<PAGE> 1
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UNITED STATES
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 MARCH 31, 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 20418
KENNEDY-WILSON, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4364537
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
9601 WILSHIRE BLVD, # 220
BEVERLY HILLS, CALIFORNIA 90210
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(310) 887-6400
(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 (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 NO
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE: COMMON STOCK, $.01 PAR VALUE;
9,100,162 SHARES OUTSTANDING AT MAY 15, 2000.
================================================================================
<PAGE> 2
KENNEDY-WILSON, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
MARCH 31, 2000
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part I. Financial Information.............................................................................. 3
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 2000 (Unaudited) and December 31, 1999......... 3
Consolidated Statements of Income for the Three-Month Periods Ended
March 31, 2000 and 1999 (Unaudited)........................................................ 4
Consolidated Statements of Cash Flows for the Three-Month Periods Ended
March 31, 2000 and 1999 (Unaudited)........................................................ 5
Notes to Consolidated Financial Statements (Unaudited)..................................... 6-8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....... 9-11
Item 3. Quantitative and Qualitative Disclosure about Market Risk................................... 12
Part II. Other Information................................................................................. 13
Item 6. Exhibits and Reports on Form 8-K............................................................ 13
</TABLE>
2
<PAGE> 3
KENNEDY-WILSON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 2,255,000 $ 5,243,000
Cash - restricted 65,000 2,101,000
Accounts receivable 6,558,000 8,534,000
Notes receivable (Note 2) 29,828,000 30,643,000
Real estate held for sale (Note 4) 24,579,000 25,733,000
Investments with related parties and non-affiliates 29,952,000 23,484,000
Contracts, furniture, fixtures and equipment and other assets 17,872,000 16,237,000
Goodwill, net 22,962,000 23,175,000
------------- -------------
TOTAL ASSETS $ 134,071,000 $ 135,150,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 1,459,000 $ 2,403,000
Accrued expenses and other liabilities 14,202,000 20,602,000
Deferred taxes 812,000 812,000
Notes payable 15,632,000 9,213,000
Borrowings under lines of credit 32,493,000 27,533,000
Mortgage loans payable 9,451,000 11,401,000
Subordinated debt (Note 5) 11,500,000 16,500,000
------------- -------------
Total liabilities 85,549,000 88,464,000
------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; shares authorized 5,000,000 as
of December 31, 1999; none issued
------------- -------------
Common stock $.01 par value; shares authorized: 50,000,000 in 1999
shares issued 9,100,162 as of March 31, 2000 and 9,066,662
as of December 31, 1999 91,000 91,000
Additional paid-in capital 47,290,000 47,156,000
Accumulated retained earnings (deficit) 1,323,000 (361,000)
Notes receivable from stockholders (182,000) (200,000)
------------- -------------
Total stockholders' equity 48,522,000 46,686,000
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 134,071,000 $ 135,150,000
============= =============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
KENNEDY-WILSON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------------
2000 1999
----------- -----------
<S> <C> <C>
REVENUES:
Property management and leasing fees $ 8,495,000 $ 6,528,000
Commission income 2,473,000 2,171,000
Sales of residential real estate 22,999,000 4,964,000
Equity in income of investments with related parties and
non-affiliates (Note 3) 1,336,000 455,000
Income on restructured notes receivable (Note 2) 1,407,000 672,000
Rental income, net 77,000 1,686,000
Interest and other income 749,000 381,000
----------- -----------
Total Revenue 37,536,000 16,857,000
----------- -----------
OPERATING EXPENSES:
Commissions and marketing expenses 93,000 52,000
Cost of residential real estate sold 20,257,000 4,801,000
Compensation and related expenses 8,128,000 3,352,000
General and administrative 4,357,000 3,036,000
Depreciation and amortization 970,000 611,000
Interest expense 1,483,000 3,232,000
----------- -----------
Total Operating Expenses 35,288,000 15,084,000
----------- -----------
Income Before Provision for Income Taxes 2,248,000 1,773,000
Provision for Income Taxes 564,000 603,000
----------- -----------
NET INCOME $ 1,684,000 $ 1,170,000
=========== ===========
SHARE DATA:
Basic net income per share $ 0.19 $ 0.17
Basic weighted average shares 9,080,887 6,707,284
Diluted net income per share $ 0.17 $ 0.16
Diluted weighted average shares 10,264,576 7,329,809
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
KENNEDY-WILSON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------------
2000 1999
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,684,000 $ 1,170,000
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 970,000 611,000
Equity in income of investments with related parties
and non-affiliates (1,336,000) (455,000)
Income on restructured notes receivable - non-cash (740,000) (684,000)
Change in assets and liabilities:
Accounts receivable 1,976,000 1,389,000
Other assets (2,046,000) (290,000)
Accounts payable (944,000) 1,229,000
Accrued expenses and other liabilities (6,400,000) (4,570,000)
------------ -----------
Net cash used in operating activities (6,836,000) (1,600,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of contract, furniture, fixtures and equipment (303,000) (439,000)
Purchase and additions to real estate held for sale (18,724,000) (6,607,000)
Proceeds from sales of real estate held for sale 19,835,000 5,101,000
Additions to notes receivable (97,000) (5,773,000)
Payments from notes receivable 1,652,000 1,007,000
Repayments from stockholders 18,000 4,000
Distributions from joint ventures 1,873,000 86,000
Contributions to joint ventures (7,005,000) (2,011,000)
------------ -----------
Net cash used in investing activities (2,751,000) (8,632,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of mortgage loans payable 643,000 1,836,000
Repayment of mortgage loans payable (2,593,000) (1,328,000)
Borrowings under lines of credit 6,032,000 7,476,000
Repayment of lines of credit (1,072,000) (350,000)
Borrowings under notes payable 7,059,000 --
Repayment of notes payable (640,000) (5,000)
Repayment of subordinated debt (5,000,000) --
Cash - restricted decrease 2,036,000 190,000
Issuance of common stock 134,000 274,000
------------ -----------
Net cash provided by financing activities 6,599,000 8,093,000
------------ -----------
Net decrease in cash (2,988,000) (2,139,000)
CASH, BEGINNING OF PERIOD 5,243,000 9,838,000
------------ -----------
CASH, END OF PERIOD $ 2,255,000 $ 7,699,000
============ ===========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
KENNEDY-WILSON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
UNAUDITED
NOTE 1 - FINANCIAL STATEMENT PRESENTATION
The above financial statements have been prepared by
Kennedy-Wilson, Inc. a Delaware corporation, and subsidiaries (the
"Company") without audit by independent public accountants, pursuant to
the Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934. The statements, in
the opinion of the Company, present fairly the financial position and
results of operations for the dates and periods indicated. The results
of operations for interim periods are not necessarily indicative of
results to be expected for full fiscal years. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the Rules and Regulations of the
Securities and Exchange Commission. The Company believes that the
disclosures contained in the financial statements are adequate to make
the information presented not misleading. These financial statements
should be read in conjunction with the financial statements and the
notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999. Certain reclassifications have been
made to prior period balances to conform to the current period
presentation. In accordance with SFAS No. 130, Reporting Comprehensive
Income, the Company does not have any material disclosure items under
comprehensive income.
NOTE 2 - NOTES RECEIVABLE
Notes receivable consists primarily of non-performing notes and
related assets acquired from financial institutions. A majority of these
notes are typically collateralized by real estate, personal property or
guarantees.
NOTE 3 - INVESTMENTS WITH RELATED PARTIES AND NON-AFFILIATES
The Company has a number of partnerships and joint venture
interests ranging from 2% to 50%, some with former related parties, that
were formed to acquire, manage, develop and or sell real estate. These
investments are accounted for under the equity method. Investments with
related parties and non-affiliates also include mezzanine loans to real
estate developers for new single-family residential developments.
NOTE 4 - REAL ESTATE HELD FOR SALE
Real estate held for sale is comprised of commercial and
residential properties and land, and is accounted for at the lower of
carrying amount or fair value less cost to sell. Real estate is
classified as held for sale since the Company's intent is to acquire and
dispose of properties as part of its normal course of business.
NOTE 5 - SUBORDINATED DEBT
During the first quarter of 2000, the Company paid down $5.0
million of its subordinated debt.
6
<PAGE> 7
KENNEDY-WILSON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
UNAUDITED
NOTE 6 - EARNINGS PER SHARE
The following table reconciles the denominator used in calculating
the earnings per share for the periods ending March 31, 2000 and 1999.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------
BASIC CALCULATION 2000 1999
- --------------------------------------------------------- ----------- ----------
<S> <C> <C>
Net Income Available to Stockholders $ 1,684,000 $1,170,000
=========== ==========
Weighted Average Shares 9,080,887 6,707,284
----------- ----------
Basic EPS $ 0.19 $ 0.17
=========== ==========
DILUTED CALCULATION
Net Income $ 1,684,000 $1,170,000
Income Effect of Dilutive Securities, tax effected 74,000 --
----------- ----------
Net Income Available to Stockholders $ 1,758,000 $1,170,000
=========== ==========
Weighted Average Shares 9,080,887 6,707,284
Weighted Average Shares, including convertible debentures 750,000 --
Common Stock Equivalents 433,689 622,525
----------- ----------
Total Diluted Shares 10,264,576 7,329,809
----------- ----------
----------- ----------
Diluted EPS $ 0.17 $ 0.16
=========== ==========
</TABLE>
NOTE 7 - SEGMENT INFORMATION
The Company's business activities currently consist of
property management, commercial and residential brokerage, and various
types of real estate and note investments. The Company's segment
disclosure with respect to the determination of segment profit or loss
and segment assets is based on these services and its various
investments:
Property Management - As a result of recent acquisitions, the
Company has become a nationwide commercial and residential property
management and leasing company, providing a full range of services
relating to property management, including tenant representation.
The Company also provides asset management services for some of our
joint ventures.
Brokerage - Through it's various offices, the Company provides
specialized brokerage services for both commercial and residential
real estate and provides other real estate services such as
property valuations, development and implementation of marketing
plans, arranging financing, sealed bid auctions and open bid
auctions.
7
<PAGE> 8
KENNEDY-WILSON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
UNAUDITED
Investments - With joint venture partners and on its own, the
Company invests in commercial and residential real estate and
purchases and manages pools of distressed notes. The Company's
current real estate portfolio focuses on commercial buildings and
multiple and single-family residences. The Company has entered into
joint ventures with large international investors, to invest in
both U.S. and Japanese real estate and note pools. The Company also
makes mezzanine loans to real estate developers for new
single-family, residential developments.
The following table reconciles the Company's income and expense
activity for the three months ended March 31, 2000 and balance sheet
data as of March 31, 2000. The Company does not disclose based on
geographic segments due to immateriality.
2000 Reconciliation of Reportable Segment Information
<TABLE>
<CAPTION>
Property
Management Brokerage Investments Corporate Consolidated
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Property Management and Leasing Fees $ 8,213,000 $ 282,000 $ 8,495,000
Commissions 1,137,000 1,336,000 2,473,000
Other 433,000 $25,787,000 $ 348,000 26,568,000
----------- ----------- ----------- ------------ ------------
Total Revenue 9,350,000 2,051,000 25,787,000 348,000 37,536,000
Operating Expenses 7,053,000 1,336,000 23,908,000 2,991,000 35,288,000
----------- ----------- ----------- ------------ ------------
Income Before Provision for Income Taxes $ 2,297,000 $ 715,000 $ 1,879,000 $ (2,643,000) $ 2,248,000
=========== =========== =========== ============ ============
Total Assets $14,622,000 $16,880,000 $69,846,000 $ 32,723,000 $134,071,000
=========== =========== =========== ============ ============
</TABLE>
The following table reconciles the Company's income and expense
activity for the three months ended March 31, 1999, and balance sheet
data as of March 31, 1999.
1999 Reconciliation of Reportable Segment Information
<TABLE>
<CAPTION>
Property
Management Brokerage Investments Corporate Consolidated
---------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Property Management and Leasing Fees $5,354,000 $ 709,000 $ 465,000 $ 6,528,000
Commissions 1,856,000 315,000 2,171,000
Other 7,000 7,979,000 $ 172,000 8,158,000
---------- ----------- ------------ ------------ ------------
Total Revenue 5,354,000 2,572,000 8,759,000 172,000 16,857,000
Operating Expenses 3,892,000 1,223,000 8,190,000 1,779,000 15,084,000
---------- ----------- ------------ ------------ ------------
Income Before Provision for Income Taxes $1,462,000 $ 1,349,000 $ 569,000 $ (1,607,000) $ 1,773,000
========== =========== ============ ============ ============
Total Assets $7,597,000 $17,655,000 $155,437,000 $ 29,863,000 $210,552,000
========== =========== ============ ============ ============
</TABLE>
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
We are an international real estate services and investment
company. We provide property management and leasing services, asset
management, commercial and residential brokerage, and auction services
to clients primarily in the U.S. and Japan. Our clients include
financial institutions, major corporations, real estate developers,
insurance companies and governmental agencies. We also invest in
commercial and residential real estate, as well as individual and pools
of distressed notes both in the U.S. and Japan.
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
TOTAL REVENUES
Total revenues for the three months ended March 31, 2000 were
approximately $37.5 million, which represents a 122.6% increase over
$16.9 million for the same period in 1999. Earnings before taxes for the
three months ended March 31, 2000 were $2.2 million, which represents a
26.8% increase over the same period in 1999 of $1.8 million. Net income
for the three months ended March 31, 2000 was $1.7 million, which
represents a 43.9% increase over $1.2 million for March 31, 1999.
Property Management. Property management and leasing operations
generated approximately $8.5 million of revenues in the first quarter of
2000, representing 22.6% of our total revenue and a 30.1% increase over
property management revenue of approximately $6.5 million for the same
period in 1999. During 1999, we acquired five property management
companies. As of March 31, 2000, we had under management a portfolio of
approximately 75 million square feet of commercial, industrial and
apartment properties located in 26 states and the District of Columbia.
Brokerage. Brokerage commission revenues for the first quarter of
2000 were approximately $2.5 million, representing 6.6% of total
revenues and a 13.9% increase over brokerage commission revenues for the
first quarter of 1999 of approximately $2.2 million. The increase
reflects the continued expansion of our brokerage services both in the
U.S. and Japan, as well as our tenant representation business.
Investments. Sales of residential real estate were approximately
$23.0 million for the three months ended March 31, 2000, representing
61.3% of total revenues and a 363.3% increase over approximately $5.0
million for the same three month in 1999. This increase is due to sales
from three projects, including the sale of a 53-unit condominium complex
in West Los Angeles, fifteen units in a 109 unit single family
development in Cathedral City, CA, and a single family home in West Los
Angeles. This compares to revenues for the first quarter of 1999 from
the sale of fifteen units of a 23 unit single family development in Palm
Desert. The sales of residential real estate for both years reflect our
continuing strategy to sell upon completion of planned improvements,
rather than holding for speculation.
Equity in income of investments with related parties and
non-affiliates totaled approximately $1.3 million for the first quarter
in 2000, or 3.6% of total revenue compared to $455,000 realized in the
first quarter during 1999. Revenue from the mezzanine lending was
approximately $792,000 for the period ended March 31, 2000, compared to
$57,000 in the same period in 1999 due to maturing projects associated
with the loans.
Gains on restructured notes totaled $1.4 million for the period
ended March 31, 2000, or 3.7% of total revenues, a 109.4% increase from
$672,000 for the period ended March 31, 1999. The gain reflects our
continued progress in liquidating our portfolios of distressed notes
that were purchased at substantial discounts to face value both in the
U.S. and Japan. Our strategy to collect the note balances consists of
either restructuring the note to performing status, negotiating a
payoff, or foreclosing and selling the related collateral.
9
<PAGE> 10
Net rental income decreased to $77,000 for the first quarter of
2000 from approximately $1.7 million during the same period of 1999 as a
result of the sale of 6255 Sunset Blvd. office building, and the
deconsolidation of the single purpose entities which acquired the
commercial properties located at 1055 Wilshire Blvd., 6380 Wilshire
Blvd, 5900 Sepulveda Blvd., 7080 Hollywood and 301 South Fair Oaks.
TOTAL OPERATING EXPENSES
Operating expenses for the first quarter of 2000 were approximately
$35.3 million, representing a 133.9% increase over $15.0 million for the
same period in 1999. Part of the increase represents the higher cost of
goods sold associated with the sales of residential real estate
discussed above. The balance of the increase in operating expense was
primarily associated with the five property management companies
acquired in 1999. The increase was offset by the reductions in interest
expense and depreciation and amortization expense as a result of the
deconsolidation of the commercial properties as discussed above.
Brokerage commissions and marketing expenses increased to $93,000
for the period ended March 31, 2000 from $52,000 during the same period
of 1999, primarily as a result of the increased probate sales, which are
relatively more expensive than sealed bid sales or traditional brokerage
sales.
Cost of residential real estate sold was approximately $20.3
million for the period ended March 31, 2000, a 321.9% increase from
approximately $4.8 million for the same period in 1999. The increase
correlates with the increased revenues from the sales of residential
real estate discussed above.
Compensation and related expenses was approximately $8.1 million
for the first quarter of 2000, up 142.5% from approximately $3.4 million
for the first quarter of 1999. The increase was primarily a result of
the acquisition of five additional property management companies in
1999.
General and administrative expenses were approximately $4.4 million
for the first quarter of 2000, representing a 43.5% increase over the
same period in 1999 expenses of approximately $3.0 million. The increase
is due primarily to the additional expenses associated with our expanded
property management operations.
Depreciation and amortization expense increased to $970,000 for the
period ended March 31, 2000, a 58.8% increase over the $611,000 during
the same period of 1999. The increase was due, in part, to the
amortization of the goodwill and property management contracts
associated with the acquisition of the property management companies.
Interest expense was approximately $1.5 million for the first
quarter of 2000, compared to approximately $3.2 million during the same
period in 1999, representing a 45.9% decrease. The decrease resulted
from the elimination of the interest expense associated with the five
commercial properties as discussed above.
The provision for income taxes was $564,000 for the first quarter
in 2000, a 6.7% decrease compared to $603,000 for the first quarter of
1999 as a result of the reversal of an accrual in 1999.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity and capital resources requirements include
expenditures for distressed notes pools, the acquisition of property
management portfolios, real estate held for sale, and working capital
needs. Historically, we have not required significant capital resources
to support our brokerage operations. We finance our operations with
internally generated funds and borrowings under our revolving lines of
credit as described below. Our investments in real estate are typically
financed by mortgage loans secured primarily by that real estate. These
mortgage loans are generally nonrecourse in that, in the event of
default, recourse will be limited to the mortgaged property serving as
collateral, subject to certain exceptions that are standard in the real
estate industry.
Cash used in operating activities during the three months ended
March 31, 2000 was approximately $6.8 million, compared to approximately
$1.6 million in cash used in operating activities for the same period in
1999. The change included an increase in other assets, offset by the
decrease in accrued expenses and accounts payable.
Cash used in investing activities during the three months ended
March 31, 2000 was approximately $2.8, compared to approximately $8.6
million in cash used by investing activities during the same period in
1999. The change resulted primarily from the purchase and sale of a
condominium complex as well as contributions made to various joint
ventures.
Cash provided by financing activities was approximately $6.6
million for the first quarter of 2000, compared to cash provided by
financing activities for the same period of 1999 of about $8.1 million.
The change resulted from an increase in notes payable, offset by the pay
down of the Company's subordinated debt.
To the extent that we engage in additional strategic investments,
we may need to obtain third party financing which could include bank
financing or the public sale or private placement of debt or equity
securities. We believe that existing cash, plus capital generated from
property management and leasing, brokerage, sales of real estate owned,
collections from notes receivable, as well as our current unsecured $39
million lines of credit with East-West Bank and Tokai Bank, will provide
us with sufficient capital requirements for the foreseeable future.
We intend to retain earnings to finance our growth and, therefore,
do not anticipate paying any dividends. We believe that funds generated
from operations together with existing cash and available credit under
our credit facilities will be sufficient to finance our current
operations, planned investments, acquisitions of the property management
companies, and internal growth. Our need, if any, to raise additional
funds to meet our working capital and capital requirements will depend
on numerous factors, including the success and pace of the
implementation of our strategy for growth. We regularly monitor capital
raising alternatives to be able to take advantage of other available
avenues to support our working capital and investment needs, including
strategic partnerships and other alliances, bank borrowings, and the
sale of equity or debt securities.
11
<PAGE> 12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's exposure to market risk has not materially changed
from what was reported on the Company's Form 10-K for the year ended
December 31, 1999.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements as well as
historical information. Forward looking statements, which are included
in accordance with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, may involve known and unknown
risks, uncertainties and other factors that may cause the company's
actual results and performance to be materially different from any
results or performance suggested by the statements in this report. When
used in our documents or oral presentations, the words "plan,"
"believe," "anticipate," "estimate," "expect," "objective,"
"projection," " forecast," "goal," or similar words are intended to
identify forward-looking statements.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following Exhibits are included herein:
EXHIBIT INDEX
<TABLE>
<CAPTION>
ITEM DESCRIPTION
---- -----------
<S> <C>
27.0 Financial Data Schedule.
</TABLE>
(b) Reports on Form 8-K
None
SIGNATURE
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.
Date: May 15, 2000 KENNEDY-WILSON, INC.
------------------------------------
Registrant
/S/ Freeman A. Lyle
------------------------------------
Freeman A. Lyle
Executive Vice President & Chief Financial Officer
(Principal Financial and Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,320,000
<SECURITIES> 0
<RECEIVABLES> 36,386,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 134,071,000
<CURRENT-LIABILITIES> 16,473,000
<BONDS> 69,076,000
0
0
<COMMON> 91,000
<OTHER-SE> 48,431,000
<TOTAL-LIABILITY-AND-EQUITY> 134,071,000
<SALES> 0
<TOTAL-REVENUES> 37,536,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 35,288,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,248,000
<INCOME-TAX> 564,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,684,000
<EPS-BASIC> 0.19
<EPS-DILUTED> 0.17
</TABLE>
