Annual Report (Form 10-K), fiscal year 1994

Item 1 - Business
The Company
Merry Land is one of the largest owners and operators of upscale garden apartments in the United States. At December 31, 1994, the Company owned a high quality portfolio of 71 apartment communities located primarily in the Southeastern United States, containing 18,851 units and having an aggregate cost of $796.4 million. At that date, the communities had an average occupancy of 96% and an average monthly rental rate of $591 per unit. The Company owns all of its properties in fee simple without any partners. Merry Land became an independent publicly owned company in 1981 and has been managing apartment communities since 1982. It is a self-administered and self-managed Real Estate Investment Trust headquartered in Augusta, Georgia. It is not a so-called "UPREIT" nor does it have any subsidiaries, nor does it manage apartments for or provide other services to third parties. Merry Land's objective is to increase funds from operations and distributions to shareholders by producing greater cash flows at its existing apartment communities through effective management and also by purchasing and developing additional apartment properties. In recent years, Merry Land has conducted an active program of apartment acquisition. The Company buys properties which it expects will produce attractive initial rates of return and which have the potential for cash flow growth. The following table summarizes the Company's acquisitions in recent years (dollars in thousands):
Substantially all of the Company's properties are relatively new, suburban garden apartments located in the Southern United States. The Company intends to continue to focus on the acquisition of apartments and also intends to develop communities in selected locations throughout the entire Southern region of the United States, including Texas.
1994 Highlights
Apartment Acquisitions. In 1994, the Company bought 18 apartment communities containing 4,872 apartment units at an aggregate cost of $226.2 million. Twelve of these communities containing 3,343 units were acquired in one portfolio transaction which was closed in November 1994, at a purchase price of $154.4 million. This transaction brought Merry Land ten communities located within its target market areas and two communities in Ohio. The following table summarizes the 1994 acquisitions.
The apartment communities which the Company acquired in 1994 averaged seven years of age, 271 units in size and $46,774 per unit in cost at December 31, 1994. At that date, The Company's other apartment communities averaged seven years of age, 254 units in size and $40,670 per unit in cost. At December 31, 1994, rental rates at the 1994 acquisition communities averaged $629 per month compared to $578 for the Company's other communities.
Development. In recent years strong demand for apartment rentals in the South has caused rent rates and occupancy to rise to the extent that, in the Company's opinion, construction of new apartment communities has become financially feasible in certain locations. In order to take advantage of these conditions, the Company has commenced a program of apartment construction by engaging experienced apartment developers to provide development and construction management services to the Company on a project by project basis. The developers' fees will be computed as a share of the value of the completed projects, based on agreed upon formulas, less actual costs. Merry Land's employees will supervise development activities with the assistance of architects and engineers as required. The Company will own all land and improvements, will directly contract for construction and will bear essentially all risks of project development. While the Company intends to add several individuals to its acquisition and development department as a result of this program, it does not intend to establish a large, specialized development organization. The Company believes that this system of constructing new communities will allow it the flexibility to develop communities in a number of markets and to expand, or contract, or terminate such activities as conditions warrant. The Company's present intention is to limit its total financial commitment to development to no more than 10% of its total assets. Merry Land will manage these new communities during and after construction. In December 1994, the Company purchased three tracts of land on which it has begun to develop high quality garden apartment communities. The land acquired included tracts located in Atlanta, 43 acres for $3.7 million; Nashville, 67 acres for $3.5 million; and Savannah, 37 acres for $1.4 million. The Company expects to develop these three projects in phases with construction scheduled to begin in the first half of 1995 and with the first units expected to be available for occupancy late that year. The initial phases of these projects are described as follows (dollars in thousands):
Common Stock Sale. On June 30, 1994 the Company issued 4.6 million shares of common stock in a public offering at a price of $20.25 per share, for net proceeds of $87.5 million. The proceeds were used to repay short term acquisition debt and to acquire additional apartment communities.
Preferred Stock Sale. On November 1, 1994, the Company issued 4.0 million shares of $2.205 Series B Cumulative Convertible Preferred Stock at a price of $25.00 per share for net proceeds of $96.7 million. The Series B Preferred Stock was sold in a private placement to a small group of institutional investors. It has an annual dividend rate of $2.205 per year, payable quarterly, and is convertible into common shares at a price of $21.04 per common share (equivalent to a conversion rate of 1.188 shares of common stock for each share of preferred). The Series B Preferred Stock may not be redeemed for cash at any time, but may be redeemed by the Company for common stock after October 31, 1999, provided the Company's common stock is trading above the conversion price of $21.04 per share.
Common Stock Repurchases. In December 1994, the Company's Board of Directors authorized the repurchase of up to 1.0 million shares of the Company's common stock. The Board took this action because in its judgment the stock price had fallen significantly below price levels which the Board felt were appropriate. The Company bought and retired 175,440 shares for approximately $3.1 million, an average price of $17.94 per share. The Company discontinued the repurchase program as the stock price rose over the last weeks of the year.
Organization
Merry Land has 577 employees. Of this number, 535 work at its apartment communities, 21 are employed in accounting, administrative and general management, 15 in corporate property management and 6 in acquisitions and development. The Company manages all of its properties under the trade name "Merry Land Apartment Communities". Each apartment community is operated by an on-site Property Manager and staff who are extensively trained by the Company in sales, management, accounting, maintenance and other disciplines. Each community functions as an individual business unit according to well developed policies and procedures. On site staff participate in an incentive program under which cash bonus payments are made to individuals whose communities attain budgeted levels of cash flow. All full-time employees are eligible to participate in the Company's Employee Stock Ownership Plan. Property Managers report to eight Regional Property Managers who report to the Company's two Vice Presidents of Property Management. Regional Property Managers are located in Raleigh, Charlotte, Augusta, Atlanta, Savannah, Jacksonville, Orlando and Tampa. The Company believes it has successfully integrated newly acquired apartment communities into its portfolio using the property management organization and expertise developed in its thirteen years of buying and operating apartments. The Company's operating efficiency has increased as it has grown. General and administrative expense for 1994 declined to 1.7% of rental revenues from 2.6% in 1993 as the Company spread its overhead over more apartment units.
Market Conditions
Residents at the Company's apartments generally earn middle and upper middle levels of incomes, and typically include young professionals, white collar workers, medical personnel, teachers, members of the military, single parents, single adults and young families. These residents often have the means to own homes but choose to live in apartment communities because of their current employment, family or other personal circumstances. There is a steady turnover of leases at the Company's communities, allowing rents to be adjusted upward as demand allows. About 60% of the Company's units turn over each year, a rate the Company believes is typical for higher end apartment communities. Leases are generally for either six or twelve month terms. The Company believes that investments in apartments in the Southern region of the U.S. are attractive because of the favorable relationship between supply and demand for apartment rentals. The twenty-five metropolitan areas in which the Company operates contain 11% of the country's total population and have experienced growth in households, a key determinant of apartment demand, well in excess of national averages during the 1980's and 1990's. U.S. Census data indicate that from 1980 to 1990 total households increased 27% as a group in these cities versus an increase of 13% nationally. From 1990 to 1993, households increased 9% in these cities versus an increase of 3% nationally and from 1993 to 1998, households are expected to increase 9% here versus 7% nationally. At present the Company is experiencing its highest occupancy in recent years. Furthermore, current rent levels do not encourage extensive new apartment construction, and while construction has begun to rise from historically low levels in recent years, the Company does not expect added supply of apartments to meet added demand for the foreseeable future. Multi-family housing starts in the Company's markets fell from a high of 165,200 units in 1987 to 23,905 in 1992, and have risen to 35,213 in 1993 and 52,982 on an annualized basis for the first ten months of 1994. The Company owns apartments in a number of cities with significant military employment. The reduction of the nation's armed forces has cut military payrolls in some of these cities and has adversely affected the rental market for some of the Company's properties. The effect of military cutbacks, which will continue for some time, are expected to be most severe in Charleston, and the Company anticipates significant weakness there over the next several years as many of that city's naval installations are closed. However, at December 31, 1994, the Company's average occupancy in Charleston was 96%. The Augusta market is weak as a result of job losses at local defense related industries and the city experienced a 91% occupancy at December 31, 1994. In the Company's other markets, military employment is expected to either remain stable or rise, or it is not a significant portion of total employment. At December 31, 1994, the percentages of the Company's occupants serving in the military were as follows: Augusta, 21%; Charleston, 17%; Savannah, 13%; Jacksonville, 6%; Melbourne, 5%; Orlando, 5%; Tampa, 1% and Columbia, 1%. Leases with Military personnel account for less than 4% of the Company's total leases.
History
Merry Land conducted its initial public stock offering in 1981 after having been spun off earlier that year by Merry Companies, Inc., one of the nation's largest brick manufacturers, in connection with the latter's acquisition by an Australian company. Merry Land was incorporated in 1966 and had remained a passive asset holding subsidiary of Merry Companies, Inc. until the 1981 spin-off, when active operations began. At that time, the Company's major asset was 4,700 acres of clay land, most of which it still owns and from which it continues to receive clay and sand royalties. For most of the 1980's, the Company invested in a portfolio of both real estate and other assets. Its real estate assets consisted of apartments, commercial properties, land, mortgage notes and mortgage backed securities. Its non-real estate assets included utility stocks, treasury securities and the securities of financial institutions. In the mid 1980's, it increased its investment in mortgage backed securities, expanding that portfolio to $226.5 million by the end of 1989. Merry Land elected to become a REIT in 1987 and thereafter began to focus on buying and operating apartments. During the late 1980's, the Company disposed of most of its portfolio of utility stocks and other financial assets. In 1992, in order to concentrate its efforts on buying and managing apartment communities and to decrease its exposure to interest rate risk, the Company sold its remaining portfolio of mortgage backed securities. The Company has now largely disposed of its non-apartment assets and intends to liquidate the remainder as conditions allow. By 1991, tax law changes and significant reductions in the amount of capital available nationally for real estate investment had led to a substantial decline in the sales prices of apartment communities. The Company began to increase its rate of acquiring such properties. In 1992, the Company conducted its first stock offering in several years, hired additional personnel for its acquisition department, and commenced the accelerated program of acquisition which continues today. The Company is a Georgia corporation. It has its principal office at 624 Ellis Street, Augusta, Georgia 30901 and the telephone number is (706) 722-6756.
Part I Item 2



Item 2 - Properties
Apartments
The Company owns high quality apartment communities, substantially all of which command rental rates in the upper range of their markets. They are generally newer "garden apartments", in wood frame two- and three-story buildings without elevators, with individually metered electric and gas service and individual heating and cooling systems. The Company's apartments are 47% one bedroom units, 48% two bedroom units and 5% three bedroom units. The units average 900 square feet in area, seven years of age and are well equipped with modern appliances and other conveniences. The communities are heavily landscaped and offer extensive amenities, which generally include swimming pools, tennis courts, club rooms, exercise facilities and hot tubs. Some of the Company's communities also offer garages, racquetball courts, saunas, alarm systems and other features.
Merry Land's apartment communities are located in metropolitan areas with populations in excess of 250,000, primarily in the Southeastern states of Florida, Georgia and the Carolinas. The following table summarizes property information by market (cost in thousands):
The following table describes the Company's apartment communities. The Company owns all its communities in fee simple. Of its communities, only the two so indicated in the table are subject to encumbrances.
Item 102. Description of Property Apartments
Development in Progress
In December 1994, the Company commenced a program of apartment development by acquiring three tracts of land and entering into development agreements with three experienced developers. The Company's development properties are summarized as follows (dollars in thousands):
Other Assets
Unimproved Land. The Company owns 5,369 acres of undeveloped land with a book value of $3.8 million. Most of this land was acquired by the Company's predecessor for clay reserves and is located in Georgia and South Carolina. Since 1981, brick manufacturer Boral Bricks, Inc. has had a long term clay mining lease on 2,622 acres of the Company's land. The Company also leases 100 acres to another corporation for the mining of sand and gravel, leases other tracts for agriculture, and grows timber on much of the remaining land. The Company expects that some of its land eventually may be developed or sold for development by others.
Commercial Properties. The Company owns eight small commercial properties in the Augusta area, primarily office buildings, including the Company's headquarters building, which were acquired before the Company began to focus on apartments. These properties, aggregating 206,000 square feet and have a book value of $4.6 million. The Company intends to sell these properties as circumstances allow.
Environmental Matters
Landfill Sites. Portions of the Company's land holdings in Richmond County, Georgia were used by the County for two municipal landfills during the late 1960's and early 1970's. One site is comprised of 71 acres and the other, the New Savannah Road Landfill, 96 acres. Both landfills were closed in the mid-1970's and have been held by the Company and its predecessors as unimproved land since that time. Although the sites were used primarily as municipal landfills, there have been some reports that industrial wastes may have been disposed of at the sites. In 1992, a contractor for the U.S. Environmental Protection Agency sampled air, surface water, soil and groundwater on the New Savannah Road Landfill in order to determine whether there was any contamination on the site and whether the site should be placed on the federal National Priorities List for potential clean up. The report indicated that some contamination was present in soil samples but that sufficient groundwater samples had not been taken to permit a complete evaluation of the site. Accordingly, the report recommended that further action be taken which the Company believes would consist principally of additional testing of the site's groundwater and surface water. The Company has had no further contact with the EPA or its agents since that time and the site has not been included on the National Priorities List. Following the EPA's 1992 study, Merry Land retained environmental consultants to conduct similar scientific studies of both sites. The consultants reported that their study of the sites did not reveal the presence on either site of contaminants in amounts likely to result in the EPA listing either site on the NPL. The Company's consultant also reviewed the EPA contractor's test results and confirmed its prior conclusion that the level of contamination discovered on the New Savannah Road Landfill is not likely to result in the EPA listing this site on the NPL. However, the studies were limited in nature and did not include an examination of all portions of the landfill sites. There can be no assurance that a more complete investigation or further testing would not reveal higher levels or different types of contamination at the sites. On July 1, 1994, the Environmental Protection Division of the State of Georgia published its initial hazardous site inventory under the state's 1992 "Superfund" law, which requires investigation, and if appropriate, clean up of listed sites. The New Savannah Road Landfill was included on this list in a category of sites identified as having released hazardous substances above reportable levels. The Company and its environmental consultants currently are evaluating the action by the State to determine whether it is appropriate for the landfill site to be included on this list. Should further investigation or remedial action be required for the landfill, the Company believes that there will likely be other entities which will be responsible for a portion of the cost of the investigation or remediation. These entities include Richmond County, which operated the landfills, any identified company or municipality whose waste was placed in the landfill, and the company that owned the site at the time of the disposal of the waste. In the third quarter of 1994, the Company recognized a non- recurring charge against income of $200,000 associated with this matter. This is the amount which the Company believes is the potential cost of its share of any expenses which may be incurred if further investigation of the New Savannah Road Landfill is required. There can be no assurance that the Company will not have material liability with respect to these landfill sites.
Southern Wood Piedmont-Augusta Site. A portion of the Company's land holdings is located adjacent to a site formerly operated as a wood treatment facility by Southern Wood Piedmont-Augusta. Southern Wood Piedmont-Augusta was the subject of a property damage class action lawsuit arising from the alleged contamination of that site and neighboring properties, including the Company property. The Company received approximately $0.8 million in a 1990 settlement of its property damage claim. In June 1992, the Company sold 16 acres of land which may have been contaminated by Southern Wood Piedmont - Augusta to that company. The contamination at the Southern Wood Piedmont-Augusta site is the subject of current remediation by Southern Wood Piedmont-Augusta under state oversight. This includes remediation of contamination on the remaining Company property in the area of the former plant. Although the Company expects that the state-supervised efforts will sufficiently address the contamination on the Company's property, there is no assurance that some remediation liability may not attach to the Company.
Part I
Item 3

Item 3 - Legal Proceedings
None
Item 4

Item 4 - Submission of Matters to a Vote of Security Holders
None
Part II
Item 5

Item 5 - Market for the Registrant's Common Stock and Related Shareholders' Matters
Common Stock
Merry Land's common stock is traded on the New York Stock Exchange under the symbol "MRY". The following table sets forth the reported high and low sales prices of the common stock on the NYSE, and the cash dividends declared per share of common stock.
On December 31, 1994 the Company had 3,115 shareholders of record.
On January 16, 1995, the Board of Directors declared a dividend of $0.35 per share of common stock to be paid on March 31, 1995 to holders of record on March 16, 1995. The current annual dividend rate is $1.40 per share. The $.35 quarterly dividend represents a payout of 77% of funds from operations available for common shares for the quarter ended December 31, 1994, a payout ratio which the Company believes is conservative relative to its REIT peers. Under the REIT rules of the Internal Revenue Code, the Company must pay at least 95% of its REIT taxable income as dividends in order to avoid taxation as a regular corporation. The Board makes decisions with respect to the distribution of capital gains on a case-by-case basis. A portion of the Company's dividends paid to its shareholders may be deemed either capital gain, ordinary income or a return of capital, or all of these. None of the Company's distributions have yet been classified as returns of capital, though the Company expects a portion of 1995 distributions will be so classified. The Company annually provides its shareholders a statement as to its designation of the taxability of the dividends. Future dividends will be declared at the discretion of the Board of Directors after considering the Company's distributable funds, financial requirements, tax considerations and other factors. The federal income tax status of dividends paid to holders of common stock was as follows:
The loan agreement for the Company's 6 5/8% Senior Notes prohibits the payment of any dividends or other distributions upon the occurrence of an event of default and otherwise limits dividends and distributions after September 30, 1993 to a cumulative amount which is not more than the Company's net earnings plus depreciation and amortization after that date, plus or minus any increase or decrease in Stockholders' Equity from the issuance or redemption of stock.
Series A Preferred Stock
Merry Land's $1.75 Series A Cumulative Convertible Preferred Stock is traded on the New York Stock Exchange under the symbol "MRYpr". The following table sets forth the reported high and low sales prices of the Series A Preferred Stock on the NYSE, and the cash dividends declared per share of Series A Preferred Stock.
The federal income tax status of dividends paid to holders Series A Preferred Stock was as follows:
The Series A Preferred Stock has an annual dividend rate of $1.75 per share, payable quarterly, and is convertible into common shares at a conversion price of $18.65 per share of common stock. The Series A Preferred Stock may not be redeemed for cash at any time, but may be redeemed by the Company for common shares after June 30, 1998, at a rate of 1.34 shares of common for each share of Series A Preferred Stock, provided the common shares are trading above $18.65, subject to adjustments or certain circumstances.
Series B Preferred Stock.
On November 1, 1994 the Company completed the private placement of $100.0 million of its $2.205 Series B Cumulative Convertible Preferred Stock with a small group of institutional investors. It has an annual dividend rate of $2.205 per year, payable quarterly, and is convertible into common shares at a conversion price of $21.04 per common share. The Series B Preferred Stock may not be redeemed for cash at any time, but may be redeemed by the Company for common shares after October 31, 1999, at a rate of 1.188 shares of common stock for each share of preferred, provided the Company's common shares are trading above the conversion price of $21.04 per share. The shares were not registered with the Securities and Exchange Commission at the time of issuance and are not publicly traded. The Company has granted to the holders of the Series B Preferred Stock certain registration rights which commence on April 2, 1995. On December 31, 1994 the Series B Preferred paid a dividend of $.370 per share, of which $.003 was capital gain.
Dividend Reinvestment and Stock Purchase Plans
The Company has adopted a Dividend Reinvestment and Stock Purchase Plan under which any holder of common or preferred stock may reinvest cash dividends or optional cash payments of up to $5,000 per quarter in additional shares of common stock purchased directly from the Company at a 5% discount. Optional cash payments are subject to the limitation that the number of shares of common stock which can be purchased with optional cash payments cannot exceed the number of shares of common stock and preferred stock owned by the shareholder. All common and preferred shareholders are eligible to join the plan including shareholders whose shares are held in the name of a nominee or broker.
Part II Item 6

Item 6 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993) (10.1.2) $120.0 million 6.625% Senior Notes/Notes Purchase Agreement (Incorporated herein by reference to Exhibit 10.ii of Item 6 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993) (10.2) Compensation Plans (10.2.1) 1993 Incentive Stock Option Plan (Incorporated herein by reference to Exhibit (10.2.1) of Item 14 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993) (10.2.2) Executive Officer Restricted Stock Loan Plan, as amended (Incorporated herein by reference to Exhibit (10.2.2) of Item 14 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993) (10.2.3) Employee Stock Ownership Plan and Trust Agreement (Incorporated herein by reference to Exhibit (10.2.3) of Item 14 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993) (10.2.4) The 1994 Stock Option and Incentive Plan (Incorporated herein by reference to Exhibit (10.2.4) of Item 14 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993) (11) Statement re computation of per share earnings (12) Statement re computation of ratios. (23) Consent of Arthur Andersen LLP (27) Financial Data Schedules
b) Reports on Form 8-K. The registrant filed reports on Form 8-K/A and Form 8-K during the last quarter of 1994 as follows with respect to the following matters.
a) THE EXHIBITS listed in paragraph a(3) above are filed herewith.
b) THE SCHEDULES listed in paragraph a(2) above are filed herewith.
Part III 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,
MERRY LAND & INVESTMENT COMPANY, INC. (Registrant)
/s/ W. Tennent Houston - - ------------------ W. Tennent Houston - President
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.
/s/Peter S. Knox III 3/6/95 /s/W. Tennent Houston 3/6/95 - - -------------------- ------ --------------------- ------- Peter S. Knox, III Date W. Tennent Houston Date Chairman of the Houston - President Board and Director Chief Financial Officer, of the Board and Director and Director
/s/W. Hale Barrett 3/6/95 /s/Pierce Merry, Jr. 3/6/95 - - ------------------ ------ -------------------- -------- W. Hale Barrett - Date Pierce Merry, Jr. Date Secretary
/s/Hugh C. Long II 3/6/95 /s/Ronald J. Benton 3/6/95 - - ------------------ ------ ------------------- --------- Hugh C. Long II - Date Ronald J. Benton - Date Director Vice President and Controller

Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations
(In thousands except apartment and per share data)
Overview
Over the past several years, Merry Land has significantly expanded its apartment holdings through an active program of acquisitions. The Company believes that its access to public and private debt and equity, its experience as an apartment operator, its knowledge of the Southern apartment markets and its acquisition expertise have allowed it to take advantage of favorable conditions to make acquisitions at attractive yields. Even though prices of apartments offered for sale have risen throughout 1993 and 1994, the Company believes that prices have recently subsided to levels which present continued favorable opportunities for both acquisition and development. The following table describes the growth of the Company's apartment holdings in recent years:
In December 1994, the Company commenced a program of apartment development by buying three tracts of land on which it intends to build high quality suburban garden apartments. The Company will build these communities using experienced apartment developers to provide development and construction management services. Construction on all three communities is expected to commence in the first half of 1995 with the first units expected to be available for occupancy later that year. The Company's present intention is to limit its financial commitment to development to no more than 10% of total assets.
Results of Operations for the Years Ended December 31, 1994, 1993 and 1992
Rental Operations. The operating performance of the Company's apartments is summarized in the following table (dollars in thousands except average monthly rent):
Rental revenues and expenses have risen sharply with the Company's acquisition of new communities. The weighted average number of apartments owned rose to 16,415 in 1994 from 10,253 in 1993 and 5,118 in 1992. Most of the rental markets in which Merry Land operates are experiencing strong job growth and household formation, and occupancy levels and rent rates have risen. However, the 7.3% increase in portfolio average rental rates in 1994 from 1993 largely reflects the higher rents charged at the communities the Company acquired in 1993 and 1994, whose monthly rents averaged $626 at December 31, 1994, versus the total portfolio average of $591. Although construction starts of new apartment communities have increased in 1994, the Company believes demand continues to outstrip supply and expects a strong rental market to continue throughout 1995, with continued high occupancy and rising rent rates. The performance of the 6,527 units which the Company held for all of both 1994 and 1993 ("same store" results), is summarized in the following table (dollars in thousands except average monthly rents; see footnotes above):
Reflecting the strong rental markets, rental revenues and operating income for those properties held for all of both periods rose as a result of 3.1% higher occupancy and 3.9% higher rental rates. Operating expenses decreased $0.7 million in 1994 as compared to 1993. Of this decrease, $0.5 million came from a change in capitalization policy which resulted in the capitalization of certain expenditures which had previously been expensed, including painting the exteriors of apartment communities, replacement of mini blinds and replacement of vinyl. The remaining decrease in expenses came from lower personnel costs. For those 3,360 apartments owned by the Company for both 1993 and 1992, rental revenues increased $1.0 million or 6% in 1993 over 1992 as monthly rental rates increased 3.4% to $491 per month from $475 per month, while occupancy for those units rose to 93.2% for 1993 from 92.2% for 1992. Operating expenses rose $1.1 million, or 19%, due to charging the cost of ESOP contributions to the communities, rather than to corporate overhead, and to higher maintenance expenditures, which included painting the exterior of three more communities than in the prior year. Taxes and insurance expense rose 8% while depreciation rose 2%. Mineral Royalty and Commercial Property Income. These amounts rose to $1.4 million in 1994 and $1.6 million in 1993 from $1.0 million in 1992 largely as the result of the sale of sand under a contract which has now expired. Mineral royalties in 1995 should total less than half of 1994 amounts.
Interest and Dividend. Income Interest and dividend income totaled $2.4 million for 1994 as compared to $2.5 million for 1993 and $5.9 million in 1992. Interest and dividend income includes interest received on temporary investments, notes receivable, and dividends earned on equity securities investments. The 1992 amount included interest on the Company's portfolio of mortgage backed securities, which was disposed of in that year.
Interest Expense. Interest expense totaled $10.4 million for 1994, up from $5.6 million for 1993 and $5.8 million for 1992. The increase resulted both from an increase in the amount of debt outstanding and from higher interest rates. Average debt outstanding rose to $165.2 million in 1994 from $95.2 million in 1993 and $74.2 million in 1992, primarily as a result of financing apartment purchases. The 1992 amount included funds used to finance the mortgage backed securities portfolio. The weighted average interest rate charged on all the Company's debt increased to 6.4% for 1994 from 5.4% for 1993 and 5.0% for 1992, primarily as a result of the Company's shift to higher cost fixed rate debt from variable rate financing and also because of rising short term rates. At December 31, 1994, $85.3 million of the Company's $212.8 million of outstanding debt was at variable interest rates, and $9.9 million of this amount was tax exempt financing bearing interest at 75% of prime.
General and Administrative Expenses. In 1994, general and administrative expense totaled $1.8 million, versus $1.4 million for 1993 and $1.3 million in 1992. In 1994 general and administrative expenses equaled 1.7% of rental revenues, down from 2.6% for 1993 and 5.6% in 1992. The decrease in this ratio is attributable to increased operating efficiency as the Company's overhead was spread over more apartment units. The Company expects that as it continues to grow, even though general and administrative expenses will increase in absolute terms, such expenses will continue to decline as a percentage of revenues. In 1994, the Company began charging the cost of property management activities conducted at the regional and corporate level to rental expense. Previously, such expenses had been included as part of general and administrative expenses. Results for both 1993 and 1992 have been presented on a basis consistent with 1994 expenses.
Non Recurring Costs. In 1994, the Company reserved $0.2 million as the estimated potential cost of its share of a possible environmental investigation of a landfill located on land the Company owns in Richmond County, Georgia. (See "Part I, Item 2 -Properties - Environmental Matters"). In 1993 the Company sold $120.0 million of 6.625% unsecured senior notes and used the $119.0 net proceeds to repay substantially all other debt. Prepayment penalties and the cost of closing out an interest rate swap agreement totaled $1.3 million.
Gains on Sales of Assets. Net gains recognized on the sale of assets totaled $0.5 million for 1994, $8.0 million for 1993 and $2.7 million in 1992. Gains in 1994 came from the sale of securities and real estate. Gains in 1993 resulted primarily from the sale of thrift stocks and in 1992 from the sale of mortgage backed securities.
Net Income. Net income totaled $37.0 million for 1994, $26.4 million in 1993, and $11.4 million for 1992. Net income available for common shareholders totaled $29.1 million for 1994, $22.4 million for 1993, and $11.4 million for 1992. The increases in net income and net income available for common shareholders for 1994 when compared to 1993 arose principally from substantially increased operating income from apartments, which were partially offset by lower levels of gains recognized on sales of assets. Net income per share for 1994 fell to $1.10 from $1.30 in 1993 as a result of various factors, including the lower level of gains recognized, increased depreciation and the increased number of shares outstanding. The increase in net income for 1993 as compared to 1992 arose both from increased operating income from apartments and from greater gains recognized on the sale of assets, principally securities.
Dividends to preferred shareholders. Dividends to preferred shareholders totaled $7.9 million for 1994 and $4.0 million in 1993. The increase in preferred dividends arose from the sale of preferred stock during the two years. In June 1993, the Company sold 4.6 million shares of Series A Cumulative Convertible Preferred Stock in a public offering. In November 1994, the Company completed a private placement of 4.0 million shares of its Series B Preferred Stock. During 1994, holders of Series A Preferred Stock converted 2.1 million shares of the Series A Preferred Stock into approximately 2.8 million shares of the Company's common stock as the common dividend was raised above the equivalent preferred dividend..
Funds From Operations. The Company believes that funds from operations is an important measure of its operating performance. Funds from operations does not represent cash flows from operations as defined by generally accepted accounting principles, GAAP, and should not be considered as an alternative to net income or as an indicator of the Company's operating performance, or as a measure of the Company's liquidity. Based on recently published recommendations of a task force of the National Association of Real Estate Investment Trusts, the Company defines funds from operations as net income computed in accordance with GAAP, excluding non-recurring costs and net realized gains, plus depreciation of real property. This revised definition eliminates from funds from operations any amortization of debt costs and any non-real estate depreciation which reduced the Company's funds from operations by $0.5 million in 1994, $0.2 million in 1993 and $0.04 million in 1992. Funds from operations rose 90% to $54.6 million for 1994 as compared to $28.8 million for 1993, and $12.9 million for 1992. These increases were principally due to increased rental operating income resulting from the growth of the Company's apartment holdings. The following is a reconciliation of net income to funds from operations (data in thousands, except per share data):
Liquidity and Capital Resources
Merry Land's financial strategy is to buy apartment communities for cash, using amounts drawn on its unsecured line of credit, and subsequently to raise funds in the capital markets to permanently finance these investments. The Company completed a number of such acquisition and funding cycles in recent years and expects to continue to fund its acquisition and development activities in this manner. In 1994, the Company acquired 4,872 apartment units for $226.2 million and funded these purchases initially by liquidating temporary investments and borrowing funds under its line of credit. On June 30, 1994, the Company completed a public offering of 4.6 million shares of common stock at a price of $20.25 per share, for net proceeds of $87.5 million. Of this amount, $58.7 million was used to repay debt incurred in the acquisition and improvement of apartments and the remainder was used for further acquisitions. On November 1, 1994, the Company completed the private placement of $100.0 million of its $2.205 Series B Cumulative Convertible Preferred Stock for net proceeds of $96.7 million, and used this amount to pay in part for the $154.4 million apartment portfolio acquired on November 18, 1994. The remainder of the purchase price was financed with the Company's line of credit.
Common Stock Repurchases. In December 1994, the Company's Board of Directors authorized the repurchase of up to 1.0 million shares of the Company's common stock. The Board took this action because in its judgment the Company's stock price had fallen significantly below price levels which the Board felt were appropriate. The Company bought and retired 175,440 shares for approximately $3.1 million, an average price of $17.94 per share. The Company discontinued the repurchase program as the stock price rose over the last weeks of the year.
Financial Structure. At December 31, 1994, debt equaled 27% of total capitalization at cost, and 20% of total capitalization with equity valued at market. At that date, the Company's financial structure was as follows (dollars in thousands):
Merry Land's primary commercial bank provides the Company with a $100.0 million unsecured line of credit for property acquisitions and other general corporate purposes. This line bears interest at 0.65% over the 30 day LIBOR rate, matures on September 30, 1995, and, subject to the bank's approval, is expected to be renewed annually. At December 31, 1994, the Company had $42.4 million available under this line of credit. The Company is negotiating with a group of banks to obtain a syndicated credit facility in addition to the existing line. It generally is not the practice of the Company to finance its acquisitions using mortgage debt. At times, however, the Company finds it advantageous to assume such debt in order to successfully negotiate and close property acquisitions. During 1994, the Company repaid approximately $19.2 million of mortgage debt previously assumed in property acquisitions of prior years. Repurchase agreements are borrowings secured by the Company's temporary investments in U.S. Treasury Notes. The Company's Preferred Stock, and implicitly its senior notes, are rated investment grade by Standard & Poor's Corporation and Moody's Investors Service, Inc.
Liquidity. Merry Land expects to meet its short-term liquidity requirements with the net cash flow provided by operating activities and with its line of credit. The Company believes that its primary short-term liquidity needs are operating expenses, capital improvements, debt service payments, dividend payments and current requirements of its program of new apartment development. The Company expects to meet its long-term liquidity requirements, including additional borrowings and the issuance and sale of debt or equity securities in the public and private markets. The Company is limited in the amount of debt it may incur under the terms of its existing loan agreements. At December 31, 1994, the Company's loan agreements would have allowed it to borrow an additional $180 million on an unsecured basis.
Cash Flows. Operating cash flow has grown significantly with the expansion of the Company's apartment holdings. Operating cash flow grew to $56.1 million in 1994 from $30.9 million in 1993 and $14.3 million in 1992. Sales of common and preferred stock, however, have been the largest source of cash for the past three years. The primary use of cash has been for new apartment acquisitions and improvements. Dividends paid in 1994 and 1993 increased from levels in prior years due to an increase in the average amount of stock outstanding during 1994 and 1993, and in the case of the Company's common stock, an increase in the quarterly dividend per share from $0.15 for the first quarter of 1992 to $0.35 for the last quarter of 1994. The following table summarizes cash flows for 1994, 1993, and 1992 (in thousands):
Capital Expenditures. The Company capitalizes the cost of expenditures for the acquisition or development of additional productive assets and for expenditures which significantly increase the revenue producing capability or which reduces the cost of operating such assets. Normal operating costs are expensed as incurred. Certain items which are replaced on a regular basis, but which have lives of more than one year, such as carpet, vinyl flooring and exterior repainting, are capitalized. At newly acquired communities, the Company often finds it necessary to upgrade the physical appearance of such properties and to complete maintenance and repair work which had been deferred by prior owners. These activities often result in heavier capital expenditures in the early years of Company ownership.
Inflation. Substantially all of the Company's leases are for terms of one year or less, which should enable the Company to replace existing leases with new leases at higher rentals in times of rising prices. The Company believes that this would offset the effect of cost increases stemming from inflation.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Merry Land & Investment Company, Inc.:
We have audited the accompanying balance sheets of Merry Land & Investment Company, Inc. (a Georgia corporation) as of December 31, 1994 and 1993 and the related statements of income, changes in stockholders' equity, and cash flows for each of the three years in the period end December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these 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 financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 financial statements referred to above present fairly, in all material respects, the financial position of Merry Land & Investment Company, Inc. as of December 31, 1994 and 1993, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP Arthur Andersen LLP
Atlanta, Georgia January 13, 1995
Part II Item 8


Item 8 - Financial Statements and Supplementary Data
The accompanying notes are an integral part of these statements.
Part II Item 8 -Financial Statements and Supplementary Data
The accompanying notes are an integral part of these statements.
Part II Item 8 - Financial Statements and Supplementary Data
The accompanying notes are an integral part of these statements.
Part II Item 8 - Financial Statements and Supplementary Data
Item 8 - Financial Statements and Supplementary Data Statements of Cash Flows (Continued)
The accompanying notes are an integral part of these statements.
Part II Item 8 - Financial Statements and Supplementary Data
MERRY LAND & INVESTMENT COMPANY, INC. Notes to Financial Statements
1. Nature of Business Merry Land & Investment Company, Inc. is a real estate investment trust, which invests in upscale apartment communities located primarily in Florida, Georgia, North Carolina and South Carolina. At December 31, 1994 the Company owned 71 apartment communities containing 18,851 units in twenty five cities and eight states. In past years it invested in mortgage backed and other securities, most of which were sold by 1992. As a qualified REIT, the Company pays no corporate income taxes on earnings distributed to stockholders. It must specialize in investments in real estate and real estate mortgages, meet certain requirements as to stock ownership, gross income and asset mix. The Company is self administered and has no affiliated advisor, sponsor, or property manager. Information on the Company's real estate and securities investments follows for the years ended (in thousands):
2. Summary of Significant Accounting Policies
Recognition of Income The Company leases its apartment properties generally for terms of one year or less. Rental income is recognized when paid. Depreciation and Amortization Depreciation of buildings and equipment is computed on the straight-line method for financial reporting purposes using the following estimated useful lives:
Straight line and accelerated methods are used for income tax reporting purposes. Betterments, renewals and extraordinary repairs that extend the lives of assets are capitalized; other repairs and maintenance are expensed.
Income Taxes As a real estate investment trust, the Company does not pay income taxes on its distributed income. It does pay income taxes on that income which is not distributed, and it may be subject to excise taxes on income distributed after certain dates. See Note 8 where income taxes are discussed further.
Earnings Per Share and Share Information Earnings per share are computed on the basis of the weighted average number of shares outstanding during the year. Earnings per share assuming full dilution are computed based on the assumption that convertible preferred stock was converted at the beginning of the year with an applicable reduction in preferred dividends.
3. Marketable Securities
The cost and market value of securities by major classification at December 31 were as follows:
In 1994, the Company sold 86,500 shares of First Financial Holdings for a gain of $0.7 million, and sold $6.0 million of Treasury Notes for a loss of $0.7 million. On January 1, 1994, the Company adopted SFAS 115 and reports its marketable securities at market value with unrealized gains and losses as a separate component of shareholder's' equity. Changes in net unrealized gains are recorded as adjustments to this account and not as credits or charges to earnings. 4. Notes Receivable
Notes receivable at December 31 were as follows (in thousands):
At December 31, 1994, maturities of notes receivable were as follows (in thousands):
The Company estimates that the fair value of its notes receivable approximates their carrying value.
5. Borrowings and Assets Subject to Lien
Borrowings outstanding at December 31 were as follows (in thousands):
Maturities of borrowings at December 31 were as follows (in thousands):
6. Mineral Leases
The Company entered into a clay lease with Boral Bricks, Inc. ("Boral") for a term of 40 years from January 1, 1981 to December 31, 2020. Each year the royalty rate is adjusted for any change in the Producer Price Index for Crude Materials Less Agricultural Products. The royalty rate for 1994 was $.45 per ton mined. The clay lease further provides that if the clay is exhausted before December 31, 2020, and prior to 36 million tons being mined, the Company is obligated to obtain other clay deposits within 20 miles of the Augusta brick plant of Boral and to subject such deposits to the clay lease. From 1981 through 1994, 7,711,200 tons of clay have been mined under the terms of this lease. The Company also leases land in Richmond County, Georgia, to a building materials firm which mines sand and gravel on the tract.
7. Income Taxes
As discussed in Note 1, the Company has elected to be taxed as a REIT. The Internal Revenue Code provides that a REIT, which in any taxable year meets certain requirements and distributes to its stockholders at least 95% of its ordinary taxable income, will not be subject to federal income taxation on taxable income which is distributed. The Company distributed the required amounts of income for the periods reported. Accordingly, no provision for income taxes is required. The Company's taxable income differs from its income reported in the accompanying financial statements because of the difference in the timing of recognition of certain items of income and expense for tax purposes. A reconciliation of tax and book income follows:
8. Incentive Stock Option Plan
Under the Company's incentive stock option plan, at December 31, 1994, there were 5,000 shares available for grant and there were 57,000 exercisable options outstanding. Options granted under the plan expire ten years from date of grant and may not be exercised at a rate greater than 20% per year. Shares under option which subsequently expire or are canceled are available for subsequent grant. The option price is equal to the market price of the shares on the date of the option grants. Options outstanding for the years ended December 31, 1994, 1993, and 1992, are as follows:
During 1993 and 1992, the Company loaned officers and employees approximately $0.1 million and $0.3 million, respectively, to exercise such options. The loans are secured by the shares purchased, carry a 0% interest rate, and are due upon demand. At December 31, 1994, the balance of such loans was $0.4 million. During 1994, 1993 and 1992, the Company loaned officers and employees $7.2 million, $2.0 million and $0.8 million respectively, to purchase shares of the Company's common stock. The terms of these loans are the same as for the loans to exercise options, as discussed above. The Company requires that at least two thirds of dividends paid on these notes be used to repay the indebtedness. $0.5 million, $0.3 million and $0.1 million was repaid in 1994, 1993 and 1992. At December 31, 1994, the balance of such loans was $9.3 million.
9. Employee Stock Ownership Plan
The Company maintains an Employee Stock Ownership Plan. Under the plan, the Company makes annual contributions to a trust for the benefit of eligible employees in the form of either cash or common shares of the Company. The amount of the annual contribution is discretionary. The Company contributed $0.5 million, $0.3 million and $0.2 million in 1994, 1993 and 1992. In 1993, the Company advanced the ESOP $1.4 million to buy 75,000 shares of common stock on the open market. The note bears an interest rate equal to the thirty-day LIBOR rate and is due November 30, 2000. At December 31, 1994, the balance of this note was $0.7 million.
10. Preferred Stock
On November 1, 1994, the Company sold 4.0 million shares of Series B Cumulative Convertible Preferred Stock for net proceeds of $96.7 million. The Series B Preferred Stock was sold in a private placement to a small group of institutional investors. It has an annual dividend rate of $2.205 per year, payable quarterly, and is convertible into common shares at a conversion price of $21.04 per common share (equivalent to a conversion rate of 1.188 shares of common stock for each share of preferred). The Series B Preferred Stock may not be redeemed for cash at any time, but may be redeemed by the Company for common stock after October 31, 1999, provided the Company's common shares are trading above the conversion price of $21.04 per share. The shares were not registered under the Securities Act of 1933, but the Company has agreed to register them after April 2, 1995. In 1993, the Company sold to the public 4.6 million shares of Series A Cumulative Convertible Preferred Stock. The Series A Preferred shares have a liquidation preference of $25.00 per share and an annual dividend rate of $1.75 per year, payable quarterly. The shares are convertible into common shares at any time at the option of the holders at a conversion price of $18.65 per common share (equivalent to a conversion rate of 1.34 shares of common stock for each share of preferred stock). On or after June 30, 1998, the preferred shares will be redeemable for common shares, at the option of the Company at a conversion rate of 1.34 shares of common stock for each share of preferred stock. At December 31, 1994, 2,083,676 shares of Series A Preferred Stock had been converted into 2,792,118 shares of common stock.
11. Dividends
In 1994, the Company paid dividends as follows:
Of the total dividends paid in 1994, 99.1% related to ordinary income and 0.9% related to capital gains. On January 16, 1995 the Company declared a $.35 per common share, $.4375 preferred A share, and $.55125 Preferred B share dividend payable on March 31, 1995. The Company has established a dividend reinvestment plan whereby any shareholder may elect to use all or a portion of cash dividends paid to acquire additional shares of the Company's common stock at a price equal to 95% of the higher of: (a) the high and low sales prices of the Company's common stock on the dividend payment date, or (b) the average of the daily high and low sales prices for the ten trading days prior to the dividend payment date. During 1994, 194,227 shares were issued at a total value of $3.9 million. In December 1993 the Company established a Stock Purchase Plan which provides holders of the Company's common stock and preferred stock with a method of purchasing additional common stock of the Company through optional cash payments without fees and at a 5% discount. Optional cash payments are subject to the limitation that the number of shares of common stock which can be purchased cannot exceed the number of shares of common and preferred stock owned by the shareholder. During 1994, 127,824 shares were issued for a total value of $2.5 million
12. Environmental Matters
Portions of the Company's land holdings in Richmond County, Georgia were used by the County for two municipal landfills during the late 1960's and early 1970's. One site is comprised of 71 acres and the other, the "New Savannah Road Landfill", 96 acres. Both landfills were closed in the mid-1970's and have been held by the Company and its predecessors as unimproved land since that time. Although the sites were used primarily as municipal landfills, there have been reports that some industrial wastes may have been disposed of at the sites. In 1992, a contractor for the U.S. Environmental Protection Agency sampled air, surface water, soil and groundwater on the New Savannah Road landfill in order to determine whether there was any contamination on the site and whether the site should be placed on the federal National Priorities List for potential clean up. In October 1992, the EPA issued a report which indicated that some contamination was present in soil samples but that sufficient groundwater samples had not been taken to permit a complete evaluation of the site. Accordingly, the report recommended that further action be taken which the Company believes would consist principally of additional testing of the site's groundwater and surface water. The Company has had no further contact with the EPA or its agents since that time and the site has not been included on the National Priorities List. Following the EPA's 1992 study, Merry Land retained an environmental consultant to conduct similar scientific studies of both sites The consultant reported that its study of the sites did not reveal the presence on either site of contaminants in amounts likely to result in the EPA listing either site on the NPL. After receiving the EPA's report, the Company's consultant also reviewed the EPA contractor's test results and confirmed its prior conclusions that the level of contamination discovered on the New Savannah Road landfill is not likely to result in the EPA listing this site on the NPL. However, the studies were limited in nature and did not represent an examination of all portions of the landfill sites. There can be no assurance that a more complete investigation, or further testing would not reveal higher levels or different types of contamination at the sites. On July 1, 1994, the Environmental Protection Division of the State of Georgia published its initial hazardous site inventory under the state's 1992 "Superfund" law, which requires investigation, and if appropriate, clean up of listed sites. The New Savannah Road landfill was included on this list in a category of sites identified as having released hazardous substances above reportable levels. The Company and its environmental consultants have evaluated the action by the State and have initiated discussions with the State of Georgia to determine whether it is appropriate for the New Savannah Road Landfill site to be included on this list. Should further investigation or remedial action be required for the landfill sites, the Company believes that there will likely be other entities which will be responsible for a portion of the cost of the investigation or remediation. These entities include Richmond County, which operated the landfills, any identified company or municipality whose waste was placed in the landfills, and the company that owned the sites at the time of the disposal of the waste. In the third quarter of 1994, the Company recognized a non-recurring charge against income of $0.2 million associated with this matter. This is the amount which the Company believes to be the potential cost of its share of any expenses which may be incurred if further investigation of the New Savannah Road Landfill is required as a result of the action by the State of Georgia. There can be no assurance that the Company will not have material liability with respect to these landfill sites.
Part II
Item 9

Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Part III
Item 10



Item 10 - Directors and Executive Officers of the Registrant
Incorporated by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission.
Item 11

Item 11 - Executive Compensation Incorporated by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission.
Item 12

Item 12 - Security Ownership of Certain Beneficial Owners and Management
Incorporated by reference to the Company's definitive proxy statement to be filed with the Securities and Exchange Commission.
Item 13

Item 13 - Certain Relationships and Related Transactions
Incorporated by reference to the Company's definitive proxy statement
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Merry Land & Investment Company, Inc. We have audited in accordance with generally accepted auditing standards, the financial statements included in this Form 10-K, and have issued our report thereon dated January 13, 1995. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in Item 14

Item 14 - Schedule XI - Real Estate and Accumulated Depreciation for the Year Ending December 31, 1994:
Part IV Item 14 _ Schedule XII _ Mortgage Loans on Real Estate at December 31, 1994 [CAPTION]
========= ========== =========
Part IV Item 14 _ Exhibit II _ Computation of Per Share Earnings
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS -----------------------------------------
As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 10-K into the Company's previously filed Registration Statement File Nos. 33- 68172 and 33-56431.
/s/ Arthur Andersen LLP Arthur Andersen LLP
ATLANTA, GEORGIA March 6, 1995
Part IV Item 14 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K
a) FINANCIAL STATEMENTS. The following schedule lists the financial statements filed as part of this report:
Report of Independent Public Accountants Balance Sheets Statements of Income Statements of Changes in Stockholders' Equity Statements of Cash Flows Reconciliation of Net Income to Cash Flows Notes to Financial Statements
2. FINANCIAL STATEMENT SCHEDULES. The following schedule lists the financial statement schedules required to be filed by Item 8 and Item 14(d) of Form 10K:
Real Estate and Accumulated Depreciation Mortgage Loans on Real Estate at December 31, 1994 Report of Independent Public Accountants on Schedules
3. Exhibits. The following schedule lists the exhibits required to be filed by Item 601 of Regulation S-K and Item 14(c) of Form 10-K: (3.i) Articles of Incorporation (Incorporated herein by reference to Exhibit 3(i) of Item 14 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993 and to Exhibit 1 of Item 7 of the Company's current report on Form 8-K/A filed on January 25, 1995)
(3.ii) By-laws (Incorporated herein by reference to Exhibit 3(ii) of Item 14 of the Company's Annual Report on Form 10- K for the year ended December 31, 1993) (10.1) Material Contracts (10.1.1) $100.0 Million Revolving Credit Agreement between First Union National Bank of Georgia and the Company (Incorporated herein by reference to Exhibit 10.i of Item 6 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993) (10.1.2) $120.0 million 6.625% Senior Notes/Notes Purchase Agreement (Incorporated herein by reference to Exhibit 10.ii of Item 6 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993) (10.2) Compensation Plans (10.2.1) 1993 Incentive Stock Option Plan (Incorporated herein by reference to Exhibit (10.2.1) of Item 14 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993) (10.2.2) Executive Officer Restricted Stock Loan Plan, as amended (Incorporated herein by reference to Exhibit (10.2.2) of Item 14 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993) (10.2.3) Employee Stock Ownership Plan and Trust Agreement (Incorporated herein by reference to Exhibit (10.2.3) of Item 14 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993) (10.2.4) The 1994 Stock Option and Incentive Plan (Incorporated herein by reference to Exhibit (10.2.4) of Item 14 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993) (11) Statement re computation of per share earnings (12) Statement re computation of ratios. (23) Consent of Arthur Andersen LLP (27) Financial Data Schedules
b) Reports on Form 8-K. The registrant filed reports on Form 8-K/A and Form 8-K during the last quarter of 1994 as follows with respect to the following matters.
a) THE EXHIBITS listed in paragraph a(3) above are filed herewith.
b) THE SCHEDULES listed in paragraph a(2) above are filed herewith.
Part III 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,
MERRY LAND & INVESTMENT COMPANY, INC. (Registrant)
/s/ W. Tennent Houston - - ------------------ W. Tennent Houston - President
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.
/s/Peter S. Knox III 3/6/95 /s/W. Tennent Houston 3/6/95 - - -------------------- ------ --------------------- ------- Peter S. Knox, III Date W. Tennent Houston Date Chairman of the Houston - President Board and Director Chief Financial Officer, of the Board and Director and Director
/s/W. Hale Barrett 3/6/95 /s/Pierce Merry, Jr. 3/6/95 - - ------------------ ------ -------------------- -------- W. Hale Barrett - Date Pierce Merry, Jr. Date Secretary
/s/Hugh C. Long II 3/6/95 /s/Ronald J. Benton 3/6/95 - - ------------------ ------ ------------------- --------- Hugh C. Long II - Date Ronald J. Benton - Date Director Vice President and Controller