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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
---- OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
---- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
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)
Registrant's Telephone Number, including area code
(386) 255-7558
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF
THE SECURITIES EXCHANGE ACT OF 1934:
Name of each exchange on
Title of each class which registered
COMMON STOCK, $1 PAR VALUE AMERICAN STOCK EXCHANGE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT:
NONE
(Title of Class)
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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. X
----
The aggregate market value of the voting stock held by non-affiliates of
the Registrant at February 23, 2001 was approximately $83,486,760.
The number of shares of the Registrant's Common Stock outstanding on
February 23, 2001 was 5,565,784.
Portions of the Proxy Statement of Registrant dated March 15, 2001 are
incorporated by reference in Part III of this report.
"Safe Harbor"
Statement under the Private 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 "before," "estimate," "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, 2001,
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 of the Company's real estate parcels; 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 fluctuations 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.
TABLE OF CONTENTS
PART I
Item 1. BUSINESS...............................................1
Item 2. PROPERTIES.............................................5
Item 3. LEGAL PROCEEDINGS......................................7
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....7
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS....................................7
Item 6. SELECTED FINANCIAL DATA................................8
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................9
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK...................................................15
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ..........15
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES...................15
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.....15
Item 11. EXECUTIVE COMPENSATION.................................15
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.............................................15
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.........15
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K...............................................16
PART I
Item 1. Business
------ --------
Consolidated-Tomoka Land Co. (the "Company") is primarily engaged
in the real estate industry through its wholly owned subsidiaries,
Indigo Group Inc.,Indigo Development Inc., Indigo International Inc.,
Indigo Group Ltd. and Palms Del Mar Inc. Real estate operations
include commercial real estate, real estate development, residential
and golf operations, property leasing, leasing properties for oil and
mineral exploration and the sale of forest products.
These operations are predominantly located in Volusia and
Highlands Counties in Florida.
On December 28, 1998, the Company entered into an agreement for
the sale of its citrus operations. The transaction closed
on April 7, 1999. The results of the citrus operations have been
reported separately as discontinued operations in the Consolidated
Statements of Income.
Due to the sale of the citrus operations, the Company's
continuing operations include only one segment. Thus
segmental disclosures are not applicable.
REAL ESTATE OPERATIONS
----------------------
Commercial Development. In August of 1989, the Company reached
an agreement in principle with the Ladies Professional Golf
Association ("LPGA") and the City of Daytona Beach, which called
for the planning and development of the site for the national
headquarters of the LPGA along with two championship golf
courses. The mixed-use development plan, located immediately
west of Interstate 95 in Daytona Beach, Florida, and known
as LPGA International, additionally provided for a clubhouse, resort
facilities, and residential communities along with other
commercial uses. This development is on approximately
3,300 acres owned by the Company's real estate development
subsidiary, Indigo Development Inc. ("IDI"), the City of
Daytona Beach, other developers, and individual homesite
owners. The LPGA International development is part of a 4,500-acre
tract located both west and east of Interstate 95 which
received Development of Regional Impact (DRI) approval in 1993.
The LPGA has successfully relocated its headquarters to
Daytona Beach and occupies facilities constructed in 1996,
within the development. The official opening of the
first LPGA International golf course occurred in July 1994 with
the second course opening in October 1998. In early 1996,
the Interstate 95 interchange at LPGA Boulevard, which
is the north and main entrance to the project, was opened
for use. On September 1, 1997, responsibility for the
operations of the LPGA International golf courses was
transferred from the City of Daytona Beach to a wholly
Item 1. Business (CONTINUED)
------ --------
owned subsidiary of the Company. The agreement with the City of
Daytona Beach provided for the second golf course and a clubhouse
to be constructed by the Company in return for a long-term lease
from the City on both golf courses. The first phase of the clubhouse,
which consists primarily of the cart barn, was completed in 1999.
Construction of the final phase of the clubhouse, consisting of
a 17,000 square-foot facility including a pro shop, locker rooms,
informal dining and banquet rooms, and a swimming pool, was completed
in December 2000 and opened for business in January 2001.
During 1999 the Company sold 180 acres plus 44 developed lots to Renar
Development Company ("Renar"). As part of this transaction, Renar
became the residential and commercial developer of the community,
while the Company maintained its position as master developer of the
project.
Indigo Commercial Realty Inc., a commercial real estate brokerage
company formed in 1991, is the Company's agent in the marketing
and management of commercial properties. In addition to the LPGA
development, approximately 50 acres of fully developed sites
located in the Daytona Beach area and owned by Indigo Group Inc.
were available for sale at December 31, 2000. All development
and improvement costs have been completed at these sites.
Residential. Until December 1993, the Company, through Indigo
Group Ltd. ("IG LTD"),operated in residential development, home
building and sales. At the end of 1993 IG LTD closed down the
development and building functions. IG LTD continues to sell its
remaining lot inventory in the following communities:
Riverwood Plantation, a 180-acre community in Port Orange, Florida,
with 44 lots remaining at December 31, 2000.
Tomoka Heights, a 180-acre development adjacent to Lake Henry in
Highlands County, Florida. There are approximately 107 developable
lots remaining to be sold including 64 fully developed lots.
The remaining lots within Indigo Lakes, a 200-acre development
located in Daytona Beach, were sold in 2000.
IG LTD also had an inventory of fully developed non-contiguous
lots in Palm Coast. The remaining lots were sold during 2000.
Income Properties. During 2000, the Company implemented a new
business strategy. This strategy involves becoming a company, over
time, with a more predictable earnings pattern from geographically
dispersed Florida real estate operations. To this end, the Company
acquired several income properties in 2000 and the first month of
2001. In December 2000, the Company purchased a 10,880 square-foot
building located in Tallahassee, Florida. This site is under a long-
term triple net lease with Eckerd. In January 2001, the Company
acquired two additional properties. The properties consist of a
28,000 square-foot retail building located in Daytona Beach, Florida,
Item 1. Business (CONTINUED)
------ --------
and an 18,150 square-foot building located in Lakeland, Florida. Both
of these properties are under long-term triple net leases with Barnes
& Noble.
Other rental property is limited to a 17,000 square-foot office
building and an automobile dealership site, both of which are located
in Daytona Beach, Florida, along with ground leases for billboards,
a communication tower site and a hunting lease. The office building
is under a lease/purchase agreement which is considered a direct
financing lease. The dealership site was purchased in 2000, and
is leased under an operating lease arrangement.
Prior to 2000, the Company had successfully implemented
a strategy of disposing of its inventory of miscellaneous
income properties. During 1998 the Company sold its 50% interest
in a 70,000 square-foot shopping center located in Marion
County, Florida. At the end of 1997, the Company sold the
office building located in Daytona Beach, known as Consolidated
Center. The Company continues to use a portion of the building as
its headquarters, as terms of the sale included a commitment to
lease 6,000 square feet for a period of at least three years. Also
in 1997, the 24,000 square-foot office building in Palm Coast,
Florida was sold. During 1996, the Company sold the 24,000
square-foot office building in Daytona Beach, which had been leased
to the LPGA as the principal tenant, along with the 70,000
square-foot Mariner Village shopping center located in Spring Hill,
Florida.
Forest Product Sales. The timber lands encompass approximately
13,000 acres west of Daytona Beach. Geographic location of the
timber tract is excellent. In addition to access by major
highways (Interstate 95, State Road 40, and International
Speedway Boulevard), the internal road system for forestry
purposes is good. Income from sales of forest products varies
considerably from year-to-year depending on economic conditions
and rainfall, which sometimes limits access to portions of
the woodlands. In addition, drought conditions sharply increase
the potential of forest fires, as occurred during the summer
of 1998. The wildfires which ravaged central Florida burned
approximately 9,000 acres of the Company's timberland. This
and the sale of the approximately 11,000-acre parcel to St.
Johns River Water Management District in 1997 will reduce
the Company's potential for future income from sales of forest
products; although, sales should more than cover expenses
associated with the forestry operation. These expenses
consist primarily of real estate taxes, with additional
expenses including the costs of installing and maintaining
roads and drainage systems, reforestation, and wild fire
suppression.
Subsurface Interests. The Company owns full or fractional subsurface
oil, gas, and mineral interests in approximately 530,000 "surface"
acres of land owned by others in various parts of Florida, equivalent
Item 1. Business (CONTINUED)
------ --------
to approximately 292,400 acres in terms of full interest. The
Company leases its interests to mineral exploration firms whenever
possible.
Leases on 800 acres have reached maturity; but, in accordance with
their terms, are held by the oil companies without annual rental
payments because of producing oil wells, on which the Company
receives royalties.
The purchasers of 82,543 surface acres in which the Company has a
one-half reserved mineral interest are entitled to releases of
the Company's rights if such releases are required for residential
or business development. Consideration for such releases on 72,137
of those acres would be at the rate of $2.50 per surface acre.
On other acres in Lee and Hendry Counties (where producing oil
wells exist), the Company's current policy is to grant no release
rights with respect to its reserved mineral rights. Periodically,
a release of surface entry rights might be granted upon request of a
surface owner who requires such a release for special financing or
development purposes. In counties other than Lee and Hendry, releases
are granted for a percentage of the surface value of a parcel of land.
At December 31, 2000 there were two producing oil wells on the
Company's interests. Volume in 2000 was 133,280 barrels and volume
in 1999 was 141,973 barrels from three producing wells.
Production for prior recent years was: 1998 - 138,664,
1997 - 125,356, and 1996 - 131,231 barrels.
Real Estate Held and Land Transactions. More than 90% of the
Company's lands have been owned by the Company or its affiliates
for more than fifty years. To date, the Company has not been in
the business of acquiring and holding real estate for sale.
Instead, portions of the Company's lands are put to what
management believes is their best economic use. Unsolicited sales
are made of parcels which do not appear to offer opportunities for
use in the foreseeable future.
GENERAL, CORPORATE AND OTHER OPERATIONS
---------------------------------------
Land development beyond that discussed at "Business - Real Estate
Operations" will necessarily depend upon the long-range economic
and population growth of Florida and may be significantly affected
by fluctuations in economic conditions, prices of Florida real
estate, and the amount of resources available to the Company for
development.
CITRUS
------
The Company, under the name Lake Placid Groves, owned
and operated approximately 3,900 acres of orange and grapefruit
groves located primarily on two large parcels in Highlands County,
Florida. On April 7, 1999, the Company's citrus business,
Lake Placid Groves, was sold. The Company harvested and sold both
Item 1. Business (continued)
------ --------
fresh and to-be-processed citrus from its groves. In connection
with the groves, the Company owned and operated an efficient fresh
fruit citrus packing plant, in which the portion of the crop which
was sold as fresh fruit was packed. Fresh fruit sales were
made by the Company to wholesale produce distributors and retail
grocery chains primarily in the Eastern and Midwestern regions of the
United States and Canada. In an effort to achieve optimum
utilization of the packing facility, the Company also handled the
fruit of other growers in the area.
That portion of the Company's citrus crop which was not sold
as fresh fruit was processed by Citrus World Incorporated
("Citrus World"), an agricultural cooperative, under a participating
marketing pool agreement. Citrus World, one of the larger
processors of citrus products in the United States, pooled its
own fruit with the fruit received from the Company and other
citrus growers, processed the pooled fruit, and sold the
products produced therefrom. Each participant in the pool,
including Citrus World, shared ratably in the proceeds from
the sales of these products, net of Citrus World's actual
processing and marketing costs, plus a per-unit handling fee.
Citrus World made periodic payments to all participants
on their pro rata share of net sales proceeds and made
final payment after all the products in the pool had
been sold. During the years 1999 and 1998, the Company's
sales under the above pooling agreement amounted to
$1,217,604 and $4,321,531, respectively.
Employees
---------
The Company has 17 employees and considers its employee relations
to be satisfactory.
Item 2. Properties
------- ----------
Land holdings of the Company and its affiliates, all of which are
located in Florida, include: approximately 15,000 acres (including
commercial/retail sites) in the Daytona Beach area of Volusia County;
approximately 80 acres in Highlands County, near Lake Placid; and full
or fractional subsurface oil, gas, and mineral interests in
approximately 530,000 "surface acres" in 20 Florida counties.
Approximately 8,300 acres of the lands located in Volusia County are
encumbered under a mortgage. The conversion and subsequent
utilization of these assets provides the base of the Company's
operations.
The Volusia County holdings include approximately 11,700 acres within
the city limits of Daytona Beach, approximately 3,200 acres within
the unincorporated area of Volusia County, and small acreages in
the Cities of Ormond Beach and Port Orange. Of the 11,700 acres
inside the city limits of Daytona Beach, approximately 3,300 acres
Item 2. Properties (CONTINUED)
------- ----------
have received development approval by governmental agencies. The
3,300 acres plus approximately 730 acres owned by the City of
Daytona Beach, 15 acres owned by Indigo Community Development
District, and 410 acres sold to others for development are the
site of a long-term, mixed-use development which includes
"LPGA International." LPGA International is made up of the national
headquarters of the Ladies Professional Golf Association
along with two "Signature" golf courses and a residential community,
a clubhouse, and a maintenance facility, and main entrance roads to
serve the LPGA community. Construction of homes around
the first golf course, on 70 acres of land sold to a residential
developer, began in 1995 with the first residences completed
in early 1996. In 1999, an additional 180 acres and 44
developed lots in LPGA International were sold to Renar. Renar has
become the new residential and commercial developer at the LPGA
International mixed-use development, while the Company continues as
master developer. The lands not currently being developed, including
those on which development approvals have been received, are involved
in an active forestry operation. Except for a 12-acre parcel at the
Interstate 95 and Taylor Road interchange in the Port Orange area
south of Daytona Beach, the tract straddles Interstate 95 for 6- 1/2
miles between International Speedway Boulevard (U. S. Highway 92) and
State Road 40, with approximately 13,500 acres west and 1,500 acres
east of the interstate. Subsidiaries of the Company are holders of
the developed Volusia County properties and are involved in
the development of additional lands zoned for residential,
commercial, or industrial purposes.
In Highlands County, located in south central Florida along U.S.
Highway 27, the Company sold its citrus operation of approximately
3,900 acres in 1999. The remaining Highlands County lands, located
near Lake Placid, Florida, which is about 75 miles east of Sarasota
and 150 miles northwest of Miami, total approximately 80 acres.
These are primarily in a subsidiary's inventory of residential or
industrial lands.
The Company's oil, gas, and mineral interests, which are equivalent to
full rights of 292,400 acres, were acquired by retaining subsurface
rights when acreage was sold many years ago.
From October 1990 until December 1993, IG LTD centered its operations
on residential community development, home construction, and sales.
In 1993, IG LTD discontinued its home building and sales activities
under lot marketing and sales arrangements. Residential lots
owned by IG LTD at December 31, 2000 are:
44 lots in Riverwood Plantation, a community of 180 acres
in Port Orange, Florida.
64 lots at the 180-acre Tomoka Heights development in
Highlands County, Florida. IG LTD is developing this
community, located adjacent to Lake Henry, and consisting
of single-family and duplex units.
6
Item 2. Properties (CONTINUED)
------- ----------
After the sale of the Consolidated Center and the Palm Coast office
buildings in 1997 and the 1998 sale of the Company's 50% interest in
the shopping center in Marion County, Florida, rental property was
limited to a three-story office building in downtown Daytona Beach,
adjacent to the Consolidated Center. The office building, containing
17,000 square feet, is under a lease/purchase agreement, and is
considered a financing lease.
During 2000, the Company added two new income properties with two
additional properties acquired in January 2001. The properties
acquired in 2000 include an automobile dealership site located on 12
acres in Daytona Beach, Florida. Also purchased in 2000, was a
10,880 square-foot retail building in Tallahassee, Florida, which is
under lease on a long-term triple net basis to Eckerd. The properties
purchased in 2001 are under lease on a long-term triple net basis to
Barnes & Noble and consist of buildings of 28,000 and 18,150 square-
feet located in Daytona Beach and Lakeland, Florida, respectively.
Other leasing activities of the Company include ground leases
for billboards, leases of communication tower sites, and a hunting
lease covering approximately 8,300 acres.
Item 3. Legal Proceedings
------ -----------------
There are no material pending legal proceedings to which
the Company or its subsidiaries are a party.
Item 4. Submission of Matters to a Vote of Security Holders
------ ---------------------------------------------------
No matters were submitted to a vote of security holders
during the fourth quarter of the year ended December 31, 2000.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
------ ----------------------------------------------------
COMMON STOCK PRICES AND DIVIDENDS
The Company's common stock trades on the American Stock Exchange
(AMEX) under the symbol CTO. The Company has paid dividends on a
continuous basis since 1976, the year in which its initial dividends
were paid. The following table summarizes aggregate annual dividends
paid over the five years ended December 31, 2000.
1996 $0.55 1999 $0.35
1997 $0.65 2000 $0.20
1998 $0.70
7
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters (CONTINUED)
------ ----------------------------------------------------
Indicated below are high and low sales prices for the quarters of
the last two fiscal years. All quotations represent actual
transactions.
2000 1999
--------------- ----------------
High Low High Low
----- ----- ----- -----
$ $ $ $
First Quarter 12-3/4 11 16-3/8 13-1/4
Second Quarter 12-9/16 11-3/16 16 12-7/8
Third Quarter 12-7/8 11-5/8 17-1/4 12-5/8
Fourth Quarter 12-3/4 11-3/8 13-13/16 11-11/16
Approximate number of shareholders of record as of December 31, 2000
(without regard to shares held in nominee or street name): 1,557
There have been no sales of unregistered securities within the
past three years.
Item 6. Selected Financial Data
------- -----------------------
The following selected financial data should be read in conjunction
with the Company's Consolidated Financial Statements and Notes
along with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in this report.
8
Item 6. Selected Financial Data (CONTINUED)
------- -----------------------
Five-Year Financial Highlights
(In thousands except per share amounts)
2000 1999 1998 1997* 1996*
$ $ $ $ $
Summary of Operations:
Revenues:
Real Estate 19,860 17,130 6,388 5,412 7,642
Profit on Sales of
Undeveloped Real Estate
Interest 1,379 2,115 132 7,725 385
Interest and Other Income 1,987 1,854 785 1,369 6,123
------------------------------------------
TOTAL 23,226 21,099 7,305 14,506 14,150
------------------------------------------
Operating Costs and Expenses 8,045 8,600 4,867 3,408 4,170
General and Administrative
Expenses 3,365 2,879 2,319 5,932 3,386
Income Taxes 2,956 3,261 19 1,836 2,493
------------------------------------------
Income from Continuing
Operations 8,860 6,359 100 3,330 4,101
Income from Discontinued
Operations (net of tax) -- 9,424 1,204 681 2,502
------------------------------------------
Net Income 8,860 15,783 1,304 4,011 6,603
==========================================
Basic and Diluted Earnings
per Share:
Income from Continuing
Operations 1.51 1.00 0.01 0.53 0.65
Net Income 1.51 2.48 0.20 0.64 1.05
Dividends Paid Per Share 0.20 0.35 0.70 0.65 0.55
Summary of Financial Position:
Total Assets 63,354 63,420 50,101 58,026 59,454
Shareholders' Equity 46,555 48,034 34,698 37,854 35,791
* Restated for Discontinued Operations - See Note 2 to Consolidated
Financial Statements.
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations
-------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
2000 Compared to 1999
Real Estate Operations
----------------------
Profits from real estate operations for 2000 escalated to $11,815,425.
These profits represent a 39% increase over 1999's profits totaling
9
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
$8,529,694. The higher profits are primarily attributable to higher
gross profits recognized on commercial real estate transactions.
During 2000 the sale of 391 acres of land produced gross profits
approximating $13,200,000. This compares to gross profits realized
during 1999 of $9,250,000 on the sale of 443 acres. Sales prices and
gross profits vary site to site based on location and intended use.
The average sales price per acre on 2000 sales was $39,600, a 33%
increase over 1999's average sales price of $29,800.
Revenues from golf operations rose 18% for the year 2000 to
$3,200,000, on a 33% increase in rounds played. The increase in
rounds played was somewhat offset by a 15% decline in average green
fees. Despite this climb in revenues overall profits from golf
operations fell 118% with a loss of $760,000 posted. This decline in
operating results occurred due to a 29% rise in expenses resulting
from increased depreciation and maintenance costs of the new cart
barn, higher course maintenance costs and increased costs associated
with the gain in number of rounds played.
Income properties net income rose 43% over prior year to $184,000.
The addition of the automobile dealership site located in Daytona
Beach, in October 2000, and the Eckerd retail building in December
2000 accounted for the gain in profits.
A 31% fall in forestry revenues led to a 37% drop in income from
forestry operations. Profits from forestry operations totaled
$125,000 during 2000 compared to $197,000 one year earlier. The
revenue decline was the result of lower harvesting as pricing levels
were depressed during the second half of the year.
General, Corporate and Other
----------------------------
The sale of 75 acres of land, along with the release of subsurface
interests on 2,551 acres during 2000 generated profits on sale of
undeveloped real estate interests amounting to $1,378,918. This
represents a 35% downturn from prior year's profits of $2,115,768.
Sales of undeveloped real estate interests in 1999 included the sale
of 100 acres of property in addition to the release of subsurface
interests on 3,918 acres.
Interest and other income earned during 2000 rose 7% to $1,986,608.
This gain was achieved on increased interest earned on notes
receivable and investment securities. Interest and other income
posted in calendar year 1999 totaled $1,853,808.
General and administrative expenses of $3,364,792 for the calendar
year 2000 represent a 17% increase over prior year's total cost of
$2,879,365. This rise can be attributed to higher stockholders'
expense, due to the increase in the number of shareholders resulting
from the September 1999 distribution of the Company's stock by Baker,
Fentress & Co., along with higher compensation costs and professional
fees.
10
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
The resolution, in the third quarter 2000, of several income tax
issues under examination with tax authorities resulted in the
reduction of deferred income taxes by $1,500,000 for the year.
Discontinued Citrus Operations
During the second quarter of 1999 the Company consummated the sale of
its citrus operations. An after-tax gain of $8,047,576 was realized
on the transaction. After-tax profits of $1,376,157 from operating
activities were recognized in 1999 through the sale date.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
1999 COMPARED TO 1998
Real Estate Operations
----------------------
Profits from real estate operations for the year ended
December 31, 1999 rose 461% when compared to the prior year.
Profits of $8,529,694 were realized in 1999 compared to $1,521,401
for the twelve months of 1998. These strong profits were generated
through commercial land sales, with sales of 443 acres
producing gross profits of $9,200,000 for the twelve-month
period of 1999. This compares to gross profits of $1,330,000 earned
on the sale of 90 acres during 1998. The transactions closed
during 1999 generated higher profit margins as pricing and profits
vary from property to property depending upon location and
intended use.
With a full year's operation of the second golf course, which
opened October 1998, golf revenues rose 11% to $2,700,000. This
increase was created on a 27% gain in rounds played. Depreciation
and maintenance costs associated with the new course caused a 30%
jump in golf expenses, resulting in an overall $436,000 downturn
in operating results when compared to the prior year.
A 59% decrease in revenues generated from forestry activities
resulted in a 69% decline in forestry profits for the year to
$197,000. This downturn resulted from limited harvesting during the
year due to depressed pricing and accelerated salvage harvesting in
1998 due to fire damage.
General, Corporate and Other
----------------------------
Profits on the sale of undeveloped real estate interests
totaled $2,115,768 during 1999, representing a substantial increase
over the $132,033 profit realized for the year in 1998. The profits
for 1999 were generated on the sale of 100 acres of property in
addition to the release of subsurface interests on 3,918 acres.
11
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
Profits on sale of undeveloped real estate interests produced during
1998 were realized on the release of subsurface interests on 2,229
acres.
Interest and other income earned during the twelve months of
1999 amounted to $1,853,808 representing a 136% increase over
prior year's interest and other income totaling $784,471. This
higher income was generated primarily on higher investment
interest earned on the proceeds received from the sale of the citrus
operations.
A 24% increase in general and administrative expenses was reported
for 1999 when compared to prior year. This increase was
attributed to lower interest and overhead costs capitalized
to development projects during the period. Substantial amounts of
interest were capitalized to the construction of the golf course and
LPGA International development during 1998.
Discontinued Citrus Operations
------------------------------
During the second quarter of 1999, the Company consummated the sale of
its citrus operations. An after-tax gain of $8,047,576 was realized
on the transaction. Operating activities through the sale date
resulted in income after tax of $1,376,157 during 1999. For the
calendar year 1998, after tax profits of $1,203,895 were generated.
The increase in operating profits, despite the short period, were
generated on substantially higher pricing, in particular fresh fruit
pricing. The rise in pricing was achieved due to a significantly
lower state crop for the 1998-1999 season, along with the impact of
the freeze experienced in California in late 1998.
FINANCIAL POSITION
Record earnings from continuing operations were posted during 2000,
as net income totaled $8,859,811, equivalent to $1.51 per share.
These earnings represent a 39% jump from 1999's income from continuing
operations of $6,358,959, equivalent to $1.00 per share. Net income
for 1999, including discontinued citrus operations and the gain posted
on the sale of that business, amounted to $15,782,692, equivalent to
$2.48 per share. The favorable results from continuing operating
activities are primarily the result of increased profits generated on
commercial real estate closings.
12
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
Following is the calculation of EBDDT:
Year Ended
----------------------------
December 31, December 31,
2000 1999
----------------------------
Income From Continuing Operations $ 8,859,811 $ 6,358,959
Add Back:
Depreciation 278,655 257,215
Deferred Taxes 3,411,291 586,908
Earnings Before Depreciation and ----------------------------
Deferred Taxes $12,549,757 $ 7,203,082
============================
EBDDT Per Share $2.14 $1.13
============================
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 as they represent non-cash charges. Net
income in 1999 excludes discontinued citrus operations' net profits,
including the gain from sale of that business segment.
Due to the Company's new business strategy introduced at year end 1999
and implemented in 2000, the Company is introducing Earnings Before
Depreciation and Deferred Taxes ("EBDDT") as a new performance
measure. The new business strategy should produce significant
amounts of both depreciation and deferred taxes and this measure will
track results in this area.
Cash and investment securities decreased in excess of $12,000,000 for
the calendar year 2000. The primary uses of cash were $9,530,245
invested in property, plant and equipment additions, $9,152,351 used
to repurchase Company stock, and an additional $1,186,851 used to pay
dividends equivalent to $.20 per share. Offsetting these cash
outflows was $8,234,719 of cash provided by operating activities.
Funds used for additions to property, plant and equipment include
approximately $5,985,000 invested on the purchase of two income
properties and $3,300,000 expended on the completion of the clubhouse
facilities at the LPGA mixed-use development. The new income
properties consist of a 10,880 square-foot retail building located in
Tallahassee, Florida occupied by Eckerd under a long-term triple-net
lease, and a 12 acre auto dealership facility in Daytona Beach,
Florida, also under lease.
13
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
At December 31, 2000, the Company had two income properties under
contract at purchase prices totaling $8,725,000. These properties,
which were purchased in January 2001, are under long-term triple-net
leases with Barnes & Noble and consist of retail buildings of 28,000
square-feet and 18,150 square-feet located in Daytona Beach and
Lakeland, Florida, respectively. Additionally, a retail building in
Palm Bay, Florida, under long-term lease to Walgreens, was put under
contract at a purchase price of $4,260,000. The funds used for these
transactions were generated from year end 2000 real estate closings
and had been escrowed for this purpose. The Company intends to use
the proceeds available from 2001 real estate closings, which qualify
for like-kind exchange tax treatment, to invest in additional income
properties. Construction and development expenditures planned for
2001 approximate $2,000,000. These expenditures include the final
amounts due on the construction of the clubhouse, along with other
golf operations additions, and road and entrance feature additions on
lands adjacent to Interstate 95. Other capital requirements include
the continuation of the stock repurchase program. The funds needed
for these requirements will be available from cash and short-term
investments on hand, operating activities and, if necessary, financing
sources in place.
Activity in and around the LPGA International mixed-use development
was relatively strong during the year. Construction of the clubhouse
facilities was substantially complete by year end, and opened for
business the beginning of 2001. Development of five new residential
communities by Renar Development Company ("Renar") began during the
year with completion expected in the first quarter of 2001. This
development activity along with the new marketing program put in
place by Renar has strengthened the sales of homesites. Also adding
momentum to the project was the nationally televised Ladies
Professional Golf Association Arch Championship held at LPGA
International during November and the approval by the Florida section
of the United State Tennis Association ("USTA") of moving its
headquarters to Daytona Beach. The approximate 12 acre headquarter
site, which will be donated by the Company, is located adjacent to
the entrance of the LPGA development. The complex will include 24
lighted tennis courts, a grandstand, pro shop and clubhouse, and an
office complex. The USTA is obligated to sponsor a minimum of ten
tournaments each year for ten years.
Sales activity was strong during 2000, and included the sale of a 66
acre parcel at the southwest quadrant of the I-95 interchange at LPGA
Boulevard. This site will serve as the location for a new multi-
dealership auto mall, which is now under construction. A project of
this magnitude tends to increase interest and activity on the
surrounding lands. Although the national economy appears to be
slowing and the local economy is always subject to its influences, at
this time the local economy appears relatively strong and the Company
enters 2001 with a significant land sales contract backlog. These
facts lead to prospects for continued near-term profits.
14
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
Ownership and investment in income properties has inherent risks, as
does all real estate. These risks include, but are not limited to:
the general health of the national and local economies, declines in
market values, deterioration of surrounding properties and related
values, financial stability of tenants and acts of God and nature.
The Company attempts to limit these risks through its knowledge of
real estate, due diligence efforts, and insurance practices.
The year 2000 was the first year of implementation of the Company's
business strategy, with the objective to become, over time, a company
with a more predictable earnings pattern from geographically
dispersed Florida real estate holdings. To this end, the Company
used funds generated from qualified land sales, to acquire income
properties utilizing tax deferred like-kind exchange transactions.
This strategy will be utilized in the future in conjunction with
management's continuing efforts to add value to its core Daytona
Beach land holdings through the master planning and development
process.
Item 7A Quantitative and Qualitative Disclosures about Market Risk
------- ---------------------------------------------------------
The Company has no material market risk associated with
interest rates, foreign currency exchange rates or
commodity prices.
Item 8. Financial Statements and Supplementary Data
------ --------------------------------------------------------
The Company's Consolidated Financial Statements appear
beginning on page F-1 of this report. See Item
14 of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting
------ and Financial Disclosures
----------------------------------------------------------
There were no disagreements with accountants on accounting
and financial disclosures.
PART III
The information required by Items 10, 11, 12, and 13 is
incorporated herein by reference to the registrant's 2001 annual
meeting proxy statement pursuant to Instruction G to Form 10-K.
On March 15, 2001, the registrant anticipates filing with the
Commission, pursuant to Regulation 14A under the Securities Exchange
Act of 1934, its definitive proxy statement to be used in connection
with its 2001 annual meeting of shareholders at which directors will
be elected for the ensuing year.
15
Executive Officers of the Registrant
------------------------------------
The executive officers of the registrant, their ages at January 31,
2001, their business experience during the past five years, and the
year first elected as an executive officer of the Company are as
follows:
Bob D. Allen, 66, chairman of the board since April 1998 and
chief executive officer since March 1990; president from March
1990 to January 2000.
William H. McMunn, 54, president and chief operating officer
since January 2000; president, Indigo Development Inc., a
subsidiary of the Company, since December 1990.
Bruce W. Teeters, 55, senior vice president-finance and
treasurer, since January 1988.
All of the above are elected annually as provided in the By-Laws.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
------- 8-K
------------------------------------------------------------
1. Financial Statements
--------------------
The following financial statements are filed as part of this
report:
Page No.
--------------
Report of Independent Certified Public Accountants F-1
Consolidated Balance Sheets as of December 31,
2000 and 1999 F-2
Consolidated Statements of Income for the
three years ended December 31, 2000 F-3
Consolidated Statements of Shareholders' Equity
for the three years ended December 31, 2000 F-4
Consolidated Statements of Cash Flows for the three
years ended December 31, 2000 F-5
Notes to Consolidated Financial Statements F-6
16
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
------- 8-K (CONTINUED)
-----------------------------------------------------------
2. Financial Statement Schedules
-----------------------------
Included in Part IV on Form 10-K:
Schedule III - Real Estate and Accumulated
Depreciation on page 21 of
Form 10-K
Schedule IV - Mortgage Loans on Real Estate
on page 22 of Form 10-K
Other Schedules are omitted because of the absence of conditions
under which they are required, materiality or because the
required information is given in the financial statements or
notes thereof.
3. Exhibits
See Index to Exhibits on page 20 of this Annual Report on
Form 10-K.
Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the last
quarter of the fiscal year ended December 31, 2000.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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)
3/15/01 By /s/ Bob D. Allen
Bob D. Allen, Chairman of the
Board and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
3/15/01 Chairman of the Board and
Chief Executive Officer
(Principal Executive
Officer), and Director By: /s/ Bob D. Allen
----------------
3/15/01 Senior Vice President-Finance,
Treasurer (Principal Financial
and Accounting Officer), and
Director /s/ Bruce W. Teeters
--------------------
3/15/01 Director /s/ David D. Peterson
---------------------
3/15/01 Director /s/ John C. Adams, Jr.
----------------------
3/15/01 Director /s/ Robert F. Lloyd
--------------------
18
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
Commission File No. 0-5556
CONSOLIDATED-TOMOKA LAND CO.
(Exact name of registrant as specified in the charter)
19
EXHIBIT INDEX
Page No.
(2.1) Agreement of Merger and Plan of Merger and Reorganization
dated April 28, 1993 between Consolidated-Tomoka Land Co.
and CTLC, Inc. filed with the registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993 and
incorporated by this reference. *
(2.2) Certificate of Merger dated April 28, 1993 filed with the
registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993 and incorporated by this reference. *
(3.1) Articles of Incorporation of CTLC, Inc. dated February 26,
1993 and Amended Articles of Incorporation dated March 30,
1993 filed with the registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993 and incorporated
by this reference. *
(3.2) By-laws of CTLC, Inc. filed with the registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993 and
incorporated by this reference. *
10 Material Contracts:
(10.1) 1998-1999 Citrus World Marketing Agreement dated
September 1, 1998 between Citrus World, Inc. and
Consolidated-Tomoka Land Co. filed on Form 10-K
for the year ended December 31, 1998 and incorporated by
this reference. *
(10.2) The Consolidated-Tomoka Land Co. Unfunded Deferred
Compensation Plan filed with the registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1981
and incorporated by this reference. *
(10.3) The Consolidated-Tomoka Land Co. Unfunded Deferred
Compensation Plan executed on October 25, 1982 filed with
the registrant's Annual Report on Form 10-K for the year
ended December 31, 1982 and incorporated by this reference. *
(10.4) The Consolidated-Tomoka Land Co. Stock Option Plan
effective April 26, 1990 as amended and restated effective
April 26, 1995, filed with the Registrant's Form S-8 filed on
September 15, 1995 and incorporated by this reference. *
(10.5) Lease Agreement dated August 28, 1997 between the City
of Daytona Beach and Indigo International Inc., a wholly
owned subsidiary of Consolidated-Tomoka Land Co., filed
on Form 10-K for the year ended December 31, 1997 and
incorporated by this reference. *
(10.6) Development Agreement dated August 18, 1997 between the
City of Daytona Beach and Indigo International Inc., a
wholly owned subsidiary of Consolidated-Tomoka Land Co.,
filed on Form 10-K for the year December 31, 1997 and
incorporated by this reference. *
(10.7) Purchase and Sale Agreement dated December 28, 1998
between Alton D. Rogers and Wade H. Walker and
Consolidated-Tomoka Land Co. filed on Form 10-K for
the year ended December 31, 1998 and incorporated by
this reference. *
(21) Subsidiaries of the Registrant 23
(23) Report of Independent Certified Public Accountants on
Financial Statement Schedules. 24
(23.2) Consent of Arthur Andersen LLP. 25
* - Incorporated by Reference
20
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEAR ENDED DECEMBER 31, 2000
COSTS CAPITALIZED
INITIAL COST TO COMPANY SUBSEQUENT TO
ACQUISITION
-------------------------------------------------------------------------------
BUILDINGS &
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS
IMPROVEMENTS CARRYING COSTS
- ----------- -------------------------------------------------------------------------------
Income Properties:
Gary Yeomans Ford, Daytona Beach,FL -0- 1,403,615 2,399,685 -0- -0-
Eckerd, Tallahassee, FL -0- 590,800 1,595,000 -0- -0-
Miscellaneous -0- 728,582 -0- 1,099,921 -0-
-------------------------------------------------------------------------------
-0- 2,722,997 3,994,685 1,099,921 -0-
===============================================================================
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
-----------------------------
DATE OF
ACCUMULATED COMPLETION OF DATE DEPR
LAND BUILDINGS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED LIFE
-------------------------------------------------------------------------------
5
12-MOS
DEC-31-2000
DEC-31-2000
12,909,722
8,178,186
11,602,477
0
9,767,635
0
18,862,556
1,227,098
63,353,914
0
0
0
0
5,584,684
40,969,889
63,353,914
21,239,421
23,226,029
6,287,756
8,045,078
2,617,658
0
747,134
11,816,159
2,956,348
8,859,811
0
0
0
8,859,811
1.51
1.51