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, 1997
___ 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)
(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.
Class of Common Stock Outstanding
May 1, 1997
$1.00 par value 6,261,272
1
CONSOLIDATED-TOMOKA LAND CO.
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Consolidated Condensed Balance Sheets -
March 31, 1997 and December 31, 1996 3
Consolidated Condensed Statements of Income and
Retained Earnings - Three Months Ended
March 31, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Condensed Financial Statements 6-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
PART II -- OTHER INFORMATION 11
SIGNATURES 12
2
PART I -- FINANCIAL INFORMATION
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1997 1996
--------- ------------
ASSETS
Cash & Cash Equivalents $ 390,793 $ 1,760,835
Investment Securities 998,276 1,396,415
Notes Receivable 14,578,261 14,770,281
Accounts Receivable 1,726,843 2,217,584
Inventories 636,324 686,597
Cost of Fruit on Trees 1,916,832 2,179,989
Real Estate held for Development and Sale 14,691,618 14,499,495
Net Investment in Direct Financing Lease 689,958 710,990
Other Assets 603,185 354,473
Property, Plant, and Equipment - Net 20,958,716 21,095,863
---------- ----------
TOTAL ASSETS $57,190,806 $59,672,522
========== ==========
LIABILITIES
Accounts Payable $ 394,353 $ 680,935
Notes Payable 17,788,897 17,947,771
Accrued Liabilities 3,995,903 3,651,507
Deferred Income Taxes 406,930 406,930
Income Taxes Payable 465,416 1,193,994
---------- ----------
TOTAL LIABILITIES 23,051,499 23,881,137
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock 6,261,272 6,261,272
Additional Paid-in Capital 1,782,105 1,782,105
Retained Earnings 26,095,930 27,748,008
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 34,139,307 35,791,385
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $57,190,806 $59,672,522
========== ==========
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
---------------------------
March 31, March 31,
1997 1996
--------- -----------
INCOME:
Citrus Operations:
Sales of Fruit and Other Income $ 4,422,426 $ 5,168,901
Production and Selling Expenses ( 3,547,544) ( 3,474,465)
---------- ----------
874,882 1,694,436
---------- ----------
Real Estate Operations:
Sales and Other Income 848,770 2,792,325
Costs and Expenses ( 793,629) ( 1,201,565)
---------- ----------
55,141 1,590,760
---------- ----------
Profit on Sales of Undeveloped
Real Estate Interests 2,000 2,056
---------- ----------
Interest and Other Income 298,634 172,315
---------- ----------
General and Administrative Expenses ( 882,933) ( 850,479)
---------- ----------
Income Before Income Taxes 347,724 2,609,088
Income Taxes ( 121,420) ( 960,212)
---------- ----------
Net Income 226,304 1,648,876
Retained Earnings, Beginning of Period 27,748,008 24,589,150
Dividends ( 1,878,382) ( 1,565,318)
---------- ----------
Retained Earnings, End of Period $26,095,930 $24,672,708
========== ==========
PER SHARE INFORMATION:
Average Shares Outstanding 6,261,272 6,261,272
========== ==========
Net Income Per Share $ .04 $ .26
========== =========
Dividends Per Share $ .30 $ .25
========== =========
See accompanying Notes to Consolidated Condensed Financial Statements.
4
CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
--------------------------
March 31, March 31,
1997 1996
--------- ---------
CASH FLOW FROM OPERATING ACTIVITIES:
CASH RECEIVED FROM:
Citrus Sales of Fruit and Other Income $ 4,895,613 $ 4,448,216
Real Estate Sales and Other Income 979,963 3,415,306
Sales of Undeveloped Real Estate Interests 2,000 44,827
Interest and Other Income 241,701 127,766
--------- ---------
Total Cash Received from Operating Activities 6,119,277 8,036,115
--------- ---------
CASH EXPENDED FOR:
Citrus Production and Selling Expense 3,020,671 2,899,312
Real Estate Costs and Expenses 748,720 717,263
General and Administrative Expenses 854,815 638,118
Interest 316,235 369,032
Income Taxes 849,998 1,975,000
--------- ---------
Cash Expended for Operating Activities 5,790,439 6,598,725
--------- ---------
Net Cash Flow Provided by Operating Activities 328,838 1,437,390
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of Property, Plant, and Equipment ( 107,001) ( 144,480)
Net (Increase) Decrease from Investment Securities 398,139 ( 200,572)
Direct Financing Lease 21,032 20,003
Proceeds from Sale of Property, Plant and Equipment 26,206 5,275
--------- ---------
Net Cash Provided by (Used In) Investing Activities 338,376 ( 319,774)
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Cash Proceeds from Notes Payable - 850,000
Payments on Notes Payable ( 158,874) ( 562,019)
Dividends Paid ( 1,878,382) ( 1,565,318)
--------- ---------
Net Cash Used in Financing Activities ( 2,037,256) ( 1,277,337)
--------- ---------
Net Decrease In Cash and Cash Equivalents ( 1,370,042) ( 159,721)
Cash and Cash Equivalents at Beginning of Period 1,760,835 1,167,373
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 390,793 $ 1,007,652
========= =========
See accompanying Notes to Consolidated Condensed Financial Statements.
5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Principles of Interim Statements. The following
unaudited 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
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 lesser extent, forestry activities are seasonal in nature.
Accordingly, results for the three months ended March 31, 1997
and 1996 are not necessarily indicative of results to be
expected for the full year. Results of operations for the twelve
months ended March 31,1997 and 1996 are summarized as follows
(in thousands):
Twelve Months Ended March 31,
------------------------------------------------
1997 1996
------------------------------------------------
Revenues Income Revenues Income
-------- ------------ -------- -----------
Citrus Operations $13,117 $ 3,192 $10,267 $ 2,096
Real Estate Operations 5,698 1,937 9,634 4,400
General Corporate & Other 6,634 3,215 7,064 3,684
------ ----- ------ -----
Total Revenues $25,449 $26,965
====== ======
Income Before Income Taxes 8,344 10,180
Income Taxes ( 3,164) ( 3,857)
------ ------
Net Income $ 5,180 $ 6,323
====== ======
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
periods. Primary and fully diluted earnings per share are
the same for the periods.
6
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128
"Earnings Per Share," (SFAS 128). SFAS 128 establishes new
standards for computing and presenting earnings per share (EPS).
Specifically, SAS 128 replaces the presentation of primary EPS
with a presentation basic of EPS, requires dual presentation of
basic and diluted EPS on the face of the income statement for
all entities with complex capital stuctures and requires a
reconciliation of the numerator and denominator of the basic
EPS computation to the numerator and denominator of the diluted
EPS computation. SFAS 128 is effective for financial statements
issued for periods ending after December 15, 1997; earlier
application is not permitted. EPS for the periods ended March
31, 1997 and March 31, 1996 computed under SFAS 128 would not
be different than that previously computed.
4. Notes Payable. Notes payable consist of the following:
March 31, 1997
-------------------------------------------
Due Within
Total One Year
-------------------------------------------
Consolidated-Tomoka Land Co.
----------------------------
$ 7,000,000 Line of Credit $ - $ -
Mortgage Payable 9,365,441 251,109
Industrial Revenue Bond 2,774,936 295,142
---------- --------
12,140,377 546,251
---------- --------
Indigo Group Ltd.
----------------
Industrial Revenue Bond 1,921,900 56,400
Mortgages Payable 3,726,620 36,139
---------- --------
5,648,520 92,539
---------- --------
Total $17,788,897 $ 638,790
========== ========
Indigo Group Ltd. ("IG LTD.") is a 100% owned limited partnership
in the real estate business. Included in notes payable is a
$2,526,620 mortgage note collateralized by developed real estate
in a joint venture project. IG Ltd.'s 50% partner is jointly
liable on the note.
7
Payments applicable to reduction of principal amounts will be
required as follows:
Consolidated- Indigo
Tomoka Group
Year Ending March 31, Land Co. Ltd. Total
--------------------- ------------- ------- -----------
1998 $ 546,251 $ 92,539 $ 638,790
1999 621,499 2,546,881 3,168,380
2000 675,262 56,400 731,662
2001 733,681 56,400 790,081
2002 797,167 1,696,300 2,493,467
Thereafter 8,766,517 1,200,000 9,966,517
---------- ---------- ----------
$12,140,377 $5,648,520 $17,788,897
========== ========== ==========
In the first three months of 1997 interest totaled
$427,945, of which $50,000 was capitalized to land
held for development and sale. Total interest for
three months ended March 31, 1996 was $426,827 of which
$57,795 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 Operation
Citrus profits declined 48% to $874,882 for the first three months of
1997 when compared to prior year's same period $1,694,436 profit.
Revenues totaling $4,422,426 represent a 14% decrease as the result of
an 8% fall in fruit harvested and sold combined with a 7% reduction in
average fruit pricing. Boxes produced during 1997's first quarter
amounted to 511,000 compared to 1996's total of 555,000 boxes. Pricing
on both fresh and processed fruit contributed to the fall in average
pricing. Production and selling expenses rose 2% during the period, the
result of additional packing costs associated with a 4% increase in fresh
fruit along with lower handling credits associated with a 95% reduction
in outside growers fruit processed.
Real Estate Operations
Profits from real estate operations posted a 97% decline to $55,141.
This compares to 1996's first quarter profit of $1,590,760. This
downturn can be attributed to the absence of commercial real estate
closings in 1997; whereas, closings of commercial real estate in the
first quarter of 1996 totaled 22 acres and generated revenue and gross
profits of $1,615,000 and $1,460,000, respectively.
Revenue from income properties decreased 32%, producing a small loss
compared to a small profit one year earlier. The sale of the 70,000
square foot shopping center located in Spring Hill, Florida which
occurred in June 1996 and the December 1996 sale of the 24,000 square
foot Daytona Beach, Florida office building accounted for these declines.
Decreased harvesting resulted in a 17% decline in both revenues and
profits from forestry operations, with profits totaling $181,808 in
1997's first quarter. A 125% gain was posted from subsurface income as
both oil royalties, on increased production, and income from oil and
mineral leases rose during the period, combining to add $55,780 to the
bottom line.
General, Corporate and Other
Interest and other income rose 73% for the first quarter of 1997,
primarily due to increased interest recorded on mortgage notes receivable
from year end 1996 real estate closings. General and administrative
expenses posted a nominal 4% increase for the period.
9
FINANCIAL POSITION
Company profits of $226,304, equivalent to $.04 per share, for 1997's
first quarter represent an 86% downturn from 1996's same period
$1,648,876 profit, equivalent to $.26 per share. The fall in profits can
be traced to the absence of commercial real estate closings, coupled with
lower citrus volume and pricing. Dividends totaling $1,878,382,
equivalent to $.30 per share, were paid during the period and represent
a 20% increase over prior year's first quarter dividend payment of $.25
per share. Overall cash including the dividend payment declined
$1,370,042. Cash flow from operating activities provided $328,838, with
cash from investing activities adding $338,376 and cash used in financing
activities which includes dividends totaling $2,037,256. Total notes
payable decreased during the period $158,874. Capital spending was
minimal for the first quarter with $2.3 million dollars projected to be
expended the remainder of the year. These capital dollars will be funded
through operations and if necessary available financing sources.
Company citrus groves remain in good condition, despite a lack of rain
during the late winter and early spring. The overall spring bloom and
subsequent fruit set on Company groves was very good and leads to
projections of a strong crop for the upcoming 1997-1998 crop year. The
cold temperatures experienced in early 1997 appear to have had little
effect on Company groves and the current crop statewide, with the Florida
orange crop forecast for the 1996-1997 season at a record 221 million
boxes. Pricing pressures from Brazilian fruit coupled with the abundant
crop have led to relatively weak pricing for both fresh and processed
fruit.
Activity at the Ladies Professional Golf Association ("LPGA") mixed-use
development has been strong. The East Florida Building Association's
Parade of Homes was held in March with the community hosting the "Grand
Showcase Home" and attracting thousands of visitors. In early May the
LPGA Sprint Titleholders golf tournament was held at the LPGA
International golf course giving national exposure to the development.
The development of the clubhouse, hotel and second golf course will soon
be underway. Development continues on new residential products selling
in the low $100,000 to mid $150,000 price range. Interest remains strong
for land within the development and surrounding lands. Commercial real
estate contract backlog for closing in 1997 stands at $6.0 million on the
sale of 213 acres with several additional transactions in the negotiation
stage.
The conversion of the existing commercial real estate contract backlog
and contracts under negotiation into closed transactions will be a key
to profitable full year earnings. Continued strong fruit production with
relative stable pricing is also important to near term earnings.
10
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 23, 1997
and the following votes were received for each of the three
nominees for Class III directors:
Number of
Number of Number of Votes Votes
Nominee votes for Withheld Abstaining
Jack H. Chambers 6,100,326 1,232 5,165
William O. E. Henry 6,097,738 3,820 5,165
John H. Pace, Jr. 6,097,238 4,320 5,165
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:
No reports on Form 8-K were filed by the Company during the
quarter covered by this report.
11
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 7, 1997 By:/s/ Bob D. Allen
----------------------------
Bob D. Allen, President and
Chief Executive Officer
Date: May 7, 1997 By:/s/ Bruce W. Teeters
----------------------------
Bruce W. Teeters, Senior
Vice President - Finance
and Treasurer
12
EXHIBIT 11
CONSOLIDATED-TOMOKA LAND CO. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
For the Three Months Ended
--------------------------
March 31, March 31,
1997 1996
--------- ---------
PRIMARY EARNINGS PER SHARE
NET INCOME 226,304 1,648,876
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 6,261,272 6,261,272
COMMON SHARES APPLICABLE TO STOCK OPTIONS
USING THE TREASURY STOCK METHOD AT
AVERAGE MARKET PRICE FOR THE PERIOD 72,106 74,857
--------- ---------
TOTAL PRIMARY SHARES 6,333,378 6,336,129
========= =========
PRIMARY EARNINGS PER COMMON SHARE $0.04 $0.26
========= =========
FULLY DILUTED EARNINGS PER SHARE
TOTAL PRIMARY SHARES 6,333,378 6,336,129
COMMON SHARES APPLICABLE TO STOCK OPTIONS
USED IN PRIMARY COMPUTATION DUE TO USE
OF THE HIGHER OF AVERAGE MARKET PRICE
OR PERIOD END MARKET PRICE -- 5,341
--------- ---------
TOTAL FULLY DILUTED SHARES 6,333,378 6,341,470
========= =========
FULLY DILUTED EARNINGS PER SHARE $0.04 $0.26
========= =========