SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
___ OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
___ TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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)
(904) 255-7558
(Registrant's telephone number, including area code)
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding
April 30, 1999
$1.00 par value 6,371,833
1
<PAGE>
CONSOLIDATED-TOMOKA LAND CO.
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
March 31, 1999 and December 31, 1998 3
Consolidated Condensed Statements of Income and
Retained Earnings - Three Months Ended
March 31, 1999 and 1998 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1999 and 1998 5
Notes to Consolidated Condensed Financial Statements 6-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
PART II -- OTHER INFORMATION 14
SIGNATURES 15
2
<PAGE>
PART I -- FINANCIAL INFORMATION
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
ASSETS
Cash & Cash Equivalents $ 393,824 $ 283,200
Investment Securities 1,173,333 1,191,390
Notes Receivable 9,387,812 9,115,868
Real Estate Held for Development and Sale 13,528,871 13,597,967
Deferred Income Taxes 1,826,761 1,826,761
Refundable Income Taxes -- 285,199
Net Investment in Direct Financing Lease 520,284 542,123
Other Assets 1,315,282 1,111,871
Net Assets of Discontinued Citrus Operations 14,372,222 14,792,453
Property, Plant, and Equipment - Net 7,445,900 7,354,619
---------- ----------
TOTAL ASSETS $49,964,289 $50,101,451
========== ==========
LIABILITIES
Accounts Payable $ 42,982 $ 292,646
Notes Payable 11,512,340 10,742,063
Accrued Liabilities 4,865,702 4,368,464
Income Taxes Payable 218,755 --
---------- ----------
TOTAL LIABILITIES 16,639,779 15,403,173
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock 6,371,833 6,371,833
Additional Paid-in Capital 3,793,066 3,793,066
Retained Earnings 23,159,611 24,533,379
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 33,324,510 34,698,278
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $49,964,289 $50,101,451
========== ==========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
3
<PAGE>
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
---------------------------
March 31, March 31,
1999 1998
--------- -----------
<S> <C> <C>
INCOME:
Real Estate Operations:
Sales and Other Income $ 1,287,026 $ 1,376,649
Costs and Expenses ( 1,142,128) ( 931,554)
---------- ----------
144,898 445,095
---------- ----------
Profit on Sales of Undeveloped
Real Estate Interests 3,500 96,415
---------- ----------
Interest and Other Income 197,010 257,473
---------- ----------
General and Administrative Expenses ( 990,206) ( 840,550)
---------- ----------
Loss From Continuing Operations Before
Income Taxes ( 644,798) ( 41,567)
Income Taxes 250,575 24,841
---------- ----------
Loss From Continuing Operations ( 394,223) ( 16,726)
Income From Discontinued Citrus Operations,
Net of Tax 1,250,597 446,877
---------- ---------
Net Income 856,374 430,151
Retained Earnings, Beginning of Period 24,533,379 27,689,548
Dividends ( 2,230,142) ( 2,230,142)
---------- ----------
Retained Earnings, End of Period $23,159,611 $25,889,557
========== ==========
PER SHARE INFORMATION:
Basic and Diluted
Loss From Continuing Operations $ (0.06) --
Income From Discontinued Citrus Operations $ 0.19 $ 0.07
---------- ---------
Net Income $ 0.13 $ 0.07
========== =========
Dividends $ 0.35 $ 0.35
========== =========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
4
<PAGE>
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended
--------------------------
March 31, March 31,
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 856,374 $ 430,151
Adjustments to Reconcile Net Income to
Net Cash Provided by (Used In)Operating
Activities:
Discontinued Citrus Operations (1,250,597) ( 446,877)
Depreciation and Amortization 63,700 38,739
Gain on Sale of Property, Plant and Equipment ( 10,305) ( 17,507)
(Increase) Decrease in Assets:
Notes Receivable ( 271,944) 100,545
Real Estate Held for Development 69,096 ( 289,408)
Other Assets ( 203,411) ( 197,975)
(Decrease) Increase in Liabilities:
Accounts Payable ( 249,664) 161,406
Accrued Liabilities 497,238 690,513
Income Taxes Payable and Refundable 503,954 (1,871,903)
--------- ---------
Net Cash Provided By (Used In) Operating
Activities 4,441 (1,402,316)
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of Property, Plant, and Equipment ( 165,559) ( 2,054,816)
Net Decrease (Increase) in Investment Securities 18,057 ( 4,048,524)
Direct Finance Lease 21,839 20,166
Proceeds from Sale of Property, Plant and Equipment 20,883 17,507
Cash from Discontinued Citrus Operations 1,670,828 922,388
--------- ---------
Net Cash Provided by (Used In) Investing
Activities 1,566,048 ( 5,143,279)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Notes Payable 2,443,000 --
Payments on Notes Payable ( 1,672,723) ( 94,529)
Dividends Paid ( 2,230,142) ( 2,230,142)
--------- ---------
Net Cash Used in Financing Activities ( 1,459,865) ( 2,324,671)
--------- ---------
Net Increase (Decrease) In Cash and
Cash Equivalents 110,624 ( 8,870,266)
Cash and Cash Equivalents at Beginning of Period 283,200 9,385,327
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 393,824 $ 515,061
========= =========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
5
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Principles of Interim Statements. The following
unaudited condensed financial statements have been
prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information
and note disclosures which are normally included in annual
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or
omitted pursuant to those rules and regulations. The
information presented in the unaudited consolidated
condensed financial statements reflects all adjustments which
are, in the opinion of the management, necessary to present
fairly the Company's financial position and the results
of operations for the interim periods. The consolidated
condensed format is designed to be read in conjunction
with the last annual report. For further information
refer to the consolidated financial statements and the
notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998.
The consolidated condensed financial statements include
the accounts of the Company and its wholly owned
subsidiaries. Intercompany balances and transactions have
been eliminated in consolidation.
2. Discontinued Citrus Operations. On April 7, 1999 the Company
completed the sale of its citrus operations at a price
approximating $30,945,000. The gain on the transaction will
be recognized in the second quarter of 1999. The results
of the citrus operations have been reported separately as
discontinued operations in the Consolidated Statements of
Income. Prior year consolidated financial statements have
been restated to present citrus operations as discontinued
operations. The assets and liabilities associated with
the citrus operations as of March 31, 1999 and December
31, 1998 have been presented separately on the consolidated
balance sheets as "Net Assets of Discontinued Citrus
Operations." Summary financial information of the citrus
operations is as follows:
Three Months Ended
----------------------
March 31, March 31,
1999 1998
--------- ---------
Revenues from Discontinued Citrus
Operations $5,157,513 $4,573,379
========= ==========
Income from Discontinued Citrus
Operations Before Tax 2,005,126 716,494
Income Tax Expense from Discontinued
Citrus Operations ( 754,529) ( 269,617)
---------- ---------
Net Income from Discontinued
Citrus Operations $1,250,597 $ 446,877
========= =========
6
<PAGE>
3. Seasonal Operations. The Company's citrus operations, which
are reported as discontinued citrus operations, involve
a single-crop agricultural commodity and are seasonal in nature.
To a lesser extent, real estate operations including
forestry and golf activities are seasonal in nature.
Accordingly, results for the three months ended March 31, 1999
and 1998 are not necessarily indicative of results to be
expected for the full year. Results of operations for the twelve
months ended March 31,1999 and 1998 are summarized as follows
(in thousands):
<TABLE>
<CAPTION>
Twelve Months Ended March 31,
------------------------------------------------
1999 1998
------------------------------------------------
Revenues Income Revenues Income
-------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Real Estate Operations $ 6,299 $ 1,221 $ 5,940 $2,393
General Corporate & Other 763 (1,705) 9,147 3,258
------ ----- ------ -----
Total Revenues $ 7,062 $15,087
====== ======
Income (Loss) From
Continuing Operations
Before Income Taxes ( 484) 5,651
Income Taxes 207 (2,018)
----- -----
Net Income (Loss) From
Continuing Operations ( 277) 3,633
Income From Discontinued Citrus
Operations, Net of Tax 2,007 582
------ ------
Net Income $1,730 $4,215
====== ======
</TABLE>
4. Common Stock and Earnings Per Common Share. Basic earnings per
common share are computed by dividing net income by the
weighted average number of shares of common stock outstanding
during the year. Diluted earnings per common share are
determined based on assumption of the conversion of stock
options at the beginning of each period using the treasury
stock method at average cost for the periods.
7
<PAGE>
Three Months Ended
---------------------------
March 31 March 31
1999 1998
--------- --------
Income Available to Common
Shareholders:
Loss from Continuing Operations $( 394,223) $( 16,726)
Income from Discontinued Citrus
Operations 1,250,597 446,877
--------- --------
Net Income 856,374 430,151
========= ========
Weighted Average Shares Outstanding 6,371,833 6,371,833
Common Shares Applicable to Stock
Options Using the Treasury Stock
Method 7,150 26,759
--------- ---------
Total Shares Applicable to Diluted
Earnings Per Share $6,378,983 $6,398,592
========= =========
Basic and Diluted Earnings
Per Share:
Loss from Continuing Operations ($0.06) $0.00
Income from Discontinued
Citrus Operations $0.19 $0.07
--------- ---------
Net Income $0.13 $0.07
========= =========
8
<PAGE>
5. Notes Payable. Notes payable consist of the following:
<TABLE>
<CAPTION>
March 31, 1999
------------------------------------
Due Within
Total One Year
------------------------------------
<S> <C> <C>
$ 7,000,000 Line of Credit $ 959,000 $ 959,000
Mortgage Notes Payable 10,040,386 221,689
Industrial Revenue Bond 512,954 63,289
----------- --------
$11,512,340 $1,243,978
========== =========
</TABLE>
Payments applicable to reduction of principal amounts will be
required as follows:
Year Ending March 31,
---------------------
2000 $ 1,243,978
2001 409,249
2002 453,634
2003 8,065,999
2004 123,854
Thereafter 1,215,626
----------
$11,512,340
==========
In the first three months of 1999 interest totaled
$232,587 of which none was capitalized to land held
for development and sale. Total interest for the three
months ended March 31, 1998 was $291,816 of which
$161,947 was capitalized to land held for development and sale.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Management's Discussion and Analysis is designed to be
read in conjunction with the financial statements and
Management's Discussion and Analysis in the last annual report.
RESULTS OF OPERATIONS
Real Estate Operations
Profits from real estate operations fell 67% for the first three
months of 1999 when compared to the prior year. This decline can
primarily be attributed to a 72% reduction in profits from
forestry operations combined with a 37% decrease in profits
generated from golf operations. The lack of harvestable timber
due to the fires experienced last summer, coupled with depressed
pricing resulted in a 65% reduction in forestry revenues to $97,000
as profits fell to $73,000. The 12% rise in golf revenues, generated
on a 9% increase in rounds played, was not enough to offset
the additional maintenance expense associated with the second
golf course, which opened in the fourth quarter 1998. Income from
golf operations totaled $175,000 during 1999's first quarter.
Commercial real estate sold for both periods totaled 5 acres with
gross profits realized of $86,000 and $60,000 for the first quarter
of 1999 and 1998, respectively.
General, Corporate and Other
The release of surface entry rights on one acre generated $3,500
during 1999's first quarter. This compares unfavorably to the
$96,415 realized on the release of surface entry rights on 2,332
acres during 1998's first three month period. Interest and other
income declined 23% to $197,000 as interest earned on
investment securities was reduced on lower investable funds.
General and administrative expenses rose 18% as there was no
capitalization of interest or other overhead costs
to the LPGA International development and golf course during
the first quarter of 1999. In the prior year when the golf
course was under construction certain general and administrative
expenses were capitalized. This increase is
offset to some extent by a reduction in expense associated with
stock options, as the price of the Company's stock remained
relatively constant during the period.
Discontinued Citrus Operations
During the first three months of 1999 citrus operations posted
profits of $2,005,000 before tax, representing a 180% rise when
compared to 1998's first period profits totaling $716,000.
Revenues increased 13% during the period, despite a 24% reduction
in fruit harvested and sold. A total of 422,000 boxes were sold for
the first quarter of 1999 compared to 555,000 boxes of fruit sold
for 1998's same period. Average fruit pricing jumped 48%, primarily
10
<PAGE>
on the strength of fresh fruit pricing. The rise in pricing was
achieved due to significantly lower state crop for the
1998-1999 season, along with the impact of the freeze experienced
in California during late 1998. Production and selling expenses
dropped 18% on the lower fruit volume.
11
<PAGE>
FINANCIAL POSITION
Net income for the first quarter of 1999 totaled $856,374, equivalent
to $.13 per share and represents a 99% increase in profits over
1998's three month profit of $430,151, equivalent to $.07 per share.
The favorable results in profits are attributable to a 180% rise
from citrus profits before tax to $2,005,126, with real estate
operations income dropping 67% to $144,898. Cash and cash
equivalents increased $110,000 for the period after the payment
of dividends totaling $2,230,000, equivalent to $.35 per share.
Cash used to pay these dividends was generated from citrus operations,
along with borrowings on the existing line-of-credit.
Capital expenditures during the period totaled $165,000 and consisted
of design of the clubhouse at the LPGA International development
and forestry tree planting. Capital requirements for the remainder
of 1999 approximate $5,000,000 and consist primarily of the design
and construction of the clubhouse facility. These expenditures will
be funded through existing cash and investments on hand.
As previously reported, on April 7, 1999 the Company completed the
sale of its citrus business, Lake Placid Groves. The sale at a price
of $30,945,000, subject to post closing adjustments, was
paid substantially in cash and resulted in an approximate gain
of $8,000,000 after income taxes. This gain will be recognized in
the second quarter of 1999. The cash proceeds generated on the sale
will be used to fund capital expenditures with excess funds to
be invested in high quality investment securities.
Site work on the clubhouse facilities has commenced. Construction
will take place in two phases. The first phase consists of a
parking area and cart barn. Construction on this phase is underway.
The second phase, which consists of the clubhouse building and amenities,
is in the latter stages of the design phase and is anticipated to
be under construction during the third quarter of 1999, with
completion by year end. Completion of these facilities will be
a significant addition to the community and is anticipated
to substantially enhance the sales efforts.
Sales activity on commercial properties is relatively strong.
Contracts are in place on several parcels of land which will
generate significant cash and earnings later in the year if
successfully closed. Additionally, negotiations are taking place
on several other properties.
The Company has evaluated and identified the risks of software
and hardware failure due to processing errors arising from the year
2000 date. The risk of these software and hardware failures is
not judged to have a material affect on the Company's business,
results of operations, or financial position. The Company has a plan
12
<PAGE>
in place for conversion and is in the midst of carrying-out this
plan. The plan, the cost of which is not material
in relation to the Company's financial position, will be completed
well before year end.
With the sale of its citrus operations, the Company is now solely in
the real estate business. Management is now focusing its entire
efforts on adding value to Company lands by originating development
plans and establishing development rights, while recognizing
this increased value through sales to site specific developers.
13
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to
which the Company or its subsidiaries is a party.
Item 2 through 3
Not Applicable
Item 4. Submission of matters to a vote of security holders.
The annual meeting of Shareholders was held April 15, 1999
and the following votes were received for each of the three
nominees for Class II directors:
Number of
Number of Number of Votes Votes
Nominee votes for Withheld Abstaining
Robert F. Lloyd 6,139,942 1,882 17,200
William H. McMunn 6,139,142 2,682 17,200
Bruce W. Teeters 6,138,842 2,982 17,200
Item 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11 - Incorporated by Reference on Page 8 of this
10-Q report.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
A Form 8-K under Item 5 "Other Events", dated March 5, 1999
was filed. The report dealt with the removal of
contingencies and the moving forward towards closing on the
sale of the citrus business.
A Form 8-K under Item 2 "Acquisition or Disposition of
Assets", dated April 22, 1999 was filed. The report
dealt with the closing of the sale of the citrus business,
including pro forma financial statements.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONSOLIDATED-TOMOKA LAND CO.
(Registrant)
Date: May 5, 1999 By:/s/ Bob D. Allen
----------------------------
Bob D. Allen, President and
Chief Executive Officer
Date: May 5, 1999 By:/s/ Bruce W. Teeters
----------------------------
Bruce W. Teeters, Senior
Vice President - Finance
and Treasurer
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from
Consolidated-Tomoka Land Co.'s March 31, 1999 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 393,824
<SECURITIES> 1,173,333
<RECEIVABLES> 9,387,812
<ALLOWANCES> 0
<INVENTORY> 13,528,871
<CURRENT-ASSETS> 0
<PP&E> 8,359,859
<DEPRECIATION> 913,959
<TOTAL-ASSETS> 49,964,289
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 6,371,833
<OTHER-SE> 26,952,677
<TOTAL-LIABILITY-AND-EQUITY> 49,964,289
<SALES> 1,290,526
<TOTAL-REVENUES> 1,487,536
<CGS> 328,034
<TOTAL-COSTS> 1,142,128
<OTHER-EXPENSES> 757,619
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 232,587
<INCOME-PRETAX> (644,798)
<INCOME-TAX> 250,575
<INCOME-CONTINUING> (394,223)
<DISCONTINUED> 1,250,597
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 856,374
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
