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, 2004 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 1-10153 HOMEFED CORPORATION (Exact name of registrant as specified in its Charter) Delaware 33-0304982 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1903 Wright Place, Suite 220, Carlsbad, California 92008 (Address of principal executive offices) (Zip Code) (760) 918-8200 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) ---------------------- 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 by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Act). YES X NO ------- ------ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. On April 30, 2004, there were 8,257,959 outstanding shares of the Registrant's Common Stock, par value $.01 per share. PART I - FINANCIAL INFORMATION ------------------------------ Item 1. Financial Statements. HOMEFED CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets March 31, 2004 and December 31, 2003 (Dollars in thousands, except par value) March 31, December 31, 2004 2003 ----------- ----------- (Unaudited) ASSETS Real estate $ 34,497 $ 37,612 Cash and cash equivalents 49,744 43,503 Restricted cash 3,952 4,609 Investments-available for sale (aggregate cost of $62,248 and $88,503) 62,249 88,519 Deposits and other assets 1,200 995 Deferred income taxes 36,448 41,772 ----------- ----------- TOTAL $ 188,090 $ 217,010 =========== =========== LIABILITIES Note payable to Leucadia Financial Corporation $ -- $ 24,716 Notes payable to trust deed holders 12,747 13,580 Deferred revenue 48,880 53,491 Accounts payable and accrued liabilities 6,826 10,985 Liability for environmental remediation 10,412 10,785 Income taxes payable 6,846 503 Other liabilities 4,420 13,509 ----------- ----------- Total liabilities 90,131 127,569 ----------- ----------- COMMITMENTS AND CONTINGENCIES MINORITY INTEREST 7,203 13,111 ----------- ----------- STOCKHOLDERS' EQUITY Common stock, $.01 par value; 25,000,000 shares authorized; 8,257,959 and 8,155,159 shares outstanding 83 82 Additional paid-in capital 381,176 380,545 Deferred compensation pursuant to stock incentive plans (3) (4) Accumulated other comprehensive income 1 9 Accumulated deficit (290,501) (304,302) ----------- ----------- Total stockholders' equity 90,756 76,330 ----------- ----------- TOTAL $ 188,090 $ 217,010 =========== =========== See notes to interim consolidated financial statements. 2 HOMEFED CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations For the three month periods ended March 31, 2004 and 2003 (In thousands, except per share amounts) (Unaudited) 2004 2003 ---- ---- REVENUES Sales of real estate $ 43,406 $ 7,016 Co-op marketing and advertising fees 186 380 --------- --------- 43,592 7,396 --------- --------- EXPENSES Cost of sales 9,654 2,340 Interest expense 715 649 General and administrative expenses 2,468 1,812 Administrative services fees to Leucadia Financial Corporation 30 30 --------- --------- 12,867 4,831 --------- --------- Income from operations 30,725 2,565 Other income (expense) (1,108) 406 --------- --------- Income before income taxes and minority interest 29,617 2,971 Income tax provision (12,245) (1,252) --------- --------- Income before minority interest 17,372 1,719 Minority interest (3,571) (474) --------- --------- Net income $ 13,801 $ 1,245 ========= ========= Basic income per common share $ 1.68 $ 0.15 ========= ========= Diluted income per common share $ 1.67 $ 0.15 ========= ========= See notes to interim consolidated financial statements. 3 HOMEFED CORPORATION AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity For the three month periods ended March 31, 2004 and 2003 (Dollars in thousands, except par value) (Unaudited) Deferred Common Compensation Accumulated Stock Additional Pursuant to Other Total $.01 Par Paid-In Stock Incentive Comprehensive Accumulated Stockholders' Value Capital Plans Income Deficit Equity ------- ---------- --------------- -------------- ------------- ----------- Balance, January 1, 2003 $ 82 $ 380,364 $ (418) $ -- $ (378,378) $ 1,650 Comprehensive income: Net income 1,245 1,245 --------- Amortization of restricted stock grants 11 11 Amortization related to stock options 156 156 Change in value of performance-based stock options (90) 90 -- ----- ---------- ------ --------- ----------- --------- Balance, March 31, 2003 $ 82 $ 380,274 $ (161) $ -- $ (377,133) $ 3,062 ===== ========== ====== ========= =========== ========= Balance, January 1, 2004 $ 82 $ 380,545 $ (4) $ 9 $ (304,302) $ 76,330 Comprehensive income: Net change in unrealized gain (loss) on investments (8) (8) Net income 13,801 13,801 --------- Comprehensive income 13,793 --------- Amortization related to stock options 1 1 Exercise of options to purchase common shares 1 631 632 ----- ---------- ------ --------- ----------- --------- Balance, March 31, 2004 $ 83 $ 381,176 $ (3) $ 1 $ (290,501) $ 90,756 ===== ========== ====== ========= =========== ========= See notes to interim consolidated financial statements. 4 HOMEFED CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flow For the three month periods ended March 31, 2004 and 2003 (In thousands) (Unaudited) 2004 2003 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 13,801 $ 1,245 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Minority interest 3,571 474 Provision for deferred income taxes 5,330 920 Net securities gains (5) -- Amortization of deferred compensation pursuant to stock incentive plans 1 167 Loss on prepayment of Leucadia Financial Corporation note 1,470 -- Amortization of debt discount on note payable to Leucadia Financial Corporation 276 257 Other amortization related to investments (135) -- Changes in operating assets and liabilities: Real estate 3,505 (7,887) Deposits and other assets (205) (231) Notes payable to trust deed holders (60) -- Deferred revenue (4,611) (6,696) Accounts payable and accrued liabilities (4,159) 247 Liability for environmental remediation (373) (61) Income taxes payable 6,343 175 Other liabilities (9,089) 5,551 -------- -------- Net cash provided by (used for) operating activities 15,660 (5,839) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments (other than short-term) (30,440) -- Proceeds from maturities of investments 9,900 -- Proceeds from sales of investments 46,936 -- Decrease in restricted cash 657 -- -------- -------- Net cash provided by investing activities 27,053 -- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payment of Leucadia Financial Corporation note (26,462) -- Principal payments to trust deed holders (1,163) -- Exercise of options to purchase common shares 632 -- Contribution from (distribution to) minority interest (9,479) 43 -------- -------- Net cash provided by (used for) financing activities (36,472) 43 -------- -------- Net increase (decrease) in cash and cash equivalents 6,241 (5,796) Cash and cash equivalents, beginning of period 43,503 33,601 -------- -------- Cash and cash equivalents, end of period $ 49,744 $ 27,805 ======== ======== Supplemental disclosures of cash flow information: Cash paid for interest (net of amounts capitalized) $ 410 $ 392 Cash paid for income taxes $ 597 $ 128 Non cash financing activities: Contribution of real estate from minority interest $ -- $ 244 See notes to interim consolidated financial statements. 5 HOMEFED CORPORATION AND SUBSIDIARIES Notes to Interim Consolidated Financial Statements 1. The unaudited interim consolidated financial statements, which reflect all adjustments (consisting only of normal recurring items) that management believes are necessary to present fairly the results of interim operations, should be read in conjunction with the Notes to Consolidated Financial Statements (including the Summary of Significant Accounting Policies) included in the Company's audited consolidated financial statements for the year ended December 31, 2003 which are included in the Company's Annual Report filed on Form 10-K, as amended by Form 10-K/A, for such year (the "2003 10-K"). Results of operations for interim periods are not necessarily indicative of annual results of operations. The consolidated balance sheet at December 31, 2003 was extracted from the Company's audited annual consolidated financial statements and does not include all disclosures required by generally accepted accounting principles for annual financial statements. Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), establishes a fair value method for accounting for stock-based compensation plans, either through recognition in the statements of operations or disclosure. As permitted, the Company applies APB Opinion No. 25 and related Interpretations in accounting for its plans. Accordingly, no compensation cost has been recognized in the statements of operations related to employees and directors under its stock compensation plans. Had compensation cost for the Company's fixed stock options been recorded in the statements of operations consistent with the provisions of SFAS 123, the Company's net income and income per share would not have been materially different from that reported. Certain amounts for prior periods have been reclassified to be consistent with the 2004 presentation. 2. In March 2004, the Company prepaid in full its note payable to Leucadia Financial Corporation ("LFC"), a subsidiary of Leucadia National Corporation ("Leucadia"), in the amount of $26,462,000. As of the date of prepayment, the Company expensed the remaining unamortized discount on the note in the amount of $1,470,000, which is included in the caption "Other income (expense)" in the consolidated statements of operations. Interest on the note of $373,000 and $392,000 was expensed and paid during the three month periods ended March 31, 2004 and 2003, respectively. Additionally, $276,000 and $257,000 of debt discount on the note was amortized as interest expense during the three month periods ended March 31, 2004 and 2003, respectively. 3. The Company has a $10,000,000 line of credit agreement with LFC that has a maturity date of February 28, 2007. Loans outstanding under this line of credit bear interest at 10% per annum. At March 31, 2004, no amounts were outstanding under this facility. 4. Basic and diluted income per share of common stock was calculated by dividing the net income by the weighted average shares of common stock outstanding, and for diluted income per share, the incremental weighted average number of shares issuable upon exercise of outstanding options for the periods they were outstanding. The number of shares used to calculate basic income per common share was 8,217,893 and 8,155,084 for the three month periods ended March 31, 2004 and 2003, respectively. The number of shares used to calculate diluted income per share was 8,272,409 and 8,220,950 for the three month periods ended March 31, 2004 and 2003, respectively. 5. Pursuant to the administrative services agreement, LFC provides administrative services, including providing the services of one of the Company's officers to the Company through December 31, 2004. Administrative fees paid to LFC were $30,000 for the three month periods ended March 31, 2004 and 2003. A subsidiary of the Company sublets a portion of its office space to Leucadia, for which it receives monthly rental fees in the amount equal to Leucadia's pro rata share of the Company's cost. The rental fee is approximately $6,000 per month. 6 Notes to Interim Consolidated Financial Statements, continued 6. Certain of the Company's lot purchase agreements with home builders include provisions that entitle the Company to a share of the profits realized by the home builders upon their sale of the homes, after certain thresholds are achieved. The actual amount which could be received by the Company is generally based on a formula and other specified criteria contained in the lot purchase agreements, and is generally not payable and cannot be determined with reasonable certainty until the builder has completed the sale of a substantial portion of the homes covered by the lot purchase agreement. The Company's policy is to accrue revenue earned pursuant to these agreements when amounts are payable pursuant to the lot purchase agreements. The Company accrued $300,000 under these agreements for the three month period ended March 31, 2003. 7. In May 2004, the Company agreed to extend the lease covering its corporate office space for an additional five years to February 2010. The annual minimum rent is slightly less than the Company's current rate per square foot; however, the agreement provides for rent escalation charges over the extended term. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Interim Operations. Liquidity and Capital Resources For the three month period ended March 31, 2004, net cash was provided by operating activities, principally resulting from sales of real estate at the San Elijo Hills project. For the three month period ended March 31, 2003, net cash was used for operating activities, principally to pay interest and general and administrative expenses and for real estate improvements. The Company's principal sources of funds are proceeds from the sale of real estate, its $10,000,000 line of credit with LFC, fee income from the San Elijo Hills project, dividends and tax sharing payments from its subsidiaries and borrowings from or repayment of advances by its subsidiaries. As of March 31, 2004, the Company had aggregate cash, cash equivalents and investments of $112,000,000 to meet its liquidity needs. The Company currently has a $10,000,000 line of credit agreement with LFC, which has a maturity date of February 28, 2007. Loans outstanding under this line of credit bear interest at 10% per annum. As of March 31, 2004, no amounts were outstanding under this facility. In January 2004, a dividend of $50,000,000 was paid by the Company's subsidiary that owns the San Elijo Hills project, of which $9,500,000 was paid to the minority interests in the San Elijo Hills project, and the balance was retained by the Company. In March 2004, the Company prepaid its $26,462,000 borrowing from LFC in full, using its available cash. During the three months ended March 31, 2004, the Company closed on the sales of two neighborhoods in the San Elijo Hills project consisting of 94 single family lots and 45 multi-family units for aggregate sales proceeds of $33,000,000, net of closing costs. The sales proceeds included $3,100,000 of non-refundable options payments that the Company had received previously in 2003. The Company has deferred recognition of $10,700,000 of revenue from these sales since it is required to complete certain improvements under the purchase agreements. As of March 31, 2004, the aggregate balance of deferred revenue for all real estate sales was $48,900,000, including amounts related to the 2004 sales. The Company estimates that it will spend approximately $14,300,000 to complete the required improvements, including costs related to common areas. The Company will recognize revenues previously deferred and the related cost of sales in its statements of operations as the improvements are completed under the percentage of completion method of accounting. The Company currently estimates that it will substantially complete the required improvements during 2004. The remaining land at the San Elijo Hills project to be developed and sold or leased consists of the following: Single family lots to be developed and sold 736 Multi-family units 42 Very low income apartment units 70 School sites 2 Square footage of commercial space 135,000 The Company currently plans to develop and sell the residential sites during 2004 and 2005, after which the remaining activity at the San Elijo Hills project will be primarily concentrated on the commercial sites. These estimates of future property available for sale and the timing of the sales are derived from the current plans for the project, and could change based upon the actions of the project's home builders or regulatory agencies. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Interim Operations, continued. Results of Operations Real Estate Sales Activity San Elijo Hills Project: ------------------------ For the three month periods ended March 31, 2004 and 2003, the Company recorded revenues from sales of real estate of approximately $37,600,000 and $7,000,000, respectively. For the three month period ended March 31, 2004, the Company closed on the sale of two neighborhoods, consisting of 94 single family lots and 45 multi-family units for an aggregate purchase price of $33,000,000, net of closing costs. For the three month period ended 2003, no sales of real estate closed. As discussed above, a portion of the revenue from sales of real estate is deferred, and is recognized as revenues upon the completion of the required improvements to the property, including costs related to common areas, under the percentage of completion method of accounting. Included in revenues are previously deferred amounts of $15,300,000 and $6,700,000 for the three month periods ended March 31, 2004 and 2003, respectively, which were recognized upon completion of certain required improvements. Revenues from sales of real estate also include amounts received pursuant to profit sharing agreements with home builders of $300,000 for the three month period ended March 31, 2003. During the three month periods ended March 31, 2004 and 2003, cost of sales of real estate aggregated $8,700,000 and $2,300,000, respectively. Cost of sales is recognized in the same proportion to the amount of revenue recognized under the percentage of completion method of accounting. Otay Ranch Project: ------------------- As more fully described in the 2003 10-K, in January 2004 the City of Chula Vista acquired 439 acres of mitigation land from Otay Land Company by eminent domain proceedings for aggregate proceeds of approximately $5,800,000, substantially all of which had been received as of December 31, 2003. The Company recognized a pre-tax gain of approximately $4,800,000 on this transaction during the first quarter of 2004. There was no other real estate sales activity at the Otay Ranch project during the first quarter of 2004, and no sale activity at all during the first quarter of 2003. Other Results of Operations Activity The Company recorded co-op marketing and advertising fees of $186,000 and $380,000 for the three month periods ended March 31, 2004 and 2003, respectively. The Company records these fees when the San Elijo Hills project builders sell homes, and are generally based upon a fixed percentage of the homes' selling price. Interest expense reflects the interest due on indebtedness to LFC of $373,000 and $392,000 for the three month periods ended March 31, 2004 and 2003, respectively. Interest expense also includes amortization of debt discount related to the previously outstanding indebtedness to LFC of $276,000 and $257,000 for the three month periods ended March 31, 2004 and 2003, respectively. As described above, the note payable to LFC was fully repaid in March 2004, and as such these related interest charges will not be incurred in future periods. In addition, interest expense for 2004 includes $66,000 related to the Rampage vineyard project as described in the 2003 10-K. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Interim Operations, continued. General and administrative expenses increased during the three month period ended March 31, 2004 as compared to the same period in 2003, primarily due to greater expenses related to legal and professional fees, marketing and property tax expenses. The increase in legal and professional fees principally reflects costs related to the investigation of acquisition opportunities and costs associated with the Otay Ranch project, including costs incurred in connection with the acquisition of certain Otay Ranch land by the City of Chula Vista as discussed above. Marketing expenses are higher as a result of promotional expenses related to the next phase of residential lots to be sold at the San Elijo Hills project. The increase in property tax expense relates to the Rampage vineyard project, which was purchased in November 2003. General and administrative expenses also reflect a decrease, as compared to the same period in 2003, in compensation expenses related to performance options which fully vested in April 2003. Other income (expense) for the three month period ended March 31, 2004 includes $1,470,000 for the remaining unamortized discount on the LFC note which was expensed upon repayment of the note. Investment income in 2004 increased by $240,000 as compared to the prior period primarily due to greater interest income resulting from a larger amount of invested assets. Other income (expense) for the 2003 period includes cash received to settle a dispute with one of the Company's vendors. The increase in minority interest expense for the three month period ended March 31, 2004 as compared to the same period in 2003 primarily relates to minority interest in CDS Holding Corporation. The Company's effective income tax rate in 2004 and 2003 is higher than the federal statutory rate due to California state income taxes and state franchise taxes. Cautionary Statement for Forward-Looking Information Statements included in this Management's Discussion and Analysis of Financial Condition and Results of Interim Operations may contain forward-looking statements. Such statements may relate, but are not limited, to projections of revenues, income or loss, plans for growth and future operations, competition and regulation as well as assumptions relating to the foregoing. Such forward-looking statements are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted or quantified. When used in this Management's Discussion and Analysis of Financial Condition and Results of Interim Operations, the words "estimates," "expects," "anticipates," "believes," "plans," "intends" and variations of such words and similar expressions are intended to identify forward-looking statements that involve risks and uncertainties. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. In addition to risks set forth in the Company's other public filings with the Securities and Exchange Commission, the following important factors could cause actual results to differ materially from any results projected, forecasted, estimated or budgeted: o Changes in prevailing interest rate levels, including mortgage rates. Any significant increase in the prevailing low mortgage interest rate environment could reduce consumer demand for housing. o Changes in domestic laws and government regulations or requirements and in implementation and/or enforcement of governmental rules and regulations. The Company's plans for its development projects require numerous governmental approvals, licenses, permits and agreements, which must be obtained before development and construction may commence. The approval process can be delayed by withdrawals or modifications of preliminary approvals, by litigation and appeals challenging development rights and by changes in prevailing local circumstances or applicable laws that may require additional approvals. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Interim Operations, continued. o Changes in real estate pricing environments. Any significant decrease in the prevailing price of real estate in the geographic areas in which the Company owns, develops and sells real estate may adversely affect the Company's results of operations. o Regional or general increases in cost of living. Any significant increases in the prevailing prices of goods and services that result in increased costs of living, particularly in the regions in which the Company is currently developing properties, may adversely affect consumer demand for housing. o Demographic and economic changes in the United States generally and California in particular. The Company's operations are sensitive to demographic and economic changes. Any economic downturn in the United States in general, and California in particular, may adversely affect consumer demand for housing by limiting the ability of people to save for down payments and purchase homes. In addition, if the current trend of population increases in California were not to continue, demand for real estate in California may not be as robust as current levels indicate. o Increases in real estate taxes and other local government fees. Any such increases may make it more expensive to own the properties that the Company is currently developing, which would increase the carrying costs to the Company of owning the properties and decrease consumer demand for them. o Significant competition from other real estate developers and homebuilders. There are numerous residential real estate developers and development projects operating in the same geographic area in which the Company operates. Many of the Company's competitors may have advantages over the Company, including greater financial resources and/or access to cheaper capital. o Decreased consumer spending for housing. Any decrease in consumer spending for housing may directly affect the Company's results of operations. o Delays in construction schedules and cost overruns. Any material delays could adversely affect the Company's ability to complete its projects, significantly increasing the costs of doing so, including interests costs, or drive potential customers to purchase competitors' products. Cost overruns, if material, could have a direct adverse impact on the Company's results of operations. o Availability and cost of land, materials and labor and increased development costs, many of which the Company would not be able to control. The Company's current and future development projects require the Company to purchase significant amounts of land, materials and labor. If the costs of these items increase, it will increase the costs to the Company of completing its projects; if the Company is not able to recoup these increased costs, its results of operations could be adversely affected. o Damage to or condemnation of properties and occurrence of significant natural disasters and fires. Damage to or condemnation of any of the Company's properties, whether by natural disasters and fires or otherwise, may either delay or preclude the Company's ability to develop and sell its properties, or affect the price at which it may sell such properties. o Imposition of limitations on the Company's ability to develop its properties resulting from environmental laws and regulations and developments in or new applications thereof. The residential real estate development industry is subject to increasing environmental, building, construction, zoning and real estate regulations that are imposed by various federal, state and local authorities. Environmental laws may cause the Company to incur additional costs, and adversely affect its ability to complete its projects in a timely and profitable manner. 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Interim Operations, continued. o The inability to insure certain risks economically. The Company cannot be certain that it will be able to insure certain risks economically. o The availability of adequate water resources and reliable energy source in the areas where the Company owns real estate projects. Any shortage of reliable water and energy resources and drop in consumer confidence in the dependability of such resources in areas where the Company owns land may adversely affect the values of properties owned by the Company and curtail development projects. o Changes in the composition of the Company's assets and liabilities through acquisitions or divestitures. The Company may make future acquisitions or divestitures of assets. Any change in the composition of the Company's assets and liabilities as a result thereof could significantly affect the financial position of the Company and the risks that it faces. o The actual cost of environmental liabilities concerning land owned in San Diego County, California exceeding the amount reserved for such matter. The actual cost of remediation of undeveloped land owned by a subsidiary could exceed the amount reserved for such matter. o The Company's ability to generate sufficient taxable income to fully realize the deferred tax asset, net of the valuation allowance. The Company and certain of its subsidiaries have NOLs and other tax attributes, but may not be able to generate sufficient taxable income to fully realize the deferred tax assets. o The impact of inflation. The Company, as well as the real estate development and homebuilding industry in general, may be adversely affected by inflation, primarily because of either reduced rates of savings by consumers during periods of low inflation or higher land and construction costs during periods of high inflation. Undue reliance should not be placed on these forward-looking statements, which are applicable only as of the date hereof. The Company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this Management's Discussion and Analysis of Financial Condition and Results of Interim Operations or to reflect the occurrence of unanticipated events. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Information required under this Item is contained in Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 2003, and is incorporated by reference herein. Item 4. Controls and Procedures. (a) The Company's management evaluated, with the participation of the Company's principal executive and principal financial officers, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of March 31, 2004. Based on their evaluation, the Company's principal executive and principal financial officers concluded that the Company's disclosure controls and procedures were effective as of March 31, 2004. (b) There has been no change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company's fiscal quarter ended March 31, 2004, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 12 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. a) Exhibits. 31.1 Certification of President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Vice President and Controller pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. b) Reports on Form 8-K. None. 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. HOMEFED CORPORATION (Registrant) Date: May 5, 2004 By: /s/ Erin N. Ruhe ----------------------- Erin N. Ruhe Vice President, Treasurer and Controller (Principal Accounting Officer) 14 EXHIBIT INDEX Exhibit Number Description 31.1 Certification of President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Vice President and Controller pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 15