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, 2000
___ 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 October 23, 2000
_____________________ _________________
$1.00 par value 5,678,684
1
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CONSOLIDATED-TOMOKA LAND CO.
INDEX
Page No.
________
PART I - - FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
September 30, 2000 and December 31, 1999 3
Consolidated Condensed Statements of Income -
Three Months and Nine Months Ended
September 30, 2000 and 1999 4
Consolidated Condensed Statements of Shareholders'
Equity - Nine Months Ended September 30, 2000 5
Consolidated Condensed Statements of Cash Flow -
Nine Months Ended September 30, 2000 and 1999 6
Notes to Consolidated Condensed Financial Statements 7-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-12
PART II -- OTHER INFORMATION 13
SIGNATURES 14
2
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PART I -- FINANCIAL INFORMATION
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Cash $ 2,202,285 $16,458,208
Investment Securities 19,773,358 16,689,438
Notes Receivable 6,966,210 7,365,754
Real Estate Held For Development and Sale 11,404,847 11,624,833
Deferred Income Taxes 2,739,853 1,239,853
Refundable Income Taxes 836,975 --
Other Assets 1,643,547 1,634,499
Net - Property, Plant and Equipment 10,641,249 8,407,805
---------- ----------
TOTAL ASSETS $56,208,324 $63,420,390
========== ==========
LIABILITIES
Accounts Payable $ 290,608 $ 251,241
Accrued Liabilities 5,346,465 4,232,820
Income Taxes Payable -- 631,528
Notes Payable 9,953,483 10,270,837
---------- ----------
TOTAL LIABILITIES 15,590,556 15,386,426
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock 5,678,684 6,359,284
Additional Paid-in Capital -- 3,588,751
Retained Earnings 34,939,084 38,085,929
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 40,617,768 48,033,964
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $56,208,324 $63,420,390
========== ==========
</TABLE>
3
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CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
-------------------------- --------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCOME:
Real Estate Operations:
Sales and Other Income $ 2,882,689 $ 6,381,248 $ 5,685,087 $13,660,410
Costs and Other Expenses ( 1,425,888) ( 4,517,593) ( 4,221,624) (7,327,201)
---------- ---------- ---------- ----------
1,456,801 1,863,655 1,463,463 6,333,209
---------- ---------- ---------- ----------
Profit On Sales of Undeveloped
Real Estate Interests 14,750 67,476 100,176 2,099,314
---------- ---------- ---------- ----------
Interest and Other Income 423,419 574,373 1,271,188 1,178,484
---------- ---------- ---------- ----------
1,894,970 2,505,504 2,834,827 9,611,007
General and Administrative Expenses ( 876,533) ( 868,726) ( 2,799,969)( 2,737,415)
---------- ---------- ---------- ----------
Income from Continuing
Operations Before Income Taxes 1,018,437 1,636,778 34,858 6,873,592
Income Taxes 1,124,811 ( 491,463) 1,488,503 ( 2,463,705)
---------- ---------- ---------- ----------
Income from Continuing Operations 2,143,248 1,145,315 1,523,361 4,409,887
Income (Loss) from Discontinued
Citrus Operations, Net of Tax -- ( 41,130) -- 9,069,127
---------- ---------- ---------- ----------
Net Income 2,143,248 1,104,185 1,523,361 13,479,014
========== ========== ========== ==========
Per Share Information:
Basic and Diluted
Income From Continuing Operations $0.37 $0.19 $0.26 $0.70
Income (Loss) From Discontinued
Citrus Operations -- $(0.01) -- $1.42
--------- --------- --------- ---------
Net Income $0.37 $ 0.18 $0.26 $2.12
========== ========== ========== ==========
Dividends Per Share $0.05 -- $0.15 $0.35
========== ========== ========== ==========
</TABLE>
4
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CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained
Stock Capital Earnings Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance, December 31, 1999 $ 6,359,284 $ 3,588,751 $38,085,929 $48,033,964
Net Profit -- -- 1,523,361 1,523,361
Cash Dividends
($0.15 per share) -- -- ( 903,916) ( 903,916)
Repurchase of 680,600 Shares ( 680,600) ( 3,588,751) ( 3,766,290) (8,035,641)
---------- ---------- ---------- ----------
Balance, September 30, 2000 $ 5,678,684 $ -- $34,939,084 $40,617,768
========== ========== ========== ==========
</TABLE>
5
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CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Nine Months Ended
----------------------------
September 30, September 30,
2000 1999
------------- -------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 1,523,361 $13,479,014
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used In) Operating Activities:
Discontinued Citrus Operations -- (9,069,127)
Depreciation and Amortization 199,155 178,944
(Gain) Loss on Sale of Property, Plant and Equipment 4,618 ( 9,947)
Decrease (Increase) in Assets:
Notes Receivable 399,544 (3,481,240)
Real Estate Held for Development 219,986 1,986,128
Deferred Income Taxes (1,500,000) --
Refundable Income Taxes ( 836,975) --
Other Assets ( 9,048) ( 201,006)
Increase (Decrease) in Liabilities:
Accounts Payable 39,367 ( 249,757)
Accrued Liabilities 1,113,645 1,447,597
Income Taxes Payable ( 631,528) 2,773,224
---------- ---------
Net Cash Provided By
Operating Activities 522,125 6,853,830
---------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of Property, Plant and Equipment ( 2,437,217) ( 731,539)
Net Increase in Investment Securities ( 3,083,920) (25,799,175)
Proceeds from Sale of Property, Plant
and Equipment -- 20,883
Cash from Discontinued Citrus Operations -- 23,861,580
---------- ---------
Net Cash Used In Investing Activities ( 5,521,137) (2,648,251)
---------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Notes Payable -- 2,469,000
Payments on Notes Payable ( 317,354) (2,849,208)
Funds Used to Repurchase Common Stock (8,035,641) --
Dividends Paid ( 903,916) (2,230,142)
--------- ----------
Net Cash Used In Financing Activities (9,256,911) (2,610,350)
--------- ----------
Net (Decrease) Increase in Cash
And Cash Equivalents ( 14,255,923) 1,595,229
Cash and Cash Equivalents at Beginning of Year 16,458,208 283,200
---------- ----------
Cash and Cash Equivalents at End of Year $ 2,202,285 $ 1,878,429
========== ==========
</TABLE>
6
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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, 1999.
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. The results of the
citrus operations have been reported separately as discontinued
operations in the Consolidated Statements of Income. There were
no remaining assets or liabilities of the operations as of
September 30, 2000 and December 31, 1999. Summary
financial information of the citrus operations is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- -------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues from Discontinued Citrus
Operations $ -- $ -- -- $5,393,171
========= ========== ========== ==========
Income from Discontinued
Citrus Operations Before Tax -- -- -- 2,206,440
Income Tax Expense from Discontinued
Citrus Operations -- -- -- ( 830,283)
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) $ -- $9,069,127
========== ========= ========= ==========
</TABLE>
7
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3. Income Taxes. The Company accounts for income taxes under
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". Deferred income taxes have been provided to
reflect temporary differences that represent the cumulative
differences between taxable or deductible amounts recorded in
the financial statements and in the tax returns. During the
third quarter of 2000, several income tax issues under
examination with tax authorities were resolved. The resolution
of these issues resulted in a $1,500,000 reduction of the
valuation allowance associated with deferred income taxes.
4. Common Stock and Earnings Per Common Share. Pursuant to the
stock repurchase program, approved by the Board of Directors
at their July 21, 1999 meeting, the Company repurchased
680,600 shares of its common stock at a cost of $8,035,641
during the nine months ended September 30, 2000. 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.
<TABLE>
<CAPTIONS>
Three Months Ended Nine Months Ended
------------------------ --------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Income Available to
Common Shareholders:
Income from Continuing
Operations 2,143,248 1,145,315 1,523,361 4,409,887
Income (Loss) from
Discontinued Citrus Operations
Net of Tax -- ( 41,130) -- 9,069,127
--------- --------- --------- ---------
Net Income 2,143,248 1,104,185 1,523,361 13,479,014
========= ========= ========== ==========
Weighted Average Shares
Outstanding 5,737,785 6,372,600 5,953,979 6,374,108
Common Shares Applicable
to Stock Options Using
the Treasury Stock Method -- 8,579 -- 7,098
--------- --------- --------- --------
Total Shares Applicable to
Diluted Earnings Per Share 5,737,785 6,381,179 5,953,979 6,381,206
========= ========= ========= =========
Basic and Diluted Earnings
Per Share:
Income from Continuing
Operations $0.37 $0.19 $0.26 $0.70
Income (Loss) from Discontinued
Citrus Operations -- ($0.01) -- $1.42
-------- ------- -------- --------
Net Income $0.37 $0.18 $0.26 $2.12
======== ======= ======== ========
</TABLE>
8
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5. Notes Payable. Notes payable consist of the following:
<TABLE>
<CAPTION>
September 30, 2000
-----------------------------
Due Within
Total One Year
---------- -----------
<S> <C> <C>
$ 7,000,000 Line of Credit $ -- $ --
Mortgages Notes Payable 9,582,052 340,546
Industrial Revenue Bond 371,431 95,247
---------- ----------
$ 9,953,483 $ 435,793
========== ==========
</TABLE>
Payments applicable to reduction of principal amounts
will be required as follows:
<TABLE>
<CAPTION>
Year Ending September 30,
<S> <C>
2001 $ 435,793
2002 8,153,610
2003 121,410
2004 42,670
2005 1,200,000
Thereafter --
----------
$ 9,953,483
==========
</TABLE>
In the first nine months of 2000, interest totaled
$652,413 of which $49,383 was capitalized to
property, plant and equipment. Total interest for
the nine months ended September 30, 1999 totaled
$680,715, of which $30,508 was capitalized.
9
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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 for the third quarter of 2000
totaled $1,456,801, representing a 22% decrease from the $1,863,655
profit posted during 1999's same period. This decline in earnings can
be attributed to lower commercial sales volume, coupled with increased
losses from golf operations. During 2000's third period, gross
profits approximating $1,980,000 were produced on the sale of 78 acres
of land. This compares to the sale of 205 acres of land, which
generated gross profits totaling $2,080,000, during 1999's third
quarter. Losses from golf operations during the normally slow third
period of the year rose 137% to $330,000, despite a 22% rise in
revenues generated on a 28% increase in the number of rounds played.
The revenue gain was more than offset by a 47% rise in expenses.
Higher costs associated with course maintenance and equipment leasing,
along with additional costs related to the new cart barn, which was
put into service the end of 1999, account for the expense increase.
For the first nine months of 2000 lower commercial real estate closing
activity was the primary factor for the 77% downturn in profits from
real estate operations. Profits posted for the first nine months of
2000 totaled $1,463,463 compared to profits of $6,333,209 one year
earlier. Gross profits of $2,100,000 were generated during the
current nine month period on the sale of 90 acres of commercial
property. During the first nine months of 1999, 351 acres of land
were sold which produced gross profits approximating $6,850,000. Also
contributing to the downturn in earnings from real estate was a 231%
fall in earnings from golf activities, with a loss of $428,987
recorded for the nine months. This falloff from golf, despite a 15%
revenue gain, occurred on increased costs related to course
maintenance and equipment leasing, resulting in a 28% rise in
expenses. Income from forestry operations rose 106% to $150,000 on a
55% increase in revenues on accelerated harvesting and higher pricing.
General, Corporate and Other
The release of subsurface entry rights on one residential lot during
the third quarter of 2000 and 2,551 acres for the nine months account
for profits on the sale of undeveloped real estate interests of
$14,750 and $100,176 posted for the periods, respectively. Sales of
undeveloped real estate interests during 1999's third period provided
income of $67,476 on the release of 2,684 acres of subsurface
interests. The sale of 100 acres of land combined with subsurface
10
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interest releases on 3,279 acres for the nine months of 1999 produced
profits on sales of undeveloped real estate interests totaling
$2,099,314.
Lower investable funds during the third quarter of 2000 resulted in a
26% decline from interest and other income. Interest and other income
earned for the three months amounted to $423,419. This compares to
$574,373 realized in the prior year. For the nine months interest and
other income amounted to $1,271,188, representing an 8% increase over
1999's interest and other income totaling $1,178,484. The gain for
the nine month period was achieved on higher interest earned on
increased funds generated from the April 1999 sale of the citrus
operations.
General and administrative expenses, totaling $876,533 in the third
quarter were in line with $868,726 expended in prior year's same
period. For the nine months year-to-date, higher stockholders'
expense, due to the increase number of shareholders resulting from the
September 1999 distribution of the Company's stock by Baker, Fentress
& Co., along with increased salaries and benefits, and professional
fees resulted in a 2% rise in general and administrative expenses to
$2,799,969.
The resolution, in the third quarter, of several income tax issues
under examination with tax authorities resulted in the reduction of
deferred income taxes by $1,500,000 for the quarter and nine month
periods of 2000.
Discontinued Citrus Operations
During the second quarter of 1999 the Company consummated the sale of
its citrus operations. After tax profits from operating activities of
$1,376,157 were recognized during first nine months of 1999, with the
sale of the operations generating an after tax profit of $7,692,970.
FINANCIAL POSITION
For the first nine months of 2000 net income totaled $1,523,361,
equivalent to $.26 per share. These earnings represent a 65% downturn
from prior year's same period income from continuing operations of
$4,409,887, equivalent to $.70 per share. Discontinued citrus
operations provided additional income during 1999 bringing net income
to $13,479,014 for the nine month period, equivalent to $2.12 per
share. The prime factor in the downswing in continuing operations was
lower commercial sales closing volume.
Cash and investment securities decreased $11,172,003 for the first
nine months of 2000. Funds totaling $8,035,641 were used to
repurchase 680,600 shares of the Company's common stock during the
period. Additionally, $2,437,217 was expended on the acquisition of
property, plant and equipment and $903,916 was paid out in dividends,
equivalent to $.15 per share. Acquisition of property, plant and
equipment was centered primarily on the construction of the clubhouse
facilities at the LPGA International golf courses. Cash requirements
for the remainder of the year will include approximately $1,000,000
11
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for the completion of the clubhouse facilities, with additional funds
to be expended on the continuation of the stock repurchase program.
There are sufficient cash and short-term investments available to fund
these expenditures.
The construction of the clubhouse and development of five new
residential communities by Renar Development Company ("Renar")
represent positive steps at the LPGA mixed-use development. The
clubhouse is projected to be substantially complete by year end, with
the development of the residential communities anticipated to be
complete shortly thereafter. With this activity, homesite sales
should be relatively strong. The Ladies Professional Golf Association
("LPGA") announced the nationally televised Arch Championship will be
held at LPGA International the third week of November. The Florida
section of the United States Tennis Association ("USTA") approved
moving its headquarters to Daytona Beach. The 12 acre headquarters
site, which will be donated by the Company, is located adjacent to the
entrance of the LPGA International development. The complex will
include 24 lighted tennis courts, a grandstand, pro shop and clubhouse
and an office complex. The USTA is obligated to sponsor a minimum of
10 tournaments each year for 10 years. It is anticipated all these
activities will give the development additional momentum.
Although real estate closing activity has been relatively slow year-
to-date, a significant contract backlog for closing in 2000 is in
place. It is management's top priority to resolve all contingencies
on these contracts and to convert this contract backlog to closings.
Management continues to work towards its objective of diversifying its
development activities and building a portfolio of income properties
in order to become a company with a more predictable earnings pattern
from geographically dispersed Florida real estate holdings. To this
end, as current qualified land holdings are sold the Company has
implemented a strategy to enter into tax deferred like-kind exchange
transactions in building its portfolio.
12
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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
13
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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: October 30, 2000 By: /s/ Bob D. Allen
--------------------
Bob D. Allen, Chairman and
Chief Executive Officer
Date: October 30, 2000 By: /s/ Bruce W. Teeters
--------------------
Bruce W. Teeters
Sr. Vice President -
Finance and Treasurer
14
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