end of period . . $40,461,000 $ 25,000
=========== ===========
5
See accompanying notes to consolidated financial statements.
CALTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Three months ended February 28, 1999
(Unaudited)
Common Paid in Retained Treasury
Stock Capital Earnings Stock Total
-------- ----------- ----------- ----------- -----------
Balance,
November 30, 1998 $267,000 $27,957,000 $10,112,000 $ (115,000) $38,221,000
Net income. . . . . -- -- 4,137,000 -- 4,137,000
Issuance of stock
under stock option
plans. . . . . . . 5,000 174,000 -- -- 179,000
Acceleration of stock
option vesting . . -- 525,000 -- -- 525,000
Provision in lieu of
income taxes . . . -- 2,759,000 -- -- 2,759,000
Less: Purchase of
treasury stock . . -- -- -- (1,263,000) (1,263,000)
-------- ----------- ----------- ----------- -----------
Balance,
February 28, 1999. $272,000 $31,415,000 $14,249,000 $(1,378,000) $44,558,000
======== =========== =========== =========== ===========
6
See accompanying notes to consolidated financial statements.
CALTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
---------------------
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and in accordance with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. These interim financial statements should be read in conjunction
with the Company's annual report for the year ended November 30, 1998.
Operating results for the three month period ended February 28, 1999 are not
necessarily indicative of the results that may be expected for the year ended
November 30, 1999.
On December 31, 1998, the Company completed the sale of Calton Homes, Inc.
("Calton Homes"), its primary operating subsidiary, to Centex Real Estate
Corporation ("Centex" or the "purchaser"), subject to certain post closing
adjustments. As a result of the sale of Calton Homes and the sale of the
Florida homebuilding assets that occurred at the end of fiscal 1997, the
financial statement presentation treats the Company's homebuilding business and
results as discontinued operations in accordance with APB Opinion No. 30,
"Reporting the Results of Operations Reporting the Effects of Disposal of a
Segment of a Business." Certain reclassifications have been made to prior
years' financial statements in order to conform with the 1998 presentation. All
significant intercompany accounts and transactions have been eliminated.
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
requires the presentation of basic and diluted per share amounts, effective for
financial statements issued for periods ending after December 15, 1997. As of
February 28, 1999, a total of 2,234,000 stock options have been granted and are
outstanding under the Company's stock option plans and 458,000 options have
been exercised. In addition, a warrant to purchase 1,000,000 shares of Common
Stock is also outstanding.
2. Discontinued Operations
-----------------------
On December 31, 1998, the Company completed the sale of Calton Homes. The
shareholders of Calton, Inc. approved the sale of the stock of Calton Homes on
December 30, 1998. The purchase price of the sale of Calton Homes was
$48,100,000, which will result in a estimated pretax gain
of approximately $8,800,000. Of this total, $6,477,000 pretax gain was
recognized in the first quarter and the remainder is subject to the resolution
of certain post-closing adjustments. No assurance can be given that the entire
estimated gain will be realized. Cash proceeds upon closing were approximately
$41,048,000, with $5,200,000 put in escrow in accordance with the holdback
provision (see Note 3).
As a result of the sale of Calton Homes and the sale of the Florida
homebuilding assets that occurred at the end of fiscal 1997, the financial
statements for the current and prior periods have been restated to reflect the
Company's homebuilding and real estate development business as discontinued
operations, including the operations of other subsidiaries located in Orlando,
Florida; Chicago, Illinois; Pennsylvania and California, where the Company had
similar operations and commercial land held for sale.
7
Net assets (liabilities) of discontinued operations are as follows (amounts in
thousands):
February 28, November 30,
1999 1998
----------- -----------
Assets
Cash and cash equivalents. . . . . . . . . . $ -- $ 11,910
Receivables and other assets . . . . . . . . 635 9,385
Inventories. . . . . . . . . . . . . . . . . -- 61,449
Commercial land. . . . . . . . . . . . . . . 250 252
Liabilities
Revolving credit agreement . . . . . . . . . -- (21,000)
Mortgages payable. . . . . . . . . . . . . . -- (1,262)
Accounts payable and accrued expenses. . . . (1,413) (21,883)
----------- -----------
Net assets/(liabilities). . . . . . . . . . . $ (528) $ 38,851
=========== ===========
Results of operations from discontinued operations are as follows (amounts in
thousands):
February 28,
---------------------------
1999 1998
----------- -----------
Revenues . . . . . . . . . . . . . . . . . . . $6,513 $12,804
----------- -----------
Cost of revenue . . . . . . . . . . . . . . . 5,710 11,662
Selling, general and administrative . . . . . 649 1,358
----------- -----------
6,359 13,020
----------- -----------
Income (loss) from operations. . . . . . . . . 154 (216)
Interest expense, net. . . . . . . . . . . . . -- 213
----------- -----------
Income (loss) before income taxes. . . . . . . 154 (429)
Provision (benefit) for income taxes . . . . . 62 (193)
----------- -----------
Net income (loss) from
discontinued operations . . . . . . . . . . . $ 92 $ (236)
=========== ===========
3. Commitments and Contingent Liabilities
--------------------------------------
(a) As part of the sale of Calton Homes on December 31, 1998, the Company
entered into a consulting agreement with the purchaser that requires the
purchaser to make payments of $1,300,000 per year over a three-year period to
the Company.
(b) The stock purchase agreement pursuant to which the Company sold Calton
Homes on December 31, 1998 requires the Company to indemnify the purchaser for,
among other things, breaches of the agreement and certain liabilities that
arise out of events occurring prior to the closing of the sale, including the
cost of warranty work on homes delivered if such costs exceed $600,000. On
December 31, 1998, as a condition to the sale of Calton Homes, the Company
entered into a holdback escrow agreement with the purchaser pursuant to which
$5,159,000 of the closing proceeds were deposited into escrow. Of this amount,
$3,000,000 (the "General Indemnification Funds") was deposited to provide
security for the Company's indemnity obligations and $2,159,000 (the "Specific
Indemnification Funds") was deposited to fund costs associated with certain
specified litigation involving Calton Homes. Subject to claims for
indemnification, one-half of the General Indemnification Funds will be
disbursed to the Company on December 31, 1999. The remaining General
Indemnification Funds will be disbursed to the Company, subject to claims for
indemnification, on December 31, 2000. The Specific Indemnification Funds will
be disbursed, to the extent not otherwise utilized in the resolution of
litigation, on a case by case basis as the litigation is resolved. If all of
the specified litigation is not resolved by December 31, 2000, a portion of the
General Indemnification Funds will not be disbursed to the Company until the
resolution of the litigation. The holdback funds are earning interest for the
Company at a market rate, approximately 4.5%, however, the earnings are also
-8-
subject to the indemnity obligations. The Company may, under certain
circumstances, be required to deposit additional funds in the holdback if all
of the specified litigation is not resolved by December 31, 2000. In addition,
the Company's indemnity obligations are not limited to the amounts deposited in
escrow. In the event that the Company elects to liquidate and dissolve prior to
December 31, 2003, it will be required to organize a liquidating trust to
secure its obligations to the purchaser. The liquidating trust will be funded
with the Specific Indemnification Funds plus $4,000,000 if created before
December 31, 1999, $3,000,000 if created between December 31, 1999 and
December 31, 2000 and $2,000,000 if created after December 31, 2000. If the
liquidation occurs prior to December 31, 2000, the Company may be required to
deposit additional amounts in the liquidating trust if the specified litigation
is not resolved by such date. Any General Indemnification Funds remaining in
the holdback escrow fund will be applied as a credit against amounts required
to be deposited in the liquidating trust.
(c) The Company had a qualified contributory retirement plan (401(k) Plan)
which covered all eligible full-time employees with a minimum of one year of
service. The Company terminated the 401(k) Plan effective December 31, 1998.
4. Shareholders' Equity
--------------------
The Company has begun a significant stock repurchase program pursuant to which
it will seek to repurchase up to 10,000,000 shares of Common Stock in open
market repurchases and privately-negotiated transactions during fiscal 1999. As
of February 28, 1999, there were 1,258,000 shares held in Treasury in the
amount of $1,378,000. Through March 31, 1999, the Company had repurchased
5,713,000 shares at an average price of $1.29 per share, $7,357,000 in the
aggregate.
In connection with the sale of Calton Homes, Inc. the Company elected to make
certain adjustments to the terms of the options to acquire Calton Common Stock
previously granted and outstanding as of December 31, 1998 under the Company's
stock option plans. Effective January 1, 1999, those options outstanding became
exercisable, regardless of whether the right to exercise the option had
previously vested; employees of Calton Homes, Inc. have until December 31, 2000
to exercise any options; and options of employees of Calton, Inc. will expire
in accordance with their original terms. The effect of the amendments to the
stock option plans of approximately $525,000 was reflected as severance cost
and reduced the gain on the sale of Calton Homes in the first quarter of 1999.
In January 1999, the Company's Board of Directors approved the grant to the
Company's Chairman and President of options to acquire an aggregate of 600,000
shares of Common Stock under the Company's Amended and Restated 1993
Non-Qualified Stock Option Plan (the "1993 Plan"). In addition, the Board
approved
the grant to other employees of options to acquire an aggregate of 35,000
shares of Common Stock under the Company's 1996 Equity Incentive Plan (the
"1996 Plan"). Each of the options granted has an exercise price of $1.22 per
share, the fair market value of Calton, Inc. stock on the date of the grant,
and has a term of 10 years. The options granted under the 1993 Plan vest in
equal installments over a three year period. The options granted under the 1996
Plan vest in equal installments over a five year period.
- 9-
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SALE OF CALTON HOMES, INC.
- - --------------------------
On December 31, 1998, the Company completed the sale of Calton Homes, Inc.
("Calton Homes"), its primary operating homebuilding subsidiary, to Centex Real
Estate Corporation ("Centex" or the "purchaser"). The shareholders of Calton,
Inc. approved the sale of the stock of Calton Homes on December 30, 1998. The
purchase price for the stock of Calton Homes was $48.1 million, which resulted
in an estimated pretax gain of approximately $8.8 million. The gain is subject
to a $5.2 million holdback (see Commitments and Contingencies), and is subject
to certain post closing adjustments. Cash proceeds upon closing were
approximately $41.1 million, net of the $5.2 million holdback and other closing
adjustments. These funds have been temporarily invested in highly liquid funds.
A pretax gain of $6.5 million was recorded in the first quarter of 1999. The
Company is currently finalizing the post-closing adjustments with the
purchaser, however, certain issues and amounts may result in arbitration. As a
result, no assurance can be given that the entire estimated gain will be
realized. No tax liability is expected to result from the sale. However, a
provision in lieu of taxes is anticipated to be recorded for financial
reporting purposes in the amount of $3.5 million related to the sale, of which
$2.6 million was recorded in the first quarter. As a result, the net gain
recorded in the first quarter of fiscal 1999 was $3.9 million. Calton has
entered into an agreement to provide consulting services to Centex that
requires payments to the Company of $1.3 million per year over a three-year
period.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED FEBRUARY 28, 1999 AND
FEBRUARY 28, 1998
- - -----------------------------------------------------------------------------
Revenues for the three months ended February 28, 1999 were $574,000 comprised
of two months of revenues earned in the amount of $217,000 under the consulting
agreement and $357,000 of interest income earned on funds generated from the
sale of Calton Homes. Revenues from discontinued homebuilding operations were
$6.5 million resulting from twenty-two home deliveries occurring prior to
December 31, 1998 as compared to revenues of $12.8 million for the three months
ended February 28, 1998 on 37 home deliveries.
Income from continuing operations was $159,000 for the three months ended
February 28, 1999 as compared to a loss of $301,000 for the three months ended
February 28, 1998. General and administrative costs have decreased by $222,000,
a forty-two percent (42%) decrease, due to a significant reduction in corporate
fixed costs related to the sale of Calton Homes, including personnel
reductions, leasing costs and other overhead items.
Income from discontinued operations was $92,000 for the three months ended
February 28, 1999, as compared to a loss of $236,000 for the three months ended
February 28, 1998. The loss for the prior period was primarily due to the low
delivery levels for the full three month period (37 deliveries) in contrast to
the one month of operations (22 deliveries) during the first quarter of fiscal
1999. In addition, the fixed costs attributable to Calton Homes' operations
terminated for the Company on December 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
On December 31, 1998, as a part of the sale of Calton Homes, the outstanding
balance of the Company's revolving credit facility with BankBoston in the
amount of $19.5 million was repaid by the purchaser.
The sale of Calton Homes liquidated a substantial part of the Company's assets
and liabilities and generated approximately $41.1 million of cash, which was
net of a $5.2 million holdback (see commitments and contingent liabilities) and
other closing adjustments.
The Company believes that funds generated by the sale of Calton Homes, income
tax payment reductions, derived from NOL utilization and funds provided under
the three-year consulting agreement with the purchaser of Calton Homes, which
provides for payments of $1.3 million per year, will provide sufficient capital
to support the Company's operations and fund its stock repurchase program.
Although the Company is currently analyzing potential business opportunities
consistent with its strategic plan, it has not determined the specific
application of the proceeds of the sale of Calton Homes. If over the next 18
months, the Company has not redeployed a substantial portion of the sale
proceeds of Calton Homes, or developed a plan to redeploy a substantial portion
-10-
of the proceeds within a reasonable time frame, the Company will be liquidated
and proceeds distributed to its shareholders.
The Company currently has no outstanding indebtedness other than accounts
payable. As a result, the Company's exposure to market rate risk relating to
interest rate risk is not material. The Company's funds are primarily invested
in highly liquid money market funds with its underlying investments comprised
of investment-grade, short-term corporate issues and commercial paper. The
Company does not believe that it is currently exposed to market risk relating
to foreign currency exchange risk, commodity price risk or equity price risk.
However, a substantial part of the Company's cash equivalents are not FDIC
insured or bank guaranteed.
Cash Flows from Operating Activities
- - ------------------------------------
The proceeds from the sale of Calton Homes are invested in highly liquid funds
earning interest at approximately 4.5% per annum that amounted to $338,000 for
the period ended February 28, 1999. Operating activities primarily utilize cash
for general and administrative costs.
Cash Flows from Investing Activities
- - ------------------------------------
On December 31, 1998, the Company received cash of $41.1 million from the sale
of Calton Homes, which was net of a $5.2 million holdback and other closing
adjustments, and subject to post closing adjustments.
Cash Flows from Financing Activities
- - ------------------------------------
For the three months ended February 28, 1999, the Company purchased 1,116,210
shares for an aggregate purchase price of $1.3 million, which is consistent
with its repurchase program to repurchase up to 10.0 million shares of its
Common Stock.
Also during this period, certain optionholders exercised their options to
purchase 458,000 shares under the Company's stock option plans generating
$179,000.
PART II - OTHER INFORMATION
---------------------------
Item 2. Changes in Securities
---------------------
In February 1999, the Company's Board of Directors adopted a shareholder
rights plan (the "Rights Plan") and declared a dividend of one preferred stock
purchase right (a "Right") for each outstanding share of Common Stock. Under
the Rights Plan, each Right represents the right to purchase from the Company
one one-hundredth (1/100th) of a share of Class A Preferred Stock Series One
(the "Preferred Stock") at a price of $5.50 per one one-hundredth (1/100th) of
a share. Each one one-hundredth (1/100th) of a share of Preferred Stock has
economic and voting terms equivalent to those of one share of the Company's
Common Stock. The Rights will not become exercisable unless and until, among
other things, a person or group acquires or commences a tender offer for 15% or
more of the Company's outstanding Common Stock. In the event that a person or
group, without Board approval, acquires 15% or more of the outstanding Common
Stock, each Right would entitle its holder (other than such person or group) to
purchase shares of Preferred Stock having a value equal to twice the exercise
price. Also, if the Company is involved in a merger or sells more than 50% of
its assets or earning power, each Right will entitle its holder (other than the
acquiring person or group) to purchase shares of common stock of the acquiring
company having a market value equal to twice the exercise price. If any person
or group acquires at least 15%, but less than 50%, of the Company's Common
Stock, the Board may, at its option, exchange one share of Common Stock for
each Right (other than Rights held by such person or group). The Rights Plan
may cause substantial dilution to a person or group that, without prior Board
approval, acquires 15% or more of the Company's Common Stock, unless the Rights
are first redeemed by the Board. The Rights expire on February 1, 2009 and may
be redeemed by the Company at a price of $0.01 per Right.
-11-
Item 4. Submission of Matters to a Vote of Securityholders
--------------------------------------------------
On December 30, 1998, the Company held a special meeting of shareholders (the
"Special Meeting") at which the Company's shareholders were asked to approve
the sale by the Company of Calton Homes. Of the votes cast in person or by
proxy at the Special Meeting, 14,313,274 shares voted in favor of the sale,
382,281 voted against the sale and 25,942 shares abstained from voting.
Item 6. Exhibits and reports on Form 8-K.
---------------------------------
A) Exhibits
27. Financial Data Schedule as of February 28, 1999.
B) Reports on Form 8-K.
On February 2, 1999, the Company filed a report on Form 8-K reporting
that it had adopted a shareholder rights plan and declared a dividend of
one Preferred Stock purchase right for each outstanding share of Common
Stock.
On January 15, 1999, the Company reported that it completed the sale of
Calton Homes, Inc. to Centex Real Estate Corporation on December 31, 1998.
The shareholders of Calton, Inc. approved the sale of the stock of Calton
Homes at a special meeting held on December 30, 1998.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Calton, Inc.
-------------------------------
(Registrant)
By: /s/ David J. Coppola
------------------------------
David J. Coppola
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
12
Date: April 14, 1999