UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
_____
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
For the transition period from ___ to ___
Commission File Number 0-5556
CONSOLIDATED-TOMOKA LAND CO.
(Exact name of registrant as specified in its charter)
FLORIDA 59-0483700
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
149 South Ridgewood Avenue
Daytona Beach, Florida 32114
(Address of principal executive offices) (Zip Code)
Registrant's telephone Number, including area code
(904) 255-7558
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF
THE SECURITIES EXCHANGE ACT OF 1934:
Name of each exchange on
Title of each class which registered
COMMON STOCK, $1 PAR VALUE AMERICAN STOCK EXCHANGE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT:
NONE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
YES X NO ___
----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. X
-----
The aggregate market value of the voting stock held by non-affiliates
of the Registrant at March 10, 1997 was approximately $21,756,942.
The number of shares of the Registrant's Common Stock outstanding on
March 15, 1997 was 6,261,272.
Portions of the 1996 Annual Report to Stockholders of Registrant are
incorporated by reference in Part I, II, and IV of this report.
Portions of the Proxy Statement of Registrant dated March 25, 1997 are
incorporated by reference in Part III of this report.
<PAGE> 1
PART I
Item 1. Business
_______ ________
The Company is primarily engaged in the citrus industry and,
through its wholly owned subsidiaries, Indigo Group Inc.,
Indigo Development Inc., and Indigo Group Ltd., the real
estate industry. Real estate operations include property
leasing, commercial real estate, real estate development,
leasing properties for oil and mineral exploration and the
sale of forest products. The Company also operated in the
resort industry until July 14, 1994 when the resort complex
at Indigo Lakes was sold. From time to time, the Company
sells unimproved real estate considered surplus to its operating
needs. This latter function is not considered part of
the Company's ordinary operations and is included in general
corporate and other operations, along with earnings from
temporary investments, in the information below which separates
the business segments.
Revenues of each segment are as follows:
Year Ended December 31,
______________________________________
1996 1995 1994
---- ---- ----
(In Thousands)
$ $ $
Citrus Operations 13,863 8,819 8,175
Real Estate Operations 7,642 7,743 16,528
General Corporate and
Other Operations 6,508 7,122 4,023
------ ------ ------
Combined 28,013 23,684 28,726
====== ====== ======
Operating Income (Loss) for each segment is as follows:
Year Ended December 31,
_____________________________________
1996 1995 1994
----- ------ -------
(In Thousands)
$ $ $
Citrus Operations 4,012 629 86
Real Estate Operations 3,472 2,889 9,637
General Corporate and
Other Operations 3,121 3,638 545
------ ------ ------
Combined 10,605 7,156 10,268
====== ====== ======
2
<PAGE>
Item 1. Business (continued)
- ------- --------
Identifiable assets of each segment are as follows:
At December 31,
------------------------------------------
1996 1995 1994
--------- ------- --------
(In Thousands)
$ $ $
Citrus Operations 17,043 17,866 17,349
Real Estate Operations 32,169 35,349 40,813
General Corporate and
Other Operations 10,461 6,478 3,373
------ ------ ------
Combined 59,673 59,693 61,535
====== ====== ======
Identifiable assets by segment are those assets that are used
in each segment. General corporate assets and those used in the
Company's other operations consist primarily of cash and cash
equivalents, investment securities, notes receivable, and property,
plant, and equipment.
CITRUS
------
Citrus groves. The Company, under the name Lake Placid Groves,
owns and operates approximately 3,900 acres of orange and grapefruit
groves located primarily in two large parcels in Highlands County,
Florida. The average age of grove trees is 13 1/2 years, well within
the average 45-year productive life. At December 31, 1996, all grove
acres were classified as fruit bearing. Both groves require
expenditures chargeable to production expenses, such as fertilizer,
irrigation, and cultivation.
In late 1988, the Company began a grove development project on
1,600 acres east of U. S. Highway 27, fronting on State Road 70,
south of Lake Placid. This project, which included the installation
of deep wells and low pressure micro-jet irrigation systems, was
completed in mid-1992. Initial development work was started on
approximately 400 acres of grove in 1989 with 400 additional acres
developed in each of the three following years. The land, which is
about one mile from the Company's fresh fruit packing plant, is high
and dry and well suited for growing citrus. The 1992-93 crop year
was the first year any significant fruit was harvested from these
groves.
Citrus operations. The Company harvests and sells both fresh and
to-be-processed citrus from its groves. In connection
3
<PAGE>
Item 1. Business (continued)
------- --------
with the groves, the Company owns and operates an efficient fresh
fruit citrus packing plant, placed in service during the fall of
1969, in which the portion of the crop which is sold as fresh
fruit is packed. Fresh fruit sales are made by the Company to
wholesale produce distributors and retail grocery chains primarily
in the Eastern and Midwestern regions of the United States
and Canada. In an effort to achieve optimum utilization of the
packing facility, the Company also handles the fruit of other
growers in the area.
The Company has an agreement in place with Turner Foods, Inc.
whereby the Company processes the portion of Turner's crop
being sold on the fresh market through the Company's
packing house. Turner also pays the Company for delivery
of the fruit to the packing plant.
The obligations under the agreements can be terminated by
either party on August 31 of each year upon thirty days written
notice. The amounts received by the Company for such services
for the years ended 1996, 1995 and 1994, amounted to $546,759,
$449,605, and $699,423, respectively.
That portion of the Company's citrus crop which is not sold
as fresh fruit is processed by Citrus World Incorporated, an
agricultural cooperative under a participating marketing
pool agreement. The agreement is a two year arrangement which
the Company may terminate on October 1 of any year by
giving written notice sixty days prior to such date with
the arrangement continuing for two additional years from
the notice of cancellation. Citrus World, one of the larger
processors of citrus products in the United States, pools its own
fruit with the fruit purchased from the Company and other citrus
growers, processes the pooled fruit, and sells the products produced
therefrom. Each participant in the pool, including Citrus World,
shares ratably in the proceeds from the sales of these products, net
of Citrus World's actual processing and marketing costs, plus a per-
unit handling fee. Citrus World makes periodic payments to all
participants on their pro rata share of net sales proceeds
and makes final payment after all the products in the pool have
been sold. During the years 1996, 1995, and 1994, the Company's
sales under the above pooling agreement amounted to $5,203,787,
$2,912,415, and $2,993,457, respectively.
The percentages of the Company's citrus which are sold as fresh
fruit and which are diverted to the processing plant can vary
considerably from year to year, depending upon fruit size, exterior
appearance, and the relative profitability of the markets. During
the crop year ended August 31, 1996, approximately 35% of the
Company's citrus crop was sold as fresh fruit and the balance
was diverted to the cannery, as compared with 38% in the crop year
ended August 31, 1995 and 43% the crop year ended August 31, 1994.
The citrus industry, which is seasonal in nature as are other
agricultural pursuits, is subject to wide fluctuations in income
because of changes in demand, weather conditions, and other economic
factors. Also affecting income are the continuing large amounts
of frozen concentrate orange juice from Brazil which maintains
high supply levels and tend to lower selling prices. The Company's
4
<PAGE>
Item 1. Business (continued)
------- --------
sales of fresh citrus fruit can be affected adversely by marketing
orders issued by the United States Department of Agriculture under
the Agricultural Marketing Agreement Act, which can result in
periodic proration, controlled by grade and size, of interstate
shipment of Florida oranges and grapefruit. Also, tariffs
established by the International Tariff Commission and approved
by Congress can impact the cost of importing citrus products and
thus affect the supply and selling prices of processed citrus.
The North American Free Trade Agreement, which was passed in 1994,
may also have an effect on future fruit prices as it is phased in.
RESORT OPERATIONS
-----------------
During 1994, the Company sold its resort operation known as the
Indigo Lakes Holiday Inn Crowne Plaza Resort located on U. S.
Highway 92 in Daytona Beach, Florida. The Resort had been under
a management contract with Sandcastle Resorts since August 17,
1990. A group associated with Sandcastle Resorts formed a
partnership named Indigo Lakes Resort, Ltd. and purchased the
145-unit inn, 8 separate buildings housing 64 condominium-style
units, tennis courts and pro shop, a conference center, several
small meeting rooms, two swimming pools, and other properties
related to those facilities. The 18-hole championship golf course,
fully equipped golf pro shop, restaurant and cocktail lounge, and
a 500-seat banquet and meeting room facility, were sold to The
Fairways Group, L.P.
On January 4, 1992, the Company had assumed a leasehold interest
in a 21,000-square-foot restaurant located adjacent to the Indigo
Lakes Holiday Inn Crowne Plaza Resort. The Resort's food and
beverage division operated the restaurant and lounge for a
portion of the period from time of lease until April of 1993,
after which it stood empty until the lease was terminated in 1994.
REAL ESTATE OPERATIONS
----------------------
Commercial Development. In August of 1989, the Company reached
an agreement in principle with the Ladies Professional Golf
Association ("LPGA") and the City of Daytona Beach, which calls
for the planning and development of the site for the national
headquarters of the LPGA along with two championship golf
courses. The mixed-use development will also include a clubhouse,
resort facilities, and residential communities along with other
commercial uses. This development is on approximately 3,800
acres of land owned by the Company's real estate development
subsidiary, Indigo Development Inc. ("IDI"), in Daytona Beach,
plus 500 acres owned by the City of Daytona Beach immediately
west of Interstate 95. The LPGA has successfully relocated its
headquarters to Daytona Beach and occupies their newly constructed
facilities within the development. The official opening of the LPGA
International golf course occurred in July 1994. In December 1994,
the first sale within the development was completed with the closing
of 60 acres of residential land located in the northern section
5
<PAGE>
Item 1. Business (continued)
------- --------
of the property. During 1995, the first residential units
within the community were completed. In early 1996,
the Interstate 95 interchange at LPGA Boulevard, which
is the north and main entrance to the project, was opened
for use. The second golf course, which is located in the
southern half of the LPGA project, is in the early stage of
development as land clearing has commenced. The clubhouse
and resort facilities are in the design phase with construction
projected to begin by mid to late 1997. The Company will donate
the land for the golf course to the City of Daytona Beach and
will sell the land for the clubhouse and resort facilities to
a third party entity which will manage and operate the golf
course and resort facilities.
Indigo Commercial Realty, a commercial real estate brokerage
company formed in 1991, is the Company's agent in the marketing
and management of commercial properties. In addition to the LPGA
development, approximately 105 acres of fully developed sites,
owned by Indigo Group Inc. and Indigo Group Ltd. ("IG LTD") were
available for sale at December 31, 1996. All development and
improvement costs have been incurred at these sites. All of
these commercial sites are located in the Daytona Beach area.
Residential. Until December 1993, the Company, through IG LTD,
operated in residential development, building and sales. At the
end of 1993 IG LTD closed down the development and building
functions. IG LTD continues to sell its remaining lot inventory
in the following communities:
Riverwood Plantation, a 180-acre community in Port Orange, Florida
with 74 lots remaining at December 31, 1996.
Indigo Lakes, a 200-acre development located in Daytona Beach
with 5 lots remaining at December 31, 1996. This community
also includes a 304 unit apartment complex constructed in 1989
by a joint venture between IG LTD and the Trammel Crow Company.
The apartment complex was sold to the mortgage holder in 1994.
Tomoka Heights, a 180-acre development adjacent to Lake Henry in
Highlands County, Florida. There are approximately 135 developable
lots remaining to be sold. The sales and construction operations
were assumed by third parties as of January 1994.
IG LTD was the developer and builder in three additional communities
in Volusia County:
Dunlawton Hills, a 320-unit community comprised of sixty acres in
Port Orange, Florida which was sold out in 1991.
St. Andrews Highlands at Pelican Bay, a 166 unit golf course
community on 34 acres in Daytona Beach, Florida which was sold
out in 1991.
Woodlake, a community on 62 acres in Port Orange, Florida containing
185 units which sold out in 1993.
6
<PAGE>
Item 1. Business (continued)
------- --------
IG LTD also provided housing contract services to homesite
owners in Palm Coast in Flagler County, approximately twenty-five
miles north of Daytona Beach, Florida. The sales and administrative
offices at Palm Coast were consolidated with Daytona Beach facilities
in 1991 due to the weak economy and extremely competitive market,
effectively eliminating the construction services in Palm Coast.
IG LTD had an inventory of 42 fully developed non-contiguous
lots in Palm Cost at December 31, 1996.
INCOME PROPERTIES
-----------------
Volusia County. On December 31, 1986, the Company acquired a two-
building office complex in downtown Daytona Beach. The larger
building, known as Consolidated Center, is a modern steel and
glass, seven-story, 47,000-square-foot office building constructed
in 1985. The Company moved its corporate headquarters to the
building in January 1988 and made space available for the
headquarters of IG LTD. The remaining space is under lease to
other tenants. The smaller building at 17,000 square feet is
subject to an existing lease/purchase agreement and is considered
a direct financing lease by the Company.
During 1996, the Company sold the 24,000-square-foot office
building in Daytona Beach which had been leased to LPGA as
the principal tenant. The 11,000-square-foot office building
previously used as the Company's administrative
offices in Daytona Beach and subsequently leased to 3rd parties
was sold in December 1992.
Two service stations located near the interchange of Interstate
Highway 95 and U. S. Highway 92, which pass through the Daytona
Beach area lands owned by the Company, were leased to major oil
companies until sold in December 1992. A third service
station, located at the interchange of Interstate 95 and State
Road 40, was leased to a major oil company through December 31,
1991, at which time it was sold.
During 1978 and early 1979, the Company constructed a commercial
building at the intersection of Interstate 95 and State Road 40.
Previously this facility was operated as a gift and fruit shop.
This building was sold in December 1993.
Highlands County. The Company leased a 50,000-square-foot
building, located in Sebring, Florida, to Scotty's Home Builder's
Supply, Inc until sold in early 1993. Two other buildings formerly
vacant were leased up with occupancy in early 1992:
A 12,000-square-foot facility was leased for a ten-year term
with an option to purchase, and sold in 1993. A second
10,500-square-foot building, formerly the Company's administrative
office, was leased for a three-year term. This 10,500 square
foot building was sold in December of 1992.
7
<PAGE>
Item 1. Business (continued)
------ --------
Sunshine Newspaper, Inc. leased from the Company a
7,000-square-foot building located near Lake Placid, in which
it operated a printing plant until the building was sold to
them in 1993.
Other Income Properties. The Company owns other commercial
rental properties throughout Florida. Forest Center is a
72,000 square foot neighborhood shopping center located east
of Ocala, Florida. This facility was 91% leased at December
31, 1996 and has a Winn Dixie grocery store, Eckerd drug store
and Family Dollar department store as its anchor tenants.
During 1993, Winn Dixie expanded its leased space by 10,500
square feet at the Forest Center location. Another
developed commercial property is a 24,000 square foot office
building at Palm Coast. This property was 100% leased at December
31, 1996. The Mariner Village Shopping Center, a 70,000 square
foot neighborhood center anchored by a Winn Dixie grocery store
and Eckerd Drug store located in Spring Hill, Florida, was sold
during 1996. Mariner Towne Square, an adjacent 18,000 square foot
facility, was sold during 1995.
Forest product sales. Income from sales of forest products varies
considerably from year to year depending on economic conditions and
rainfall, which sometimes limits access to portions of the woodlands.
In addition, drought conditions such as experienced in early 1985
and throughout 1990 sharply increase the potential of forest fires.
The timber lands encompass approximately 24,000 acres west of Daytona
Beach. Forest product sales during the next few years are projected
to exceed expenses which are primarily real estate taxes.
Additional expenses include the costs of installing roads and drainage
systems, reforestation, and wild fire suppression.
Subsurface Interests. The Company owns full or fractional subsurface
oil, gas, and mineral interests in approximately 539,000 "surface"
acres of land owned by others in various parts of Florida, equivalent
to approximately 300,000 acres in terms of full interest. The
Company leases its interests to mineral exploration firms whenever
possible.
At December 31, 1996, mineral leases were in effect covering a total
of 15,800 surface acres. Although the leases are for five- to ten-
year
terms, they are terminable annually by the lessees; and the lessees
have no obligation to conduct drilling operations. Leases on 1,600
acres have reached maturity but are held by the oil companies without
annual rental payments because of producing oil wells, on which the
Company receives royalties.
The purchasers of 82,543 surface acres in which the Company has a
one-half reserved mineral interest are entitled to releases of
the Company's rights if such releases are required for residential
or business development. Consideration for such releases on 73,117
of those acres would be at the rate of $2.50 per surface acre.
On other acres the Company's current policy is to grant no releases
of its reserved mineral rights. In rare instances, a release of
surface entry rights might be granted upon request of a surface
owner who requires such a release for special financing or development
purposes.
8
<PAGE>
Item 1. - Business - continued
-------------------------------
At December 31, 1996, there were four producing oil wells on the
Company's interests. During 1996 no new wells were brought
into production. Volume in 1996 was 131,231 barrels and volume
in 1995 was 117,831 barrels. Production for prior recent years
was: 1994 - 141,488 barrels, 1993 - 111,739 barrels, and
1992 - 130,693 barrels.
GENERAL, CORPORATE AND OTHER OPERATIONS
_______________________________________
Real estate held and land transactions. More than 90% of the
Company's lands have been owned by the Company or its affiliates
for more than fifty years. To date the Company has not been in the
business of acquiring and holding real estate for sale. Instead,
portions of the Company's lands are put to their best economic use.
Unsolicited sales are made of parcels which do not appear to offer
opportunities for use in the foreseeable future.
Land development beyond that discussed at "Business - Real Estate
Operations" will necessarily depend upon the long-range economic and
population growth of Florida and may be significantly affected by
fluctuations in economic conditions, prices of Florida real estate,
and the amount of resources available to the Company for
development.
Employees. The Company has approximately 150 employees, including
approximately 80 seasonal employees in citrus operations. During
the citrus harvesting season, these seasonal employees are hired
to pack and handle the citrus crop. No employees are represented
by unions. The Company considers its employee relations to be
satisfactory.
9
<PAGE>
Item 2. Properties
------- ------------
Information concerning the Company's properties is included on
pages 2-4 of the Company's 1996 Annual Report to Shareholders
(the "Annual Report") under the captions "Land Holdings",
"Citrus", "Conference Center and Resort" and "Real Estate
Operations" and is incorporated herein by reference. Except
for parts of the Annual Report expressly incorporated herein
by reference, the annual report is not to be deemed filed with
the Securities and Exchange Commission.
Item 3. Legal Proceedings
------- ------------------
There are no material pending legal proceedings to which
the Company or its subsidiaries are a party.
Item 4. Submission of Matters to a Vote of Security Holders
------- ---------------------------------------------------
No matters were submitted to a vote of security holders
during the fourth quarter of the year ended December 31, 1996.
10
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related
Shareholder Matters
------ ----------------------------------------------------
(a) Common Stock
Information concerning the Company's common stock and dividends
is included on page 28 of the Annual Report under the caption
"Common Stock Prices and Dividends" and page 4 under the
caption "Five-Year Financial Highlights" and such discussion
is incorporated herein by reference.
(b) Recent sales of Unregistered Securities
None
Item 6. Selected Financial Data
------- -----------------------
Five-year financial statement data is included on page 4
of the Annual Report under the caption "Five-Year Financial
Highlights" and such information is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations.
--------------------------
Management's Discussion and Analysis of Financial Condition
and Results of Operations is included on pages 25 through 27 of the
Annual Report, under the captions "Management's Discussion and
Analysis," and "Financial Position" and such discussion is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
------ -------------------------------------------
Financial Statements
--------------------
Financial statements incorporated by reference in this report
are listed at Part IV, Item 14 (a), "Financial Statements."
Item 9. Disagreements on Accounting and Financial Disclosures
------ -----------------------------------------------------
There were no disagreements with accountants on accounting and
financial disclosures.
11
<PAGE>
PART III
The information required by Items 10, 11, 12, and 13 is
incorporated herein by reference to the registrant's 1996 annual
meeting proxy statement pursuant to Instruction G to Form 10-K.
On March 25, 1997, the registrant anticipates filing with the
Commission, pursuant to Regulation 14A under the Securities Exchange
Act of 1934, its definitive proxy statement to be used in connection
with its 1997 annual meeting of shareholders at which directors will
be elected for the ensuing year.
Executive Officers of the Registrant
------------------------------------
The executive officers of the registrant, their ages at January
31, 1996, their business experience during the past five years, and
the year first elected as an executive officer of the Company are as follows:
Bob D. Allen, 62, president and chief executive officer, March 1990
to present.
Bruce W. Teeters, 51, senior vice president-finance and
treasurer, January 1988 to present.
Both of the above are elected annually as provided in the By-Laws.
12
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K
------- ------------------------------------------------------------
(a.) 1. Financial Statements
--------------------
The Company's 1996, 1995, and 1994 financial statements, together
with the report of Arthur Andersen LLP, dated February 6, 1997,
appearing on pages 5 to 24 of the accompanying 1996 Annual Report to
Shareholders are incorporated by reference in this Form 10-K Annual
Report. The following is a list of such financial statements with
references to the pages of the 1996 Annual Report to Shareholders on
which they may be found:
Annual Report
Page No.
--------------
Report of Independent Certified Public Accounts 5
Consolidated Statements of Operations and Retained
Earnings for the three years ended
December 31, 1996 6
Consolidated Balance Sheets as of December 31,
1996 and 1995 7
Consolidated Statements of Cash Flows for the three
years ended December 31, 1996 8-9
Notes to Consolidated Financial Statements 10-23
With the exception of (i) the aforementioned financial
statements and (ii) the information incorporated under
Items 2, 5, 6, and 7, the 1996 Annual Report to Shareholders
is not to be deemed filed as part of this report.
2. Financial Statement Schedules
Included in Part IV of this Annual Report on Form
10-K:
Report of Independent Certified Public Accountants
on Financial Statement Schedules on Page 16 of this
Annual Report on Form 10-K.
Schedule III - Real Estate and Accumulated
Depreciation on page 17 of this
Annual Report for Form 10-K
Schedule IV - Mortgage Loans on Real Estate on
page 18 of this Annual Report on Form
10-K.
Other Schedules are omitted because of the absence of
conditions under which they are required or because the
required information is given in the financial statements
or notes thereof.
13
<PAGE>
Item 14. Exhibits, Financial Statements Schedules and Reports
on Form 8-K
(continued)
(a) 3. Exhibits
---------
See Index to Exhibits on page 20 of this
Annual Report on Form 10-K.
(b) Reports on Form 8-K
-------------------
No reports were filed on Form 8-K during the fourth
quarter of the year ended December 31, 1996.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED-TOMOKA LAND CO.
(Registrant)
3/24/97 By /s/ Bob D. Allen
------------------
Bob D. Allen, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this
report is signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
3/24/97 Chairman of the Board and
Director /s/ David D. Peterson
----------------------
3/24/97 President, Chief Executive
Officer (Principal Executive
Officer), and Director /s/ Bob D. Allen
---------------------
3/24/97 Senior Vice President-Finance
Treasurer (Principal Financial
and Accounting Officer), Director /s/ Bruce W. Teeters
----------------------
3/24/97 Director /s/ John C. Adams, Jr.
----------------------
3/24/97 Director /s/ Robert F. Lloyd
-----------------------
15
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
TO CONSOLIDATED-TOMOKA LAND CO.:
We have audited in accordance with generally accepted auditing
standards, consolidated financial statements included in
Consolidated-Tomoka Land Co.'s 1996 Annual Report to Shareholders
incorporated by reference in this Form 10-K, and have issued
our report thereon dated February 6, 1997. Our audits were
made for the purpose of forming an opinion on those statements
taken as a whole. The schedules listed in item 14(a) 2 are
the responsibility of the Company's management and are presented
for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated
financial statements. These schedules have been subjected to
the auditing procedures applied in the audits of the basic
consolidated financial statements and, in our opinion, fairly
state in all material respects the financial data required to be
set forth therein in relation to the basic consolidated financial
statements taken as a whole.
Arthur Andersen LLP
Tampa, Florida
February 6, 1997
16
<PAGE>
SCHEDULE III
CONSOLIDATED-TOMOKA LAND CO.
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
COSTS CAPITALIZED GROSS AMOUNT AT
INITIAL COST TO COMPANY CARRIED AT CLOSE OF PERIOD
----------------------- ---------------------------- ------------------------------
BUILDINGS &
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS CARRYING COSTS LAND BUILDINGS TOTAL
- ----------- ------------ ----------- ------------ ------------- -------------- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTER AT:
OCALA 2,535,140 406,414 3,040,377 53,768 406,414 3,094,145 3,500,559
RENTAL OFFICE BUILDING AT:
DAYTONA BEACH 2,851,755 739,666 3,355,263 938,158 739,666 4,293,421 5,033,087
PALM COAST 1,936,000 247,462 1,577,878 1,024,921 247,462 2,602,799 2,850,261
CITRUS FACILITY AT:
LAKE PLACID 9,424,876 1,485,974 1,335,426 9,889,112 1,485,974 11,224,538 12,710,512
MISCELLANEOUS 1,262,811 26,956 159,931 1,422,742 26,956 1,449,698
----------- -------------------------- --------------------- -----------------------------------
16,747,771 4,142,327 9,335,900 12,065,890 -- 4,302,258 21,241,859 25,544,117
========== ========================== ====================== ===================================
DATE OF
ACCUMULATED COMPLETION OF DATE DEPR.
DESCRIPTION DEPRECIATION CONSTRUCTION ACQUIRED LIFE
- ------------ ------------ ------------- --------- ----------
<S> <C> <C> <C> <C>
SHOPPING CENTER AT:
OCALA 864,208 N/A 1987 5-31.5 YRS
RENTAL OFFICE BUILDING AT:
DAYTONA BEACH 2,049,381 N/A 1986 7-40 YRS.
PALM COAST 864,208 N/A 1987 5-31.5 YRS.
CITRUS FACILITY AT:
LAKE PLACID 2,623,293 VARIOUS N/A 5-30 YRS.
MISCELLANEOUS 99,325 N/A VARIOUS 5-40 YRS.
---------
6,566,029
=========
1996 1995 1994
---------- ---------- ----------
COST:
BALANCE AT BEGINNING OF YEAR 31,683,184 32,320,163 41,729,610
IMPROVEMENTS 182,985 851,394 1,182,518
COST OF REAL ESTATE SOLD (6,322,052) (1,488,373) (10,591,965)
---------------------------------------
BALANCE AT END OF YEAR 25,544,117 31,683,184 32,320,163
=======================================
ACCUMULATED DEPRECIATION:
BALANCE AT BEGINNING OF YEAR 7,631,177 7,015,261 15,357,900
DEPRECIATION AND AMORTIZATION 833,994 879,776 1,100,739
DEPRECIATION ON REAL ESTATE SOLD (1,899,142) ( 263,860) (9,443,378)
--------------------------------------
BALANCE AT END OF YEAR 6,566,029 7,631,177 7,015,261
=======================================
</TABLE>
17
<PAGE>
SCHEDULE IV
CONSOLIDATED-TOMOKA LAND CO.
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
FINAL FINAL PERIODIC AMOUNT OF
DESCRIPTION INTEREST MATURITY PAYMENT PRIOR FACE CARRYING LOANS
RATE DATE TERMS LIENS AMT. AMOUNT (A) DELINQUENT
- ------------ ------- -------- -------------------------------- ----- ----- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
MORTGAGE N/R
SECURED BY
REAL ESTATE:
Highlands Co 8.00% 12/97 Level, plus balloon of $1,778,400 -- $1,976,000 $1,778,400 --
Highlands Co 8.00% 12/99 Level, plus balloon of $2,187,500 -- 2,500,000 2,500,000 --
Highlands Co 8.50% 01/03 Level, plus balloon of $394,334 -- 560,000 510,577 --
Volusia Co 9.50% 12/98 Level, plus balloon of $1,116,073 -- 1,969,541 1,181,725 --
Volusia Co 9.50% 12/00 Level, plus balloon of $611,200 -- 764,000 764,000 --
Volusia Co 9.25% 12/98 Level, plus balloon of $313,438 -- 356,250 331,250 --
Volusia Co 8.50% 12/01 Level, plus balloon of $974,083 -- 1,220,000 1,220,000 --
Volusia Co 8.50% 01/03 Level, plus balloon of $502,381 -- 713,440 650,474 --
Volusia Co 9.25% 10/97 Level, plus balloon of $411,057 -- 411,057 411,057 --
Hernando Co 9.00% 05/00 Level, plus balloon of $888,516 -- 975,000 951,515 --
Other 6.25%-10% 01/97-08/01 Level, plus balloon of $571,943 -- 738,547 645,358 --
-----------------------------------------
-- $12,183,835 $10,944,356 --
=========================================
(A) FOR FEDERAL INCOME TAX PURPOSES, THE AGGREGATE BASIS OF THE LISTED MORTGAGES WAS $10,944,356
(B) A RECONCILIATION OF THE CARRYING AMOUNT OF MORTGAGES FOR THE THREE YEARS ENDED DECEMBER 31, 1996, 1995,
AND 1994 IS AS FOLLOWS:
1996 1995 1994
---------- ---------- -----------
BALANCE AT BEGINNING OF YEAR $ 7,097,776 $8,993,825 $2,998,164
NEW MORTGAGE LOANS 4,911,607 2,247,350 6,755,522
COLLECTIONS OF PRINCIPAL ( 1,065,027) (4,143,399) ( 759,861)
------------------------------------
BALANCE AT END OF YEAR $10,944,356 $7,097,776 $8,993,825
====================================
</TABLE>
18
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission File No. 0-5556
CONSOLIDATED-TOMOKA LAND CO.
(Exact name of registrant as specified in the charter)
19
<PAGE>
EXHIBIT INDEX
Page No.
-------
(2.1) Agreement of Merger and Plan of Merger and Reorganization
dated April 28, 1993 between Consolidated-Tomoka Land Co.
and CTLC, Inc. filed with the registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993 and
incorporated by this reference. *
(2.2) Certificate of Merger dated April 28, 1993 filed with the
registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993 and incorporated by this reference. *
(3.1) Articles of Incorporation of CTLC, Inc. dated February 26,
1993 and Amended Articles of Incorporation dated March 30,
1993 filed with the registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993 and incorporated
by this reference. *
(3.2) By-laws of CTLC, Inc. filed with the registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993 and
incorporated by this reference. *
10 Material Contracts:
(10.1) Marketing Agreement executed September 1, 1996 between
Citrus World, Inc. and Consolidated-Tomoka Land Co. 21
(10.2) Packing House Agreement executed October 2, 1996 between
Turner Food Corporation and Consolidated-Tomoka Land Co.
29
(10.3) The Consolidated-Tomoka Land Co. Unfunded Deferred
Compensation Plan filed with the registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1981
and incorporated by this reference. *
(10.4) The Consolidated-Tomoka Land Co. Unfunded Deferred
Compensation Plan executed on October 25, 1982 filed with
the registrant's annual report on Form 10-K for the year
ended December 31, 1982 and incorporated by this reference. *
(10.5) The Consolidated-Tomoka Land Co. Stock Option Plan
effective April 26, 1990 filed with the registrant's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1990 and incorporated by this reference. *
(11) Computation Earnings of Per Common Share 34
(13) 1996 Annual Report to Shareholders 35
(21) Subsidiaries of the Registrant 67
(23 Consent of Arthur Andersen LLP 68
* - Incorporated by Reference
20
<PAGE>
EXHIBIT 10.1
MARKETING AGREEMENT
CITRUS WORLD, INC.
This Agreement, made as of the 1st day of September, 1996,
between CITRUS WORLD, INC., a cooperative association organized under
the laws of the State of Florida with its principal place of business
at Lake Wales, Florida (hereinafter referred to as "Citrus World") and
Consolidated-Tomoka Land Co. of Daytona Beach, Florida (hereinafter
referred to as "Member").
WITNESSETH
WHEREAS, Citrus World owns and operates a citrus fruit canning,
packaging, and processing plant at Lake Wales, Florida, as well as
other facilities both within and without the State of Florida for the
extraction, canning, and/or processing, warehousing, and marketing of
processed citrus fruit products; and
WHEREAS, Member is a member-stockholder of Citrus World and
desires to arrange for the sale and delivery of citrus fruit to Citrus
world for processing and marketing of the products derived therefrom.
NOW, THEREFORE, in consideration of the premises and other
valuable considerations, it is mutually agreed as follows:
1. Definitions. For the purpose of this Agreement:
(a) "Grower-Members" shall mean citrus fruit growers who are
members of Member where Member is a cooperative association.
(b) "Non-Member Patrons" shall mean citrus fruit growers who are
not Grower-Members but who have agreed as of or prior to October 1,
1992, to sell fruit to Member (if a cooperative) for marketing; to
allow pooling of such fruit on a cooperative basis; and to accept the
pool proceeds (after deduction of all costs and expenses) as the total
amount due for such fruit.
(c) "Growers" shall include both Grower-Members and Non-Member
Patrons.
(d) "Specified Acreage Fruit" shall mean all citrus fruit from
Member which is not packed as fresh fruit and which is either produced
by Member itself or which, where Member is a cooperative association,
is committed to Member by means of valid Grower Marketing Agreements
and is grown on Grove Property as hereinafter defined. For the
purposes of this definition and of this agreement fruit "packed as
fresh fruit" shall mean all fruit and is harvested into pallet boxes,
delivered to Member's designated packinghouse, washed, waxed, graded
packed in cartons, bags, or bulk containers, marketed and shipped in
fresh fruit form.
(e) "Grower Marketing Agreements" shall mean valid agreements
between Member if a cooperative and Member's Growers whereby each
Grower will have agreed (i) to sell and deliver citrus fruit to Member
for marketing; (ii) that such fruit will be grown on specific groves
the description of which has been furnished to Member; and (iii) that
such agreements shall not be terminable except upon two years notice
(subject, however, to the provisions of paragraph 17 hereof).
(f) "Limited Fruit" shall mean all citrus fruit from Member and
quantity of which has been set, in terms of a specified number of
boxes, by Citrus World's Board of Directors less an allowance, not to
exceed five percent (5%) of said total quantity of fruit as fixed by
the Board, to accommodate Member's fresh fruit operations. Fruit
comprising said 5% allowance may be of any variety regardless of the
restrictions on changes in the quantity and variety of fruit as
contained in paragraph 3 of this Agreement, and may be packed in any
packing house provided that all eliminations derived from such packing
operation (or equivalent quantity and variety) shall be delivered to
Citrus World.
21
<PAGE>
(g) "Grove Property" shall mean all planted grove properties
owned or leased as of October 1, 1992 by Member, or by a Grower, or
which Member has been specifically permitted to acquire or add to its
membership after such date, the fruit from which will be Specified
Acreage Fruit. Such properties may be comprised of actual producing
groves or young groves not producing fruit as of October 1, 1992.
Former groves destroyed by blight, disease or freeze that are to be
replanted but which may not have been replanted as of October 1, 1992,
may be included provided they are, in fact, replanted by September 1,
1998. But such acreage that is not planted shall not be eligible for
replacement as provided in Paragraph 11 hereof.
(h) Fruit Owned or Controlled by Member" shall include all
Specified Acreage Fruit and Limited Fruit, either or both.
(i) "Florida Citrus Season" means the period each year commencing
on September 1 and ending on the following August 31.
2. Delivery and Transfer of Title. Subject to the terms of this
Agreement, Member agrees to deliver to Citrus World all Fruit Owned or
Controlled by Member, and Member hereby assigns and transfers to
Citrus World upon such delivery absolute title and ownership to all
such fruit that is accepted by Citrus World. Member agrees to deliver
the same to such place as Citrus World may direct and Member hereby
warrants that Member will have good and lawful authority to sell and
transfer said fruit at the time of such delivery and warrants title to
said fruit against the lawful claims of all persons whomsoever.
3. Estimate and Identity of Fruit. On or before October 1st of each
year this Agreement is in effect, Member agrees to furnish to Citrus
World the estimated quantity by varieties of Fruit Owned or Controlled
by Member. In addition, Member shall at the same time clearly
identify all Specified Acreage Fruit by delivering to Citrus World a
list specifying the Grove property (including the information
specified in paragraph 4 below) from whence the same is to be
harvested. And, except as provided in paragraph 10 hereof, Grove
Property included in such list may not be removed therefrom except
upon 2 years written notice to Citrus World. If applicable, Member
will furnish at such time the varieties and quantities of Limited
Fruit to be delivered to Citrus World pursuant to this Agreement,
provided that any changes in the varieties of fruit and quantities
thereof from that delivered during the previous Florida Citrus Season
must be approved by Citrus World's Board of Directors, unless
management determines a varietal change is beneficial to Citrus World.
4. Records. So as long as this agreement remains in effect, Member
will maintain adequate records, and will furnish copies thereof to
Citrus World, so as to be able to describe fully all Grove Properties
listed by Member pursuant to paragraph 3 above, including acreage,
block by variety, and the number and age of the trees in each block.
If Member is a cooperative, Member will also furnish to Citrus World
an up-to-date copy of Member's standard Grower Marketing Agreement.
5. Certificate of Compliance. Each year, within 30 days following
the close of Member's fiscal year, Member will deliver to Citrus World
a certificate of compliance in the form of Exhibit "A" attached hereto
and made a part hereof signed by Member, and accompanied by an opinion
of Member's independent auditor to be based on Member's records and in
the form of Exhibit "B" also attached hereto and made a part hereof,
attesting to the fact (a) that all fruit delivered by Member to Citrus
World during the preceding Florida citrus season was in fact Fruit
Owned or Controlled by Member as herein defined; and (b) that the
total quantity of all such Fruit Owned or Controlled by member was in
fact delivered to Citrus World by Member.
6. Acceptance of Fruit by Citrus World. Subject to the provisions of
paragraph 13 hereof, Citrus World shall accept for processing and
marketing all Fruit Owned or Controlled by Member which is (a)
included in the estimate made pursuant to paragraph 3 above and
derived from the Grove property designated pursuant to said paragraph;
or (b) consists of Limited Fruit. However, subject to the provisions
of paragraph 12 of this Agreement, Citrus World shall not accept any
fruit which does not comprise fruit from the Grove Property specified
22
<PAGE>
or is in excess of the number of boxes of Limited Fruit, and no waiver
of the provisions of this paragraph shall be valid unless approved by
Citrus World's Board of Directors, Executive Committee or Marketing
Committee.
7. Purchase Price. Citrus World agrees to sell the product
manufactured from fruit delivered by member hereunder, pooled with
products manufactured from fruit delivered by other members or any
other source, and to pay over ratably as the agreed purchase price due
Member hereunder the net amount received from such sale, as final
settlement in full to Member, less any and all advances to Member and
less Citrus World's usual uniform and regular charges and expenses for
handling and processing the fruit and from marketing the products
therefrom including all commonly accepted business expenses and
conventional reserves. Member further agrees to accept capital equity
certificates or credits of the type and in the form authorized by the
By-Laws of Citrus World as payment of that part of such purchase price
which is equal to the retained amounts for capital purchases fixed by
the Board of Directors of Citrus World.
8. Advances. Citrus World agrees to make advances to Member upon the
delivery of fruit to it as may from time to time be established by
Citrus World's Board of Directors; however, Citrus World shall not be
obligated to make any final settlement on account of such deliveries
until the end of its fiscal year, or later at the discretion of its
Board of Directors.
9. Excess Fruit. Any and all fruit acquired by Member but which
Member could not include in the estimate made pursuant to paragraph 3
above, shall first be offered to Citrus World for purchase on a cash
or participation basis and Member agrees not to sell such fruit to
others at a price lower than that offered by Citrus World, or on a
participation basis upon terms less favorable than those offered by
Citrus world.
10. Diversion of Fruit. Member agrees it will not permit any citrus
fruit now or hereafter comprising Fruit Owned or Controlled by Member
to be delivered to any canning or processing plant other than those
Citrus World or designated by Citrus world during the period covered
by this Agreement, except:
(a) where a Grower or Member has made a bona fide sale of all or
part of a grove such that the fruit therefrom is no longer available
to Member. For the purposes of this paragraph 10 (a), "bona fide
sale" shall mean an actual arms length sale for fair value and shall
specifically exclude gifts, transfers to family members, transfers
among trustees, or among partners, or to stockholders or any other
transfer of whatsoever sort or nature other than an arms length sale
for fair value.
(b) Where a Grower dies and such deceased Grower's heirs,
administrators, or executors desire to withdraw the deceased Grower's
groves such that the fruit therefrom is no longer available to Member.
(c) Where a Grower abandons all or part of a grove for economic
reasons such that the fruit therefrom is no longer available to Member
and such fact is certified by Citrus World.
(d) Where a Grower requests a transfer of membership from Member
to another member of Citrus World without complying with the two year
notice of termination requirement, provided (i) that such transfer
complies in all respects with all other provisions of this agreement;
and (ii) Member, the other member, and Citrus World all consent in
writing to such transfer thereby waiving said two year notice
requirement.
(e) Where the Board of Directors of Citrus World has permitted
Member to make specified deliveries to others.
23
<PAGE>
11. Replacement of Grove Property. Whenever Member should occasion a
reduction in Member's designated Grove Property pursuant to the
provisions of paragraph 10(a) or (b) above, or due to the withdrawal
of a Grower or for any other reason, then Member may replace such
property, provided, however, that:
(a) Member has actually suffered a reduction in the amount of
Member's Grove Property;
(b) the property to be replaced consists only of planted
acreage;
(c) the replacement shall be completed within two (2) years from
the date of the loss;
(d) Member will immediately notify Citrus World upon the making
of any such replacement;
(e) the varieties of citrus fruit grown on the replacement
acreage shall be substantially the same as that grown on the lost
property unless otherwise approved by Citrus World's Board of
Directors; and
(f) no replacement shall be allowed where the reduction in
Member's designated Grove Property (i) consists of property located
within any of the three grove developments known as Cooperative
Producers Inc., Ranch One, Inc., and Cooperative Three Inc., AND (ii)
the restrictive covenants and/or contractual arrangements remain in
effect whereby the marketing of fruit grown on such property is
restricted.
All grove property added as replacement property pursuant to this
paragraph shall be deemed to be Grove Property as herein defined and
included in the properties identified pursuant to paragraph 3 hereof,
but nothing herein shall be deemed or construed as modifying the two
year notice requirement from the addition or removal of the
replacement property or any other properties as set forth in said
paragraph 3, nor the obligation of Member to deliver to Citrus World
the quantities of fruit specified by Member in the then current
estimate delivered by Member to Citrus World pursuant to said
paragraph 3. In addition, in the event the replacement of property
has not taken place within the two year period specified in
subparagraph (c) above Member's right of replacement pursuant to this
paragraph 11 shall terminate to the extent of the difference between
the amount of Member's designated Grove Property actually existing as
of the May 31 next following the expiration of said two year period
and 97% of the Grove Property that existed before the loss.
12. Fruit Exchange. If for pooling considerations, or in the
interest of Citrus World's plant efficiency, Fruit Owned or Controlled
by Member is, with the knowledge and consent of Citrus World, exchange
for other fruit of like type and quality, then such exchange fruit
shall nevertheless be deemed to be Fruit Owned or Controlled by Member
for the purposes of this Agreement, provided, however, that the fruit
used for such exchange shall consist only of fruit produced and owned
by Member, or, where Member is a cooperative, by Member's Growers.
Any such exchanges will be noted in the Certificate and Opinion to be
submitted by Member pursuant to paragraph 5 hereof.
13. Origin and Rejection of Fruit. All fruit to be deliverd by
Member under this agreement shall consist only of fruit grown upon
groves located within the State of Florida and such fruit, together
with the horticultural practices used in growing and harvesting the
same, shall conform in all respects to all applicable laws and
regulations of the United States and the State of Florida. Citrus
World may, at its option, reject any and all fruit that fails to pass
State and/or Federal inspection or to conform with this Agreement, and
any loss or additional cost Citrus World may suffer thereby shall be
charged against Member.
24
<PAGE>
14. Increase or Decrease in Grove Property Acreage or Amount of
Fruit. The quantity of Member's Grove Property and/or the amount of
fruit may be increased or decreased but only in the following manner:
(a) On or before June 1 of each year, Citrus World will consider
an increase in the amount of Grove Property acreage and/or total
quantity of fruit to be handled by it for the next ensuing Florida
Citrus Season. Beginning September 1, 1994, should Citrus World
determine to increase such acreage or fruit quantity then such
increase will be allocated to the then current members of Citrus World
in proportion to the total number of shares of A, B, and C stock held
by each such member as of the preceding August 31.
(b) The quantity of Grove Property listed by Member pursuant to
paragraph 3 may be increased or decreased whenever such change is to
consist solely of grove properties located within any of the three
grove developments known as Cooperative Producers Inc., Ranch One
Inc., and Cooperative Three Inc., provided that such right shall
terminate whenever the restrictive covenants and/or contractual
arrangements currently applicable to such properties restricting the
marketing of fruit grown thereon expire or terminate.
(c) In the event an increase in acreage or fruit quantity is
allocated to the then current members of Citrus World as provided in
subparagraph (a) above, then each such member shall have until the
commencement of the next ensuing Florida Citrus Season (September 1)
after such allocation to utilize the same otherwise the right to
increase acreage or fruit quantity shall terminate. With respect to
Specified Acreage Fruit, Member's right to increase acreage shall
terminate to the extent the amount of Grove Property actually
designated by Member as of the commencement of said Florida Citrus
Season is less than 97% of the total amount of Grove Property Member
was at that time authorized to designate.
(d) Member's right to utilize any unused portion of the
allocation of acreage, or quantity of fruit, made to Member on or
about June 24, 1994 will terminate on May 31, 1997 but it is agreed
that such termination shall, as to Specified Acreage Fruit, only be to
the extent the amount of Grove Property actually designated by Member
as of such date is less than 97% of the total amount of Grove Property
Member was authorized to designate for the 1996-1997 Florida Citrus
Season.
15. Liquidated Damages. Inasmuch as the remedy at law would be
inadequate and inasmuch as it would be impracticable and extremely
difficult to determine the actual damage resulting to Citrus World
should Member fail to deliver fruit hereunder, regardless of the cause
of such failure (except as provided in paragraph 18 hereof) Member
hereby agrees to pay to Citrus World as liquidated damages for breach
of this agreement for all fruit which Member has agreed to deliver
hereunder for each Florida Citrus Season but which Member has failed
to deliver (a) as to Specified Acreage Fruit, the sum of Seven
Hundred and Fifty Dollars ($750.00) per acre for each acre the fruit
from which was not deliverd in its entirety or (b) as to Limited
Fruit, the sum of Two Dollars ($2.00) per standard field box for all
diverted or undelivered fruit. Both parties agree that this Agreement
is one of a series dependent for its true value upon the adherence by
each and all of the contracting parties to each and all of the said
agreements, but the cancellation of any other similar agreement or the
failure of any of the parties thereto to comply with the same, shall
not affect the validity of this Agreement.
16. Attorney's Fees. If any action whatsoever by reason of breach or
threatened breach of this Agreement is brought, the party that does
not prevail shall pay all costs thereof, including reasonable
attorneys fees expended or incurred in such proceedings.
25
<PAGE>
17. Term and Termination. This Agreement shall commence upon its
execution by both parties and shall remain in effect until terminated
by Member which may be accomplished only as of September 1st of any
year and only by notifying Citrus World in writing at least two (2)
years prior to the September 1st upon which such termination is to be
effective. Provided, however, that Citrus World shall not be
obligated to release Member from this Agreement as long as Member is
indebted to Citrus World in any sum.
18. Force Majeure. Neither party to this Agreement shall be liable
for damages for failure to perform hereunder to the extent that
performance by either of them is made impossible or delayed by Act of
God, war, fire, equipment breakdown, strike, embargo, lockout
inability to obtain materials, supplies or transportation or any other
cause beyond the control of either of said parties.
19. Bylaws and Rules. The By-Laws of Citrus World now in existence
and as hereafter amended, and all rules, regulations and orders
promulgated by Citrus World from time to time shall be parts of this
Agreement and binding upon the parties thereto.
20. Right of Offset. Citrus World shall have the right to offset and
deduct any sums that may become due to it from Member from amounts
accruing to Member under this Agreement whether such indebtedness to
Citrus World arises under this Agreement or otherwise.
21. No Oral Agreement. The parties agree that there are no oral or
other conditions, promises, covenants, representations or inducements
in addition to or at variance with any of the terms hereof, and that
this contract represents the voluntary and clear understanding of both
parties fully and completely.
22. Successors and Assigns. This Agreement shall inure to and be
binding upon the successors, assigns and/or legal representatives of
both of the parties hereto.
IN WITNESS WHEREOF, both parties have executed this agreement as
of the day and year first above written by their duly authorized
representatives.
MEMBER-Consolidated-Tomoka Land Co. Attest or Witness:
By: /s/ Hugh J. Veley, VP /s/ Linda M. Doyle
----------------------- ------------------
CITRUS WORLD, INC.
By: /s/ F. M. Hunt, Pres. /s/ N. T. Mitchell
---------------------- -------------------
26
<PAGE>
EXHIBIT A
CITRUS WORLD 1996-97 UNIFORM MARKETING AGREEMENT
CERTIFICATE OF COMPLIANCE
To the best of our knowledge and belief, the undersigned member of
Citrus World hereby certifies (a) that all fruit delivered to Citrus
World by the undersigned during the 1996-1997 Florida Citrus Season
consisted of Fruit Owned or Controlled by the undersigned as such
terms are defined in Paragraph 1 of the Citrus World Uniform Marketing
Agreement; and (b) that the total quantity of such fruit has been
delivered to Citrus World in accordance with paragraph 2 of said
Agreement.
EXHIBIT B
CITRUS WORLD 1996-97 UNIFORM MARKETING AGREEMENT
CERTIFICATE OF MEMBER'S INDEPENDENT AUDITOR
We have examined the accompanying Certificate of Compliance with the
Citrus World Marketing Agreement, Paragraphs 1 and 2, for the 1996-
1997 Florida Citrus Season as executed by Consolidated-Tomoka Land Co.
of Daytona Beach, Florida (hereinafter referred to as "Member".) Our
examination was made in accordance with standards established by the
American Institute of Certified Public Accounts and, accordingly,
included such procedures as we considered necessary in the
circumstances.
In our Opinion, based upon the books and records of Member, the
Certificate of Compliance referred to above correctly reflects
compliance by Member with the criteria established in the Citrus World
Marketing Agreement, Paragraphs 1 and 2.
27
<PAGE>
EXHIBIT 10.2
PACKING HOUSE AGREEMENT
THIS AGREEMENT, made and entered into the 2nd day of October,
1996, by and between TURNER FOODS CORPORATION, a Florida corporation,
25450 Airport Road, Punta Gorda, Florida 33950 (herein referred to as
"TFC") and CONSOLIDATED-TOMOKA LAND CO., Post Office Box 1005, Lake
Placid, Florida 33852 (hereinafter referred to as "CONSOLIDATED").
WITNESSETH
WHEREAS, CONSOLIDATED is the owner and operator of a fresh citrus
fruit packing house located near Lake Placid, Florida (hereinafter
referred to as the "packing house"), and
WHEREAS, TFC is the owner of citrus groves located in Highlands,
Collier, Hendry and DeSoto Counties, Florida, known as the 'HICKORY,
HIGHLAND, GATOR SLOUGH, and DESOTO CITRUS GROVES", and
WHEREAS, the parties desire that a portion of the citrus fruit raised
on said TFC CITRUS GROVES which is suitable for packing as fresh fruit
shall be run through CONSOLIDATED's packing house, pursuant to the
terms and conditions hereinafter set forth:
1.0 Committed Fruit: TFC agrees to deliver and CONSOLIDATED agrees
to receive at its packing house the following estimated quantities
providing that previous commitments can be met:
Variety Estimated Quantity
Robinson Tangerine 20,000
Hamlin Orange As mutually agreed upon
Pineapple Orange As mutually agreed upon
Orlando Tangelo 50,000
Temple 50,000
Murcott Tangerine 35,000
Valencia as mutually agreed upon
The above volumes are subject to market conditions, TFC and
CONSOLIDATED have the right to add varieties or volumes, or to delete
varieties or volumes, if acceptable to both parties.
2.0 Pools: All fruit from TFC run through CONSOLIDATED's packing
house will be pooled with other fruit of like grade and quality from
CONSOLIDATED or from other growers.
2.1 Pool Periods: All fruit harvested will be accounted for in a
seasonal pool period by variety. The seasonal pool period is further
defined as August through June or upon completion of final harvest of
fruit covered by this Agreement.
2.2 Pack-out: CONSOLIDATED shall account for all fruit, received
by its packing house from HICKORY, HIGHLAND, GATOR SLOUGH, or DESOTO
CITRUS GROVES separately and on a daily basis by standard box
(hereinafter defined and shall transmit DAILY to TFC (c/o Chet
Townsend; FAX No. 941-657-6418) a report of all pack-out data for such
fruit. "Pack-Out Data" shall be deemed to mean listing by variety and
by grade of (i) all fruit that meets fresh fruit standards and (ii)
all fruit that is eliminated.
3.0 Packing and Selling Costs: Packing and selling costs are based
on a packed 1-3/5 bu. carton.
3.1 Packing Costs: Packing and costs based on a packed 1-3/5 bu.
box:
Packed In 4/5 Bu 2/5 Bu #4 #5 Bulk
Bins
Carton Carton Bagmasters Bagmasters Wood
Oranges $5.40 $7.00 $6.90 $6.80 $1.50
Temples $5.40 $7.00 $6.90 $6.80 $1.50
Tangelos $5.40 $7.00 $6.90 $6.80 $1.50
Tangerines $6.90 N/A N/A N/A $1.50
28
<PAGE>
3.2 Selling Costs: $0.30 per packed or bulk standard box.
3.3 Handling Costs: $0.20 per packed or bulk standard box.
3.4 Elimination Haul: Hauling: Per weight box (90 lbs. for
Oranges, Temples and Tangelos; 95 lbs. for Tangerines).
Elimination Haul Rates:
Temple
Tangelo
Destination Orange Tangerine
Silver Springs, Winter Garden $0.50/box $0.60/box
SunPac, Winter Haven $0.42/box $0.52/box
Coke, Auburndale $0.45/box $0.55/box
Tropicana, Bradenton $0.45/box $0.55/box
Tropicana, Fort Pierce $0.45/box $0.55/box
Cargill, Frostproof $0.35/box $0.45/box
LaBelle $0.35/box $0.45/box
Orange Co., Bartow $0.42/box $0.52/box
3.5 Elimination Charges: $0.25 for Orange, Temples, Tangelos:
$0.40 for Tangerines.
3.6 Industry Assessments: As set by the industry groups (to be
determined after the October 11, 1996 crop estimate and attached as an
addendum to this agreement) and is to be deducted from Fruit Proceeds
of TFC and paid by CONSOLIDATED.
4.0 Haul Charges from Grove to Packing House: CONSOLIDATED agrees
to haul all fruit from HICKORY CITRUS GROVE for $0.16 per box, from
HIGHLANDS and GATOR SLOUGH CITRUS GROVES for $0.40 per box, and from
DESOTO CITRUS GROVE for $0.20 per box, to be deducted from Fruit
Proceeds of the participation plan.
5.0 Pick and Roadside Charges: Pick and roadside charges will be
negotiated with an independent contractor approved by TFC. TFC will
pay for all pick and roadside charges direct to harvester.
CONSOLIDATED agrees to advance TFC $1.25 per box weekly for fruit
delivered to packing house.
6.0 Elimination Fruit: Packing house eliminations will be sold
directly to a processing plant of TFC's choice under a separate
contract agreement. Proceeds from sale of elimination fruit will go
directly to TFC. TFC will furnish TFC Trip Ticket books, one for each
grove, for a CONSOLIDATED representative to write for each load of
eliminations delivered for TFC's account. CONSOLIDATED will mail,
daily, copies of TFC Trip Tickets to the Punta Gorda address above.
All TFC Trip ticket books used or unused should be returned to the
grove location by the end of the current season.
7.0 Terms of Payment: Within 30 days following the close of each
month during each Florida Citrus season, CONSOLIDATED will pay to TFC
75% of the anticipated pool returns, less the harvesting advance and
other charges listed in paragraphs 3.0, 4.0, and 5.0, due TFC arising
from all fruit picked and sold during each month.
The remaining balance due from such pool returns will be paid by
CONSOLIDATED to TFC within 75 days after the final close of each pool.
Each TFC Grove should be accounted for separately, with separate
statements. Each statement should tie to TFC Trip Ticket numbers,
which can be sorted by ticket prefix numbers (grove identification
number). All payment checks and statements should be sent to Turner
Foods Corporation, 25450 Airport Road, Punta Gorda, FL 33950.
8.0 Estimated Returns: CONSOLIDATED will provide estimated returns
and payment dates as requested throughout the season. TFC understands
the estimates may vary considerably from actual final returns
depending upon many variables. CONSOLIDATED will report the average
FOB selling price for each carton size on a weekly basis (to be faxed
to Chet Townsend at 941-657-6418).
29
<PAGE>
9.0 Standard Box: For the purposes of this Agreement, "standard
box" means Florida standard weight boxes as follows: Oranges - 90
pounds; Grapefruit - 85 pounds; Tangerines - 95 pounds.
10.0 Delivery Schedule: Delivery schedules shall enable TFC to
harvest in a timely fashion so as to enhance marketability and to
avoid loss from premature harvest or excess loss due to over-maturity.
Delivery schedules shall be coordinated with CONSOLIDATED and TFC site
representatives
11.0 Right of Entry: TFC reserves the right for its agents or
designees to enter CONSOLIDATED's packing house as it may elect for
the purpose of inspecting the work. CONSOLIDATED reserves the right
for its agents or designees to enter TFC's groves for inspection and
harvest of the fruit under contract.
12.0 Records and Accounts: CONSOLIDATED shall keep and maintain such
records and accounts in connection with the performance of the
Contract, as shall permit CONSOLIDATED to furnish TFC an accurate
written allocation of the total amount paid for performance of the
Contract to the various elements of the Contract. CONSOLIDATED shall
retain such records and accounts for a period not less than five (5)
years and shall make records available to TFC for inspection and
copying, where records are kept, during reasonable business hours and
upon seven (7) days' written request.
13.0 Term of Contract: This contract shall commence upon full
execution of this Contract and shall remain in force through the 1996-
1997 season.
14.0 Complete Agreement and Non-Waiver: This Contract is intended to
be final and complete, and exclusive statements of the terms of the
Agreement between the parties. The parties agree that parol or
extrinsic evidence may not be used to vary or contradict the express
terms of this Contract. Except as specifically provided herein, this
contract shall not be amended or modified, and no waiver of any
provision hereof shall be effective, unless set forth in a written
instrument authorized and executed with the same formality as this
contract.
15.0 Binding Effect: This Agreement shall be binding upon and inure
to the benefit of the parties successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement this 2nd
day of October, 1996.
TURNER FOODS CORPORATION
/s/ Dagmar Gewlas By: /s/ Chet Townsend
------------------------ --------------------
Witness Chet Townsend
Vice President,
Marketing & Sales
/s/ James A. Snively
________________________
CONSOLIDATED-TOMOKA LAND CO.
/s/ Sylvia Leon By: /s/ Hugh J. Veley
-------------------------- ---------------------
Witness Vice President-Citrus
/s/ Linda Doyle
_______________________
Witness
30
<PAGE>
ADDENDUM
October 14, 1996
Mr. Chet Townsend, VP
Turner Foods Corp.
Rt. 1, Box 6B
Immokelee, FL 33934
Dear Chet,
The following assessments have been finalized for the 1996-97 season.
This should complete our agreement for this season.
Assessments 1996-97 Season
1 3/5 BU. Box
Florida Citrus Packers .007
Citrus Admin Committee .007
Dept. of Agriculture .172
Dept. of Citrus:
Oranges .29
Grapefruit .35
Reticulata .34
Total Assessments:
Oranges .476
Grapefruit .536
Reticulata .526
Looking forward as always to working with you and Jim for a good
season for both our companies.
/s/ Hugh J. Veley
Vice Pres. Citrus
-----------------
31
<PAGE>
EXHIBIT 11
CONSOLIDATED-TOMOKA LAND CO. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
For the Year Ended December 31,
1996 1995 1994
--------- --------- ----------
<S> <S> <S> <S>
PRIMARY EARNINGS PER SHARE
INCOME FROM CONTINUING OPERATIONS 6,602,558 4,420,007 6,490,401
LOSS FROM DISCONT. RESORT OPERATIONS
(NET OF TAX) -- -- (135,611)
--------- --------- ---------
NET INCOME 6,602,558 4,420,007 6,354,790
========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,261,272 6,261,272 6,261,272
COMMON SHARES APPLICABLE TO STOCK
OPTIONS USING THE TREASURY STOCK
METHOD AT AVERAGE MARKET PRICE
FOR THE PERIOD 82,031 42,237 25,376
--------- --------- ---------
TOTAL PRIMARY SHARES 6,343,303 6,303,509 6,286,648
========= ========= =========
PRIMARY EARNINGS PER COMMON
SHARE:
INCOME FROM CONTINUING
OPERATIONS $1.05 $0.71 $1.04
LOSS FROM DISCONT. RESORT
OPERATIONS (NET OF TAX) -- -- ($0.03)
--------- ---------- ---------
NET INCOME $1.05 $0.71 $1.01
========= ========== =========
FULLY DILUTED EARNINGS PER SHARE
TOTAL PRIMARY SHARES 6,343,303 6,303,509 6,286,648
COMMON SHARES APPLICABLE TO STOCK
OPTIONS IN ADDITION TO THOSE
USED IN PRIMARY COMPUTATION
DUE TO USE OF THE HIGHER OF
AVERAGE MARKET PRICE OR PERIOD
END MARKET PRICE -- 30,182 --
--------- --------- ---------
FULLY DILUTED EARNINGS PER
COMMON SHARE: 6,343,303 6,333,691 6,286,648
========= ========= =========
FULLY DILUTED EARNINGS PER SHARE:
INCOME FROM CONTINUING OPERATIONS $1.05 $0.71 $1.04
LOSS FROM DISCONT. RESORT
OPERATIONS (NET OF TAX) -- -- ($0.03)
--------- --------- ---------
NET INCOME $1.05 $0.71 $1.01
========= ========= =========
</TABLE>
32
<PAGE>
CONSOLIDATED-TOMOKA LAND CO.
ANNUAL REPORT
1997
33
<PAGE>
CONSOLIDATED-TOMOKA LAND CO.
MISSION - To efficiently produce and market fresh citrus fruit for
distribution by supermarkets primarily located in the
eastern half of the United States and Canada.
MISSION - To originate optimum development plans and establish
development rights for the company's land holdings
generating increased land values recognized in sales to
site specific developers.
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS COUNSEL
<S> <C> <C>
John C. Adams, Jr.(2) David D. Peterson Holland &night LLP
Chairman of the Board of Hilb, Chairman of the Board Post Office Box 1526
Rogal and Hamilton Company of Orlando, FL 32802-1526
Daytona Beach, Inc. (an insurance Bob D. Allen
agency); Executive Vice President President and Chief REGISTRAR AND STOCK TRANSFER AGENT
of Hilb, Rogal and Hamilton Executive Officer ChaseMellon Shareholder Services,
L.L.C.Company Four Station Square, Third Floor
Bruce W. Teeters Pittsburgh, Pennsylvania 15219-1173
Bob D. Allen(1) Senior Vice President-Finance
President and Chief Executive and Treasurer
Officer of the Company
Robert F. Apgar
Jack H. Chambers(3) Vice President-General Counsel
Of Counsel to law firm of
Foley & Lardner Joseph Benedict III AUDITORS
Vice President-Government
James P. Gorter Relations Arthur Andersen LLP
Chairman of the Board of 101 East Kennedy Boulevard
Baker Fentress & Company; limited Patricia Lagoni Tampa, Florida 33602
partner of Goldman, Sachs & Co. Vice President-Administration
and Corporate Secretary
William O. E. Henry(3)
Practicing attorney and partner Hugh J. Veley MAILING ADDRESS
in law firm of Holland & Knight LLP Vice President-Citrus
counsel for the Company Consolidated-Tomoka Land Co.
Emily J. Sottile Post Office Box 10809
Robert F. Lloyd (2) Assistant Secretary and Daytona Beach, Florida 32120-0809
Chairman of the Board and Assistant Treasurer
Chief Executive Officer of
Lloyd Buick-Cadillac Inc. Linda Crisp
Assistant Secretary
John H. Pace, Jr.(3)
Chairman of Cardinal Investment Gary Moothart
Company (investor in securities Controller
and real estate)
INDIGO DEVELOPMENT INC.
David D. Peterson(1) William H. McMunn
Chairman of the Board of the Company; President
Retired President and Chief Executive
Officer of Baker Fentress & Company (1) Member of the Executive Committee
(2) Member of the Compensation and
Bruce W. Teeters Stock Option Committee
Senior Vice President-Finance (3) Member of the Audit Committee
and Treasurer of the Company
</TABLE>
34
<PAGE>
TO OUR SHAREHOLDERS
A record citrus harvest, coupled with fourth quarter real estate
closings, produced record earnings for 1996. Net income of $6,602,558
or $1.05 per share was recorded in the current year compared with
$4,420,007 or $.71 per share reported in 1995.
Citrus operating profit rose substantially in 1996 as production for
the year increased to 1.4 million boxes, a 37% improvement over the
prior year. The groves planted in the late 1980's and early 1990's
continue to produce more fruit as they mature.
The freeze, which hit Florida in mid-January 1997, although considered
severe in southwest Florida, did not lower the total Florida citrus
crop estimate for the current year ending in August. Accordingly,
citrus prices, which have been lower than those recorded in the prior
crop year, have not improved as hoped. The impact of the freeze on
the Company's groves appears to be nominal, as the lowest temperatures
were experienced in groves producing early season fruit which had
already been harvested.
Year-end real estate closings boosted full year earnings. Although
commercial sales activity was at a lower level than the prior year,
land sales in Highlands County, which included older citrus acreage,
produced strong overall real estate earnings. Sale of a shopping
center in Spring Hill and an office building in Daytona Beach also
aided full year profits.
A lighting ceremony to commemorate the completion of the I-95
interchange landscaping project was held in December. The initial
night lighting was switched on at sunset dramatically highlighting the
water fountains, numerous palm trees, and plantings spelling out
"Daytona Beach" and "LPGA Boulevard." The interchange landscaping
will enhance the Company's real estate activity by creating an
awareness of LPGA property on the part of the 50,000,000 automobile
passengers passing by on Interstate 95 each year.
LPGA International will again host the Showcase Home and numerous
housing entries in the East Florida Building Industry Association's
1997 Parade of Homes in March. Last year this event brought thousands
of potential home buyers to the community. The LPGA International
golf course will again play host to the Sprint Titleholders
Championship May 1-4. The nationally televised tournament draws broad
attention to the community through exposure to television viewers and
thousands of visiting golf enthusiasts.
At LPGA International, home sales during the first year of operations
were disappointing. The slowness in sales may have been due, in part,
to the lack of a major amenity package to be provided by the
clubhouse. After announcing the start of construction of the
permanent clubhouse and destination resort hotel last May, the
developer, Buena Vista Hospitality Group, experienced a delay in
securing permanent financing due to the unexpected withdrawal of the
project participant who was to provide the financing. A replacement
financing source has been located but the additional effort has taken
several months' time.
Dividends paid in 1996 totaled $.55 per share, a 22% increase over the
prior year dividends. This marks the fourth straight year of
increased dividend payments. Dividends paid during the four- year
period have increased from $.20 per share to $.55 per share, an
increase of 175%.
35
<PAGE>
The Company is working on several new initiatives. One example is a
new agreement with an oil exploration company to allow three
dimensional seismic operations and surveys over 10,200 surface acres
in Lee County. Another example is a recently signed agreement to
create pre-permitted industrial sites on Company land in Daytona
Beach. Both initiatives have high profit potential.
The Florida economy is healthy, and interest in Company land remains
strong. With these factors in place, the Company is well positioned
to benefit from Florida's economic growth.
Bob D. Allen
President
36
<PAGE>
SHAREHOLDERS' REPORT
LAND HOLDINGS
Land holdings of Consolidated-Tomoka Land Co. (the "Company") and its
affiliates, all of which are located in Florida, include:
approximately 26,800 acres in the Daytona Beach area of Volusia
County; approximately 4,080 acres in Highlands County, near Lake
Placid; a shopping center in Marion County; commercial/retail sites in
Volusia County; two office buildings in Volusia and Flagler Counties;
and full or fractional subsurface oil, gas, and mineral interests in
approximately 539,000 "surface acres" in 20 Florida counties. The
conversion and subsequent utilization of these assets provides the
base of the Company's operations.
The holdings of approximately 26,800 acres in Volusia County include
approximately 19,800 acres within the city limits of Daytona Beach,
approximately 6,600 acres within the unincorporated area of Volusia
County, and small acreages in the cities of Ormond Beach and Port
Orange. Of the 19,800 acres inside the city limits of Daytona Beach,
approximately 3,800 acres have received development approval by
governmental agencies. The 3,800 acres plus approximately 500 acres
owned by the City of Daytona Beach, 15 acres owned by Indigo Community
Development District, and 165 acres sold for development by others are
the site of a long-term, mixed-use development known as "LPGA
International," which includes the national headquarters of the Ladies
Professional Golf Association along with a "Signature" golf course and
a residential community, a maintenance facility, an interim
clubhouse, and main entrance roads to serve the LPGA community.
Construction of the entrance signage and landscaping was completed in
1995, and site work for construction of a second golf course is
underway. Construction of several homes around the first golf course,
on a 60-acre parcel of land that was sold to a residential developer
in 1994, began in 1995 with the first residences completed in early
1996. Construction by the LPGA of its headquarters was completed in
April 1996. The lands not currently being developed, including those
on which development approvals have been received, are involved in an
active forestry operation. Except for a 15-acre parcel at the
Interstate 95 and Taylor Road interchange in the Port Orange area
south of Daytona Beach, the tract straddles Interstate 95 for 6 1/2
miles between International Speedway Boulevard (U. S. Highway 92) and
State Road 40, with approximately 23,700 acres west and 3,100 east of
the interstate.
Subsidiaries of the Company are holders of the developed Volusia
County properties and are involved in the development of additional
lands zoned for residential, commercial, or industrial purposes.
In Highlands County, located in south central Florida along U.S.
Highway 27, the Company utilizes approximately 3,900 acres in its
citrus operation. The citrus groves and most of the other Highlands
County lands are near Lake Placid, Florida, which is about 75 miles
east of Sarasota and 150 miles northwest of Miami. The remaining
lands, approximately 180 acres, are mostly in a subsidiary's inventory
of residential or industrial lands.
The Company's oil, gas, and mineral interests, which are equivalent to
full rights of 300,000 acres, were acquired by retaining subsurface
rights when acreage was sold many years ago.
CITRUS
Under the name "Lake Placid Groves," the Citrus Division of
Consolidated-Tomoka Land Co. grows and packs fresh whole citrus fruit,
primarily oranges, tangelos, temples, tangerines, and Ruby Red
grapefruit. The brand names "Lake Placid" and "Winding Waters" are
used in marketing directly to wholesalers and retailers in the eastern
half of the United States and Canada. Because fresh fruit usually
commands higher prices, the operation emphasizes sales of fresh fruit
37
<PAGE>
packed in the Company's fresh fruit packing plant; however, the
division also ships part of the harvest (not suitable for packing
because of size, appearance, content deficiencies, or demand) to a
cooperative, partially owned by the Company, in Lake Wales, Florida,
where it is processed into juice and juice concentrate.
All groves are situated in prime citrus-growing areas on the southern
ridge of Highlands County, Florida; and a portion of the land is
adjacent to the southeastern shore line of Lake Placid, whose water
temperatures provide some protection against freezing weather. The
trees are in excellent condition. During 1996, a 480-acre parcel,
including a grove of approximately 460 acres, a portion of which
fronts on the east shore of Lake June, was sold. The Company crop for
the 1994-95 and 1995-96 seasons showed production of 930,000 boxes and
1,385,000 boxes, respectively; and the 1996-97 harvest is expected to
be 1,000,000 boxes. Production from the 1,600-acre grove planted
during the years 1989 through 1992 continues to increase as these
trees reach maturity. The average age of grove trees is approximately
13 1/2 years, well within the average 45-year productive life. The
groves are well maintained and irrigated by a modern low-volume
system. A portion of the citrus groves are mortgaged as collateral
for a term loan.
The fresh fruit packing plant near Lake Placid, Florida, packs and
sells both Company fruit and that of other growers. This process
involves washing, grading, waxing, and packing into cartons or bags
for direct shipment to customers who buy in truckload quantities. For
each of the last ten seasons, the plant has been among the top ten
largest Florida packers of fresh oranges. The facility is within a
seven-mile radius of all its grove sources, providing a significant
transportation cost advantage.
The cooperative to which a portion of the crop is sent is owned by the
Company and eleven other growers. It markets and processes under
several brand names, including Donald Duck, Blue Bird, and Florida's
Natural. The division shares in the net proceeds from the processed
products (juice, juice concentrate, and by-products) according to the
amount and content of fruit delivered to the plant.
CONFERENCE CENTER AND RESORT
During 1994, the resort operation known as the Indigo Lakes Holiday
Inn Crowne Plaza Resort was sold to Indigo Lakes Resort Ltd.; and the
18-hole Indigo Lakes championship golf course and related facilities
were sold to The Fairways Group, L.P.
REAL ESTATE OPERATIONS
One of the Company's major achievements in recent years was the
relocation of the Ladies Professional Golf Association ("LPGA") to
Daytona Beach in 1989 with planned construction of its national
headquarters on Company lands. The LPGA signed a four-party agreement
with the Company, Indigo Group Ltd., a wholly owned subsidiary ("IG
LTD"), and the City of Daytona Beach which includes development of a
new mixed-use community on approximately 3,800 acres of Company land.
Development plans were approved by the governmental agencies in 1993.
The City of Daytona Beach completed construction of a Rees Jones
designed "signature" golf course in 1994. That course is ranked by
Golf Magazine as one of the ten best municipal golf courses in the
country. Site preparation for a second golf course, designed by
architect Arthur Hills, is underway for construction on lands to be
donated by the Company to the City. The City will contract with
others to build the second course and to operate both courses. The
LPGA's prestigious Sprint Titleholders Championship Tournament, which
is nationally televised, will be held at the LPGA International course
for the third time in May 1997.
38
<PAGE>
Significant to the City of Daytona Beach and to development of the
Company's lands is the opening of an interchange at Interstate 95 and
LPGA Boulevard in early 1996, providing a new gateway to the LPGA
International development and other Company land. This interchange
has been dramatically landscaped with funds provided by a Florida
Department of Transportation Beautification grant and the Company.
From October 1990 until December 1993, IG LTD centered its operations
on residential community development, construction, and sales. In
December of 1993, IG LTD disposed of its interest in two communities
under a lot marketing and sales arrangement. Residential lots owned
by IG LTD at December 31, 1996 are:
o 74 lots in Riverwood Plantation, a community of 180 acres in
Port Orange, Florida.
o 5 lots at the 200-acre Indigo Lakes development in Daytona
Beach.
o 50 lots at the 180-acre Tomoka Heights development in
Highlands County, Florida. IG LTD is developing this community,
located adjacent to Lake Henry. It is approved for a total of 587
single-family and duplex units now selling in the $89,000 to $135,000
price range. The development features controlled access and has
appeal for active retired couples.
Rental properties consist of a two-building office complex in downtown
Daytona Beach and a 24,000-square-foot office building in Palm Coast,
which is approximately 30 miles north of Daytona Beach. The larger
building of the downtown Daytona Beach complex is a 47,000-square-
foot, seven-story office building leased to several tenants and
partially occupied by the Company; the smaller, containing 17,000
square feet, is under a lease/purchase agreement and considered a
financing lease. The Palm Coast building is leased to multiple
tenants. The downtown Daytona Beach and Palm Coast buildings are
covered by debt in the form of industrial revenue bonds. A 24,000-
square-foot office building near the interchange of Interstate 95 and
International Speedway Boulevard (U. S. Highway 92) in Daytona Beach,
was sold in 1996.
IG LTD owns a 50% interest in The Forest Center Shopping Center east
of Ocala. The property is encumbered by a mortgage. The Mariner
Towne Square Shopping Center in Spring Hill was sold in 1995, with the
adjacent Mariner Village Shopping Center sold in 1996.
Other leasing activities of the Company include ground leases for
billboards, leases of communication tower sites, and a hunting lease
covering approximately 19,900 acres.
Another source of income is from subsurface interests which are leased
for mineral exploration, as described under "Land Holdings." At
December 31, 1996, oil and gas leases were in effect covering a total
of 15,800 surface acres in Lee and Hendry Counties, Florida. In
addition, a geophysical permit and option to lease 10,200 acres in Lee
County was executed in 1996. The permit calls for 3-D seismic
exploration; and both the permit and the option expire in March of
1998. At December 31, 1996, there were four producing oil wells on
the Company's interests. Volume produced in 1996 from these wells
was 131,231 barrels, compared with 117,831 barrels in 1995. A fifth
well on Company interests is being permitted. Oil lease income and
oil royalty income have in the past been much more significant sources
of income for the Company than in recent years. The Company's current
policy is to grant no releases of its reserved mineral rights in oil-
producing counties unless required to do so through contractual
obligations; however, releases of surface entry rights might be sold
upon request of a surface owner who requires such a release for
financing or development purposes. As Florida develops, such requests
will no doubt increase. Sales and releases of surface entry rights in
1996 produced revenues of $322,600.
39
<PAGE>
Income from sales of forest products varies considerably from year to
year depending on economic conditions and weather. The primary market
today is in pulpwood with sawtimber, plylogs, and some cypress being
marketed as conditions and the market allow. Geographic location of
the timber tract is excellent. In addition to access by major
highways (Interstate 95, State Road 40, and International Speedway
Boulevard), the internal road system for forestry purposes is good.
40
<PAGE>
Five-Year Financial Highlights
(In thousands except per share amounts)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
$ $ $ $ $
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Revenues:
Citrus 13,863 8,819 8,175 10,719 10,714
Real Estate 7,642 7,743 16,528 15,780 20,185
Profit on Sales of
Undeveloped Real Estate 385 4,718 1,400 314 239
Interest and Other Income 6,123 2,404 2,623 653 1,672
------------------------------------------
TOTAL 28,013 23,684 28,726 27,466 32,810
------------------------------------------
Operating Costs and Expenses 14,021 13,044 14,980 22,029 24,834
General and Administrative
Expenses 3,386 3,484 3,478 3,549 3,146
Provision for Income Taxes 4,003 2,736 3,778 672 1,803
Income from Continuing Operation 6,603 4,420 6,490 1,216 3,027
Loss from Discontinued Operations
(net of tax) - - (135) (759) (517)
Extraordinary Item-Income Tax
Benefit of Net Operating Loss
Carryforward - - - - 1,492
Cumulative Effect of Change in
Accounting for Income Taxes - - - 329 -
Net Income 6,603 4,420 6,355 786 4,002
Primary Earnings per Share:
Income from Continuing
Operation 1.05 0.71 1.04 0.20 0.48
Net Income 1.05 0.71 1.01 0.13 0.64
Fully Diluted Earning Per Share:
Income from Continuing
Operation 1.05 0.71 1.04 0.20 0.48
Net Income 1.05 0.71 1.01 0.13 0.64
Dividends Paid Per Share 0.55 0.45 0.35 0.30 0.20
Summary of Financial Position:
Total Assets 59,673 59,693 61,535 65,815 65,058
Shareholders' Equity 35,791 32,633 31,030 26,867 27,959
</TABLE>
41
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Assets
Cash and Cash Equivalents $ 1,760,835 $ 1,167,373
Investment Securities (Note 3) 1,396,415 640,343
Notes Receivable (Note 5) 14,770,281 10,937,614
Accounts Receivable 2,217,584 2,143,305
Inventories 686,597 802,515
Cost of Fruit on Trees 2,179,989 2,658,126
Real Estate Held for Development and Sale (Note 6) 14,499,495 13,801,477
Net Investment in Direct Financing Lease (Note 7) 710,990 792,530
Other Assets 354,473 499,272
---------- ----------
38,576,659 33,442,555
---------- ----------
Property, Plant and Equipment:
Land, Timber and Subsurface Interests 3,648,383 3,854,178
Citrus Properties:
Trees 8,523,852 8,811,210
Buildings and Equipment 9,164,146 9,166,232
Income Properties 10,671,197 16,323,215
Other Buildings and Equipment 743,768 991,599
---------- ----------
Total Property, Plant and Equipment 32,751,346 39,146,434
Less Accumulated Depreciation and Amortization ( 11,655,483) ( 12,895,521)
---------- ----------
Net Property, Plant and Equipment 21,095,863 26,250,913
---------- ----------
Total Assets $59,672,522 $59,693,468
========== ==========
Liabilities
Accounts Payable $ 680,935 $ 1,213,692
Notes Payable (Notes 8 and 14) 17,947,771 20,921,298
Accrued Liabilities 3,651,507 2,732,794
Deferred Income Taxes (Note 4) 406,930 69,466
Income Taxes Payable (Note 4) 1,193,994 2,123,691
---------- ----------
Total Liabilities 23,881,137 27,060,941
---------- ----------
SHAREHOLDERS' EQUITY
Preferred Stock - 50,000 Shares Authorized,
$100 Par Value; None Issued - -
Common Stock - 10,000,000 Shares Authorized;
$1 Par Value; 6,261,272 Issued and Outstanding 6,261,272 6,261,272
Additional Paid-In Capital 1,782,105 1,782,105
Retained Earnings 27,748,008 24,589,150
---------- ----------
Total Shareholders' Equity 35,791,385 32,632,527
---------- ----------
Total Liabilities and Shareholders' Equity $59,672,522 $59,693,468
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
42
<PAGE>
Consolidated Statements of Operations and Retained Earnings
<TABLE>
<CAPTION>
Calendar Year
------------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Income
Citrus Operations:
Sales of Fruit and Other Income $ 13,862,864 $ 8,819,259 $ 8,174,816
Production and Selling Expenses ( 9,851,352) ( 8,190,430) (8,088,518)
---------- ---------- ----------
4,011,512 628,829 86,298
---------- ---------- ----------
Real Estate Operations:
Sales and Other Income 7,641,898 7,742,915 16,528,217
Costs and Other Expenses ( 4,169,717) ( 4,854,321) ( 6,890,969)
---------- ---------- ----------
3,472,181 2,888,594 9,637,248
---------- ---------- ----------
Profit On Sales of Undeveloped
Real Estate Interests 384,756 4,718,248 1,399,711
---------- ---------- ----------
Interest and Other Income 6,123,025 2,404,063 2,623,447
---------- ---------- ----------
General and Administrative Expenses ( 3,386,296) ( 3,483,706) ( 3,477,842)
---------- ---------- ----------
Income From Continuing Operations
Before Income Taxes 10,605,178 7,156,028 10,268,862
Income Taxes (Note 4) ( 4,002,620) ( 2,736,021) ( 3,778,461)
---------- ---------- ----------
Income From Continuing Operations 6,602,558 4,420,007 6,490,401
Loss From Discontinued Resort
Operations, net of tax (Note 2) - - ( 135,611)
---------- ---------- ----------
Net Income 6,602,558 4,420,007 6,354,790
Retained Earnings, Beginning of Year 24,589,150 22,986,715 18,823,370
Dividends ( 3,443,700) ( 2,817,572) ( 2,191,445)
---------- ---------- ----------
Retained Earnings, End of Year $27,748,008 $24,589,150 $22,986,715
========== ========== ==========
Per Share Information:
Average Shares Outstanding 6,261,272 6,261,272 6,261,272
========== ========== ==========
Income From Continuing Operations $1.05 $0.71 $1.04
Loss From Discontinued Resort Operations
(Net of tax) - - ($0.03)
=========== ========== ==========
Net Income Per Share $1.05 $0.71 $1.01
=========== ========== =========
Dividends Per Share $0.55 $0.45 $0.35
=========== ========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
43
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Calendar Year
----------------------------------------
1996 1995 1994
----------- ---------- ------------
<S> <C> <C> <C>
Cash Flow from Operating Activities
Cash Received from:
Citrus Sales of Fruit and Other Income $13,627,237 $ 8,635,807 $ 7,998,995
Real Estate Sales and Other Income 7,575,069 9,671,554 10,923,789
Sales of Undeveloped Real Estate Interests 428,026 4,674,978 1,399,711
Interest and Other Income 647,512 599,960 230,869
---------- ---------- ----------
Total Cash Received from
Operating Activities 22,277,844 23,582,299 20,553,364
---------- ---------- ----------
Cash Expended for:
Citrus Production and Selling Expenses 8,828,098 8,135,094 7,288,990
Real Estate Costs and Expenses 3,419,452 5,223,375 5,647,964
General and Administrative Expenses 2,067,615 1,293,073 2,019,947
Interest 1,402,767 2,007,655 1,917,447
Income Taxes (Note 4) 4,594,853 2,119,899 1,017,146
---------- ---------- ----------
Total Cash Expended for
Operating Activities 20,312,785 18,779,096 17,891,494
---------- ---------- ----------
Net Cash Provided by
Operating Activities 1,965,059 4,803,203 2,661,870
---------- ---------- ----------
Cash Flow from Investing Activities
Acquisition of Property, Plant and Equipment ( 444,718) (1,201,509) (1,385,731)
Net Increase in Investment
Securities (Note 3) ( 756,072) 79,063 ( 36,868)
Direct Financing Lease (Note 7) 81,540 87,692 83,900
Proceeds from Sale of Property, Plant and
Equipment 6,164,880 3,193,387 3,012,604
Cash Flow from Discontinued Resort
Operations (Note 2) - - 6,670,950
--------- ---------- ---------
Net Cash Provided by Investing Activities 5,045,630 2,158,633 8,344,855
---------- ---------- ----------
Cash Flow from Financing Activities
Cash Proceeds from Notes Payable (Note 8) 6,800,000 6,950,000 3,600,000
Payments on Notes Payable (Note 8) ( 9,773,527) (11,001,985) (13,600,938)
Dividends Paid ( 3,443,700) ( 2,817,572) ( 2,191,445)
---------- ---------- ----------
Net Cash Used in Financing Activities ( 6,417,227) ( 6,869,557) (12,192,383)
---------- ---------- ----------
Net Increase (Decrease) in Cash and Cash
Equivalents 593,462 92,279 (1,185,658)
Cash and Cash Equivalents, Beginning of Year 1,167,373 1,075,094 2,260,752
---------- ---------- ----------
Cash and Cash Equivalents, End of Year $ 1,760,835 $ 1,167,373 $ 1,075,094
========== ========== ==========
</TABLE>
44
<PAGE>
Consolidated Statements of Cash Flows
continued
<TABLE> Calendar Year
<CAPTION> --------------------------------------
1996 1995 1994
----------- ---------- ---------
<S> <C> <C> <C>
Reconciliation of Net Income to Net Cash Provided
by Operating Activities:
Net Income $6,602,558 $4,420,007 $6,354,790
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Discontinued Resort Operations - - 135,611
Depreciation and Amortization 1,111,036 1,094,523 1,050,965
Deferred Income Taxes 337,464 ( 26,038) 1,378,222
Gain on Sales of Property, Plant and
Equipment (5,396,148) (1,674,662) (2,402,186)
(Increase) Decrease in Assets:
Notes Receivable ( 112,667) (1,714,646) (6,039,589)
Accounts Receivable ( 74,279) ( 266,085) 277,195
Inventories 115,918 ( 142,054) 81,790
Cost of Fruit on Trees 478,137 ( 222,725) 361,525
Real Estate Held for Development and Sale ( 698,018) 2,825,028 ( 110,838)
Other Assets 144,799 ( 123,786) 112,101
Increase (Decrease) in Liabilities:
Accounts Payable ( 532,757) 464,415 ( 510,622)
Accrued Liabilities 918,713 (472,934) 589,813
Income Taxes Payable (Note 4) ( 929,697) 642,160 1,383,093
---------- --------- ---------
Net Cash Provided by Operating Activities $1,965,059 $4,803,203 $2,661,870
========== ========= =========
</TABLE>
Supplement Disclosure of Noncash Operating Activities:
In connection with the sale of real estate, the Company received, as
consideration, mortgage notes receivable of $1,143,607, $1,255,350, and
$4,554,830 for the years 1996, 1995 and 1994, respectively.
In connection with the sale of property, plant and equipment, the Company
received as consideration, mortgage notes receivable of $3,720,000 for
the year 1996.
The accompanying notes are an integral part of these consolidated state-
ments.
45
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
Consolidated-Tomoka Land Co.
We have audited the accompanying consolidated balance sheets of
Consolidated-Tomoka Land Co. and subsidiaries as of December 31, 1996
and 1995, and the related consolidated statements of operations and
retained earnings and cash flows for each of the three years in the
period ended December 31, 1996. 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Consolidated-Tomoka Land Co. and subsidiaries as of December 31,
1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
Tampa, Florida Arthur Andersen LLP
February 6, 1997
46
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of
Consolidated-Tomoka Land Co. and its wholly owned
subsidiaries: Indigo Group Inc., Indigo Group Ltd., and
Indigo Development Inc. (collectively, theCompany). All
significant intercompany accounts and transactions have been
eliminated in consolidation.
Nature of Operations
The Company is primarily engaged in the citrus industry and,
through its wholly owned subsidiaries, the real estate
industry. The Company harvests and sells both fresh and to-
be-processed citrus from its bearing groves, all of which are
located in Highlands County, Florida. Fresh fruit sales are
made by the Company to wholesale produce distributors and
retail grocery chains primarily in the Eastern and Midwestern
regions of the United States and Canada. The to-be-processed
fruit is sent to Citrus World, Inc. (Citrus World), an
agricultural cooperative owned by the Company and eleven
other growers. The cooperative processes the fruit and
markets it under several names on a regional and national
basis. Real estate operations, which are primarily commercial
in nature, also include residential, income properties and
forestry operations. These operations are predominantly
located in Volusia and Highlands counties in Florida.
From time to time the Company sells unimproved real estate
considered surplus to its operating needs. The latter
function is not considered part of the Company's ordinary
operations.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Prior-Year Reclassifications
Certain 1994 and 1995 amounts have been reclassified to
conform with the 1996 presentation.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased
with a maturity of three months or less to be cash
equivalents. Due to the short maturity period of the cash
equivalents, the carrying amount of these instruments
approximates their fair values.
Inventories
Inventories which are stated at the lower of cost (first-in,
first-out method) or market, consist primarily of citrus
supplies.
47
<PAGE>
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Cost of Fruit on Trees
Direct and allocated indirect costs incurred in connection
with the production of crops are capitalized into cost of
fruit on trees. As the crop is harvested and sold, the
related costs are charged to production expense, pro-rata
based on the boxes harvested and sold to the estimated total
boxes expected to be harvested and sold. The cost of fruit on
trees is carried at the lower of cost or market.
Real Estate Held for Development and Sale
The carrying value of land and land development costs
includes the initial acquisition costs of the land,
improvements thereto and other costs incidental to the
acquisition or development of land. These costs are
allocated to properties on a relative sales value basis
and are charged to costs of sales as specific properties are
sold. Land and land development costs include approximately
$261,068 and $168,438 of interest and $96,861 and $77,900 of
property taxes capitalized during 1996 and 1995,
respectively.
Property, Plant and Equipment
Property, plant and equipment are stated at cost, less
accumulated depreciation and amortization. Such properties
are depreciated on a straight-line basis over their estimated
useful lives. Renewals and betterments are capitalized to
property accounts. The cost of maintenance and repairs is
expensed as incurred. The cost of property retired or
otherwise disposed of, and the related accumulated
depreciation or amortization, are removed from the accounts,
and any resulting gain or loss is taken into income.
The amount of depreciation and amortization taken for the
years 1996, 1995, and 1994, is summarized as follows:
<TABLE>
<CAPTION>
Calendar Year
-------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Citrus Properties $ 501,954 $ 411,624 $ 328,399
Other Properties 609,082 682,899 722,566
--------- --------- ---------
$1,111,036 $1,094,523 $1,050,965
========= ========= =========
</TABLE>
The range of estimated useful lives for property, plant and
equipment is as follows:
Citrus Trees 20-40 Years
Citrus Buildings and Roads 10-30 Years
Citrus Irrigation Equipment 5-20 Years
Citrus Other Equipment 3-30 Years
Income Properties 3-30 Years
Other Buildings 10-30 Years
Other Equipment 3-30 Years
48
<PAGE>
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNT
POLICIES (CONTINUED)
Long-Lived Assets
Effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 121, "Accounting for
Impairment of Long-Lived Assets (SFAS 121)." SFAS 121
requires entities to review the recoverability of long-lived
assets, including real estate held for development and
sale and certain identifiable intangibles to be held and
used for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset
may not be recoverable. The implementation of SFAS 121 did
not have a material effect on the accompanying consolidated
financial statements.
Sale of Citrus
The Company sells a portion of its citrus crop as fresh fruit
through the Company-owned packing plant and recognizes
revenues, and related cost of sales, at the time of shipment.
The Company sells the remainder of the citrus crop under a
participating marketing pool agreement to Citrus World of
which the Company owns a 4 percent equity interest. Citrus
World is a citrus grower and the owner of a citrus processing
plant in Lake Wales, Florida. Citrus World pools its own
fruit with the fruit purchased from the Company and other
citrus growers, processes the pooled fruit and sells the
products produced. Each participant in the pool, including
Citrus World, shares ratably in the proceeds from the sale of
products, net of Citrus World's actual processing and
marketing costs, plus a per-unit handling fee. Citrus
World makes periodic payments to all participants based on
their pro rata share of net sales proceeds and makes
final payment after all the products in the pool have been
sold.
The Company records estimated revenues at the time of
delivery of the fruit to Citrus World and finalizes revenues
after all the products in the pool have been sold. During
the years 1996, 1995, 1994, the Company's estimated pro rata
share of said net sales proceeds under the above pooling
agreement amounted to $5,203,787, $2,912,415, and
$2,993,457, respectively.
Real Estate
The profit on sales of real estate is accounted for in
accordance with the provisions of the Statement of Financial
Accounting Standards No. 66, "Accounting for Sales of Real
Estate (SFAS 66)." The Company recognizes revenue from the
sale of real estate at the time the sale is consumated
unless the property is sold on a deferred payment plan and
the initial payment does not meet criteria established under
SFAS 66. No income was deferred for the three years in the
period ended December 31, 1996.
Rental income from income properties is recognized ratably
over the periods of the related property leases.
Pensions
The Company has a funded, non-contributory defined benefit
pension plan covering all eligible full-time employees. The
Company's method of funding and accounting for pension costs
is to fund and accrue all normal costs plus an amount
necessary to amortize past service cost over a period of 30
years.
49
<PAGE>
NOTE 1 SUMMARY OF SIGNIFICATN ACCOUNTING
POLICIES (CONTINUED)
Earnings Per Share Information
Earnings per common share is computed by dividing net income
by the weighted average shares of common stock outstanding
during the year. Fully diluted earnings per share amounts
are not presented because such dilution was immaterial for
1996, 1995 and 1994.
Concentration of Credit Risk
Financial instruments which potentially subject the Company
to concentrations of credit risk consist principally of cash
and cash equivalents, investment securities, accounts
receivables and notes receivable. Concentration of credit
risk with respect to accounts receivables is limited due to
the Company's large number of customers and their dispersion
across geographic areas and industries.
Fair Value of Financial Instruments
The carrying amounts of the Company's financial assets and
liabilities, including cash and cash equivalents, accounts
receivable and accounts payable at December 31, 1996 and
1995, approximate fair value because of the short maturity
of these instruments. The carrying amount of the Company's
notes receivable and notes payable approximates fair value at
December 31, 1996 and 1995, since the notes are at floating
rates or fixed rates which approximate current market rates
for notes with similar risks and maturities.
Citrus Production and Selling
The Company is the owner of a citrus fruit packing plant and
packs and sells its own fruit, together with fruit received
from outside growers, under a pooling agreement. During the
years 1996, 1995, and 1994, the Company's charges to other
growers for handling and packing their fruit amounted to
$517,815, $428,087, and $656,281, respectively. In addition,
agreements are in place for delivery of citrus fruit. The
amounts received by the Company for such services for years
1996, 1995, and 1994 amounted to $28,944, $21,518, and
$43,142, respectively. All of these revenues are accounted
for by the Company as a reduction of citrus production and
selling expenses.
NOTE 2 DISCONTINUED RESORT OPERATIONS
On July 14, 1994, the Company sold its resort complex for a
cash price of $7,175,000. The sale resulted in a pretax loss
of $111,804 ($69,732 net of tax). The results of the resort
operations have been reported separately as discontinued
operations in the Consolidated Statements of Operations and
Retained Earnings. There are no remaining assets or
liabilities reflected on the consolidated balance sheets at
December 31, 1996 and 1995. Summary financial information of
the operation and sale is as follows:
50
<PAGE>
NOTE 2 DISCONTINUED RESORT OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994
------- --------- ---------
<S> <C> <C> <C>
Revenues from Discontinued
Resort Operations - - $4,590,516
------- --------- ----------
Loss from Discontinued Resort
Operations Before Tax - - (105,626)
Income Tax Benefit from
Discontinued Resort Operations - - 39,747
Loss on Sale of Resort Operations
(Net of Income Tax Benefit of
$42,072) - - ( 69,732)
------ --------- ----------
Loss From Discontinued
Resort Operations, Net of Tax - - $(135,611)
======== ========= =========
Total Loss Per Share from Discontinued
Resort Operations - - $ (0.03)
======== ========= =========
</TABLE>
NOTE 3 INVESTMENT SECURITIES
The Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities (SFAS 115), effective January 1,
1994. This standard requires classification of the investment
portfolio into three categories: held to maturity, trading
and available for sale. The Company classifies as held to
maturity those securites for which the company has the intent
and ability to hold through their stated maturity date.
Investment securities which are classified as held to
maturity are carried at cost, adjusted for amortization of
premiums and accretion of discounts. Investments which are
classified as available for sale may be sold for
liquidity or other purposes, but are not actively traded.
Investments which are classified as available for sale are
recorded at cost which approximates fair value. Gains and
losses are determined using the specific identification
method.
Prior to adopting SFAS 115, investment securities were
carried At amortized cost. The change in accounting did
not have a material effect on the financial statements.
Investment securities as of December 31, 1996 and 1995, all
of which are classified as held to maturity, are as follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Debt Securities Issued by States
and Political Subdivisions of States $1,289,572 $ 640,343
Mortgage-Backed Securities 106,843 -
--------- ---------
$1,396,415 $ 640,343
========= =========
</TABLE>
51
<PAGE>
NOTE 3 INVESTMENT SECURITIES
The contractual maturities of these securities are as follows:
Maturity Date Amount
---------------- -----------
Within 1 year $ 601,344
1-5 Years 370,128
6-10 Years 151,065
After 10 Years 273,878
---------
$1,396,415
=========
NOTE 4 INCOME TAXES
Effective January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes."
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Current Deferred Current Deferred Current Deferred
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Federal $3,198,460 $221,699 $2,374,049 $( 22,232) $2,193,763 $1,022,442
State 466,696 115,765 388,010 ( 3,806) 206,476 355,780
--------- ------- --------- --------- --------- ---------
Total $3,665,156 $337,464 $2,762,059 $( 26,038) $2,400,239 $1,378,222
========= ======= ========= ========= =========
=========
</TABLE>
Deferred income taxes have been provided to reflect temporary
differences that represent the cumulative difference between
taxable or deductible amounts recorded in the financial
statements and in the tax returns. The sources of these
differences and the related provision (credit) and
deferred income tax assets (liabilities) are summarized as
follows:
52
<PAGE
NOTE 4 INCOME TAXES (CONTINUED)
<TABLE>
<CAPTION>
Provision (Credit) Deferred Taxes
------------------ ---------------
1996 1995 1994 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Depreciation $ 79,047 $ 100,222 $( 3,955) $(1,144,043) $(1,064,996)
Sales of Real
Estate 392,438 (200,852) 575,756 (1,175,951) (783,513)
Deferred
Compensation (181,590) (155,461) (137,488) 809,895 628,305
Basis
Difference in
Joint Venture (219,858) 52,285 (546,502) 1,328,118 1,108,260
Revolving Fund
Certificates ( 24,985) ( 48,182) ( 16,336) 280,133 255,148
Charitable
Contributions
Carryforward 391,210 479,321 372,559 1,153,935 1,545,145
Alternative
Minimum Tax
Credit - - 1,032,255 - -
Other (258,551) 6,389 178,907 374,832 116,281
Less-Valuation
Allowance 159,753 (259,760) ( 76,974) (2,033,849) (1,874,096)
------- --------- -------- --------- ---------
$ 337,464 $( 26,038) $1,378,222 $( 406,930) $( 69,466)
======= ======== ========= =========== ===========
</TABLE>
Following is a reconciliation of the income tax computed at
the federal statutory rate of 34 percent.
<TABLE>
<CAPTION>
Calendar Year
-------------
1996 1995 1994
---- ---- -----
<S> <C> <C> <C>
Income Tax Computed at
Federal Statutory Rate $3,605,761 $2,433,050 $3,491,413
Increase (Decrease) Resulting
from:
State Income Tax, Net of
Federal Income Tax Benefit 384,968 260,175 371,089
Other Reconciling Items 11,891 42,796 ( 84,041)
--------- --------- ---------
Provision for Income Taxes $4,002,620 $2,736,021 $3,778,461
========= ========= =========
</TABLE>
53
<PAGE>
NOTE 5 NOTES RECEIVABLE
Notes Receivable consisted of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1996 1995
----------- ----------
<S> <C> <C>
Mortgage Notes Receivable
Various notes with interest rates ranging
from 6.25% to 10% with payments due from 1997
through 2003. Collateralized by real
estate mortgages held by the Company $10,944,356 $7,097,776
Other Notes Receivable
Interest at 5.425%, total principal and
accrued interest due June 1997 3,678,794 3,678,794
Interest at prime rate, receivable in
monthly installments of principal and
interest to amortize the original note
over a period of 15 years, due January
2006 147,131 161,044
---------- ----------
Total Notes Receivable $14,770,281 $10,937,614
========== ==========
Prime rate was 8.25 percent at December 31, 1996 and
8.5 percent at December 31, 1995.
The required annual principal receipts are as follows:
Year ending December 31, Amount
-----------
1997 $ 6,672,177
1998 1,784,513
1999 2,433,541
2000 1,761,222
2001 1,114,336
2002 and thereafter 1,004,492
----------
$14,770,281
==========
</TABLE>
54
<PAGE>
NOTE 6 REAL ESTATE HELD FOR DEVELOPMENT AND SALE
Real estate held for development and sale as of December 31,
1996 and 1995, is summarized as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
---- ----
<S> <C> <C>
Undeveloped Land $ 1,581,212 $ 2,400,312
Land and Land Development 12,674,028 10,861,863
Completed Houses 244,255 539,302
---------- ----------
$14,499,495 $13,801,477
========== ==========
</TABLE>
NOTE 7 NET INVESTMENT IN DIRECT FINANCING LEASE
On December 31, 1986, the Company acquired certain real
estate and equipment subject to a direct financing-type
lease. The aggregate amounts due under the lease are
identical in amount to the payments required to be made by
the Company in order to amortize the debt applicable to the
properties. The required annual payments on the lease at
December 31, 1996, are summarized as follows:
<TABLE>
<CAPTION>
Amount
Aggregate Representing Net
Year Ended December 31, Payment Interest Investment
----------------------- ---------- ------------ ----------
<S> <C> <C> <C>
1997 $130,449 $ 44,716 $ 85,733
1998 128,427 38,892 89,535
1999 127,007 32,800 94,207
2000 125,758 26,375 99,383
2001 124,440 19,597 104,843
2002 and Thereafter 254,698 17,409 237,289
------- ------- -------
$890,779 $179,789 $710,990
======= ======= =======
</TABLE>
The interest rate stated in the lease agreement is 80.65% of prime.
55
<PAGE>
NOTE 8 NOTES PAYABLE
Notes Payable consisted of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
1996 1995
---- ----
<S> <C> <C>
Mortgage Notes Payable
Mortgage notes payable are collateralized
by real estate mortgages held by the
lender. As of December 31, 1996 and 1995,
mortgage notes payable consisted of the
following:
Payments of $266,783, including interest
at 8.8% payable quarterly through
April 2002; principal balance due
July 2002 $9,424,876 $9,650,097
Payable $19,857 monthly through March
2001, including interest at 7.5%,
Paid in 1996 - 2,367,387
Interest payable quarterly at 10%,
principal and outstanding interest
due October 2005 1,200,000 1,200,000
Industrial Revenue Bonds
Industrial revenue bonds payable are
collateralized by real estate and
equipment. As of December 31, 1996
and 1995, industrial revenue bonds
consisted of the following:
Interest at 80.65% of prime rate,
payable in monthly installments of
principal and interest to amortize
the original debt over a period
of 18 years, due January 2004 2,851,755 3,144,166
Interest at 84.2% of prime rate,
payable in monthly installments
of $4,700 plus interest, remaining
principal and interest due
January 2002 1,936,000 1,992,400
Note Payable to Related Party
Principal and interest payable in
monthly installments of $23,268,
interest at 9.68%, unpaid
principal and interest due
December 1998. Collateralized by
developed real estate in a joint
venture. The venture partner
is jointly liable on the note. 2,535,140 2,567,248
---------- ----------
$17,947,771 $20,921,298
========== ==========
</TABLE>
56
<PAGE>
NOTE 8 NOTES PAYABLE (CONTINUED)
A line of credit totalling $7,000,000, payable on demand, with
interest at prime rate and no borrowing outstanding was in place at
December 31, 1996, which replaced a $15,000,000 line of credit
collateralized by citrus facilities, payable on demand, with interest
at prime minus .5%. There were no borrowings on this line at December
31, 1995.
The required annual principal payments on notes payable are as
follows:
<TABLE>
<CAPTION>
Year Ending December 31, Amount
------------------------ ----------
<S> <C>
1997 $ 563,253
1998 3,159,235
1999 711,504
2000 768,150
2001 829,705
2002 and Thereafter 11,915,924
----------
$17,947,771
==========
</TABLE>
Interest expense was $1,402,767, $2,007,655, $1,917,447 for 1996,
1995, and 1994, respectively.
NOTE 9 PENSION PLAN
The company maintains a defined benefit plan for all
employees who have attained the age of 21 and completed one
year of service. The pension benefits are based
primarily on years of service and the average compensation
for the highest five years during the final 10 years of
employment. The benefit formula generally provides for a
life annuity benefit. Due to the sale of the resort
complex, the Company recognized a curtailment and settlement
gain during 1994. Consequently, the loss from discontinued
resort operations in 1994 includes a net after tax
gain of $220,606 resulting from the settlement and
curtailment.
The Company's net periodic pension cost included the
following components:
<TABLE>
<CAPTION>
December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service Cost $175,363 $170,673 $225,827
Interest Cost on Projected Benefit
Obligation 257,745 249,027 288,705
Actual Return on Plan Assets (577,221) ( 266,582) (274,796)
Net Amortization 260,594 ( 14,734) ( 11,349)
------- ------- -------
Net Periodic Pension Cost $116,481 $138,384 $228,387
======= ======= =======
</TABLE>
57
<PAGE>
NOTE 9 PENSION PLAN (CONTINUED)
The funded status of the Company's pension plan was as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Actuarial Present Value of Benefit
Obligations:
Vested $(2,914,318) $(2,519,049) $(2,423,349)
Nonvested ( 4,628) ( 3,975) ( 87,591)
--------- --------- ---------
Accumulated Benefit Obligation (2,918,946) (2,523,024) (2,510,940)
Effect of Projected Future Salary
Increases ( 621,808) ( 834,347) ( 654,568)
--------- --------- ---------
Projected Benefit Obligation (3,540,754) (3,357,371) (3,165,508)
Plan Assets at Fair Value, Primarily
Stocks, Corporate Bonds, Treasury
Securities and Money Market Funds 4,136,008 3,698,295 3,215,378
--------- --------- ---------
Plan Assets In Excess of
Projected Benefit Obligation 595,254 340,924 49,870
Unrecognized Prior Service Cost 6,361 7,027 7,693
Unrecognized Net Gain ( 731,602) ( 346,057) ( 176,455)
Unrecognized Transition Asset ( 147,072) ( 162,472) ( 177,872)
--------- --------- ---------
Accrued Pension Liability $( 277,059) $( 160,578) $( 296,764)
========= ========= =========
</TABLE>
The actuarial assumptions made to determine the projected benefit
obligation and the fair value of plan assets are as follows:
<TABLE>
<CAPTION>
December 31,
------------
1996 1995 1994
----- ---- ----
<S> <C> <C> <C>
Weighted Average Discount Rate 8.0% 8.0% 8.0%
Weighted Average Asset Rate of Return 8.0% 8.0% 8.0%
Compensation Scale 5.0% 5.0% 5.0%
</TABLE>
NOTE 10 POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS
The Company sponsors two defined benefit postretirement
plans of certain health care and life insurance benefits for
eligible retired employees. All full-time employees
become eligible to receive these benefits if they retire
after reaching age 55 with 20 or more years of service. The
58
<PAGE>
NOTE 10 POSTRETIREMENT BENEFIT PLANS OTHER
THAN PENSIONS (CONTINUED)
postretirement health care plan is contributory,
with retiree contributions adjusted annually; the life
insurance plan is non-contributory up to $5,000 of coverage.
The accounting for the health care plan reflects caps on the
amount of annual benefit to be paid to retirees as
stipulated by the plan. The Company pays for the plan as
costs are incurred.
The Company recognizes postretirement expenses in accordance
with adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," which requires
the expected costs of postretirment benefits be charged to
expense during the years the employees render service. The
Company elected to amortize the unfunded obligation measured
at adoption of SFAS 106 over a period of 20 years. The
effect of this expense recognized in 1996, 1995, and 1994
was $89,670, $103,415, and $93,176, respectively.
The following table reconciles the plan's funded status to
the accrued postretirement benefit cost liability reflected
on the consolidated balance sheet as of December 31,
1996 and 1995:
<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---- -----
<S> <C> <C>
Retirees $(133,479) $(208,757)
Fully Eligible Plan Participants (287,462) (342,181)
Other Active Plan Participants ( 92,710) (143,477)
------- -------
Total Accumulated Postretirement
Benefit Obligation (513,651) (694,415)
Plan Assets - -
------- -------
Accumulated Postretirement Benefit
Obligation in Excess of Plan Assets (513,651) (694,415)
Unrecognized Net Gain from Changes
in Assumptions and Experience (313,792) (115,812)
Unrecognized Transition Obligation 644,658 684,949
------- -------
Accrued Postretirement Benefit Cost
in Balance Sheet $(182,785) $(125,278)
======= =======
Postretirement Benefit Cost includes the
following components:
1996 1995 1994
------- ------ ------
Service Cost $12,652 $ 13,441 $ 8,220
Interest Cost on Accumulated Postretirement
Benefit Obligation 36,727 49,683 44,665
Amortization of Transition Obligation over
20 years 40,291 40,291 40,291
------- ------- ------
Postretirement Benefit Cost $89,670 $103,415 $93,176
======= ======= ======
</TABLE> 59
<PAGE>
The discount rate used in determining the accumulated
postretirement benefit obligation was 7 percent. Due to
the capping of the insurance premium benefits
to retirees, a health care cost scale is not applicable.
NOTE 11 STOCK OPTION PLAN
The Company maintains a stock option plan (the Plan)
pursuant to which 530,000 shares of the Company's common
stock may be issued. Under the Plan the option exercise
price equals the stock's market price on the date of grant.
The Options vest over five years and all expire after
ten years. The Plan provides for the grant of (1)
incentive stock options which satisfy the requirements of
Internal Revenue Code (IRC) Section 422, and (2)
nonqualified options which are not entitled to favorable
tax treatment under IRC Section 422. No optionee may
exercise incentive stock options in any calendar year for
shares of common stock having a total market value of more
than $100,000 on the date of grant (subject to certain
carryover provisions). In connection with the grant of
nonqualified options, a stock appreciation right for each
share covered by the option may also be granted. The stock
appreciation right will entitle the optionee to receive a
supplemental payment which may be paid in whole or in part
in cash or in shares of common stock equal to all or
a portion of the spread between the exercise price and the
fair market value of the underlying share at the time of
exercise.
The Company accounts for the Plan under APB Opinion No. 25.
Had compensation cost for the Plan been determined
consistent with FASB Statement No. 123, the Company's net
income and earnings per share would have been reduced to
the following pro forma amounts:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C> <C>
Net Income: As Reported $6,602,558 $4,420,007
Pro Forma $6,551,644 $4,398,581
Earnings Per Share: As Reported $1.05 $0.71
Pro Forma $1.05 $0.70
</TABLE>
Because the FASB Statement No. 123 method of accounting has
not been applied to options granted prior to January 1,
1995, the resulting pro forma compensation cost may not be
representative of that to be expected in future years.
A summary of the status of the Company's stock option plan
for the three years ended December 31, 1996 and changes
during the years then ended is as follows:
60
<PAGE>
NOTE 11 STOCK OPTION PLAN (CONTINUED)
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- -------------
Shares Wtd Avg Shares Wtd Avg Shares Wtd Avg
Ex Price Ex Price Ex Price
------- ------- ------ ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year 291,300 $12.86 243,300 $13.01 191,300 $12.50
Granted 48,000 $17.15 48,000 $12.12 52,000 $14.87
Exercised -- -- --
Forfeited -- -- --
Expired -- -- --
------ ------ -------
Outstanding at end of year 339,300 $13.47 291,300 $12.86 243,300 $13.01
------- ------- -------
Exercisable at end of year 190,640 $12.83 132,380 $12.82 132,380 $12.82
Weighted average fair value
of options granted during
the year $4.98 $3.52 $4.32
</TABLE>
Of the 339,300 options outstanding at December 31, 1996,
139,300 have exercise prices between $10.37 and $17.75, with
a weighted average exercise price of $12.55 and a weighted
average contractual life of 3.4 years. Of these 139,300
options, 129,040 are exercisable with a weighted average
exercise price of $12.67. The remaining 200,000 options have
exercised prices between $12.12 and $17.15, with a weighted
average exercise price of $14.11 and a weighted average
remaining contractual life of 7.5 years. Of these 200,000
shares, 61,600 are exercisable and their weighted average
exercise price is $13.18.
The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option pricing model with
the following assumptions.
<TABLE>
<CAPTION>
1996 Grants 1995 Grants
----------- -----------
<S> <C> <C>
Risk-free interest rate 7% 7%
Dividend yields 3% 3%
Expected lives 7 years 7 years
Volatility 24% 24%
</TABLE>
61
<PAGE>
NOTE 12 LEASE OBLIGATIONS
The Company leases certain equipment under operating leases
expiring in various years through 2001.
Minimum future rental payments under non-cancelable
operating leases having remaining terms in excess of one
year as of December 31, 1996, are summarized as follows:
<TABLE>
<CAPTION>
Year Ending December 31, Amounts
--------
<S> <C>
1997 $156,498
1998 121,431
1999 69,697
2000 29,224
2001 393
-------
$377,243
=======
</TABLE>
Rental expense under all operating leases amounted to $315,528,
$398,345,and $463,887 for the years ended December 31, 1996, 1995 and
1994, respectively.
62
<PAGE>
NOTE 13 BUSINESS SEGMENT DATA
Information about the Company's operations in different
industries for each of the three years ended December 31 is
as follows (amounts in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <S> <S> <S>
Revenues:
Citrus $13,863 $ 8,819 $ 8,175
Real Estate 7,642 7,743 16,528
General, Corporate and Other 6,508 7,122 4,023
------ ------ ------
$28,013 $23,684 $28,726
====== ====== ======
Income:
Citrus $ 4,012 $ 629 $ 86
Real Estate 3,472 2,889 9,637
General, Corporate and Other 3,121 3,638 545
------ ------ ------
$10,605 $ 7,156 $10,268
====== ====== ======
Identifiable Assets:
Citrus $17,043 $17,866 $17,349
Real Estate 32,169 35,349 40,813
General, Corporate and Other 10,461 6,478 3,373
------ ------ ------
$59,673 $59,693 $61,535
====== ====== ======
Depreciation and Amortization:
Citrus $ 502 $ 412 $ 329
Real Estate 585 648 682
General, Corporate and Other 24 35 40
----- ----- -----
$ 1,111 $ 1,095 $ 1,051
====== ====== ======
Capital Expenditures:
Citrus $ 241 $ 580 $ 750
Real Estate 200 593 619
General, Corporate and Other 4 29 17
------ ------ ------
$ 445 $ 1,202 $ 1,386
====== ====== ======
</TABLE>
Income represents income before income taxes. Identifiable assets by
industry are those assets that are used in the Company's operations
in each industry. General corporate assets and assets used in the
Company's other operations consist primarily of cash and cash
equivalents, investment securities, mortgage notes receivable and
property, plant and equipment.
63
<PAGE>
NOTE 14 RELATED PARTIES
Baker, Fentress & Company, a publicly owned, closed-end
investment company, owned approximately 79 percent of the
Company's outstanding common stock at December 31, 1996 and
1995.
The Company sells, under a participating marketing pool
agreement, a significant portion of its citrus fruit to
Citrus World, an agricultural cooperative of which the
Company owns a 4 percent equity interest. The Company
accounts for this equity interest at cost. Non-voting
stock, in the aggregate amount of $744,440 issued by Citrus
World is owned by the Company. This non-voting
stock represents per unit retain contributions and are
considered to have no value for financial statement purposes
until redeemed. See Note 1 "Summary of Significant
Accounting Policies."
A note payable in the amount of $2,535,140 and $2,567,248 at
December 31, 1996 and 1995, respectively, was payable to an
affiliate partner in a joint venture with Indigo Group Ltd.
64
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA (Unaudited)
(In thousands except per share amounts)
March 31, June 30, September 30, December 31,
--------------- --------------- -------------- -------------
1996 1995 1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Citrus $5,169 $3,721 $4,618 $2,052 $ 50 $ 21 $ 4,026 $ 3,025
Real Estate 2,792 901 989 1,657 733 1,380 3,128 3,805
Undeveloped Real Estate 2 60 1 1,426 1 1 381 3,231
Interest and Other
Income 172 173 650 106 182 180 5,119 1,945
----- ----- ----- ----- ----- ----- ------ ------
8,135 4,855 6,258 5,241 966 1,582 12,654 12,006
----- ----- ----- ----- ----- ----- ------ ------
Cost and Expenses:
Citrus 3,474 3,493 2,827 1,799 537 449 3,013 2,449
Real Estate 1,202 822 849 1,307 713 1,157 1,406 1,568
General and
Administrative 850 955 828 909 761 819 947 801
----- ----- ----- ----- ----- ----- ----- -----
5,526 5,270 4,504 4,015 2,011 2,425 5,366 4,818
----- ----- ----- ----- ----- ----- ----- -----
Income (Loss)
Before Income Taxes 2,609 ( 415) 1,754 1,226 (1,045) (843) 7,288 7,188
Income Taxes
(Note 4) ( 960) 160 ( 638) ( 456) 415 334 (2,820) (2,774)
----- ------ ----- ----- ----- --- ----- ------
Net Income (Loss) $1,649 $( 255) $ 1,116 $ 770 $( 630) $(509) $4,468 $4,414
===== ===== ==== ==== ==== === ===== =====
Net Income (Loss)
Per Share $ 0.26 $(0.04) $0.18 $ 0.12 $(0.10) $(0.08) $0.71 $0.71
==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
65
<PAGE>
Management's Discussion and Analysis
Results of Operations
1996 Compared to 1995
Citrus Operations
Results from citrus operations for the year ended December 31, 1996
improved dramatically when compared to calendar year 1995. Profits
increased 538% to $4,011,512 for the twelve months of 1996 from
$628,829 one year earlier. Revenues of $13,862,864 were posted for
the year reflecting a 57% climb from the $8,819,259 recorded in the
prior year. The revenue gain is attributable to a 37% increase in
fruit harvested and sold, coupled with a 9% improvement in average
fruit pricing. Fruit sales for 1996 totaled 1,401,000 boxes, with
sales for 1995 amounting to 1,021,000 boxes. Pricing for
both fresh and processed fruit contributed to the average price
increase in 1996. Production and selling expenses were down on a
per box basis for the twelve months of 1996 due to the efficiencies
achieved on the higher fruit volume, but rose 20% in total
on the higher fruit volume.
Real Estate Operations
Real estate operations income rose 20% for the calendar year of 1996
to $3,472,181. This compares to 1995's income of $2,888,594.
Commercial land sales activity accounted for the improved results.
Although the sale of commercial acres decreased slightly to
92 acres sold in 1996 compared to the sale of 97 acres in 1995,
higher profit margins were earned on these 1996 sales. Sales pricing
and profit margins can vary from property to property based on its
location and intended use.
Income properties posted a 20% profit gain in 1996 on higher
occupancies and leasing rates. Both revenues and expenses decreased,
7% and 8% respectively, during the twelve month period due to the May
1995 sale of the 18,000 square foot Mariner Towne Square shopping
center and the June 1996 sale of the 70,000 square foot Mariner
Village shopping center both located in Spring Hill, Florida.
Forestry profits fell 17% for 1996's twelve months, a direct result of
a 17% decline in revenues on decreased harvesting. Higher oil
royalties on increased production combined with additional
mineral leases resulted in a 68% rise in subsurface income.
General, Corporate and Other
Profits on the sale of undeveloped real estate interests totaled
$384,756 for 1996 on the sale of 25 acres of land and the release of
surface entry rights on 11,767 acres. This represents a 92% downturn
from 1995 results when profits of $4,718,248 were recorded on the sale
of 1,218 acres.
Interest and other income realized in 1996 amounted to $6,123,025, a
155% gain over 1995's interest and other income of $2,404,063.
Interest and other income for 1996 includes $4,550,000 recognized on
the sale of 479 acres including citrus groves in Highlands County,
$450,000 posted on the sale of the Mariner Village shopping center
and $340,000 recorded on the sale of the 21,000 square foot office
building in Daytona Beach, Florida. The sale of 142 acres of citrus
groves and lakefront property in Highlands County accounted for
profits of $1,740,000 included in 1995's interest and other income.
66
<PAGE>
General and administrative expenses fell 3% for the calendar year on
decreased interest expense from lower outstanding borrowings, with
this decline partially offset by increased costs related to the
accounting for stock options.
67
<PAGE>
Management's Discussion and Analysis
Results of Operations
1995 Compared to 1994
Citrus Operations
Profits from citrus operations improved significantly for the year
ended December 31, 1995 when compared to 1994's calendar year results.
Profits of $628,829 posted in 1995 compare to prior year profits
totalling $86,298. The gain in earnings was achieved on an 8% gain in
revenue on the strength of a 7% increase in fruit harvested and sold.
Also contributing to the gain in profitability was a 12% rise in fresh
fruit pricing. During calendar year 1995, 1,021,000 boxes of fruit
were sold, compared to one year earlier production of 956,000 boxes.
Production and selling costs were down on a per-box basis primarily
due to lower grove care costs per box, but rose 1% overall due to the
higher fruit volume harvested in 1995.
Real Estate Operations
Real estate operating profits for 1995's twelve months fell 70% to
$2,888,594 on a 53% reduction in revenues. This downturn can be
directly traced to lower commercial sales volume. During 1995
commercial sales totalled 97 acres. This volume compares to the 467
commercial acres sold during 1994. Real estate costs and expenses
decreased 30% during the period as a result of the lower sales volume.
Forestry operating profits jumped threefold to over $700,000 on
increased harvesting and pricing along with cost reductions achieved
through restructuring. Increased occupancy levels coupled with higher
lease rates at the Company's income properties generated an over
$100,000 profit improvement. Further cost reductions from closed-down
residential operations provided an additional $75,000 to the bottom
line. Revenues realized from subsurface interests were in line with
prior year results.
General, Corporate and Other
Profits on the sale of undeveloped real estate interests increased to
$4,718,248 on the sale of 1,218 acres in Highlands County, Florida.
During 1994, profits of $1,399,711 were recognized on the sale of 129
acres and the release of surface entry rights on 8,340 acres.
Interest and other income realized in 1995 totaled $2,404,063,
representing an 8% decline from the total posted in 1994. Interest
and other income for 1995's calendar year included the sale of 142
acres of citrus groves and lakefront property in Highlands County
generating a profit of $1,740,000. Results for 1994 included profit
of $2,380,000 on the sale of 225 acres and the sale of the water and
sewer utility plant at the Tomoka Heights residential community, both
located in Highlands County. Interest generated on mortgage notes
receivable from year end 1994 commercial closings, and investments
added an additional $445,000 of income during 1995 when compared to
1994. General and administrative expenses were substantially in line
with prior year results.
With the sale of the resort properties in July of 1994, the results of
resort operations have been reported separately as discontinued
operations, net of tax.
68
<PAGE>
Financial Position
Total earnings for the year ended December 31, 1996 of $6,602,558,
equivalent to $1.05 per share, represent record earnings for the
Company and a 49% improvement over 1995's full year profits of
$4,420,007, equivalent to $.71 per share. Included in these earnings
were improvements from both the citrus and real estate operations, the
Company's two core businesses. The citrus operation made a dramatic
gain in profits, with profits in excess of $4,000,000 on the strength
of a 37% increase in fruit volume and a 9% rise in average pricing.
Higher profit margin commercial real estate closings led to a 20%
improvement in real estate profits. Funds generated during the year
enabled the Company to pay dividends totaling $3,443,700, equivalent
to $.55 per share, and reduce debt by approximately $3,000,000. Total
cash and cash equivalents increased $593,462 for the twelve months
with operating activities providing $1,965,059, investing activities
providing $5,045,630 and financing activities using funds totaling
$6,417,227 including the debt reduction and dividend payment.
Investing activities includes cash realized on the sale of property,
plant and equipment, which is primarily made up of the sale of the
citrus groves, a shopping center and an office building. Capital
expenditures forecasted for 1997 amount to $2,900,000, of which
$1,960,000 will be spent on the LPGA International mixed-use
development and an additional $650,000 forecasted to be expended on
citrus equipment additions and replacements. These expenditures will
be funded through operating activities and if necessary existing
financing sources.
The Company's 1995-1996 citrus crop came in at a record 1,385,000
boxes. To a large extent the abundant crop is due to additional fruit
harvested from the approximate 1,600 acres of new groves planted in
1989-1992, which are beginning to mature. As these trees continue to
mature the fruit production will continue to increase. The improved
production from these new groves will replace the fruit harvested
from the grove acreage which was sold over the last three years. The
1996-1997 USDA crop estimate for Florida oranges totals 220 million
boxes, which represents an 8% increase from 203 million boxes
harvested in the 1995-1996 season. To date this large crop has not
had a significant impact on pricing. Cold weather experienced in
early 1997 had little impact on Company fruit and although there was
some damage throughout the state it did not cause a revision in the
state crop estimate or have a significant impact on pricing.
Several activities have or will take place, which give significant
exposure to the LPGA development. The upgraded landscaping of the
interchange located at Interstate 95 and LPGA Boulevard has been
completed, with a lighting ceremony for local dignitaries held at year
end. This landscape design, which includes fountains, lighting,
numerous trees and bushes and plant formations spelling out "Daytona
Beach" and "LPGA Boulevard," will project a first-class image for the
community as well as creating a recognizable and attractive entry to
the LPGA development. The "Showcase" home for the 1997 Volusia
County Parade of Homes has been awarded to the development. This will
draw a substantial number of people to the community. National
exposure again will be attained as the prestigious LPGA Sprint
69
<PAGE>
Titleholders golf tournament will be held at the LPGA International
golf course. In December of 1996 a parcel of land within the LPGA
development was sold for the development of a more affordable product.
The developer is planning to build villa homes with prices averaging
in the $125,000 to $150,000 range. The sale should open up the
project to a broader market while still providing an attractive and
quality, yet more affordable, product.
The Company is focusing its efforts on the citrus and real estate
operations, while disposing of assets not in its long-term plans, such
as the Mariner Village shopping center and the Daytona Beach office
building both sold in 1996. Relatively stable citrus pricing and
projected strong fruit volume, coupled with the positive real estate
activities in Volusia County, lead to forecasts of continued Company
profits in the near term.
70
<PAGE>
COMMON STOCK PRICES AND DIVIDENDS
Effective September 1, 1992, the Company's common stock began trading
on the American Stock Exchange (AMEX) under the symbol CTO. The
Company has paid dividends annually on a continuous basis since 1976,
the year in which its initial dividends were paid. The following
table summarizes aggregate annual dividends paid (on a semi-annual
basis) over the five years ended December 31, 1996.
1992 $.20
1993 .30
1994 .35
1995 .45
1996 .55
The 1992 per-share amount has been adjusted for the 100% Stock
Dividend distributed on August 17, 1992 to shareholders of record on
July 15, 1992.
Indicated below are high and low sales prices for the quarters of the
last two fiscal years. All quotations represent actual transactions.
<TABLE>
<CAPTION>
1996 1995
------------- --------------
High Low High Low
---- ---- ------ -----
$ $ $ $
<S> <C> <C> <C> <C>
First Quarter 17-7/8 16-3/4 14-3/8 11-1/2
Second Quarter 20-7/8 17-1/2 16 13-1/2
Third Quarter 19-5/8 16-3/4 16-1/2 13-1/4
Fourth Quarter 17-3/8 16-1/4 17-1/4 15-1/8
</TABLE>
Approximate number of shareholders of record as of December 31,
1996 (without regard to shares held in nominee or street name): 300
71
<PAGE>
Welcome...to the world's next great golf mecca located at the World's
Most Famous Beach. When you live at LPGA International, you can play
golf on the very same Rees Jones and Arthur Hills courses that
challenge the professionals.
Award-winning architects, designers and builders are hard at work
creating this planned community for your living and working enjoyment.
As a member of the "Champions Club," LPGA International residents can
enjoy fine dining, tennis, fitness, or just relaxing around the lush
pool at the community's destination Resort. Major shopping,
restaurants, international airport, and the World's Most Famous Beach
are only minutes away using our new LPGA Boulevard/I-95 interchange.
We believe that no other community offers the same combination of
location, convenience, elegance, and value.
William H. McMunn
President, Indigo Development Inc.
72
<PAGE>
EXHIBIT 21
Subsidiaries of the Registrant
Percentage of
Organized voting securities
under owned by
laws of immediate parent
Consolidated-Tomoka Land Co.
(registrant) Florida --
Placid Utilities Company Florida 100.0
Indigo Group Inc. Florida 100.0
Indigo Group Ltd. Florida 99.0*
(A Limited Partnership)
Indigo Development Inc. Florida 100.0
Palms Del Mar, Inc. Florida 100.0
*Consolidated-Tomoka Land Co. is the limited partner of
Indigo Group Ltd., and owns 99.0% of the total partnership
equity. Indigo Group Inc. is the general partner, is the
managing partner of the partnership, and owns 1.0% of the
partnership equity.
All subsidiaries are included in the Consolidated Financial
Statements of the Company and its subsidiaries appearing
elsewhere herein.
73
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
TO: CONSOLIDATED-TOMOKA LAND CO.
As independent certified public accountants, we hereby consent to
the incorporation of our reports included and incorporatd by reference in
this Form 10-K, into the Company's previously filed Registration
Statements on Form S-8 (Files 33-62679 (prior registration number
33-50954)).
Arthur Andersen LLP
Tampa, Florida
March 24, 1997
74
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from
Consolidated-Tomoka Land Co.'s December 31, 1996 10-K and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,760,835
<SECURITIES> 1,396,415
<RECEIVABLES> 16,987,865
<ALLOWANCES> 0
<INVENTORY> 17,366,081
<CURRENT-ASSETS> 0
<PP&E> 32,751,346
<DEPRECIATION> 11,655,483
<TOTAL-ASSETS> 59,672,522
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 6,261,272
<OTHER-SE> 29,530,113
<TOTAL-LIABILITY-AND-EQUITY> 59,672,522
<SALES> 21,889,518
<TOTAL-REVENUES> 28,012,543
<CGS> 10,485,131
<TOTAL-COSTS> 14,021,069
<OTHER-EXPENSES> 2,467,408
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 918,888
<INCOME-PRETAX> 10,605,178
<INCOME-TAX> 4,002,620
<INCOME-CONTINUING> 6,602,558
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,602,558
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
</TABLE>
