SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 or 15[d] OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 or 15 (d) OF THE
EXCHANGE ACT
For the transition period from to
Commission file number 1-6762
KILLEARN PROPERTIES, INC.
(Exact name of small business issuer as specified in its charter )
Florida 59-1095497
(State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation or organization)
100 Eagle's Landing Way
Stockbridge, GA 30281
(Address of principal executive offices)
Issuer's telephone number
(770)389-2020
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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]..
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the last practicable date: 1,438,733.
Transitional Small Business Disclosure Format: No [X].
<PAGE>
KILLEARN PROPERTIES, INC. AND SUBSIDIARIES
INDEX
Part I.
Consolidated Condensed Financial Statements (Unaudited):
Consolidated Condensed Balance Sheet as of July 31, 1995 3
Consolidated Condensed Statements of Operations for the 4
Three Months Ended July 31, 1995 and 1994
Consolidated Statements of Cash Flows for the Three Months 5
Ended July 31, 1995 and 1994
Notes to Consolidated Condensed Financial Statements 6 - 7
Management's Discussion and Analysis of Financial Condition 8 - 9
and Results of Operations
Part II
Other Information 10
Signatures 10
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<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KILLEARN PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
<CAPTION>
ASSETS 7/31/95
(Unaudited)*
<S> <C>
Cash $ 88,657
Cash in improvement trust funds 160,334
Accounts and notes receivable 7,918,426
Land contracts receivable 499,336
Less: Allowance for uncollectibles (279,027)
Investments in joint ventures 366,494
Residential real estate held for sale 694,604
Real estate held for development and sale 34,201,025
Property under contract for sale 549,006
Other property , plant and equipment 12,929,918
Less: Allowance for depreciation (3,098,683)
Utility deposits 2,000
Other assets 233,426
__________
$ 54,265,516
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable & other accrued expenses $ 3,724,725
Income taxes payable 367,622
Accrued interest 394,546
Customers' deposits 1,307,263
Debt 19,986,864
Deferred improvement revenue 655,724
Deferred income taxes 5,762,720
Deferred Profit 4,304,826
__________
TOTAL LIABILITIES $ 36,504,290
__________
STOCKHOLDERS' EQUITY
Common stock - par value $.10 a share
authorized 6,000,000 shares; issued
1,438,733 shares 143,873
Additional paid-in capital 6,846,014
Retained earnings 10,771,339
__________
17,761,226
__________
$ 54,265,516
==========
<FN>
*Subject to year-end audit adjustments
See notes to consolidated condensed financial statements
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</TABLE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KILLEARN PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended
Unaudited* Unaudited*
7/31/95 7/31/94
<S> <C> <C>
Revenues:
Net sales of land $ 878,440 $ 6,696,550
Interest income 177,026 313,032
Commission income 47,830 114,186
Revenues from operating golf
and country club 866,890 798,766
Income from joint venture 1,729 22,893
Other revenues 83,503 5,918
_________ __________
2,055,418 7,951,345
_________ __________
Expenses:
Cost of land sold 602,466 4,579,272
Commissions and selling
expenses 223,493 487,740
Operating costs of golf
and country clubs 779,460 799,172
Interest expense 81,519 303,317
Depreciation 182,491 170,971
Property taxes 81,910 63,576
General & Administrative Costs 433,925 425,130
Other Costs & Expenses 21,746 -0-
_________ __________
2,407,010 6,829,178
_________ __________
Income (loss) before income taxes (351,592) 1,122,167
Income tax provision (benefit) (133,590) 448,867
_________ __________
Net income (loss) $ (218,002) $ 673,300
=========== ==========
Net income (loss) per share $ (0.15) $ 0.47
=========== ==========
Dividends per share NONE NONE
<FN>
*Subject to year-end audit adjustments.
See notes to consolidated condensed financial statements
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</TABLE>
<TABLE>
KILLEARN PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
Unaudited* Unaudited*
07/31/95 07/31/94
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (218,002) $ $673,300
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 182,491 170,971
(Increase) decrease in accounts and notes receivable 117,329 (7,385,508)
Decrease in residential real estate held for sale 1,500 30,605
Increase in real estate held for development and sale (1,513,652) (1,526,184)
Net change in other assets 49,692 (32,696)
Increase in accounts payable 20,657 236,967
Increase(Decrease) in interest payable 172,933 (226,720)
Increase (Decrease)in customer's deposits 38,431 (136,021)
Increase (decrease) in deferred income (190,985) 4,645,735
(Decrease) increase in income taxes payable (133,590) 448,867
Net change in other liabilities 0 52
Income from joint venture (1,729) (22,893)
Decrease in residential construction in process and real
estate held for development and sale resulting from the
sale of such properties 1,013,806 1,787,453
Decrease in property under contract for sale 115,090 14,203,345
___________ __________
Net cash (used in) provided by operating activities: (346,029) 12,867,273
___________ __________
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - net (4,873) 29,216
Investment in joint venture 18,407 (19,562)
___________ ___________
Net cash provided by investing activities 13,534 9,654
___________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans 526,746 2,023,334
Principal payments on debt (612,871) (14,156,949)
____________ ____________
Net cash used in financing activities (86,125) (12,133,615)
___________ ____________
NET INCREASE (DECREASE) IN CASH (418,620) 743,312
CASH - Beginning of period 507,277 527,528
___________ ____________
CASH - End of period $ 88,657 $ 1,270,840
=========== ============
<FN>
Supplemental Information
Cash Paid: Interest of 349,669 and $749,342 for 1995 and 1994, respectively.
Income tax of $30,000 in 1994.
*Subject to year-end adjustments
See notes to consolidated condensed financial statements
</TABLE>
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
Notes to Consolidated Condensed Financial Statements
July 31, 1995
Note 1. Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the instructions for Form 10-QSB,
and, therefore, do not include all information and footnotes necessary
for a fair presentation of financial position, results of operations
and changes in financial position in conformity with generally accepted
accounting principles.
The information furnished reflects all adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim period covered, including appropriate estimated provision for bonus
and profit sharing arrangements normally determined or settled at year end.
NOTE 2. Accounting Change
During the first quarter of fiscal 1995, the Company adopted Statement
of Financial Accounting Standards No. 114, "Accounting for Creditors
for Impairment of a Loan" ("SFAS No. 114"), as required by such Statement.
Given the relatively low level of delinquencies and foreclosures experienced
by the Company, the adoption of SFAS No. 114 by the Company did not have a
material effect on its financial statements.
Note 3. Debt
Interest rates on mortgages and notes payable ranged from 7.5% to 12% at
7/31/95. The aggregate maturities of long-term debt are as follows:
For the Year Ended
July 31
1996 $13,564,030
1997 4,596,727
1998 704,642
1999 104,873
2000 170,205
Thereafter 846,387
___________
$19,986,864
===========
Substantially all of the Company's assets are mortgaged or pledged as
collateral for its indebtedness.
Further information with respect to debt follows:
Notes payable secured by contracts receivable and real estate
Credit lines - prime plus 1% to prime plus
2% payable to financial institutions,
secured by contracts receivable and
real estate $18,280,798
<PAGE>
<PAGE>
Note 3. Debt (cont'd)
7.5% to 12% payable to individuals and
financial institutions, secured by
contracts receivable and real estate 1,642,395
Other notes payable - 5.56% to 11.5%
due in various installments
through 2001 63,671
___________
$19,986,864
===========
Interest expense for the period ended July 31, 1995 reflects a reduction
of $470,483 for interest capitalized in accordance with FASB 34.
Note 4. Earnings Per Share
Primary and fully diluted earnings per share are calculated based on the
following number of weighted average shares of stock outstanding including
stock options as common stock equivalent. The number of shares outstanding
for all periods presented was 1,438,733.
Note 5 - Sale of Florida Assets
On November 14, 1993, the Company entered into two agreements to sell
substantially all of its Florida assets to an unrelated purchaser for
approximately $25.7 million. As of July 31, 1995, approximately $24.8
million of the sale has closed, with the purchaser assuming debt of the
Company of approximately $9.2 million, paying approximately $7.5 million
in cash and issuing notes to the Company, secured by second mortgage on most
of the assets purchased totalling approximately $8.1 million. The notes are
payable over the next 4 years and most of the notes bear interest at 10% per
annum. The remaining $900,000 of the sale is scheduled to be closed during
the remainder of fiscal 1996, for cash. Of the $9.2 million of debt assumed,
at July 31, 1995 there remains approximately $6.1 million due. At July 31,
1995 there remains approximately $4.3 million of gross profit to be recognized
over the next 4 years as the cash is collected.
<PAGE>
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial
Conditions and Results of Operations
Results of Operations
Net sales of land decreased approximately 86.9% ($5.8 million) during the
current three months compared to the same three months a year ago. The
decrease in net sales of land from the Company's Florida operations was $3.6
million, while sales from the Company's Georgia operations decreased by $2.2
million. The decrease in sales from the Georgia operations was primarily the
result of significantly higher fiscal 1995 first quarter sales following the
Company's opening of a new residential unit of lots a year ago, while
the decrease in sales from Florida operations was the result of the sale by
the Company of substantially all of the Florida assets on November 14, 1993.
(See note 5 to The Consolidated Condensed Financial Statements.)
Interest income, interest expense and commission expense decreased 43%,
73% and 54% respectively, during the current three months compared to the
same period a year ago. These decreases in interest income, interest
expense and commission expense resulted from the sale of substantially
all of the Florida assets a year ago. (See note 5 to The Consolidated
Condensed Financial Statements.)
Country Club revenues increased 22% in the current quarter compared to the
same quarter a year ago primarily due to the flooding of the Club property in
July 1994. As a result of the flood, operations were closed for approximately
two weeks. In addition, Club revenues continue to increase as the number of
members increase. During August 1995 the Company entered into an agreement
to sell its Atlanta golf and country club to an independent third party.
The Company will retain ownership of the land and other related assets
surrounding the golf course. There are no assurances the sale will close.
If the sale does close, future revenues and costs of operating the country
club will be eliminated, and certain debt encumbering the sold property will
be retired with proceeds.
The operating statement for the current three months is not necessarily
indicative of the results expected for the year.
<PAGE>
<PAGE>
Financial Condition and Liquidity
At July 31, 1995 the Company had available lines of credit totalling
approximately $186,000 with its lenders. Such lines of credit may be
drawn as needed for the development of the Company's property and other
working capital for Corporate needs. The Company continues to look for other
sources of lines of credit and financing alternatives.
On July 19, 1994 the Company modified its loan agreement with a bank,
involving its Georgia operations. The modified agreement effectively divided
the prior $13.5 million loan into three loans totalling $13.5 million. One of
the loans, for $1.5 million is a revolving loan. The modified credit
agreement provides for interest to be paid at the bank's prime rate plus 2%.
The loans are collateralized by first mortgages on substantially all the
undeveloped land in the Company's Georgia project, a golf course and country
club and certain contracts receivable. Upon the sale of collateralized
property, all of the net proceeds are applied against the loan balances owed
to the bank. 70% is applied to the revolving loan,with remaining proceeds
applied to the amounts outstanding under the other loans. The amount of such
reduction to the revolving loan is then available as a loan to the Company.
When secured properties are developed by the Company, the Company can obtain
a release of such property by paying a lesser amount. The Company has been
able to secure development loans from other lenders in an amount sufficient
to pay the release price and all development costs. The $1.5 million
revolving credit loan expires on September 10, 1995, when the remaining
balance becomes due on demand. The failure of this lender to extend the
Company's loans, or the failure of the Company to obtain replacement
financing, could have a material adverse affect on the Company's financial
condition. Management knows of no reason the debt will not be extended,
as it has been in the past.
On July 20, 1994, the Company modified its loan agreement with a bank,
involving its Florida operations. The balance due the bank at July 31,
1995 was approximately $6.1 million of which approximately $902,000 is
due in fiscal 1996. Thereafter, $2 million per year is due until maturity
on June 30, 1997. The purchaser of the Florida assets assumed this loan.
(See note 5 to The Consolidated Condensed Financial Statements.)
In addition, the Company has other debt maturing in the amount of
approximately $3.5 million in fiscal 1996 and $1.9 million the following
fiscal year. These obligations are primarily payable through lot releases.
The Company anticipates that these obligations will be paid through normal
operations, an extension of debt or new borrowings.
The Company continues to seek lines of credit to satisfy new borrowings needed
by the Company.
There were no other material changes in the Company's financial condition from
April 30, 1995 to July 31, 1995.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
None
SIGNATURES
Pursuant to the requirement 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.
KILLEARN PROPERTIES, INC.
(Registrant)
Date:_____________________________ _________________________________
J. T. Williams, Jr.
President
Date:_____________________________ ______________________________
David K. Williams
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> JUL-31-1995
<CASH> 248,991
<SECURITIES> 0
<RECEIVABLES> 8,417,762
<ALLOWANCES> 279,027
<INVENTORY> 35,444,635
<CURRENT-ASSETS> 44,067,787
<PP&E> 12,929,918
<DEPRECIATION> 3,098,683
<TOTAL-ASSETS> 54,265,516
<CURRENT-LIABILITIES> 1,136,893
<BONDS> 27,056,847
<COMMON> 143,873
0
0
<OTHER-SE> 17,617,353
<TOTAL-LIABILITY-AND-EQUITY> 54,265,516
<SALES> 1,793,160
<TOTAL-REVENUES> 2,055,418
<CGS> 1,605,419
<TOTAL-COSTS> 668,001
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81,910
<INCOME-PRETAX> (351,592)
<INCOME-TAX> (133,590)
<INCOME-CONTINUING> (218,002)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (218,002)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
