SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
___ OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
___ TRANSITION REPORT PURSUANT TO SECTION 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 32114
Daytona Beach, Florida (Zip Code)
(Address of principal executive offices)
(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
Outstanding
Class of Common Stock November 1, 1999
_____________________ _________________
$1.00 par value 6,376,484
1
<PAGE>
CONSOLIDATED-TOMOKA LAND CO.
INDEX
Page No.
________
PART I - - FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
September 30, 1999 and December 31, 1998 3
Consolidated Condensed Statements of Income and
Retained Earnings - Three Months and
Nine Months Ended September 30, 1999 and 1998 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended September 30, 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)
September 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 1,878,429 $ 283,200
Investment Securities 26,990,565 1,191,390
Notes Receivable 12,597,108 9,115,868
Real Estate Held For Development and Sale 11,611,839 13,597,967
Deferred Income Taxes 1,826,761 1,826,761
Refundable Income Taxes -- 285,199
Net Investment in Direct Financing Lease 475,277 542,123
Other Assets 1,379,723 1,111,871
Net Assets of Discontinued Citrus Operations -- 14,792,453
Property, Plant, and Equipment - Net 7,896,289 7,354,619
---------- ----------
TOTAL ASSETS $64,655,991 $50,101,451
========== ==========
LIABILITIES
Accounts Payable $ 42,889 $ 292,646
Notes Payable 10,361,855 10,742,063
Accrued Liabilities 5,816,061 4,368,464
Income Taxes Payable 2,488,025 --
---------- ----------
TOTAL LIABILITIES 18,708,830 15,403,173
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock 6,376,484 6,371,833
Additional Paid-in Capital 3,788,426 3,793,066
Retained Earnings 35,782,251 24,533,379
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 45,947,161 34,698,278
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $64,655,991 $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) (Unaudited)
Three Months Ended Nine Months Ended
-------------------------- --------------------------
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCOME:
Real Estate Operations:
Sales and Other Income $ 6,381,248 $ 1,515,308 $13,660,410 $ 4,425,028
Costs and Other Expenses ( 4,517,593) ( 792,639) ( 7,327,201) (3,075,964)
---------- ---------- ---------- ----------
1,863,655 722,669 6,333,209 1,349,064
---------- ---------- ---------- ----------
Profit On Sales of Undeveloped
Real Estate Interests 67,476 10,385 2,099,314 124,723
---------- ---------- ---------- ----------
Interest and Other Income 574,373 242,622 1,178,484 578,553
---------- ---------- ---------- ----------
2,505,504 975,676 9,611,007 2,052,340
GENERAL AND ADMINISTRATIVE EXPENSES ( 868,726) ( 596,427) ( 2,737,415) ( 2,022,766)
---------- ---------- ---------- ----------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 1,636,778 379,249 6,873,592 29,574
INCOME TAXES ( 491,463) ( 144,196) ( 2,463,705) ( 136)
---------- ---------- ---------- ----------
NET INCOME FROM CONTINUING OPERATIONS 1,145,315 235,053 4,409,887 29,438
INCOME (LOSS) FROM DISCONTINUED
CITRUS OPERATIONS, NET OF TAX ( 41,130) ( 307,738) 9,069,127 549,026
---------- ---------- ---------- ----------
NET INCOME (LOSS) 1,104,185 ( 72,685) 13,479,014 578,464
RETAINED EARNINGS, Beginning of Period 34,678,066 26,110,555 24,533,379 27,689,548
DIVIDENDS ( 2,230,142) ( 2,230,142) ( 4,460,284)
---------- ---------- ---------- ----------
RETAINED EARNINGS, End of Period $35,782,251 $23,807,728 $35,782,251 $23,807,728
========== ========== ========== ==========
PER SHARE INFORMATION:
Basic and Diluted
Income From Continuing Operations $ .19 $ .03 $.70 $ --
Income (Loss) From Discontinued
Citrus Operations $(.01) $(.04) $1.42 $.09
--------- --------- --------- ---------
Net Income (Loss) $ .18 $(.01) $2.12 $.09
========== ========== ========== ==========
DIVIDENDS PER SHARE -- $ .35 $.35 $.70
========== ========== ========== ==========
</TABLE>
See Accompanying Notes to Consolidated Condensed Financial Statements.
4
<PAGE>
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Nine Months Ended
----------------------------
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $13,479,014 $ 578,464
Adjustments to Reconcile Net Income
to Net Cash (Used In) Provided by
Operating Activities:
Discontinued Citrus Operations ( 9,069,127) ( 549,026)
Depreciation and Amortization 178,944 108,842
Gain on Sale of Property, Plant and Equipment ( 9,947) 136,524
(Increase) Decrease in Assets:
Notes Receivable ( 3,481,240) ( 86,486)
Real Estate Held for Development 1,986,128 ( 461,694)
Other Assets ( 267,852) ( 393,486)
(Decrease) Increase in Liabilities:
Accounts Payable ( 249,757) ( 265,787)
Accrued Liabilities 1,447,597 1,594,214
Income Taxes Payable and Refundable 2,773,224 (2,844,822)
---------- ---------
Net Cash Provided By (Used In) Operating
Activities 6,786,984 (2,183,257)
---------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisitions of Property, Plant and Equipment ( 731,539) (4,536,801)
Net Increase in Investment Securities (25,799,175) ( 159,031)
Direct Financing Lease 66,846 61,724
Proceeds from Sale of Property, Plant
and Equipment 20,883 2,282,868
Cash from Discontinued Citrus Operations 23,861,580 698,712
---------- ---------
Net Cash Used In Investing Activities ( 2,581,405) (1,652,528)
---------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Notes Payable 2,469,000 2,257,000
Payments on Notes Payable (2,849,208) (3,210,741)
Dividends Paid (2,230,142) (4,460,284)
--------- ---------
Net Cash Used in Financing Activities (2,610,350) (5,414,025)
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,595,229 (9,249,810)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 283,200 9,385,327
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,878,429 $ 135,517
========== ==========
</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
consolidated 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 pre-
pared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules
and regulations. The consolidated condensed financial statements
reflect all adjustments which are, in the opinion of the manage-
ment, 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. A gain of $7,692,970, net of income
taxes, was recognized on the transaction, with an additional
$1,376,157 earned from operating activities, net of income
taxes. 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. There were no
remaining assets or liabilities of the operations as of
September 30, 1999. Remaining assets and liabilities associated
with the citrus operations as of 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:
6
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- -------------------
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues from Discontinued Citrus
Operations $ -- $ 3,729 $5,393,171 $7,551,787
========= ========== ========== ==========
Income (Loss) from Discontinued
Citrus Operations Before Tax ( 493,407) 2,206,440 880,272
Income Tax Expense from Discontinued
Citrus Operations 185,669 ( 830,283) ( 331,246)
Gain on Sale of Citrus Operations
(Net of Income Tax of ($226,835) and
$4,439,418) (41,130) -- 7,692,970
--------- --------- --------- ----------
Net income from Discontinued
Citrus Operations $ (41,130) $ (307,738) $9,069,127 $ 549,026
========== ========= ========= ==========
</TABLE>
3. 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 the 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>
<TABLE>
<CAPTIONS>
Three Months Ended Nine Months Ended
------------------------ --------------------
Sept. 30, Sept. 30, Sept. 30, Sept.30,
1999 1998 1999 1998
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Income Available to
Common Shareholders
Income from Continuing
Operations 1,145,315 235,053 4,409,887 29,438
Income (Loss) from
Discontinued Citrus Operations
Net of Tax (41,130) (307,738) 9,069,127 549,026
--------- ------- --------- --------
Net Income (Loss) 1,104,185 ( 72,685) 13,479,014 578,464
========= ======= ========== ========
Weighted Average Shares
Outstanding 6,372,600 6,371,833 6,374,108 6,371,833
Common Shares Applicable
to Stock Options Using
the Treasury Stock
Method 8,579 7,662 7,098 16,003
--------- --------- --------- --------
Total Shares
Applicable to Diluted
Earnings Per Share 6,381,179 6,379,495 6,381,206 6,387,836
========= ========= ========= =========
Basic and Diluted Earnings
Per Share:
Income from Continuing
Operations $0.19 $0.03 $0.70 --
Income (Loss) from Discontinued
Citrus Operations ($0.01) ($0.04) $1.42 $0.09
-------- ------- -------- --------
Net Income (Loss) $0.18 ($0.01) $2.12 $0.09
======== ======= ======== ========
</TABLE>
8
<PAGE>
4. The Company accounts for Investment Securities
under Statement of financial Accounting Standards No. 115,
"Accounting for Certain Investment in Debt and Equity
Securities.: This standard requires classification
of the investment portfolio into three categories:
held to maturity, trading and available for sale.
All investment securities as of September 30, 1999 and
December 31, 1998 are classified as held to maturity.
The increase in investment securities during the nine
month period was due to the proceeds received on the
sale of the citrus operations.
5. Notes Payable. Notes payable consist of the following:
<TABLE>
<CAPTION>
September 30, 1999
-----------------------------
Due Within
Total One Year
---------- -----------
<S> <C> <C>
Consolidated-Tomoka Land Co.
----------------------------
$ 7,000,000 Line of Credit $ $
Mortgages Notes Payable 9,894,207 312,155
Industrial Revenue Bonds 467,648 96,264
---------- ----------
$10,361,855 $ 408,419
========== ==========
</TABLE>
Payments applicable to reduction of principal amounts
will be required as follows:
Year Ending September 30,
2000 $ 408,419
2001 444,749
2002 8,154,359
2003 122,219
2004 32,109
Thereafter 1,200,000
----------
$10,361,855
==========
In the first nine months of 1999 interest totaled
$680,715 of which $30,508 was capitalized. Total interest
for the nine months ended September 30, 1998 was
$822,442, of which $563,244 was capitalized to
land held for development and sale.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Managements'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 totaling $1,863,655 for
the third quarter of 1999, represent a 158% gain over
prior year's same period earnings of $722,669. Increased
sales of commercial acreage provided this improvement, with
the sale of 205 acres producing gross profits of $2,080,000
during 1999's third period. Gross profits approximating
$670,000 were realized on the sale of 44 acres during 1998's
same period. Profits from forestry activities fell 97% to
breakeven as depressed pricing limited harvesting activities.
During 1998's third quarter, profits from forestry operations
totaled $227,259 on revenues of $251,857. Revenues from golf
operations rose 55% with the addition of the second golf
course, but bottom line results were in line with prior
year as additional maintenance costs offset the revenue gain.
A loss of $138,770 was posted in 1999's third quarter compared
to a $136,242 loss one year earlier.
For the first nine months of 1999 real estate operations income
jumped 369% to $6,333,209 when compared to 1998's nine month
income totaling $1,349,064. Commercial land sales again provided
this gain, with gross profits of $6,850,000 generated on the sale
of 351 acres of property. The sale of 58 acres of property
during 1998's first nine months contributed gross profits of
$950,000. Forestry operations had a negative impact on 1999
results year-to-date, as the depressed prices limited harvesting
activities resulting in an 81% drop in revenue and a
corresponding 88% decrease in profits to $72,836. This
compares to the $613,359 profit earned in the nine month period
of 1998. Profits from golf operations also reflected a downturn,
despite a 24% increase in revenue. The additional revenue provided
by the second golf course was more than offset by depreciation
and the cost of maintaining the course, resulting in a 194% decline
in profits. A loss of $129,738 was recorded for the period in
1999 compared to a profit of $137,376 in 1998.
General, Corporate and Other
The release of subsurface interests on 2,684 acres produced
profits of $67,476 during 1999's third period compared to the
10
<PAGE>
$10,385 realized on the release of 416 acres in 1998's same
period. The sale of 100 acres of land combined with the
subsurface interests releases on 3,279 acres for the nine months
of 1999 produced profits on sales of undeveloped real estate
interests totaling $2,099,314. For the first nine months
of 1998 $124,723 was earned on the release of subsurface interests
on 3,427 acres.
Interest and other income climbed 137% and 104% for the third
quarter and first nine months of 1999, respectively, when compared
to prior year. These improvements were achieved primarily on
increased investment interest earned on the proceeds received
from the sale of the citrus operations.
General and administrative expenses were substantially
higher for both periods compared with last year. The increases, 46%
for the three month period and 35% year to date, can be attributed
to lower interest and overhead costs capitalized to development
projects during the periods. Substantial amounts of interest were
capitalized to the construction of the golf course and the LPGA
development for the 1998 periods.
Discontinued Citrus Operations
During the second quarter of 1999 the Company consummated the
sale of its citrus operations. An after tax gain of $7,692,970
was posted on the transaction, with post closing adjustments
resulting in an after tax loss of $41,130 during the third quarter.
Operating activities through the sale date resulted in after tax
income of $1,376,157 during 1999. During the third quarter of 1998
an after tax loss of $307,738 was recorded, which was typical for
this out of season period when fruit harvesting is minimal. For the
first nine months of 1999 profits of $549,026 were earned after tax.
11
<PAGE>
FINANCIAL POSITION
For the first nine months of 1999 the Company had earnings
of $13,479,014, equivalent to $2.12 per share, including
$9,069,127 from discontinued citrus operations. This represents
a significant gain from the $578,464 profit, equivalent to $.09
per share, earned in 1998's first nine months. The closing of
several commercial real estate transactions propelled earnings
from continuing operations to $4,409,887, equivalent to $.70
per share, a substantial increase over the breakeven results
from continuing operations achieved in the prior year.
Cash and cash equivalents, along with investment securities
increased in excess of $27,300,000 during the nine month
period. These funds were generated from discontinued
citrus operations, $23,800,000, including the proceeds from the
sale of the business, along with $6,800,000 from operating
activities. Uses of cash included the $2,230,000 payment of
dividends and $730,000 spent on the acquisition of property, plant
and equipment, primarily the cart barn and clubhouse facilities
at the LPGA mixed-use development. The funds generated during
the period have been invested in high quality short-term
investments. It is anticipated these funds will be used to fund
the stock repurchase program which was approved by the Board
of Directors at their July 21, 1999 meeting. The Board also
decided to eliminate the semi-annual dividend payment normally
declared at the meeting in order to make an equivalent amount
of funds available to the stock repurchase program. The Company is
authorized to repurchase up to 25 percent of the then outstanding
6,371,833 shares of common stock on the open market at prevailing prices
or in privately negotiated transactions. The program was put in
place in anticipation of the September 24, 1999 distribution by
Baker, Fentress and Company of 5,000,000 shares of Company stock,
representing in excess of 78% of outstanding shares.
During the third period the Company sold 180 acres and 44
developed residential lots within the LPGA mixed-use development
to Renar Development Company ("Renar"). In addition Renar has
been granted two options to purchase additional phases with
closings on these options anticipated in three and five years,
respectively. This transaction makes Renar the residential and
commercial developer of the community, while the Company maintains
its position as master developer of the project. Renar has
committed to a substantial marketing and promotion effort to
accelerate sales activity.
The construction of the first phase of the golf clubhouse
facilities, which consists primarily of the cart barn, is near
completion. The remainder of the project, consisting of a 20,000
square foot facility including pro shop, locker rooms, informal
dining and banquet rooms, tennis courts and swimming pool is
12
<PAGE>
currently scheduled to commence construction upon contractor
selection. It is anticipated the cost of the completed facility will
approximate $5,000,000, of which approximately $1,000,000 has been
expended through September 30, 1999.
The Company projects near-term profitability as real estate
contract backlog continues to expand. In addition to
contracts scheduled to close in the remainder of 1999,
additional contracts are in place or negotiation for closing
in future years. Overall the local real estate market has not
been significantly impacted by higher interest rates and other
economic concerns, as interest in Company owned property
is strong.
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 effect on the Company's
business, results of operations, or financial position. The
Company's plan for conversion, of which the cost was not material,
has been completed.
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.
Items 2 through 5.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit (11) - Incorporated by Reference
on Page 7 of this 10-Q report
Exhibit (27) - Financial Data Schedule
(for SEC use only)
(b) Reports on Form 8-K
A form 8-K under Item 5 "Other Events" dated
July 23, 1999 was filed. It dealt with the
the Board of Directors approval of a stock
repurchase program.
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: November 9, 1999 By: /s/ Bob D. Allen
--------------------
Bob D. Allen,President and
Chief Executive Officer
Date: November 9, 1999 By: /s/ Bruce W. Teeters
--------------------
Bruce W. Teeters
Sr. 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 SEPTEMBER 30, 1999 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,878,429
<SECURITIES> 26,990,565
<RECEIVABLES> 12,597,108
<ALLOWANCES> 0
<INVENTORY> 11,611,839
<CURRENT-ASSETS> 0
<PP&E> 8,826,004
<DEPRECIATION> 929,715
<TOTAL-ASSETS> 64,655,991
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 6,376,484
<OTHER-SE> 39,570,677
<TOTAL-LIABILITY-AND-EQUITY> 64,655,991
<SALES> 15,759,724
<TOTAL-REVENUES> 16,938,208
<CGS> 6,339,971
<TOTAL-COSTS> 7,327,201
<OTHER-EXPENSES> 2,056,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 680,715
<INCOME-PRETAX> 6,873,592
<INCOME-TAX> 2,463,705
<INCOME-CONTINUING> 4,409,887
<DISCONTINUED> 9,069,127
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,479,014
<EPS-BASIC> 2.12
<EPS-DILUTED> 2.12
</TABLE>
