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 October 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>
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KILLEARN PROPERTIES, INC. AND SUBSIDIARIES
INDEX
Part I.
Consolidated Condensed Financial Statements (Unaudited):
Consolidated Condensed Balance Sheet as of October 31, 1995 3
Consolidated Condensed Statements of Operations for the 4
Three Months and Six Months Ended October 31, 1995 and 1994
Consolidated Statements of Cash Flows for the Six Months 5
Ended October 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 10/31/95
(Unaudited)*
<S> <C>
Cash $ 106,040
Cash in improvement trust funds 161,668
Accounts and notes receivable 8,162,939
Land contracts receivable 466,538
Less: Allowance for uncollectibles (229,550)
Investments in joint ventures 291,936
Residential real estate held for sale 158,081
Real estate held for development and sale 34,456,620
Property under contract for sale 457,932
Other property, plant and equipment 12,938,598
Less: Allowance for depreciation (3,270,316)
Utility deposits 22,076
Other assets 189,389
__________
$ 53,911,951
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable & other accrued expenses $ 3,481,472
Income taxes payable 1,224,296
Accrued interest 236,692
Customers' deposits 1,336,414
Debt 19,631,684
Deferred improvement revenue 926,559
Deferred income taxes 5,612,425
Deferred profit 2,533,809
__________
TOTAL LIABILITIES $ 34,983,351
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 11,938,713
__________
TOTAL STOCKHOLDERS' EQUITY 18,928,600
__________
$ 53,911,951
==========
*Subject to year-end audit adjustments
See notes to Consolidated Condensed Financial Statements
</TABLE>
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<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KILLEARN PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
Unaudited* Unaudited* Unaudited* Unaudited*
10/31/95 10/31/94 10/31/95 10/31/94
<S> <C> <C> <C> <C>
Revenues:
Net sales of land $ 8,297,860 1,902,913 9,176,300 8,599,462
Sales of residential
construction 45,500 0 45,500 0
Interest income 273,310 42,097 450,336 355,129
Commission income 74,592 162,011 122,423 276,197
Revenues from operating golf
and country club 769,396 723,392 1,636,286 1,522,157
Other revenues 443,654 54,942 528,885 83,754
__________ _________ __________ __________
Total 9,904,312 2,885,355 11,959,730 10,836,699
Expenses:
Cost of land sold 6,389,553 1,001,164 6,992,019 5,580,436
Cost of residential
construction 41,713 0 42,063 0
Commissions and selling
expenses 241,517 301,480 465,009 789,220
Operating costs of golf
and country clubs 724,884 736,191 1,504,344 1,535,363
Interest expense 73,230 73,882 154,749 377,199
Depreciation 183,102 169,517 365,593 340,487
Property taxes 53,221 78,685 135,131 142,262
General & Administrative Costs 323,339 382,558 778,661 807,687
_________ _________ __________ __________
Total Expenses 8,030,559 2,743,477 10,437,569 9,572,654
Net income before income taxes 1,873,753 141,878 1,522,161 1,264,045
Income tax provision 706,380 56,751 572,789 505,618
_________ _________ __________ _________
Net income $1,167,373 85,127 949,372 758,427
========== ========== ========== =========
Net income per share $ 0.81 0.06 0.66 0.53
========== ========== ========= ========
Dividends per share NONE NONE NONE NONE
<FN>
*Subject to year-end audit adjustments.
See notes to Consolidated Condensed Financial Statements
</TABLE>
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<TABLE>
KILLEARN PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended
Unaudited* Unaudited*
10/31/95 10/31/94
_________ _________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 949,372 $ 758,427
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 365,593 340,488
Increase in accounts and notes receivable (127,184) (7,100,271)
Decrease in residential construction in process 538,023 5,221
Increase in real estate held for development
and sale (2,401,029) (5,158,460)
(Increase) decrease in other assets 60,848 (171,812)
Increase (decrease) in accounts payable (222,596) 438,632
Increase (decrease) in interest payable 15,079 (181,711)
Increase (decrease) in deferred income (1,771,018) 5,044,391
Increase in income taxes payable 572,789 347,694
Increase (decrease) in other liabilities 147,432 (102,534)
Income from joint venture (530,370) (33,956)
Decrease in residential construction in process
and real estate held for development and sale
resulting from the sale of such properties 1,628,911 3,899,818
Decrease in property under contract for sale 206,165 14,318,938
___________ __________
Net cash (used in) provided by operating activities: (567,985) 12,404,865
___________ __________
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - net (13,553) 50,698
Provided by (investment in) joint ventures 621,605 (524,197)
___________ ___________
Net cash provided by (used in) investing
activities 608,052 (473,449)
___________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans 2,095,528 4,242,187
Principal payments on debt (2,536,832) (15,962,147)
____________ ___________
Net cash used in financing activities (441,304) (11,719,960)
___________ ___________
NET INCREASE (DECREASE) IN CASH (401,237) 211,406
CASH - Beginning of period 507,277 527,527
___________ ___________
CASH - End of period $ 106,040 $ 738,933
=========== ===========
Supplemental Information
Cash Paid: Interest paid was $1,039,627 and $1,191,453 for 1995 and 1994, respectively.
Income taxes paid were $30,000 in 1994.
*Subject to year-end adjustments
See notes to Consolidated Condensed Financial Statements
</TABLE>
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PART I. FINANCIAL INFORMATION
Notes to Consolidated Condensed Financial Statements
October 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 9.00% to 11.5% at
10/31/95. The aggregate maturities of long-term debt are as follows:
For the Year Ended
October 31
1996 $12,691,623
1997 5,814,899
1998 361,987
1999 85,190
2000 85,703
Thereafter 592,282
___________
$19,631,684
===========
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 $18,475,738
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<PAGE>
NOTE 3. Debt (cont'd)
9.00% to 11.5% payable to individuals and
financial institutions, secured by
contracts receivable and real estate $ 1,085,051
Other notes payable - 9.57% to 11.5%
due in various installments
through 1997 70,895
___________
$19,631,684
===========
Interest expense for the three and six months ended October 31, 1995
reflects a reduction of $458,935 and $924,418, respectively, 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 October 31, 1995, approximately $25.0
million of the sale has closed, with the purchaser assuming debt of the
Company of approximately $9.2 million, paying approximately $7.7 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 3 years and most of the notes bear interest at 10% per
annum. The remaining $700,000 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 October 31, 1995 there remains approximately $2.6 million due. At October
31, 1995 there remains approximately $2.5 million of gross profit to be
recognized over the next 3 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 increased approximately $6,400,000 (336%) during the
current three month period and $577,000 (6.7%) during the current six month
period compared to the same periods a year ago. The primary reason for the in-
crease for the three months was a result of the recognition of income related
to the sale of substantially all of the Florida assets on November 14, 1993.
(See note 5 to The Consolidated Condensed Financial Statements.) In addition,
the Company had an increase in other revenues from joint ventures of $530,370
as a result of the sale of a joint venture.
Cost of land sold, as a percentage of net sales of land, increased to 77.0%
for the current three month period compared to 52.6% for the same period a
year ago. The cost of land sold for the current six month period increased
to 76.2% compared to 64.9% for the same period a year ago. The increase in
cost of land sold for the current three month period resulted primarily from
the discounted sales price for the volume which was sold in connection with the
Florida operations. In addition, in both the three months and six months ended
October 31, 1995, more lot sales were in Georgia than in Florida. In Georgia,
utility costs to the Company are higher than such costs in Florida.
Interest income increased approximately $231,000 during the current three
month period compared to the same period a year ago and increased approximately
$95,000 for the current six month period compared to the same period a year
ago. The increases relate primarily to the interest on notes receivable from
the sale of substantially all the Florida assets. The Company is reporting
interest on such sale as money is received. The interest from the sale is due
every six months and therefore, the interest income from the sale varies on a
quarter by quarter basis.
Commission income decreased $87,000 in the current quarter and $154,000 for
the current six month period due to a change in marketing the homes in some
of the Company's Georgia developments by using independent brokers.
Commissions and sales expenses decreased $60,000 in the current quarter,
and $324,000 for the current six month period due partially to the change in
marketing and due to the sale of substantially all the Florida assets a
year ago. (See Note 5 to the Consolidated Condensed Financial Statements.)
During August 1995, the Company entered into an agreement to sell its
Atlanta golf and country club to an independent third party under which the
Company would retain ownership of the land and other related assets
surrounding the golf course. That contract was terminated in November 1995
when the Company refused to extend the time to close. The Company continues
to discuss such sale with that party and certain others. If a 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.
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Financial Condition and Liquidity
On November 3, 1995 the Company had available lines of credit of $670,000 which
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 November 13, 1995, the Company executed a letter of intent to modify its
loan agreements with a bank, involving its Georgia operations. The modified
agreement effectively combined a $1.5 million revolving loan with a loan with
a balance of $6.4 million. The agreement provides for interest to be paid at
the bank's prime rate plus 1 1/2%, and would extend the due date for a period
of one year from the date of Closing. The loans are collateralized by first
mortgages on substantially all the undeveloped land in the Company's Georgia
project, and certain contracts receivable. Upon the sale of collateralized
property, approximately 30% of the net proceeds are applied against the loan
balances owed to the bank. 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 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. Manage-
ment 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 October 31,
1995 was approximately $2.6 million which is due on June 30, 1997. The pur-
chaser of the Florida assets assumed this loan. (See note 5 to The Consoli-
dated Condensed Financial Statements.)
In addition, the Company has other debt maturing in the amount of approxi-
mately $1.8 million in fiscal 1996 and $2.9 million the following fiscal
year. The Company anticipates that these obligations will be paid with the
proceeds of land sales from normal operations, 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 October 31, 1995.
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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> 6-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> OCT-31-1995
<CASH> 267,708
<SECURITIES> 0
<RECEIVABLES> 8,629,477
<ALLOWANCES> 222,550
<INVENTORY> 35,072,633
<CURRENT-ASSETS> 43,951,733
<PP&E> 12,938,598
<DEPRECIATION> 3,270,316
<TOTAL-ASSETS> 53,911,951
<CURRENT-LIABILITIES> 4,942,460
<BONDS> 26,580,523
<COMMON> 143,873
0
0
<OTHER-SE> 18,784,727
<TOTAL-LIABILITY-AND-EQUITY> 53,911,951
<SALES> 11,509,394
<TOTAL-REVENUES> 11,959,730
<CGS> 9,003,435
<TOTAL-COSTS> 1,434,134
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 154,749
<INCOME-PRETAX> 1,522,161
<INCOME-TAX> 572,789
<INCOME-CONTINUING> 949,372
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 949,372
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
</TABLE>
