<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 10-Q
(Mark One)
[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
OR
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 1-8625
CITADEL HOLDING CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-3885184
(State or other jurisdiction of incorporation or (IRS Employer Identification No.)
organization)
550 South Hope Street 90071
Suite 1825 Los Angeles CA (Zip Code)
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: (213) 239-0540
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 twelve 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.
X
Yes_____ No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of November 12, 1999, there
were 6,669,924 shares of Common Stock, $0.01 par value per share outstanding.
<PAGE>
CITADEL HOLDING CORPORATION AND SUBSIDIARIES
INDEX
-----
<TABLE>
<CAPTION>
Page
----
PART 1. Financial Information
- ------
Item 1. Financial Statements
<S> <C>
Consolidated Balance Sheets as of September 30, 1999 (Unaudited)
and December 31, 1998.............................................. 3
Consolidated Statements of Operations for the Three and Nine Months
Ended September 30, 1999 and 1998 (Unaudited)...................... 4
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1999 and 1998 (Unaudited)............................ 5
Notes to Consolidated Financial Statements......................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 17
PART 2. Other Information
- ------
Item 1. Legal Proceedings.................................................. 22
Item 2. Changes in Securities.............................................. 22
Item 3. Defaults Upon Senior Securities.................................... 22
Item 4. Submission of Matters to a Vote of Security Holders................ 22
Item 5. Other Information.................................................. 22
Item 6. Exhibits and Reports on Form 8-K................................... 22
Signatures ................................................................... 23
</TABLE>
<PAGE>
Citadel Holding Corporation and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
ASSETS 1999 1998
-------------------------------------------
(In thousands of dollars)
<S> <C> <C>
Assets
Cash and cash equivalents $ 13,916 $ 4,367
Property held for sale -- 5,908
Rental Property, less accumulated depreciation 7,786 7,969
Investment in shareholder affiliate 7,000 7,000
Equity investment in and advances to Agricultural Partnerships 2,539 1,561
Investment in Gish Biomedical, Inc. 1,340 1,002
Capitalized leasing costs, net 978 1,592
Other receivables 105 577
Other assets 728 671
Deferred tax asset, net 431 4,398
-------- --------
Total assets $ 34,823 $ 35,045
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Security deposits payable $ 26 $ 98
Accounts payable and accrued liabilities 1,489 1,362
Deferred rental revenue 76 576
Lease contract payable 199 --
Mortgage notes payable -- 9,224
Minority interest in consolidated affiliate 46 44
-------- --------
Total liabilities 1,836 11,304
Commitments and contingencies
Stockholders' Equity
Serial preferred stock, par value $.01, 5,000,000 shares
authorized, 3% Cumulative Voting Convertible, none outstanding -- --
Serial preferred stock, par value $.01, 5,000,000 shares
authorized, Series B 3% Cumulative Voting Convertible, none
outstanding -- --
Common Stock, par value $.01, 20,000,000 shares authorized,
6,669,924 issued and outstanding 67 67
Additional paid-in capital 59,603 59,603
Accumulated (deficit) (24,702) (33,931)
Unrealized gain on available-for-sale securities 17 --
Note receivable from stockholder upon common stock issuance (1,998) (1,998)
-------- --------
Total stockholders' equity 32,987 23,741
-------- --------
Total liabilities and stockholders' equity $ 34,823 $ 35,045
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
------------------------------------------------------------------------
(In thousands of dollars,
except per share amounts)
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 551 $1,369 $ 3,152 $4,083
Farming management fee -- 4 10 105
Consulting fees from shareholder 49 100 204 300
----- ------ ------- ------
600 1,473 3,366 4,488
----- ------ ------- ------
Expenses:
Real estate operating expenses 178 579 1,096 1,679
Depreciation and amortization 66 130 272 307
Interest expense -- 244 556 739
General and administrative expenses 265 201 1,016 1,055
----- ------ ------- ------
Total expenses 509 1,154 2,940 3,780
----- ------ ------- ------
Dividends from investment in Reading 113 113 341 341
Interest income 196 59 326 166
Interest income from shareholder 41 42 119 129
Loss from investment in and advances to
Agricultural Partnerships (109) (164) (175) (271)
Gain on sale of property -- -- 13,337 --
----- ------ ------- ------
Earnings before minority interest and taxes 332 369 14,374 1,073
Minority interest 1 (4) (2) (15)
----- ------ ------- ------
Earnings before income taxes 333 365 14,372 1,058
Income tax (expense) benefit 422 (120) (5,143) (250)
----- ------ ------- ------
Net earnings $ 755 $ 245 $ 9,229 $ 808
===== ====== ======= ======
Basic earnings per share $0.11 $ 0.04 $ 1.38 $ 0.12
----- ------ ------- ------
Diluted earnings per share $0.11 $ 0.04 $ 1.38 $ 0.12
----- ------ ------- ------
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
----------------------------------------
(In thousands of dollars)
<C> <C>
<S>
Operating Activities
Net earnings $ 9,229 $ 808
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation 235 307
Gain on sale of property (13,337) --
Equity loss from Agricultural Partnerships 222 325
Amortization of deferred leasing costs 153 193
Amortization of deferred loan costs 59 26
Minority interest 2 15
Deferred income tax asset 3,967 --
Changes in operating assets and liabilities:
Decrease (increase) in other receivables 462 (158)
Decrease (increase) in other assets (31) (314)
Increase (decrease) in security deposits (72) 3
Increase (decrease) in liabilities and deferred rent (363) 443
-------- ------
Net cash provided by operating activities 526 1,648
Investing activities
Purchase of Gish securities (309) --
Proceeds from sale of property 19,683 --
Purchase of equipment (55) (153)
Purchase of and additions to real estate -- (233)
-------- ------
Net cash provided by (used in) investing activities 19,319 (386)
Financing activities
Loans and advances to Agriculture Partnerships (1,271) (242)
Lease contract proceeds 199 --
Commissions paid on lease -- (431)
Payment of loans by Agricultural Partnerships -- 615
Proceeds from minority interest in Big 4 Farming LLC -- 28
Repayments of long-term mortgage borrowings (9,224) (125)
-------- ------
Net cash used in financing activities (10,296) (155)
Increase (decrease) in cash and cash equivalents 9,549 1,107
Cash and cash equivalents at beginning of period 4,367 4,364
-------- ------
Cash and cash equivalents at end of period $ 13,916 $5,471
======== ======
Supplemental Disclosures:
Interest paid during the nine months ended September 30, 1999 and 1998 was
$572,000 and $720,000, respectively.
</TABLE>
See accompanying notes to consolidated financial statements
-5-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1999
Note 1 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Basis of Presentation
- ---------------------
The consolidated financial statements include the accounts of Citadel
Holding Corporation ("Citadel") and its consolidated subsidiaries (collectively,
the "Company"). All significant intercompany balances and transactions have
been eliminated in consolidation.
During the nine months ended September 30, 1999 the Company increased its
common stock ownership in Gish Biomedical, Inc. ("Gish") to 509,800 shares
(14.8%) from 398,850 shares (11.6%) as December 31, 1998 for a purchase price of
approximately $289,000. The Gish securities are classified as available-for-
sale and are carried at fair value, with the unrealized holding gains and
losses, net of tax, reported as a separate component of stockholder's equity.
At September 30, 1999, the aggregate cost basis of the Gish securities was
approximately $1,311,000 and the closing price of Gish common stock was $2.625
resulting in a $17,000 unrealized gain on available-for-sale securities, net of
deferred income tax amounting to $12,000.
The Company owns, through its interest in three general partnerships (the
"Agricultural Partnerships"), a 40% interest in approximately 1,580 acres of
agricultural land and related improvements, located in Kern County, California,
commonly known as the Big 4 Ranch (the "Property"). The other two partners in
the Partnerships are Visalia LLC ("Visalia," a limited liability company
controlled by Mr. James J. Cotter, the Chairman of the Board of the Company, and
owned by Mr. Cotter and certain members of his family) which has a 20% interest
and Big 4 Ranch, Inc., a publicly held corporation, which has the remaining 40%
interest. The Company accounts for its 40% investment in the Partnership
utilizing the equity method of accounting (Note 4).
In October 1996, the Company contributed cash in the amount of $7 million
to Reading Entertainment, Inc. ("REI" and collectively with its consolidated
affiliates, "Reading") in exchange for 70,000 shares of Reading Series A Voting
Cumulative Convertible Preferred Stock (the "REI Preferred Stock") and an option
to transfer all or substantially all (subject to certain limitations) of its
assets to Reading for Reading Common Stock (the "Asset Put Option"). The Company
accounts for its investment in Reading at cost (Note 3).
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments of a recurring nature considered
necessary for a fair presentation of its financial position as of September 30,
1999 and December 31, 1998, the results of operations and its cash flows for the
three and nine months ended September 30, 1999 and 1998. The results of
operations for the three and nine month periods ended September 30, 1999 are not
necessarily indicative of the results of operations to be expected for the
entire year.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnotes required to be in conformity with
generally accepted accounting principles. The financial information provided
herein, including the information under the heading, "Management's Discussion
and Analysis of Financial Condition and Results of Operations," is written with
the presumption that the
-6-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
September 30, 1999
users of the interim financial statements have read, or have access to, the most
recent Annual Report on Form 10-K which contains the latest audited financial
statements and notes thereto, together with the Management's Discussion and
Analysis of Financial Condition and Results of Operations as of December 31,
1998 and for the year then ended.
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Included in cash
and cash equivalents at September 30, 1999 is approximately $13,619,000 which is
being held in institutional money market mutual funds.
Basic Earnings Per Share
- ------------------------
Basic earnings per share is based on 6,669,924 shares, the weighted average
number of shares outstanding during the three and nine month periods ended
September 30, 1999 and 1998. Diluted earnings per share is based on 6,680,185
and 6,684,335, the weighted average number of shares of common stock and
potential common shares outstanding during the three and nine months ended
September 30, 1999, and is based on 6,689,076 and 6,689,456 shares for the three
and nine months ended September 30, 1998, respectively. Options to purchase an
average of 31,000 and 45,666 shares of Common Stock were outstanding during the
three and nine months ended September 30, 1999, respectively, and stock options
to purchase 53,000 shares of Common Stock were outstanding during each of the
1998 periods. The September 30, 1999 and 1998 calculations of the diluted
weighted average number of shares outstanding include the effect of such stock
options.
Effective August 1, 1999, upon the resignation of the Company's President,
the Company cancelled stock options to exercise 33,000 common shares at $2.69
per share for a cash payment of approximately $66,000. In addition, pursuant to
the terms of a consulting agreement with the President, the Company has agreed
to pay $250,000 over a twelve month period beginning August 1, 1999, which
amount is included in the Statement of Operations as "General and administrative
expenses" for the nine months ended September 30, 1999.
Note 2 - Rental Property and Property Held for Sale
- ---------------------------------------------------
The Company's rental property and property held for sale at September 30,
1999 and December 31, 1998 consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
------------------- -----------------
1999 1998
---- ----
(In thousands)
---------------------------------------
<S> <C> <C>
Rental Property:
Land $2,951 $2,951
Building and improvements 5,532 5,564
------ ------
Total 8,483 8,515
Less accumulated depreciation (697) (546)
------ ------
Rental property, net $7,786 $7,969
====== ======
</TABLE>
-7-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
September 30, 1999
<TABLE>
<CAPTION>
September 30, December 31,
-------------------- -------------------
1999 1998
---- ----
(In thousands)
-----------------------------------------
<S> <C> <C>
Property held for sale:
Commercial land and building $ -- $ 6,608
Accumulated depreciation -- (700)
--------------- -----------
Net $ -- $ 5,908
=============== ===========
</TABLE>
At December 31, 1998 rental properties consisted of two office buildings
located in Glendale, California and Phoenix, Arizona. During the second
quarter of 1999, the Company sold the Phoenix, Arizona building which was
classified as "Property held for sale" at December 31, 1998. The sale of the
Phoenix, Arizona building for $20,000,000 resulted in a book gain of
approximately $13,337,000 after consideration of selling expenses approximating
$317,000. The write off of Capitalized lease costs related to the Phoenix,
Arizona property amounting to approximately $462,000 were included as a
component of the gain on sale. The proceeds from the sale were used, in part,
to pay-off all outstanding mortgage loans totaling $9,138,000 (see Note 5).
With the exception of the ground floor, the Glendale, California Building
is leased to Disney Enterprises, Inc. ("Disney"). The rental rate for the first
five years of the Disney lease term, beginning February 1, 1997, is
approximately $148,000 per month (excluding parking) and approximately $164,000
(excluding parking) for the remaining five year term. Disney has the option to
renew the lease for two consecutive five year periods. The lease provided that
the Company contribute towards tenant improvements and common area upgrades. To
date, while fulfilling their lease obligations to the Company, Disney has not
moved into the building. Accordingly, tenant improvements required by the lease
approximating $1,985,000 have not yet been constructed. Costs to obtain the
lease inclusive of commissions, legal fees and a $450,000 payment to the
previous lessor, approximating $1,326,000 are included in the Balance Sheet as
"Capitalized leasing costs". At September 30, 1999 and December 31, 1998,
accumulated amortization with respect to the Glendale Building capitalized
leasing costs were $348,000 and $256,000, respectively.
Note 3 - Investment in Shareholder Affiliate
- --------------------------------------------
At September 30, 1999 and December 31, 1998, the Company owned 70,000
shares of REI Preferred Stock and the Asset Put Option. The REI Preferred Stock
has (i) a liquidation preference of $100 per share or $7 million ("Stated
Value"), (ii) bears a cumulative dividend of 6.5%, payable quarterly, and (iii)
is convertible into shares of REI Common Stock at a conversion price of $11.50
per share. The closing price of REI stock on September 30, 1999 was
approximately $6.1875 per share. REI, may at its option, redeem the Series A
Preferred Stock at any time after October 15, 2001, in whole or in part, at a
redemption price equal to a percentage of the Stated Value (initially 108% and
decreasing 2% per annum until the percentage equals 100%). The Company has the
right for a 90-day period beginning October 15, 2001 (provided the Company has
not exercised the Asset Put Option), or in the event of change of control of REI
to require REI to repurchase the REI Series A Preferred Stock for their
aggregate Stated Value plus accumulated dividends. In addition, if REI fails to
pay dividends for four quarters, the Company has the option to require REI to
repurchase such shares at their aggregate liquidation value plus accumulated
dividends.
-8-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
September 30, 1999
The Asset Put Option is exercisable any time through a date thirty days
after Reading's Form 10-K is filed with respect to its year ended December 31,
1999, and gives the Company the right to exchange, for shares of Reading Common
Stock, all or substantially all of the Company's assets, as defined, together
with any debt encumbering such assets (the "Asset Put"). In exchange for up to
$20 million in aggregate appraised value of the Company's assets on the exercise
of the Asset Put Option, Reading is obligated to deliver to the Company that
number of shares of Reading Common Stock determined by dividing the value of the
Company's assets by $12.25 per share. If the appraised value of the Company's
assets is in excess of $20 million, Reading is obligated to pay for the excess
by issuing Common Stock at the then fair market value up to a maximum of $30
million of assets. If the average trading price of Reading Common Stock exceeds
130% of the then applicable exchange price for more than 60 days, then the
exchange price will thereafter be the fair market of the Reading Common Stock
from time to time, unless the Company exercises the Asset Put within 120 days of
receipt of notice from Reading of the occurrence of such average trading price
over such 60 day period.
The Company accounts for its investment in REI at cost. Included in the
Statements of Operations for each of the three and nine months ended September
30, 1999 and 1998 is "Dividends from Investment in Reading" of approximately
$113,000 and $341,000, respectively, earned pursuant to the terms of the REI
Series A Preferred Stock.
As of August 13, 1999, the Company and Craig Corporation ("Craig"), a
shareholder affiliate of the Company, hold in the aggregate approximately 83% of
the voting power of Reading, with Craig's holdings representing approximately
78% of the voting power of Reading and the Company's holdings representing
approximately 5% of such voting power. As of November 12, 1999, Reading holds
2,113,673 shares or approximately 32% of the Company's outstanding common stock
and Craig holds 1,096,106 shares or approximately 16% of the Company's Common
Stock.
Summarized financial information of REI and subsidiaries as of September
30, 1999 and December 31, 1998 and for the three and nine months ended September
30, 1999 and 1998 follows:
Condensed Balance Sheets:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
(In thousands)
--------------
<S> <C> <C>
Cash and cash equivalents $ 23,804 $ 58,593
Other current assets 2,662 2,247
Equity investment in Citadel 10,910 8,158
Property held for development 32,916 32,949
Property and equipment, net 66,536 32,534
Intangible assets 10,407 23,408
Other assets 12,860 14,398
-------- --------
Total assets $160,095 $172,287
======== ========
Current liabilities $ 15,126 $ 15,462
Other liabilities 8,701 5,526
Minority interests 2,003 1,927
Series A Preferred stock held by Citadel 7,000 7,000
Shareholders' equity 127,265 142,372
-------- --------
Total liabilities and equity $160,095 $172,287
======== ========
</TABLE>
-9-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
September 30, 1999
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Total revenue $ 11,403 $ 8,820 $ 28,196 $ 26,124
Theater costs (8,742) (6,704) (22,581) (19,918)
Depreciation and amortization (1,195) (968) (3,272) (2,710)
General and administrative (3,230) (2,425) (8,563) (6,899)
Asset impairment charge (14,022) -- (14,022) --
-------- ------- -------- --------
Loss from operations (15,786) (1,277) (20,242) (3,403)
Interest and dividends 313 1,096 1,751 3,578
Equity in earnings (losses) of affiliates (59) (114) 2,555 (4)
Other income, net 437 (108) 318 (556)
-------- ------- -------- --------
Loss before income taxes (15,095) (403) (15,618) (385)
Income taxes (186) (355) (674) (762)
Minority interest (45) (105) (223) (263)
-------- ------- -------- --------
Net loss (15,326) (863) (16,515) (1,410)
Less preferred stock dividends (1,085) (1,078) (3,250) (3,233)
-------- ------- -------- --------
Net loss applicable to common
shareholders $(16,411) $(1,941) $(19,765) $ (4,643)
======== ======= ======== ========
Basic and diluted losses per share $ (2.20) $ (0.26) $ (2.65) $ (0.62)
======== ======= ======== ========
</TABLE>
Included in equity in earnings of affiliates is Readings share of Citadel's
earnings (losses) approximating $187,000 and $(10,000) for the three months
ended September 30, 1999 and 1998, respectively and $2,751,000 and $116,000 for
the nine months ended September 30, 1999 and 1998, respectively.
Note 4 - Equity investment and Note Receivable from Agricultural Partnerships
- ------------------------------------------------------------------------------
At September 30, 1999 and December 31, 1998, "Investments in and advances to
Agricultural Partnerships" consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
(In Thousands)
<C> <C>
<S>
Equity investment in Agricultural Partnerships $ (234) $ 59
Note receivable and advances to Agricultural Partnerships 2,773 1,502
------ ------
$2,539 $1,561
====== ======
</TABLE>
As described in Note 1, the Company has a 40% interest in the Agricultural
Partnerships. In addition, the Company has provided a Crop Financing Line of
Credit to the Agricultural Partnerships. Drawdowns under the Line of Credit
accrued interest at prime plus 100 basis points, payable quarterly, and was due
and payable in August 1998. Upon its expiration, Citadel entered into an
amended Line of Credit, increasing the available line of credit to $1,850,000
under the same terms and conditions for an additional twelve month period. In
December 1998, the Agricultural Partnerships suffered a devastating freeze which
resulted in a loss of substantially all of its 1998-1999 crop. As a consequence
of the freeze, the Agricultural Partnerships have no funds with which to repay
the drawdowns on the Line of Credit other than from funds provided by the
general partners of such partnerships. Big 4 Ranch, Inc., a 40% owner spun off
by the Company in 1997 to its stockholders, likewise has no funds with which to
make
-10-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
September 30, 1999
further capital contributions. Accordingly, the Agricultural Partnerships
generally have no source of funding, other than the Company and Visalia, for the
cultural expenses needed for production of the 1999-2000 crop or to fund the
crop planting program for the undeveloped acreage. In addition, to the
$1,850,000 line of credit, it was estimated that the Agricultural Partnerships
would need additional cash in the amount of $1,500,000 in order to cover
cultural costs through December 31, 1999 and approximately $125,000 in order to
complete the planting program through the end of the year. The Company and
Visalia have continued to fund the Agricultural Partnerships operating and crop
costs on an 80/20 basis. At September 30, 1999 total loans and payables
incurred on behalf of the Agricultural Partnerships totaled $2,773,000,
inclusive of a $199,000 contract obligation entered into by the Company to
lease-finance certain irrigation equipment. No revenue is expected to be
realized by the Agricultural Partnerships until the 1999 - 2000 crop is
harvested and sold.
In December 1997, Big 4 Farming LLC ("Farming", owned 80% by the Company and 20%
by Visalia) entered into a two-year farming services agreement (the "Farming
Contract") with each of the Agricultural Partnerships, pursuant to which it
provides farm operation services for an initial term of two years. The Visalia
minority interest ownership of Farming is included in the Consolidated Balance
Sheet at September 30, 1999 and December 31, 1998 as "Minority interest" in the
amount of $46,000 and $44,000, respectively. Visalia's portion of Farming's net
earnings for the nine months ended September 30, 1999 amounted to $2,000 and is
included in the Consolidated Statement of Operations as "Minority interest".
In consideration of the services provided under the Farming Contract, Farming is
paid an amount equal to 100% of its costs plus a profit factor equal to 5% of
the gross agricultural receipts from the Big 4 properties owned by the
Agricultural Partnerships, calculated after the costs of picking, packing and
hauling. However, due to the freeze, no significant revenues are expected in
the 1999 fiscal year and, accordingly, no material profit factor will be
realized. Farming has entered into a contract with Cecelia Packing Corporation
("Cecelia" owned by James J. Cotter) for certain management consulting,
purchasing and bookkeeping services for an initial terms of two years at a fee
of $6,000 per month plus reimbursement of certain out-of-pocket expenses.
Cecelia also packs a portion of the fruit produced by the Agricultural
Partnerships. During each of the three and nine months ended September 30, 1999
and 1998, Cecilia received a fee of $18,000 and $54,000, respectively.
Summarized financial information of the Agricultural Partnerships as of
September 30, 1999 and December 31, 1998 and the results of operation for the
three and nine months ended September 30, 1999 and 1998 follows:
-11-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
September 30, 1999
Condensed Balance Sheet:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
(000's)
<S> <C> <C>
Inventory $ 899 $ ---
Property and equipment, net 5,767 5,645
Deferred loan costs 72 84
--------- --------
Total assets $ 6,738 $ 5,729
========= ========
Accounts payable $ 5 $ 30
Note payable to Visalia 187 --
Equipment note payable 66 --
Due to Big 4 Farming LLC (1) 410 297
Line of credit with Citadel 2,363 1,206
--------- --------
Current liabilities 3,031 1,533
Mortgage note payable 4,050 4,050
Partners capital (343) 146
--------- --------
Total liabilities and partners capital $ 6,738 $ 5,729
========= ========
</TABLE>
(1) As described above, Farming provides all farming services to the
Agricultural Partnerships pursuant to the Farming Contract. Such services
include the contracting for the picking, packing and hauling of the crops.
The $410,000 and $297,000 reflected as "Due to Big 4 Farming LLC" at
September 30, 1999 and December 31, 1998, respectively, represents expenses
incurred by Farming on behalf of the Agricultural Partnerships not yet
drawn down for payment on the line of credit. Such amount includes the
lease contract payable amounting to $199,000 at September 30, 1999.
The Prudential Purchase Money Loan in the amount of $4.05 million is secured by,
among other things, a first priority mortgage lien on the property, has a ten-
year maturity and accrues interest, payable quarterly, at a fixed rate of 7.7%.
In order to defer principal payments until January 1, 2002, the Agricultural
Partnerships must make capital improvements to the real property totaling
$500,000 by December 31, 2000 and an additional $200,000 by December 31, 2001.
If the required capital expenditures are not made, then the Agricultural
Partnerships will be required to make a mandatory prepayment of principal on
January 31, 2001 equal to difference between $500,000 and the amount of capital
improvements made through December 31, 2000. The purchase money mortgage also
imposes a prepayment penalty equal to the greater of (a) one-half of one percent
of each prepayment of principal and (b) a present value calculation of the
anticipated loss that the note holder will suffer as a result of such
prepayment. As of September 30, 1999 the Agricultural Partnerships had made
capital expenditures of approximately $650,000 consisting primarily of new tree
plantings and improvements to irrigation systems.
-12-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
---- ----
(000's)
<S> <C> <C>
Sales of crops $ 742 $ 5,124
Costs of sales (538) (4,991)
------ -------
Gross profit 204 133
General and administrative expense (1) (231) (306)
Depreciation (380) (351)
Income from Federal grants 204 --
Interest expense (352) (288)
------ -------
Net (loss) $ (555) $ (812)
====== =======
Equity loss - 40% Citadel $ (222) $ (325)
Interest income from partnership loan (2) 47 54
------ -------
Net (loss) from investment in and advances to
Agriculture Partnership $ (175) $ (271)
====== =======
</TABLE>
__________________________
(1) Reflects principally reimbursement of expenses and fees to Big 4 Farming
LLC, an 80% owned subsidiary.
(2) Interest income earned amounted to approximately $118,000 during the nine
months ended September 30, 1999. Until such time as the other partner
contribute additional capital or the partnership has positive capital
accounts, the Company is not recording interest income for financial
statement purposes, with respect to the other partner's 60% ownership
interest amounting to $71,000.
Note 5 - Mortgage Note Payable
- ------------------------------
Concurrent with the sale of the Phoenix, Arizona property the Company paid in
full the mortgage encumbering such property in the amount of $4,199,000. In
addition, the remaining mortgage encumbering the Glendale, California property
totaling approximately $4,939,000 was repaid. Included in interest expense is
$184,000 representing prepayment penalties paid of $126,000 and the write off of
deferred loan costs related to the mortgages totaling approximately $58,000.
-13-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
September 30, 1999
Note 6 - Taxes on Income
- ------------------------
Significant components of the provisions for income taxes attributable to
operations are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Income taxes (benefit)
Current:
Federal $ (80) $ -- $ 500 $ --
State (156) 25 820 75
----- ----- ------ -----
Total current (236) 25 1,320 75
----- ----- ------ -----
Deferred:
Federal (156) 35 3,578 175
State (30) -- 245 --
----- ----- ------ -----
Total deferred: (186) 35 3,823 175
----- ----- ------ -----
Total income tax expense (benefit) $(422) $ 70 $5,143 $ 250
===== ===== ====== =====
</TABLE>
The income tax benefit for the three months ended September 30, 1999 includes
approximately $132,000 of additional proceeds received from Fidelity pursuant to
the settlement with the Company, Fidelity and the Internal Revenue Service with
respect to tax returns filed for years ending September 30, 1994. In addition,
during the third quarter of 1999, the Company reduced its deferred tax asset
valuation allowance for previously reserved net operating loss carryforwards
expected to be realized upon the filing of its December 31, 1999 tax returns
resulting in an income tax benefit being recognized for financial statement
purposes of approximately $170,000. Income taxes paid during the nine months
ended September 30, 1999 were approximately $795,000.
The deferred tax provision for the nine months ended September 30, 1999 is
principally comprised of the reversal of deferred tax assets included in the
December 31, 1998 Balance Sheet resulting from the sale of the Phoenix, Arizona
property amounting to approximately $4,009,000. The tax assets were generally
comprised of federal capital loss and net operating loss carryfowards which are
expected to be utilized as a result of the property sale to reduce the current
tax liabilities upon the filing of the Company's Consolidated federal tax return
for December 31, 1999.
-14-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
September 30, 1999
The provision for income taxes is different from amounts computed by applying
the U.S. statutory rate to earnings (losses) before taxes. The reason for
these differences follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---- ---- ---- ----
(In Thousands)
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Expected tax provision $ 113 $ 124 $4,886 $ 360
(Increase) reduction in taxes resulting
from:
Dividend exclusion of preferred stock (31) (31) (93) (93)
investment
Utilization of net operating losses (143) -- (245) --
Prior year tax adjustment (132) -- (132) --
State taxes (126) 15 702 48
Other (103) 12 25 (65)
----- ----- ------ -----
Actual tax provision (benefit) $(422) $ 120 $5,143 $ 250
===== ===== ====== =====
</TABLE>
Note 7 - Common Stock
- ---------------------
On April 11, 1997, Craig exercised its warrant to purchase 666,000 shares
of the Company's treasury common stock at an exercise price of $3.00 per share
of $1,998,000. Such exercise was consummated pursuant to delivery by Craig of
its secured promissory note (the "Craig Secured Note") in the amount of
$1,998,000, secured by 500,000 shares of REI Common Stock owned by Craig. The
Craig Secured Note in the amount of $1,998,000 is included in the Balance Sheet
as a contra equity account under the caption "Note Receivable from shareholders"
at September 30, 1999 and December 31, 1998. Interest is payable quarterly in
arrears at the prime rate computed on a 360 day-year. Principal and accrued but
unpaid interest is due upon the earlier of April 11, 2002 and 120 days following
the Company's written demand for payment. Interest income from the Craig
secured Note amounted to approximately $41,000 and $42,000 for the three months
ended September 30, 1999 and 1998 and amounted to approximately $119,000 and
$129,000 for the nine months ended September 30, 1999 and 1998, respectively.
-15-
<PAGE>
Citadel Holding Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
September 30, 199
Note 8 - Business Segments
- --------------------------
The following sets forth certain information concerning the Company's rental
real estate operations, agricultural operations and corporate activities for the
three and nine months ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>
Rental Agricultural
Three Months Ended September 30: Real Estate(1) Operations Corporate (2) Consolidated
------------------- ---------------- ---------------- ----------------
1999:
<S> <C> <C> <C> <C>
Revenues $ 551 $ -- $ 49 $ 600
Earnings (losses) before taxes 553 (153) (67) 333
1998:
Revenues $ 1,369 4 $ 100 $ 1,473
Earnings (losses) before taxes 537 (249) 77 365
Nine Months Ended September 30:
1999:
Revenues $ 3,152 $ 10 $ 204 $ 3,366
Earnings (losses) before taxes 14,810 (212) (226) 14,372
1998:
Revenues $ 4,083 $ 105 $ 300 $ 4,488
Earnings (losses) before taxes 1,479 (266) (155) 1,058
</TABLE>
(1) Earnings from rental real estate includes gain from sale of property in the
nine months ended September 30, 1999 of $13,337,000.
(2) Includes consulting fee income from Reading and interest and dividend
income earned with respect to the Company's cash balances and investment in
Reading Preferred Stock. offset by general and administrative expenses.
-16-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The following is a comparison of the results of operations for the three
months ended September 30, 1999, ("1999 Quarter") with the three months ended
September 30, 1998 ("1998 Quarter") and a comparison of the results of
operations for the nine months ended September 30, 1999 ("1999 Nine Months")
with the nine months ended September 30, 1998 ("1998 Nine Months"). Due to the
nature of the Company's business activities, revenues and earnings have and will
vary significantly reflecting the results of real estate sales, and the
operating results of the Agricultural Partnerships. Accordingly, period to
period comparisons of operating results will not necessarily be indicative of
future financial results.
The Company's net earnings for the 1999 Quarter amounted to $755,000 or $0.11
per basic share as compared to net earnings of $245,000 or $0.04 per basic share
for the 1998 Quarter. Net earnings for the 1999 Nine Months amounted to
$9,229,000 or $1.38 per basic share as compared to $808,000 or $0.12 per basic
share for the 1998 Nine Months. The increase in net earnings for the 1999
Quarter as compared to the 1998 Quarter is principally a result of the
recognition of $422,000 of income tax benefits in the 1999 Quarter as compared
to income tax expense of $120,000 in the 1998 Quarter (see Note 6 to
Consolidated Financial Statements). The significant increase in net earnings in
the 1999 Nine Months as compared to the 1998 Nine Months is primarily
attributable to the sale of a rental property located in Phoenix, Arizona in
June 1999, which resulted in a gain of approximately $13,337,000 being included
in the Consolidated Statement of Operations for the 1999 Nine Months. As
described below, the June 2, 1999 property sale resulted in a decrease to 1999
rental income, real estate operating expenses, and depreciation in the 1999
periods as compared to the 1998 periods.
Rental income amounted to $551,000 and $3,152,000 in the 1999 Quarter and
1999 Nine Months as compared to $1,369,000 and $4,083,000 for the 1998 Quarter
and 1998 Nine Months, respectively. Real estate operating expenses decreased to
$178,000 in the 1999 Quarter as compared to $579,000 in the 1998 Quarter and
decreased to $1,096,000 in the 1999 Nine Months as compared to $1,679,000 in the
1998 Nine Months, reflecting the sale of the building in June 1999, offset by
higher operating costs at the Glendale, California building. Until June 2,
1999, rental properties consisted of two office buildings located in Glendale,
California and Phoenix, Arizona. In June 1999, the Company sold the Phoenix,
Arizona property for $20,000,000 which resulted in a financial statement gain of
approximately $13,337,000, after consideration of selling expenses totaling
$317,000. The proceeds from the sale were used, in part, to pay-off all
outstanding mortgage loans totaling approximately $9,138,000. As a result of
the sale, future operating results from rental properties will significantly
decrease. The following summarizes rental income, real estate operating
expenses and depreciation from the Phoenix, Arizona property included in the
Statement of Operations for the three and nine months ended September 30, 1999
and 1998.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
----- ---- ---- ----
<S> <C> <C> <C> <C>
Rental income $ -- $ 819 $1,484 $2,430
Real estate operating expenses 17 428 612 1,168
Depreciation -- 48 84 137
</TABLE>
-17-
<PAGE>
The Glendale property is leased to Disney Enterprises, Inc., and Fidelity
Federal Bank. Rental income from the Glendale property remained consistent
during the 1999 Quarter and 1999 Nine Months as compared to the 1998 Quarter and
1998 Nine Months.
Consulting fees from shareholder amounted to $49,000 and $204,000 in the
1999 Quarter and 1999 Nine Months as compared to $100,000 and $300,000 in the
1998 Quarter and 1998 Nine Months, respectively. In recent periods the Company
has provided a substantial portion of its executives time providing real estate
consulting services to Reading in connection with the development by Reading of
multiplex cinemas in Puerto Rico, Australia and the United States. The decrease
in the 1999 Quarter and 1999 Nine Months reflects a reduction in services
provided by Citadel to Reading as compared to the 1998 Quarter and 1998 Nine
Months.
Included in the Statement of Operations as "Loss from investment in and
advances to Agricultural Partnerships" is a loss in the 1999 Nine Months and
1998 Nine Months of $175,000 and $271,000, respectively, representing the
Company's 40% equity share of the Agriculture Partnerships operating results.
The Company recorded a loss from investment in and advances to the Agricultural
Partnerships in the amount of $109,000 in the 1999 Quarter as compared to a loss
of $164,000 in the 1998 Quarter. In the 1999 Nine Months the Partnerships
received federal relief grants of approximately $204,000 related to the 1998
crop losses thereby reducing their 1999 operating loss. At September 30, 1999
and December 31, 1998, Citadel and its subsidiaries had advanced funds or
incurred liabilities on behalf of the Agricultural Partnership approximately
$2,773,000 and $1,502,000, respectively. On these dates Visalia had advanced
approximately $187,000 and $0, respectively. As described below, the
Agricultural Partnerships suffered a significant loss in Fiscal 1998 resulting
in the Agricultural Partnerships having deficit partners capital of
approximately $343,000 at September 30, 1999. The Company does not expect to
begin to recover its advances and interest income to the Agricultural
Partnerships until the 1999 crop harvest in 2000.
In December 1998, the Agricultural Partnerships suffered from a devastating
freeze which resulted in a loss of substantially all of its 1998-1999 crop. As
a consequence of the freeze, the Agricultural Partnerships have no funds with
which to repay the drawdowns on the Line of Credit other than funds provided by
its general partners, Citadel, Big 4 Ranch, Inc. and Visalia. Big 4 Ranch,
Inc., which was spun-off by the Company to its stockholders, has no funds with
which to make further capital contributions. Accordingly, the Agricultural
Partnerships generally have no source of funding, other than the Company and
Visalia, for the cultural expenses needed for production of the 1999-2000 crop
or for the funding of the planting program for the currently undeveloped
acreage. Until such time as the Agricultural Partnerships have operating
earnings and positive partners capital, the Company is not recording the other
partners 60% portion of interest income (earned at prime plus 100 basis points)
for the financial statement purposes. Interest earned, but not reported, for
the three and nine months ended September 30, 1999 amounted to approximately
$27,000 and $71,000, respectively.
In addition, to the $1,850,000 line of credit, it is estimated that the
Agricultural Partnerships would need additional cash in the amount of $1,500,000
in order to cover cultural, administrative and interest costs and approximately
$125,000 in order to complete the planting program through the end of the year.
Subsequent to December 31, 1998, the Company and Visalia have continued to fund
the Agricultural Partnerships operating and crop costs on the same terms as the
line of credit. No revenue is expected to be realized by the Agricultural
Partnerships until the 1999 - 2000 crop is harvested and sold. In addition to
the current funding the Company and Visalia are currently making available
financing to the Agricultural Partnerships to fund its crop development
activities.
-18-
<PAGE>
Interest income (reflected in the Statement of Operations as "Interest
income" and "Interest income from shareholders") increased between the 1999 and
1998 periods and amounted to $237,000 in the 1999 Quarter and $101,000 in the
1998 Quarter, and amounted to $445,000 in the 1999 Nine Months as compared to
$295,000 in the 1998 Nine Months. The overall increase is a result of the
increased cash balances subsequent to June 2, 1999, the closing date of the
property sale.
Included in the Statements of Operations for the 1999 and 1998 Quarter and
the 1999 and 1998 Nine Months is approximately $113,000 and $341,000,
respectively, of dividend income earned with respect to the Company's investment
in REI Preferred Stock. The REI Series A Preferred Stock is convertible at any
time into shares of REI Common Stock at a conversion price of $11.50 per share.
The closing market price of REI Common Stock at September 30, 1999 was $6.1875
per share. REI reported a net loss applicable to common shareholders of
approximately $16,411,000 and $19,765,000 for the 1999 Quarter and 1999 Nine
Months, respectively, as compared to net loss applicable to common shareholders
of approximately $1,941,000 and $4,643,000 in the 1998 Quarter and 1998 Nine
Months.
General and administrative expenses increased in the 1999 Quarter and
amounted to $265,000 as compared to $201,000 in the 1998 Quarter. The 1999
Quarter includes a $66,000 payment made to the former President of the Company
for cancellation of previously issued stock options. General and administrative
expenses amounted to $1,016,000 in the 1999 Nine Months as compared to
$1,055,000 in the 1998 Nine Months. The 1999 Nine Months includes a $250,000
charge for fees payable over the twelve month period beginning August 1, 1999 to
the Company's former President, who resigned effective August 1, 1999. The 1998
Quarter and Nine Months includes a charge for bonuses of $250,000 paid to the
Chairman and Vice Chairman.
Interest expense was $0 in the 1999 Quarter as compared to $244,000 in the
1998 Quarter and totaled $556,000 in the 1999 Nine Months as compared to
$739,500 in the 1998 Nine Months. Until June 2, 1999, two mortgage loans were
outstanding in the amount of $9,224,000. Concurrent with the sale of the
Phoenix, Arizona property, the mortgage encumbering the property, as well as the
mortgage encumbering the Glendale, California property were paid in full, and
accordingly, the Company has no outstanding long term debt at September 30,
1999. Included as interest expense for the nine months ended September 30, 1999
is a prepayment penalty and the write off of deferred loan costs relating to
such loans amounting to approximately $126,000 and $58,000, respectively.
Business Plan, Capital Resources and Liquidity
Cash and cash equivalents increased approximately $9,549,000 from
$4,367,000 at December 31, 1998 to $13,916,000 at September 30, 1999. Net cash
provided by investing activities amounted to $19,319,000 in the 1999 Nine Months
and reflects proceeds of $19,683,000 received upon the sale of a rental
property, offset by additional purchases of GISH common stock totaling $309,000.
Net cash used in financing activities amounted to $10,296,000 in the 1999 Nine
Months and resulted from (i) additional borrowings by the Agriculture
Partnerships of approximately $1,271,000, (ii) repayment of long-term mortgage
loans totaling $9,224,000 and (iii) proceeds of $199,000 related to the leasing
of irrigation equipment for the Agricultural Partnerships.
Cash and cash equivalents increased approximately $1,107,000 from
$4,364,000 at December 31, 1997 to $5,471,000 at September 30, 1998. Net cash
used in investing activities amounted to $386,000 in the 1998 Nine Months and
includes leasehold improvements made to rental properties amounting to $233,000
and the purchase of farm equipment of $153,000 by Big 4 Farming, LLC, which was
purchased in order to provide services to the Agricultural Partnerships pursuant
to the Farming
-19-
<PAGE>
Contract described in Footnote 4 to the financial statements included elsewhere
herein. Net cash used in financing activities amounted to $155,000 in the 1998
Nine Months and resulted from (i) additional borrowings by the Agriculture
Partnerships of approximately $242,000, offset by $615,000 of agricultural loan
repayments, (ii) the amortization of long-term mortgage loans of $125,000 and
(iii) commissions amounting to approximately $431,000 paid at the time of the
extension of a lease at the Phoenix, Arizona building.
The Company expects that its sources of funds in the near term will include
(i) cash on hand and related interest income, (ii) cash flow from the operations
of its remaining real estate property, (iii) consulting fee income from REI,
(iv) a preferred stock dividend, payable quarterly, from REI amounting to
approximately $455,000, annually, and (v) possible refinancing proceeds.
In the short term, uses of funds are expected to include (i) funding of the
Agricultural Partnerships, (ii) funding of the Glendale Building leasehold and
tenant improvements of approximately $1,985,000, and (iii) operating expenses.
The Company does not expect to have cash flow from its investment in the
Agricultural Partnerships in the next several periods due to the results of the
freeze described above. As part of the Big 4 Ranch, Inc. spin off, the Company
agreed to provide a $200,000 line of credit to that company. To date, no loans
have been requested with respect to this commitment.
Management believes that the Company's sources of funds will be sufficient
to meet its cash flow requirements for the foreseeable future. The October 1996
acquisition of the Reading Preferred Stock and the Asset Put Option, provided
the Company with the opportunity to make an initial investment in the Beyond-
the-Home segment of the entertainment industry, and the ability thereafter, to
review the implementation by Reading of its business plan and, if it approves of
the progress made by Reading, to make a further investment in this industry
through the exercise of its Asset Put Option to exchange all or substantially
all of its assets for Reading Common Stock. The Company has the right to
require Reading to redeem the Reading Preferred Stock after October 15, 2001 or
sooner if Reading fails to pay dividends on such securities for four quarters.
Year 2000 Compliance
The Company has conducted a review of the software and hardware components
that it uses to assess whether such components will properly recognize the dates
beyond December 31, 1999 ("Year 2000 Compliance"). The Company is also
continuing to conduct a review of its major suppliers of goods and services
("service providers") to understand their level of compliance with Year 2000
issues.
Based on its review to date, the Company does not believe that material
problems exist relative to the internal hardware and software utilized, as the
Company uses current versions of software provided by major software vendors,
and hardware that is less than a year old, for the most part. Based on responses
received to date, the Company believes that substantially all of its service
providers will represent that they are Year 2000 compliant or that formal
programs are in place to ensure that they will be year 2000 compliant.
The Company has adequate financial resources to replace any hardware and/or
software that is determined not to be Year 2000 compliant. The costs of
addressing Year 2000 compliance has not been, nor is expected to be, material to
the Company's financial condition or results of operations.
-20-
<PAGE>
Forward-Looking Statements
From time to time, the Company or its representatives have made or may make
forward-looking statements, orally or in writing, including those contained
herein. Such forward-looking statements may be included in, without limitation,
reports to stockholders, press releases, oral statements made with the approval
of an authorized executive officer of the Company and filings with the
Securities and Exchange Commission. The words or phrases "anticipates,"
"expects," "will continue," "estimates," "projects," or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.
The results contemplated by the Company's forward-looking statements are
subject to certain risks, trends, and uncertainties that could cause actual
results to vary materially from anticipated results, including without
limitation, delays in obtaining leases, finalization of the sale of properties,
the impact of competition, market and other risks associated with the Company's
investment activities including the investment and advances to the Agricultural
Properties and other factors described herein.
-21-
<PAGE>
Part II -- Other Information
- ----------------------------
Item 1 - Legal Proceedings
- --------------------------
For a description of legal proceedings, please refer to Item 3 entitled
Legal Proceedings contained in the Company's Form 10-K for the fiscal year ended
December 31, 1998.
Item 2 - Change in Securities
- -----------------------------
Not applicable.
Item 3 - Defaults upon Senior Securities
- ----------------------------------------
Not applicable.
Item 4 - Submission of Matters to a Vote of Securities Holders
- --------------------------------------------------------------
Not applicable.
Item 5 - Other Information
- --------------------------
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
A. Exhibits
27. Financial Data Schedule.
B. Reports on Form 8-K
None.
-22-
<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.
CITADEL HOLDING CORPORATION
---------------------------
By: /s/ James J. Cotter
-------------------------------------
James J. Cotter
President and Chief Executive Officer
November 15, 1999
/s/ S. Craig Tompkins
-------------------------------------
S. Craig Tompkins
Principal Accounting Officer
November 15, 1999
-23-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 13,916
<SECURITIES> 1,340
<RECEIVABLES> 105
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,361
<PP&E> 8,483
<DEPRECIATION> (697)
<TOTAL-ASSETS> 34,823
<CURRENT-LIABILITIES> 1,836
<BONDS> 0
0
0
<COMMON> 67
<OTHER-SE> 32,920
<TOTAL-LIABILITY-AND-EQUITY> 34,823
<SALES> 3,152
<TOTAL-REVENUES> 3,366
<CGS> 1,368
<TOTAL-COSTS> 2,384
<OTHER-EXPENSES> (13,948)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 556
<INCOME-PRETAX> 14,372
<INCOME-TAX> 5,143
<INCOME-CONTINUING> 9,229
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,229
<EPS-BASIC> 1.38
<EPS-DILUTED> 1.38
</TABLE>
