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, 2003 ___ 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 by check mark whether the registrant is an accelerated filer (as defined by rule 12b-2 of the Exchange Act). 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, 2003 $1.00 par value 5,615,579 1CONSOLIDATED-TOMOKA LAND CO. INDEX Page No. -------- PART I - FINANCIAL INFORMATION Consolidated Condensed Balance Sheets - March 31, 2003 and December 31, 2002 3 Consolidated Condensed Statements of Income - Three Months Ended March 31, 2003 and 2002 4 Consolidated Statement of Shareholders' Equity - Three Months Ended March 31, 2003 5 Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 2003 and 2002 6 Notes to Consolidated Condensed Financial Statements 7-10 Management's Discussion and Analysis of Financial Condition and Results of Operations 11-16 PART II -- OTHER INFORMATION 17 SIGNATURES 18 CERTIFICATIONS 19-22 2
PART I -- FINANCIAL INFORMATION CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) March 31, December 31, 2003 2002 -------------------------- ASSETS Cash 71,181 1,019,976 Restricted Cash 2,734,293 12,339,527 Investment Securities 4,823,416 5,013,224 Notes Receivable 9,486,806 9,640,676 Real Estate Held for Development and Sale 8,913,025 7,453,628 Refundable Income Taxes 718,858 815,503 Other Assets 3,286,593 3,684,860 ---------- ---------- $30,034,172 $39,967,394 ---------- ---------- Property, Plant and Equipment: Land, Timber and Subsurface Interests $ 1,994,628 $ 1,958,550 Golf Buildings, Improvements and Equipment 11,259,631 11,259,631 Income Properties Land, Buildings and Improvements 36,013,571 22,964,712 Other Furnishings and Equipment 889,847 886,767 ---------- ---------- Total Property, Plant and Equipment 50,157,677 37,069,660 Less Accumulated Depreciation and Amortization (3,003,344) (2,710,992) ---------- ---------- Net - Property, Plant and Equipment 47,154,333 34,358,668 ---------- ---------- TOTAL ASSETS $77,188,505 $74,326,062 ========== ========== LIABILITIES Accounts Payable $ 131,566 $ 304,480 Accrued Liabilities 3,140,766 3,085,131 Deferred Income Taxes 9,803,990 8,843,728 Notes Payable 9,752,061 9,235,072 ---------- ---------- TOTAL LIABILITIES 22,828,383 21,468,411 ---------- ---------- SHAREHOLDERS' EQUITY Common Stock 5,615,579 5,615,579 Additional Paid in Capital 887,547 835,750 Retained Earnings 48,623,369 47,171,449 Accumulated Other Comprehensive Loss ( 766,373) ( 765,127) ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 54,360,122 52,857,651 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $77,188,505 $74,326,062 ========== ========== See accompanying Notes to Consolidated Condensed Financial Statements. 3
CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) Three Months Ended --------------------------- March 31, March 31, 2003 2002 --------------------------- $ $ INCOME: Real Estate Operations: Real Estate Sales Sales and Other Income 3,318,469 726,832 Costs and Expenses ( 662,861) ( 474,960) --------- --------- 2,655,608 251,872 --------- --------- Income Properties Leasing Revenues and Other Income 715,737 464,984 Costs and Other Expenses ( 130,470) ( 102,751) --------- --------- 585,267 362,233 --------- --------- Golf Operations Sales and Other Income 1,272,718 1,290,212 Costs and Other Expenses (1,361,788) (1,322,594) --------- --------- ( 89,070) ( 32,382) --------- --------- Total Real Estate Operations 3,151,805 581,723 Profit on Sales of Other Real Estate Interests 359,112 -- Interest and Other Income 257,007 228,973 --------- --------- Operating Income 3,767,924 810,696 General and Administrative Expenses ( 977,534) ( 998,754) --------- --------- Income (Loss) Before Income Taxes 2,790,390 ( 188,058) Income Taxes (1,057,691) 68,829 --------- --------- Net Income (Loss) 1,732,699 ( 119,229) ========= ========= PER SHARE INFORMATION: Basic and Diluted Net Income (Loss) $0.31 $(0.02) ========= ========= Dividends $0.05 $ 0.05 ========= ========= See accompanying Notes to Consolidated Condensed Financial Statements.
4 CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Accumulated Additional Other Total Common Paid-In Retained Comprehensive Shareholders' Comprehensive Stock Capital Earnings Loss Equity Income --------- -------- ----------- ----------- ------------ ----------- Balance, December 31, 2002 $5,615,579 $835,750 $47,171,449 $ ( 765,127)$ 52,857,651 $ Net Income 1,732,699 1,732,699 1,732,699 Other Comprehensive Loss: Cash Flow Hedging Derivative, Net of Tax ( 1,246) ( 1,246) ( 1,246) --------- Comprehensive Income $1,731,453 ========= Stock Options 51,797 51,797 Cash Dividends ($.05 per share) ( 280,779) ( 280,779) --------- ------- ---------- ---------- ----------- Balance, March 31, 2003 $5,615,579 $887,547 $48,623,369 $( 766,373) $54,360,122 ========= ======= ========== ========== ========== See accompanying Notes to Consolidated Condensed Financial Statements.
5 CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended -------------------------- March 31, March 31, 2003 2002 ---------- ----------- $ $ CASH FLOW FROM OPERATING ACTIVITIES: Net Income (Loss) 1,732,699 (119,229) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By Operating Activities: Depreciation and Amortization 292,352 198,622 Non Cash Compensation 51,797 -- Decrease (Increase) in Assets: Notes Receivable 153,870 390,924 Real Estate Held for Development ( 1,459,397) 68,538 Refundable Income Taxes 96,645 16,145 Other Assets 398,267 (375,689) (Decrease) Increase in Liabilities: Accounts Payable ( 172,914) ( 49,921) Accrued Liabilities 54,389 376,218 Deferred Income Taxes 960,262 ( 84,975) --------- --------- Net Cash Provided By Operating Activities 2,107,970 420,633 --------- --------- CASH FLOW FROM INVESTING ACTIVITIES: Acquisition of Property, Plant, and Equipment (13,088,017) ( 70,051) Decrease (Increase) in Restricted Cash for Acquisitions Through the Like-Kind Exchange Process 9,605,234 (415,605) Net Decrease (Increase) in Investment Securities 189,808 (244,300) ---------- ---------- Net Cash Used In Investing Activities ( 3,292,975) (729,956) ---------- ---------- CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from Notes Payable 1,364,000 -- Payments on Notes Payable ( 847,011) (137,831) Dividends Paid ( 280,779) (280,779) ---------- ---------- Net Cash Provided by (Used in) Financing Activities 236,210 (418,610) ---------- ---------- Net Decrease In Cash ( 948,795) (727,933) Cash, Beginning of Year 1,019,976 2,042,631 ---------- --------- Cash, End of Period 71,181 1,314,698 ========== ========= See accompanying Notes to Consolidated Condensed Financial Statements.
6 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, 2002. 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 2002 accompanying consolidated financial statements to conform to the 2003 presentation. 2. Basic earnings per common share are computed by dividing net income (loss) 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.
7 2. Common Stock and Earnings Per Common Share (Continued) Three Months Ended March 31, March 31, 2003 2002 ---------- ---------- Income (Loss) Available to Common Shareholder: Net Income (Loss) $1,732,699 $( 119,229) ========= ========= Weighted Average Shares Outstanding 5,615,579 5,615,579 Common Shares Applicable to Stock Options Using the Treasury Stock Method 12,718 13,494 --------- --------- Total Shares Applicable to Diluted Earnings Per Share 5,628,297 5,629,073 ========= ========= Basic and Diluted Loss Per Share: Net Income (Loss) $0.31 $(0.02) ========= ========= 3. Notes Payable. Notes payable consist of the following: March 31, 2003 ------------------------------ Due Within Total One Year ------------------------------ $ 7,000,000 Line of Credit $ 593,310 $ 593,310 Mortgage Notes Payable 9,064,267 192,780 Industrial Revenue Bond 94,484 94,484 ---------- --------- $ 9,752,061 $ 880,574 ========== ========= Payments applicable to reduction of principal amounts will be required as follows: Year Ending March 31, 2003 --------------------- 2004 $ 880,574 2005 207,651 2006 1,423,459 2007 240,626 2008 & Thereafter 6,999,751 --------- $9,752,061 ========= In the first three months of 2003 and 2002, interest totaled $177,131 and $204,936 respectively. 8
4. Stock Options. In December 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure" (SFAS 148). SFAS 148 provides alternative methods of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), to require more prominent and frequent disclosures in financial statements about the effects of stock-based compensation. The transition guidance and annual disclosure provisions of SFAS 148 are effective for fiscal years ending after December 15, 2002, and interim disclosure provisions are effective for periods beginning after December 15, 2002. As permitted under SFAS 123 and SFAS 148, the Company will continue to follow the accounting guidelines pursuant to Accounting Principles Board Option No. 25, "Accounting for Stock Issued to Employees" (APB 25), for stock-based compensation and to furnish the pro forma disclosures as required under SFAS 148. The Company accounts for its stock-based compensation plans under the recognition and measurement principles of APB 25, and related interpretations, requiring that compensation expense be recorded equal to the intrinsic value of the award at the measurement date. Had compensation expense for these options been determined in accordance with SFAS No. 123, the Company's net income (loss) and income (loss) per share would have been as follows:
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CONSOLIDATED-TOMOKA LAND CO. (Registrant) Date: May 7, 2003 By:/s/ William H. McMunn ---------------------------- William H. McMunn, President and Chief Executive Officer Date: May 7, 2003 By:/s/ Bruce W. Teeters ---------------------------- Bruce W. Teeters, Senior Vice President - Finance and Treasurer
18 CERTIFICATIONS I, William H. McMunn, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Consolidated- Tomoka Land Co.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
19 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 7, 2003 By:/s/William H. McMunn ----------------------- William H. McMunn President and Chief Executive Officer
20 CERTIFICATIONS I, Bruce W. Teeters, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Consolidated- Tomoka Land Co.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
21 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 7, 2003 By:/s/Bruce W. Teeters -------------------------- Bruce W. Teeters Sr. Vice President-Finance and Treasurer
22
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly report of Consolidated-Tomoka Land
Co. (The "Company") on Form 10-Q for the period ending March 31, 2003,
as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Bruce W. Teeters, Senior Vice President -
Finance and Treasurer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirement of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of the Company.
/S/ Bruce W. Teeters
- --------------------
Bruce W. Teeters
Senior Vice President-Finance and Treasurer
May 7, 2003