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 <TABLE> <CAPTION> (Unaudited) March 31, December 31, 2002 2001 -------------------------- <S> <C> <C> 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 ========== ========== </TABLE> See accompanying Notes to Consolidated Condensed Financial Statements. 3
CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED STATEMENTS OF INCOME <TABLE> <CAPTION> (Unaudited) Three Months Ended --------------------------- March 31, March 31, 2002 2001 --------------------------- <S> <C> <C> 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 ========= ========= </TABLE> See accompanying Notes to Consolidated Condensed Financial Statements. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY <TABLE> <CAPTION> Additional Common Paid-In Retained Stock Capital Earnings Total ---------- ---------- ----------- ----------- <S> <C> <C> <C> <C> 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 ========= ========== ========== ========== </TABLE>
4 CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS <TABLE> <CAPTION> (Unaudited) Three Months Ended -------------------------- March 31, March 31, 2002 2001 ---------- ----------- <S> <C> <C> 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 ========= ========== </TABLE> 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) <TABLE> <CAPTION> Three Months Ended March 31, March 31, 2002 2001 ---------- ---------- <S> <C> <C> 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) ========= ========= </TABLE> 3. Notes Payable. Notes payable consist of the following: <TABLE> <CAPTION> March 31, 2002 ------------------------------ Due Within Total One Year ------------------------------ <S> <C> <C> $ 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 ========== ========= </TABLE> 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: <TABLE> <CAPTION> 2002 2001 <S> <C> <C> 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. </TABLE> 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: <TABLE> <CAPTION> Quarter Ended ----------------------- March 31, March 31, 2002 2001 ----------------------- <S> <C> <C> 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) ==== ==== </TABLE> 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