SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
___ OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
___ TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 0-5556
CONSOLIDATED-TOMOKA LAND CO.
(Exact name of registrant as specified in its charter)
Florida 59-0483700
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
149 South Ridgewood Avenue
Daytona Beach, Florida 32114
(Address of principal executive offices) (Zip Code)
(386) 255-7558
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class of Common Stock Outstanding
May 1, 2002
$1.00 par value 5,615,579
1
CONSOLIDATED-TOMOKA LAND CO.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
March 31, 2002 and December 31, 2001 3
Consolidated Condensed Statements of Income -
Three Months Ended March 31, 2002 and 2001 4
Consolidated Statement of Shareholders' Equity -
Three Months Ended March 31, 2002 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 2002 and 2001 5
Notes to Consolidated Condensed Financial Statements 6-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
PART II -- OTHER INFORMATION 13
SIGNATURES 14
2
PART I -- FINANCIAL INFORMATION
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2002 2001
--------------------------
ASSETS
Cash $ 2,485,540 $ 2,797,868
Investment Securities 5,731,352 5,487,052
Notes Receivable 8,854,652 9,245,576
Real Estate Held for Development and Sale 9,121,071 9,189,609
Refundable Income Taxes 1,395,412 1,411,557
Other Assets 2,689,829 2,314,140
---------- ----------
$30,277,856 $30,445,802
========== ==========
Property, Plant and Equipment:
Land, Timber and Subsurface Interests $ 1,921,831 1,877,240
Golf Buildings, Improvements and Equipment 11,232,147 11,209,610
Income Properties Land, Buildings and Improvements 19,808,770 19,808,770
Other Furnishings and Equipment 793,443 790,520
---------- ----------
Total Property, Plant and Equipment 33,756,191 33,686,140
Less Accumulated Depreciation and Amortization ( 2,113,863) ( 1,915,241)
---------- ----------
Net - Property, Plant and Equipment 31,642,328 31,770,899
---------- ----------
TOTAL ASSETS $61,920,184 $62,216,701
========== ==========
LIABILITIES
Accounts Payable $ 131,791 $ 181,712
Accrued Liabilities 4,697,957 4,321,739
Deferred Income Taxes 2,787,804 2,872,779
Notes Payable 9,319,867 9,457,698
---------- ----------
TOTAL LIABILITIES 16,937,419 16,833,928
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock 5,615,579 5,615,579
Additional Paid in Capital 758,470 758,470
Retained Earnings 38,608,716 39,008,724
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 44,982,765 45,382,773
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $61,920,184 $62,216,701
========== ==========
See accompanying Notes to Consolidated Condensed Financial Statements.
3
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
---------------------------
March 31, March 31,
2002 2001
---------------------------
INCOME:
Real Estate Operations:
Sales and Other Income $2,482,028 $2,234,391
Costs and Expenses (1,900,305) (1,772,531)
--------- ---------
581,723 461,860
--------- ---------
Interest and Other Income 228,973 391,744
--------- ---------
810,696 853,604
General and Administrative Expenses ( 998,754) (1,009,332)
--------- ---------
Loss Before Income Taxes ( 188,058) ( 155,728)
Income Taxes 68,829 56,841
--------- ---------
Net Loss ( 119,229) ( 98,887)
========= =========
PER SHARE INFORMATION:
Basic and Diluted
Net Loss $ (0.02) $ (0.02)
========= =========
Dividends $ 0.05 $ 0.05
========= =========
See accompanying Notes to Consolidated Condensed Financial Statements.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Additional
Common Paid-In Retained
Stock Capital Earnings Total
---------- ---------- ----------- -----------
Balance, December 31, 2001 $5,615,579 $ 758,470 $39,008,724 $45,382,773
Net Loss -- -- ( 119,229) ( 119,229)
Cash Dividends ($.05 per share) -- -- ( 280,779) ( 280,779)
--------- ---------- ---------- ----------
Balance, March 31, 2002 $5,615,579 $ 758,470 $38,608,716 $44,982,765
========= ========== ========== ==========
4
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
--------------------------
March 31, March 31,
2002 2001
---------- -----------
CASH FLOW FROM OPERATING ACTIVITIES:
Net Loss $( 119,229) $( 98,887)
Adjustments to Reconcile Net Loss to Net Cash
Provided By Operating Activities:
Depreciation and Amortization 198,622 170,680
Decrease (Increase) in Assets:
Notes Receivable 390,924 1,791,947
Real Estate Held for Development 68,538 52,284
Refundable Income Taxes 16,145 118,679
Other Assets ( 375,689) ( 440,143)
(Decrease) Increase in Liabilities:
Accounts Payable ( 49,921) ( 108,442)
Accrued Liabilities 376,218 80,496
Deferred Income Taxes ( 84,975) ( 175,521)
--------- ----------
Net Cash Provided By Operating Activities 420,633 1,391,093
--------- ----------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of Property, Plant, and Equipment ( 70,051) ( 9,412,382)
Net Decrease (Increase) in Investment Securities ( 244,300) 3,073,462
--------- ----------
Net Cash Used In Investing Activities ( 314,351) ( 6,338,920)
--------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Notes Payable -- 688,000
Payments on Notes Payable ( 137,831) ( 789,323)
Funds Used to Repurchase Common Stock -- ( 226,521)
Dividends Paid ( 280,779) ( 278,289)
--------- ----------
Net Cash Used in Financing Activities ( 418,610) ( 606,133)
--------- ----------
Net Decrease In Cash ( 312,328) ( 5,553,960)
Cash, Beginning of Period 2,797,868 12,909,722
--------- ----------
Cash, End of Period $2,485,540 $ 7,355,762
========= ==========
See accompanying Notes to Consolidated Condensed Financial Statements.
5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Principles of Interim Statements. The following unaudited
consolidated condensed financial statements have been prepared
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures
which are normally included in annual financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to those
rules and regulations. The consolidated condensed financial
statements reflect all adjustments which are, in the opinion
of the management, necessary to present fairly the Company's
financial position and the results of operations for the
interim periods. The consolidated condensed format is
designed to be read in conjunction with the last annual
report. For further information refer to the consolidated
financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2001.
The consolidated condensed financial statements include the
accounts of the Company and its wholly owned subsidiaries.
Inter-company balances and transactions have been eliminated
in consolidation.
Certain reclassifications were made to the 2001 accompanying
consolidated financial statements to conform to the 2002
presentation.
The Company has reviewed the recoverability of long-lived
assets, including real estate held for development and sale,
property, plant and equipment and certain identifiable
intangibles, for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset
may or may not be recoverable. There has been no material
impairment of long-lived assets reflected in the consolidated
financial statements.
2. Common Stock and Earnings Per Common Share. Basic earnings per
common share are computed by dividing net income by the
weighted average number of shares of common stock outstanding
during the period. Diluted earnings per common share are
determined based on the assumption of the conversion of stock
options at the beginning of each period using the treasury
stock method at average cost for the periods.
6
2. Common Stock and Earnings Per Common Share (Continued)
Three Months Ended
March 31, March 31,
2002 2001
---------- ----------
Net Loss $( 119,229) $( 98,887)
========= =========
Weighted Average Shares Outstanding 5,615,579 5,566,148
Common Shares Applicable to Stock
Options Using the Treasury Stock Method 13,494 3,408
--------- ---------
Total Shares Applicable to Diluted Earnings Per Share 5,629,073 5,569,556
========= =========
Basic and Diluted Loss Per Share:
Net Loss $ (0.02) $ (0.02)
========= =========
3. Notes Payable. Notes payable consist of the following:
March 31, 2002
------------------------------
Due Within
Total One Year
------------------------------
$ 7,000,000 Line of Credit $ -- $ --
Mortgage Notes Payable 9,107,942 7,907,942
Industrial Revenue Bond 211,925 107,340
---------- ---------
$ 9,319,867 $8,015,282
========== =========
Payments applicable to reduction of principal amounts will be
required as follows:
Year Ending March 31,
---------------------
2003 $8,015,282
2004 104,585
2005 --
2006 1,200,000
2007 & Thereafter --
---------
$9,319,867
=========
In the first three months of 2002 and 2001 interest totaled
$204,936 and $213,060 respectively. No interest was capitalized
during either period.
7
4. Business Segment Data. The Company primarily operates in
three business segments: real estate, income properties and
golf. Real estate operations include commercial real estate,
real estate development, residential, leasing properties for
oil and mineral exploration, and forestry operations.
Information about the Company's operations in different
industries for the quarters ended March 31 is as follows:
2002 2001
Revenues:
Real Estate $ 726,832 $ 677,235
Income Properties 464,984 369,157
Golf 1,290,212 1,187,999
General, Corporate and Other 228,973 391,744
--------- ---------
$2,711,001 $2,626,135
--------- ---------
Income (Loss):
Real Estate $ 251,872 $ 274,334
Income Properties 362,233 271,648
Golf ( 32,382) ( 84,122)
General, Corporate and Other ( 769,781) ( 617,588)
-------- --------
$( 188,058) $( 155,728)
======== ========
Income (loss) represents income (loss) before income taxes.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Management's Discussion and Analysis is designed to be read in
conjunction with the financial statements and Management's Discussion
and Analysis in the last annual report.
"Safe Harbor"
STATEMENT UNDER THE SECURITIES REFORM ACT OF 1995
Certain statements contained in this report (other than the financial
statements and statements of historical fact), are forward-looking
statements. The words "believe," "estimate," "expect," "intend,"
"anticipate," "will," "could," "may," "should," "plan," "potential,"
"predict," "forecast," and similar expressions and variations thereof
identify certain of such forward-looking statements, which speak only
as of the dates on which they were made. Forward-looking statements
are made based upon management's expectations and beliefs concerning
future developments and their potential effect upon the Company.
There can be no assurance that future developments will be in
accordance with management's expectations or that the effect of
future developments on the Company will be those anticipated by
management.
The Company wishes to caution readers that the assumptions which form
the basis for forward-looking statements with respect to or that may
impact earnings for the year ended December 31, 2002, and thereafter
include many factors that are beyond the Company's ability to control
or estimate precisely. These risks and uncertainties include, but
are not limited to, the market demand for the Company's real estate
parcels, golf activities, income properties, timber and other
products; the impact of competitive real estate; changes in pricing by
the Company or its competitors; the costs and other effects of
complying with environmental and other regulatory requirements; losses
due to natural disasters; and changes in national, regional or local
economic and political conditions, such as inflation, deflation, or
fluctuation in interest rates.
While the Company periodically reassesses material trends and
uncertainties affecting its results of operations and financial
condition, the Company does not intend to review or revise any
particular forward-looking statement referenced herein in light of
future events.
RESULTS OF OPERATIONS
REAL ESTATE OPERATIONS
REAL ESTATE SALES
The sale of 20 acres of land in the first quarter of 2002
generated revenues of $548,000 and profits totaling $236,000.
This profit represents a 17% decline from profits of $283,000
produced on revenues of $600,000 for the first three-month
period of 2001. The higher profits in 2001's first period were
the result of the sale of 11 acres of property at higher gross
margins.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
GOLF OPERATIONS
Bottom line results from golf operations improved 62% during the
first quarter of 2002 when compared to the prior year's same
period. A loss of $32,000 was posted during the period compared
to a loss of $84,000 in 2001's first quarter. The improved
results were achieved on a 9% gain in revenues. The revenue
gain was primarily the result of a 39% increase in food and
beverage activity at the clubhouse, with golf course revenues up
1% from the prior year. Overall expenses from golf operations
increased 4%. The rise in expenses was predominantly due to
higher variable costs associated with the increased food and
beverage activity.
INCOME PROPERTIES
Profits of $362,000 realized from income properties during the
first quarter of 2002 represent a 33% improvement over 2001
first-period profits of $272,000. Revenues increased 26% due to
the addition of four properties during 2001, while expenses
increased 5% on the depreciation associated with these
acquisitions. The year-end 2001 sale of a portion of the auto
dealership site obtained in 2000 somewhat offset these higher
income properties' revenues and expenses in the first quarter of
2002.
GENERAL CORPORATE AND OTHER
Interest and other income of $229,000 was earned in 2002's first
period, and represents a 42% decrease from the interest and other
income of $392,000 posted in 2001's first three months. This
decline can be attributed to lower investment income earned on
reduced investable funds.
General and administrative expenses declined 1% to $999,000 in the
first quarter as a result of lower costs associated with payroll and
benefits. This amount compares to general and administrative
expenses of $1,009,000 posted in the prior year's same period.
FINANCIAL POSITION
For the first quarter of 2002, the Company posted a loss of $119,229,
equivalent to $.02 per share. These results are substantially in line
with the net loss of $98,887, also equivalent to $.02 per share,
posted in 2001's first three months. When compared to the prior
year's three-month results, slightly lower earnings recorded from real
estate sales, coupled with lower interest and other income, were
offset by increased profits from income properties and improved
results from golf operations.
The Company also uses Earnings Before Depreciation and Deferred Taxes
("EBDDT") as a performance measure. The Company's strategy of
investing in income properties through the deferred tax like-kind
exchange process produces significant amounts of depreciation and
deferred taxes. This measure tracks results in this area.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Following is the calculation of EBDDT:
Quarter Ended
-----------------------
March 31, March 31,
2002 2001
-----------------------
Net Loss $(119,229) $( 98,887)
Add Back:
Depreciation 198,622 170,680
Deferred Taxes ( 84,975) (175,521)
------- -------
Earnings Before Depreciation and Deferred Taxes $( 5,582) $(103,728)
======= =======
EBDDT Per Share $(0.00) $(0.02)
==== ====
EBDDT is not a measure of operating results or cash flows from
operating activities as defined by generally accepted accounting
principles. Further, EBDDT is not necessarily indicative of cash
availability to fund cash needs and should not be considered as an
alternative to cash flow as a measure of liquidity. The Company
believes, however, that EBDDT provides relevant information about
operations and is useful, along with net income, for an understanding
of the Company's operating results.
EBDDT is calculated by adding depreciation, amortization and deferred
income taxes to net income (loss) as they represent non-cash charges.
Cash and investment securities at March 31, 2002 totaled $8,217,000,
representing only a modest decrease from the $8,285,000 on hand at
December 31, 2001. During the three-month period, operating
activities provided cash of $421,000, with the acquisition of
property, plant and equipment using funds totaling $70,000, reductions
in notes payable using $138,000, and dividends paid totaling $281,000,
equivalent to $.05 per share. For the remainder of the year, capital
requirements are projected to approximate $2,300,000. These funds
will primarily be expended on roads, entrance features, and site
development on lands adjacent to Interstate 95 in Daytona Beach,
Florida. Additionally, the Company intends to acquire triple-net
lease income properties through the like-kind exchange process as
funds become available through qualified sales. Cash and investment
securities on hand, operations, and existing financing sources will
provide the funds needed for these expenditures.
The Company has a commitment for $8,000,000 in long-term financing.
The new debt, which is anticipated to close in July 2002, will be for
a ten-year term at a rate of 7.35% and secured by 3,000 acres of the
Company's most westerly lands. The funds will be used to pay off the
$7,860,000, 8.8% term note, which is due July 2002. In addition, the
Company has agreed to place its unsecured $7,000,000 revolving line of
credit with the same financing source. The interest rate on the line
of credit will
11
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
continue to be 150 basis points above the 30-day LIBOR. Currently,
the income properties owned by the Company are unencumbered. The
Company believes it has the ability to borrow against these
properties on a non-recourse basis.
Spurred by continued development activities on Company owned and
surrounding lands, contract activity during the quarter was strong
with a number of new contracts signed for closing in 2002 and future
years. Management continues to work diligently to satisfy contract
contingencies and convert the contract backlog into closings. As
qualified closings occur, management intends to continue to add to
its inventory of geographically dispersed Florida income properties
through the deferred tax like-kind exchange process.
12
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to which
the Company or its subsidiaries is a party.
Item 2 through 3.
Not Applicable
Item 4. Submission of matters to a vote of security holders.
The annual meeting of Shareholders was held April 24, 2002.
The following votes were received for each of the three
nominees for Class II directors:
Number of Number of Votes
Nominee votes for Withheld
----------------- --------- ---------------
Robert F. Lloyd 4,790,518 57,324
William H. McMunn 4,775,149 72,693
Bruce W. Teeters 4,779,530 68,312
Item 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11 - Incorporated by Reference on Page 7
of this 10-Q report.
(b) Reports on Form 8-K
No Form 8-K reports were filed during the first
quarter.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CONSOLIDATED-TOMOKA LAND CO.
(Registrant)
Date: May 9, 2002 By:/s/ William H. McMunn
----------------------------
William H. McMunn, President
and Chief Executive Officer
Date: May 9, 2002 By:/s/ Bruce W. Teeters
----------------------------
Bruce W. Teeters, Senior
Vice President - Finance
and Treasurer
14