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 June 30, 1996
_____ 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 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 32114
Daytona Beach, Florida (Zip Code)
(Address of principal executive offices)
(904) 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.
Outstanding
Class of Common Stock August 1, 1996
$1.00 par value 6,261,272
1
CONSOLIDATED-TOMOKA LAND CO.
INDEX
Page No.
PART I - - FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
June 30, 1996 and December 31, 1995 3
Consolidated Condensed Statements of Income and
Retained Earnings - Three Months Ended and
Six Months Ended June 30, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 5
Notes to Consolidated Condensed Financial Statements 6-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
PART II -- OTHER INFORMATION 12
SIGNATURES 13
2
PART I -- FINANCIAL INFORMATION
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1996 1995
--------- ------------
ASSETS
Cash $ 396,712 $ 203,829
Investment Securities 1,044,071 1,603,887
Notes Receivable 10,123,052 10,937,614
Accounts Receivable 4,233,642 2,143,305
Inventories 760,996 802,515
Cost of Fruit on Trees 2,254,564 2,658,126
Real Estate Held for Development and Sale 13,867,187 13,801,477
Net Investment in Direct Financing Lease 752,271 792,530
Other Assets 469,857 499,272
Property, Plant, and Equipment - Net 22,809,664 26,250,913
---------- ----------
TOTAL ASSETS $56,712,016 $59,693,468
========== ==========
LIABILITIES
Accounts Payable $ 675,299 $ 1,213,692
Notes Payable 18,656,595 20,921,298
Accrued Liabilities 3,198,331 2,569,848
Customer Deposits 49,842 52,411
Deferred Income Taxes 69,466 69,466
Income Taxes Payable 132,371 2,123,691
---------- ----------
TOTAL LIABILITIES 22,781,904 26,950,406
---------- ----------
MINORITY INTEREST 97,741 110,535
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock 6,261,272 6,261,272
Additional Paid-in Capital 1,782,105 1,782,105
Retained Earnings 25,788,994 24,589,150
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 33,832,371 32,632,527
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $56,712,016 $59,693,468
========== ==========
See accompanying Notes to Consolidated Condensed Financial Statements.
3
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Unaudited)
Three Months Ended Six Months Ended
------------------ -----------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ---------
INCOME:
Citrus Operations:
Sales of Fruit and Other Income $ 4,618,325 $ 2,052,093 $ 9,787,226 $ 5,773,193
Production and Selling Expenses ( 2,826,662) ( 1,799,305) ( 6,301,127)( 5,292,758)
---------- ---------- ---------- ----------
1,791,663 252,788 3,486,099 480,435
---------- ---------- ---------- ----------
Real Estate Operations:
Sales and Other Income 989,383 1,656,851 3,781,708 2,557,851
Costs and Other Expenses ( 849,636) ( 1,306,631) ( 2,051,201)( 2,128,871)
---------- ---------- ---------- ----------
139,747 350,220 1,730,507 428,980
---------- ---------- ---------- ----------
Profit On Sales of Undeveloped
Real Estate Interests 1,200 1,425,741 3,256 1,485,439
---------- ---------- ---------- ----------
Interest and Other Income 650,156 106,620 822,471 279,986
---------- ---------- ---------- ---------
OPERATING INCOME 2,582,766 2,135,369 6,042,333 2,674,840
GENERAL AND ADMINISTRATIVE EXPENSES ( 828,012) ( 908,786) ( 1,678,491)( 1,863,179)
---------- --------- ---------- ----------
INCOME BEFORE INCOME TAXES 1,754,754 1,226,583 4,363,842 811,661
INCOME TAXES ( 638,468) ( 456,154) ( 1,598,680) ( 295,730)
---------- --------- ---------- ---------
NET INCOME 1,116,286 770,429 2,765,162 515,931
RETAINED EARNINGS, Beginning of Period 24,672,708 21,479,963 24,589,150 22,986,715
DIVIDENDS -- -- ( 1,565,318)( 1,252,254)
---------- ---------- ---------- ----------
RETAINED EARNINGS, End of Period $25,788,994 $22,250,392 $25,788,994 $22,250,392
========== ========== ========== ==========
PER SHARE INFORMATION:
Average Shares Outstanding 6,261,272 6,261,272 6,261,272 6,261,272
========== ========== ========== ==========
Net Income Per Share $ .18 $ .12 $ .44 $ .08
========== ========== ========== ==========
Dividends Per Share $ -- $ -- $ .25 $ .20
========== ========== ========== ==========
See accompanying Notes to Consolidated Condensed Financial Statements.
4
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Unaudited
Six Months Ended
----------------------
June 30, June 30,
1996 1995
-------- --------
CASH FLOW FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM:
Citrus Sales of Fruit and Other Income $ 8,682,366 $ 5,995,175
Real Estate Sales and Other Income 3,584,405 3,622,505
Sales of Undeveloped Real Estate 46,027 1,485,439
Interest and Other Income 246,016 270,355
---------- -----------
Total Cash Received from Operating Activities 12,558,814 11,373,474
---------- ----------
CASH EXPENDED FOR:
Citrus Production and Selling Expenses 5,683,033 4,832,127
Real Estate Costs and Expenses 1,180,318 2,215,688
General and Administrative Expenses 1,270,255 1,364,944
Interest 765,913 1,059,069
Income Taxes 3,590,000 1,600,000
---------- ----------
Total Cash Expended for Operating Activities 12,489,519 11,071,828
---------- ----------
Net Cash Provided by Operating Activities 69,295 301,646
---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of Property, Plant, and Equipment ( 265,961) ( 692,105)
Net (Increase) Decrease in Investment Securities 559,816 ( 2,400,742)
Direct Financing Lease 40,259 43,360
Proceeds from Sale of Property, Plant,
and Equipment 3,619,495 1,225,167
---------- ----------
Net Cash Provided by (Used In)
Investing Activities 3,953,609 ( 1,824,320)
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Cash Proceeds of Debt 1,550,000 4,200,000
Payments of Debt ( 3,814,703) ( 1,801,906)
Dividends Paid ( 1,565,318) ( 1,252,254)
---------- ----------
Net Cash Provided by (Used in)
Financing Activities ( 3,830,021) 1,145,840
---------- ----------
NET INCREASE (DECREASE) IN CASH 192,883 ( 376,834)
CASH, BEGINNING OF YEAR 203,829 503,545
---------- ----------
CASH, END OF PERIOD $ 396,712 $ 126,711
========== ===========
See accompanying Notes to Consolidated Condensed Financial Statements.
5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Principles of Interim Statements. The information presented in
the unaudited consolidated condensed financial statements
reflects 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.
The consolidated condensed financial statements include the accounts
of the Company and its wholly owned subsidiaries. Intercompany
balances and transactions have been eliminated in consolidation.
2. Seasonal Operations. The company's citrus operations involve
a single-crop agricultural commodity and are seasonal in
nature. To a lessor extent, its forestry activities are
seasonal in nature. Accordingly, results for the six
months ended June 30, 1996 and 1995 are not necessarily
indicative of results to be expected for the full year.
Results of operations for the twelve months ended
June 30, 1996 and 1995 are summarized as follows (in
thousands):
Twelve Months Ended June 30,
----------------------------------------------
1996 1995
--------------------- -------------------------
Revenues Income Revenues Income(Loss)
-------- ----------- -------- -----------
Citrus Operations $12,833 $ 3,634 $ 7,755 $( 37)
Real Estate Operations 8,967 4,190 12,797 6,605
General Corporate & Other 6,183 2,884 5,310 1,957
------ ----- ------ ------
Total Revenues $27,983 $25,862
====== ======
Income From Continuing
Operations Before Income Taxes 10,708 8,525
Income Taxes ( 4,039) ( 3,214)
------ ------
Income from Continuing Operations 6,669 5,311
Loss From Discontinued Resort
Operations (net of income taxes) -- ( 230)
------ ------
Net Income $ 6,669 $ 5,081
====== ======
3. Common Stock and Earnings Per Common Share. Primary earnings
per share are based on the average number of common shares
and common share equivalents outstanding during the period.
Primary and fully diluted earnings per share are the same
for the periods.
6
4. Notes Payable. Notes payable consist of the following:
June 30, 1996
--------------------------------------------
Due Within
Total One Year
----------------- ---------------
Consolidated-Tomoka Land Co.
----------------------------
$15,000,000 Line of Credit $ 400,000 $ 400,000
Mortgages Payable 9,539,937 235,239
Industrial Revenue Bonds 3,000,874 278,009
---------- ----------
12,940,811 913,248
---------- ----------
Indigo Group Ltd.
-----------------
Industrial Revenue Bonds 1,964,200 56,400
Mortgages Payable 3,751,584 33,619
---------- ----------
5,715,784 90,019
---------- ----------
Total $18,656,595 $ 1,003,267
========== ==========
Indigo Group Ltd. ("IG LTD.") is a 100% owned limited partnership
in the real estate business. Included in notes payable is a
$2,551,784 mortgage note collateralized by developed real estate
in a joint venture project. IG Ltd's 50% partner is jointly
liable on the note.
Payments applicable to reduction of principal amounts will be
required as follows:
Consolidated- Indigo
Tomoka Group
Year Ending June 30, Land Co. Ltd. Total
------------------- ------------- --------- -----------
1997 $ 913,248 $ 90,019 $ 1,003,267
1998 584,012 93,422 677,434
1999 634,524 2,537,343 3,171,867
2000 689,414 56,400 745,814
2001 749,061 56,400 805,461
Thereafter 9,370,552 2,882,200 12,252,752
---------- --------- ----------
$12,940,811 $ 5,715,784 $18,656,595
========== ========== ==========
7
In the first six months of 1996, interest totaled $853,708 of
which $87,795 was capitalized to land held for development and
sale. Total interest for the six months ended June 30, 1995
was $1,124,335, of which $65,265 was capitalized to land held
for development and sale.
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.
RESULTS OF OPERATIONS
---------------------
Citrus Operations
Citrus operations achieved a dramatic improvement for the second quarter
of 1996 with profits of $1,791,663 posted. This represents a 609%
increase over 1995's same period $252,788 profit. The turnaround can be
attributed to an 84% rise in fruit sold coupled with a 21% gain in
average sales price. Fruit sold during 1996's second period totalled
495,785 boxes with 269,131 boxes sold for the same period one year
earlier. The combined effect of the rise in pricing and the greater
fruit volume resulted in a revenue increase of 125% to $4,618,325.
Production and selling expenses rose 57% during the period as a result
of the higher fruit volume, but were down on a per box basis due to the
efficiencies achieved through the higher volume.
An increased fruit harvest and higher average pricing also led to a
significant rise in profits for 1996's first six month period. Fruit
sold for 1996 to date totalled 1,050,488 boxes, a 51% increase over the
696,056 boxes sold during 1995's first half, while average fruit prices
rose 12%. These gains resulted in a 70% jump in revenues realized to
$9,787,226 and generated profits of $3,486,099, a 626% improvement over
1995's first six months profits totalling $480,435. On a per box basis
production and selling expenses were lower; although, in total they
increased 19% due to the gain in volume.
Real Estate Operations
----------------------
Real estate profits fell 60% for the three months ended June 30, 1996 to
$139,747. The absence of commercial real estate closings during the
period is the primary factor for this downturn. These results compare
to 1995's second quarter sales of 29 acres of commercial acreage which
produced gross profits in excess of $230,000. For the first six months
of 1996 the sale of 22 acres of commercial property generated gross
profits of approximately $1,460,000 and account for the 303% increase in
real estate operating income to $1,730,507. Gross profits of $295,000
were realized on the sale of 31 commercial acres during 1995's first six
month period. Sales prices and profit margins vary significantly
depending on the location and intended use of specific properties.
The impact of higher occupancy and leasing rates produced a 57% increase
in the bottom line from income properties for the second period and a
142% favorable impact for the six months through June 30, 1996 when
compared to 1995's same periods. Revenues showed only modest changes for
both periods as the gains achieved from leasing activity were offset by
revenues lost due to the sale of the 18,000 square foot Mariner Towne
Square shopping center in May 1995.
9
Forestry operating profits declined 25% during 1996's second quarter on
an 27% decrease in revenues due to lower timber harvesting volume. Year-
to-date forestry profits are in line with prior year, although revenues
are down 11%. The revenue decline is offset by a 53% reduction in
expenses which was achieved in the six month period due to the
reorganization of the department which took place during the first
quarter of 1995.
General, Corporate and Other
----------------------------
Minimal profits from the sale of undeveloped real estate interests were
recorded for both periods of 1996 to compared the $1,485,439 profit posted
in 1995's six month period, of which $1,425,741 was realized in the
second quarter. Sales of 389 acres of land, primarily located in
Highlands County accounted for those profits in 1995's first half, of
which 375 acres closed in the second quarter.
The sale of the 70,000 square foot Mariner Village shopping center
located in Spring Hill, Florida during June of 1996 generated profits in
excess of $450,000 and account for the majority of the increase in
interest and other income for the two periods of 1996 when compared to
1995. Also contributing to 1996's gain over 1995 was a small loss
recorded on the sale of the Mariner Towne Square shopping center which
occurred in May 1995.
General and administrative expenses declined 9% and 10% for the second
period and six months, respectively, due to reduced interest expense on
lower outstanding borrowing.
10
FINANCIAL POSITION
------------------
Profits of $2,765,162, equivalent to $.44 per share, for the first six
months of 1996 represent a strong improvement over 1995's same period
$515,931 net income, equivalent to $.08 per share. These favorable
results are led by citrus operations' large crop and higher pricing.
Real estate operations also contributed to the increased earnings as the
result of the greater commercial sales volume. Net cash generated for
the six month period amounted to $192,883 after debt reduction totalling
$2,264,703 and $1,565,318 in dividends paid. The dividends paid in 1996,
equivalent to $.25 per share, represent a 20% increase over dividends
paid in 1995's first six months equivalent to $.20 per share. Cash
generated from operating activities totalled $69,295, with an additional
$3,953,609 provided by investing activities. Cash realized from
investing activities includes $3,619,495 from the sale of property, plant
and equipment, primarily the sale of the 70,000 square foot Mariner
Village shopping center located in Spring Hill, Florida. The acquisition
of property, plant and equipment accounted for $265,961 in expenditures
which consisted primarily of the addition and replacement of citrus
vehicles and equipment, and forestry tree planting. Capital requirements
for the remainder of 1996 approximate $2.7 million and will be funded
through operations and if necessary current available financing sources.
These expenditures consist primarily of development at the Ladies
Professional Golf Association (LPGA) mixed-use project and citrus
operations equipment additions and replacements.
Company groves remain in excellent condition. Fruit harvesting for the
1995-1996 crop year has ended with Company groves producing 1,385,000
boxes, the largest crop in company history. To a great extent the
abundant crop is due to the maturing of the groves planted from 1989-
1992. In the coming years as these trees continue to mature the volume
of fruit harvested from these trees should grow. The final 1995-1996
USDA Florida orange crop estimate came in at just over 203 million boxes,
the third largest orange crop in Florida's history. Pricing for both
fresh and processed fruit remains relatively strong. Retail sales of
processed juice products have shown some decline since retail prices have
increased over the last several months, which may lead to weaker
wholesale pricing.
Commercial real estate sales for the remainder of 1996 appear strong with
approximately 370 acres under contract for 1996 closing at a sales value
in excess of $8 million. In addition to these sales contracts,
negotiations are underway on several other parcels. Development activity
at the LPGA mixed-use project continues to progress. Preliminary pre-
construction work has begun on the clubhouse and second golf course. In
August, a major landscape design project will commence on the new LPGA
Boulevard I-95 interchange. This significant upgrade to the main LPGA
International entry is projected to cost $400,000, of which $150,000 will
be paid by a State of Florida grant.
Profits for the near future look promising as portrayed by the large crop
year citrus fruit volume and relatively strong citrus pricing coupled
with the existing commercial real estate sales backlog. The Company
continues to concentrate on these two core businesses while strengthening
its balance sheet through debt reduction on the sale of its non-core
assets.
11
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.
Items 2 through 3.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of shareholders was held May 8, 1996 and
the following votes were received for each of the three
nominees for Class II directors:
Number of Number of Votes Number of Votes
Nominee Votes for Withheld Abstaining
--------- ----------- ----------------- ----------------
James P. Gorter 5,978,935 2,106 2,028
Robert F. Lloyd 5,978,635 2,406 2,028
Bruce W. Teeters 5,978,835 2,206 2,028
Item 5.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit (11) - Computation of Earnings
Per Common Share
Exhibit (27) - Financial Data Schedule
(b) Reports on Form 8-K
None filed.
12
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: August 6, 1996 By: /s/ Bob D. Allen
---------------------
Bob D. Allen
President & Chief
Executive Officer
Date: August 6, 1996 By: /s/ Bruce W. Teeters
-----------------------
Bruce W. Teeters
Sr. Vice President-
Finance & Treasurer
13
EXHIBIT INDEX
Page No.
----------
No. 11 Computation of Earnings Per Common Share 15
No. 27 Financial Data Schedule 16
14
EXHIBIT 11
CONSOLIDATED-TOMOKA LAND CO. AND SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY DILUTED
EARNINGS PER COMMON SHARE
For the Three Months Ended For the Six Months Ended
-------------------------- ------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- --------- --------- ---------
PRIMARY EARNINGS PER SHARE
NET INCOME 1,116,286 770,429 2,765,162 515,931
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 6,261,272 6,261,272 6,261,272 6,261,272
COMMON SHARES APPLICABLE TO STOCK
OPTIONS USING THE TREASURY STOCK
METHOD AT AVERAGE MARKET PRICE FOR
THE PERIOD 89,604 28,594 89,604 28,594
--------- --------- --------- ---------
TOTAL PRIMARY SHARES 6,350,876 6,289,866 6,350,876 6,289,866
========= ========= ========= =========
PRIMARY EARNINGS PER COMMON
SHARE $0.18 $0.12 $0.44 $0.08
========= ========= ========= =========
FULLY DILUTED EARNINGS PER
SHARE
TOTAL PRIMARY SHARES 6,350,876 6,289,866 6,350,876 6,289,866
COMMON SHARES APPLICABLE TO STOCK
OPTIONS IN ADDITION TO THOSE
USED IN PRIMARY COMPUTATION
DUE TO USE OF THE HIGHER OF
AVERAGE MARKET PRICE OR PERIOD
END MARKET PRICE 18,244 6,365 18,244 6,365
--------- --------- --------- ---------
TOTAL FULLY DILUTED SHARES 6,369,120 6,296,231 6,369,120 6,296,231
========= ========= ========= =========
FULLY DILUTED EARNINGS PER SHARE $0.18 $0.12 $0.44 $0.08
========= ========= ========= =========
15