UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C.
20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended
September 30, 2008
TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from ___ to
___
Commission file number
0-5556
CONSOLIDATED-TOMOKA LAND
CO.
(Exact
name of registrant as specified in its charter)
Florida &
#160; 59-0483700
(State or other
jurisdiction of incorporation or organization) (I.R.S.
Employer Identification
No.)
1530 Cornerstone Blvd., Suite
100
Daytona Beach,
Florida 32117
(Address of principal
executive offices) (Zip Code)
(386) 274-2202
(Registrant's
telephone number, including area code)
N/A
(Former
name, former address and former fiscal year, if
changed since last report)
Indicate
by check mark whether the registrant (1) has filed all
reports
required to be filed by Section 13 or 15(d) of the
Securities
Exchange Act of 1934 during the preceding 12 months (or
for such
shorter period that the registrant was required to file such
reports),
and (2) has been subject to such filing requirements for the
past 90
days. Yes x No o
Indicate
by check mark whether the registrant is a large accelerated
filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See
the
definitions of “accelerated filer" "smaller reporting company" and "large
accelerated filer,” in
Rule
12b-2 of
the Exchange Act.
Large accelerated
filer o Accelerated
filer x
Non-accelerated
filer o(Do not check if a
smaller reporting company) Smaller
Reporting Company o
Indicate
by check mark whether the registrant is a shell company
(as
defined by rule 12b-2 of the Exchange Act).
Yes o No x
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
November
10, 2008
$1.00 par
value 5,727,515
1
| PART I - FINANCIAL INFORMATION |
Page
No.
|
|
Item
1. Financial Statements
|
|
|
September 30, 2008 (Unaudited) and December 31, 2007
|
3
|
|
Three Months and Nine Months ended September 30, 2008 and 2007
|
|
|
(Unaudited)
|
4
|
|
|
|
|
Comprehensive Income
|
|
|
Nine Months Ended September 30, 2008
|
|
|
(Unaudited)
|
5
|
|
Nine
Months Ended September 30, 2008 and 2007
|
|
|
(Unaudited)
|
6
|
|
7-11
|
|
|
12-15
|
|
|
15
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
Exhibit 3.1
Exhibit 3.2
|
|
|
17
|
2
PART I - FINANCIAL
INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
|
CONSOLIDATED
TOMOKA LAND CO.
|
||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
|
(Unaudited)
|
||||||||
|
September
30,
|
December
31,
|
|||||||
|
2008
|
2007
|
|||||||
|
ASSETS
|
||||||||
|
Cash
|
$ | 211,080 | $ | 863,826 | ||||
|
Restricted
Cash
|
460,555 | 10,387,550 | ||||||
|
Investment
Securities
|
5,173,172 | 10,193,094 | ||||||
|
Notes
Receivable
|
4,203,693 | 5,164,421 | ||||||
|
Land
and Development Costs
|
17,435,972 | 15,654,456 | ||||||
|
Intangible
Assets
|
5,115,113 | 4,717,699 | ||||||
|
Other
Assets
|
6,785,188 | 7,899,810 | ||||||
| 39,384,773 | 54,880,856 | |||||||
|
Property,
Plant and Equipment:
|
||||||||
|
Land,
Timber and Subsurface Interests
|
11,908,674 | 7,793,594 | ||||||
|
Golf
Buildings, Improvements & Equipment
|
11,746,179 | 11,713,046 | ||||||
|
Income
Properties Land, Buildings and Improvements
|
116,504,886 | 104,819,695 | ||||||
|
Other
Furnishings and Equipment
|
3,226,949 | 2,910,009 | ||||||
|
Construction
in Process
|
661,773 | -- | ||||||
|
Total
Property, Plant and Equipment
|
144,048,461 | 127,236,344 | ||||||
|
Less,
Accumulated Depreciation and Amortization
|
(11,928,203 | ) | (10,284,670 | ) | ||||
|
Net
- Property, Plant and Equipment
|
132,120,258 | 116,951,674 | ||||||
|
TOTAL
ASSETS
|
$ | 171,505,031 | $ | 171,832,530 | ||||
|
LIABILITIES
|
||||||||
|
Accounts
Payable
|
$ | 840,562 | $ | 452,090 | ||||
|
Accrued
Liabilities
|
8,752,305 | 8,684,175 | ||||||
|
Accrued
Stock Based Compensation
|
1,725,728 | 3,277,821 | ||||||
|
Income
Taxes Payable
|
101,640 | 3,058,049 | ||||||
|
Deferred
Income Taxes
|
34,019,605 | 32,882,399 | ||||||
|
Notes
Payable
|
8,579,550 | 6,807,388 | ||||||
|
TOTAL
LIABILITIES
|
54,019,390 | 55,161,922 | ||||||
|
SHAREHOLDERS'
EQUITY
|
||||||||
|
Common
Stock
|
5,727,515 | 5,725,806 | ||||||
|
Additional
Paid in Capital
|
5,217,955 | 5,130,574 | ||||||
|
Retained
Earnings
|
107,726,516 | 107,012,038 | ||||||
|
Accumulated
Other Comprehensive Loss
|
(1,186,345 | ) | (1,197,810 | ) | ||||
|
TOTAL
SHAREHOLDERS' EQUITY
|
117,485,641 | 116,670,608 | ||||||
|
TOTAL
LIABILITIES AND
|
||||||||
|
SHAREHOLDERS'
EQUITY
|
$ | 171,505,031 | $ | 171,832,530 | ||||
See Accompanying Notes to Consolidated Financial
Statements
3
| CONSOLIDATED-TOMOKA LAND CO. | ||||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
|
Three
Months Ended
|
Nine Months Ended | |||||||||||||||
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Income
|
||||||||||||||||
|
Real
Estate Operations:
|
||||||||||||||||
|
Real
Estate Sales
|
||||||||||||||||
|
Sales
and Other Income
|
$ | 97,735 | $ | 2,994,820 | $ | 2,358,789 | $ | 8,860,680 | ||||||||
|
Costs
and Other Expenses
|
(345,055 | ) | (627,262 | ) | (1,231,908 | ) | (4,833,438 | ) | ||||||||
| (247,320 | ) | 2,367,558 | 1,126,881 | 4,027,242 | ||||||||||||
|
Income
Properties
|
||||||||||||||||
|
Leasing
Revenues and Other Income
|
2,380,052 | 2,207,308 | 6,874,518 | 6,537,982 | ||||||||||||
|
Costs
and Other Expenses
|
(515,425 | ) | (520,110 | ) | (1,409,361 | ) | (1,373,192 | ) | ||||||||
| 1,864,627 | 1,687,198 | 5,465,157 | 5,164,790 | |||||||||||||
|
Golf
Operations
|
||||||||||||||||
|
Sales
and Other Income
|
814,067 | 930,164 | 3,481,770 | 3,907,346 | ||||||||||||
|
Costs
and Other Expenses
|
(1,531,483 | ) | (1,577,723 | ) | (4,917,257 | ) | (5,236,862 | ) | ||||||||
| (717,416 | ) | (647,559 | ) | (1,435,487 | ) | (1,329,516 | ) | |||||||||
|
Total
Real Estate Operations
|
899,891 | 3,407,197 | 5,156,551 | 7,862,516 | ||||||||||||
|
Profit
on Sales of Other
|
||||||||||||||||
|
Real
Estate Interests
|
590,439 | 816,235 | 794,696 | 1,400,979 | ||||||||||||
|
Interest
and Other Income
|
91,089 | 149,627 | 535,839 | 450,420 | ||||||||||||
|
Operating
Income
|
1,581,419 | 4,373,059 | 6,487,086 | 9,713,915 | ||||||||||||
|
General
and Administrative Expenses
|
(1,410,864 | ) | (1,044,337 | ) | (2,555,806 | ) | (5,525,328 | ) | ||||||||
|
Income Before
Income Taxes
|
170,555 | 3,328,722 | 3,931,280 | 4,188,587 | ||||||||||||
|
Income
Taxes
|
(65,309 | ) | (1,226,158 | ) | (1,498,718 | ) | (1,553,895 | ) | ||||||||
|
Net
Income
|
$ | 105,246 | $ | 2,102,564 | $ | 2,432,562 | $ | 2,634,692 | ||||||||
|
Per
Share Information:
|
||||||||||||||||
|
Basic
and Diluted Income Per Share
|
$ | 0.02 | $ | 0.37 | $ | 0.42 | $ | 0.46 | ||||||||
|
Dividends
|
$ | 0.10 | $ | 0.10 | $ | 0.30 | $ | 0.28 | ||||||||
4
| CONSOLIDATED-TOMOKA LAND CO. | |||||||||||||||||||
| CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY | |||||||||||||||||||
|
AND COMPREHENSIVE INCOME
|
|||||||||||||||||||
|
(Unaudited)
|
|||||||||||||||||||
|
Additional
|
Accumulated
|
Total
|
|||||||||||||||||
|
Common
|
Paid-
In
|
Retained
|
Other
Comprehensive
|
Shareholders'
|
Comprehensive
|
||||||||||||||
|
Stock
|
Capital
|
Earnings
|
Income
|
Eqity
|
Income
|
||||||||||||||
|
Balance
December 31, 2007
|
$ | 5,725,806 | $ | 5,130,574 | $ | 107,012,038 | $ | (1,197,810 | ) | $ | 116,670,608 | ||||||||
|
Net
Income
|
-- | -- | 2,432,562 | -- | 2,432,562 | $ | 2,432,562 | ||||||||||||
|
Other
Comprehensive Income: Cash Flow
|
|||||||||||||||||||
|
Hedging
Derivative, Net of Tax
|
-- | -- | -- | 11,465 | 11,465 | 11,465 | |||||||||||||
|
Comprehensive
Income
|
-- | -- | -- | -- | -- | $ | 2,444,027 | ||||||||||||
|
Stock
Options
|
1,709 | 87,381 | -- | -- | 89,090 | ||||||||||||||
|
Cash
Dividends ($.30 per share)
|
-- | -- | (1,718,084 | ) | -- | (1,718,084 | ) | ||||||||||||
|
Balance
September 30, 2008
|
$ | 5,727,515 | $ | 5,217,955 | $ | 107,726,516 | $ | (1,186,345 | ) | $ | 117,485,641 | ||||||||
See Accompanying Notes to Consolidated Financial
Statements
5
The Company paid income taxes totaling $3,325,122 for the
nine-months ended September 30, 2008.
See Accompanying Notes to Consolidated Financial Statements
Back to Index
See Accompanying Notes to Consolidated Financial Statements
Back to Index
6
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Unaudited)
The
unaudited consolidated 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 U.S. generally accepted
accounting principles, have been omitted pursuant to those rules and
regulations. The consolidated financial statements reflect all adjustments which
are, in the opinion of management, necessary to present fairly the Company’s
financial position and the results of operations for the interim periods. The
consolidated 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, 2007.The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. Inter-company
balances and transactions have been eliminated
in consolidation.
|
NOTE 2. COMMON STOCK AND EARNINGS PER
SHARE
|
||||||||||||||||
|
Basic
earnings per common share were computed by dividing net
income by the weighted average number of shares of common stock
outstanding during the year.
|
||||||||||||||||
|
Diluted
earnings per common share are 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. The conversion of stock options were
anti-dilutive for the three-months and nine-months ended September 30,
2008, and the
|
||||||||||||||||
| three-months ended September 30, 2007, thus were not included in the calculation of diluted earnings per share for those periods. | ||||||||||||||||
|
Three
Months Ended
|
Nine Months Ended | |||||||||||||||
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Income
Available to Common Shareholders:
|
||||||||||||||||
|
Net
Income
|
$ | 105,246 | $ | 2,102,564 | $ | 2,432,562 | $ | 2,634,692 | ||||||||
|
Weighted
Average Shares Outstanding
|
5,727,515 | 5,720,219 | 5,727,072 | 5,713,450 | ||||||||||||
|
Common
Shares Applicable to Stock
|
||||||||||||||||
|
Options
Using the Treasury Stock Method
|
-- | -- | -- | 14,738 | ||||||||||||
|
Total
Shares Applicable to Diluted Earnings Per Share
|
5,727,515 | 5,720,219 | 5,727,072 | 5,728,188 | ||||||||||||
|
Per
Share Information:
|
||||||||||||||||
|
Basic
& Diluted Income Per share
|
||||||||||||||||
|
Net
Income
|
$ | 0.02 | $ | 0.37 | $ | 0.42 | $ | 0.46 | ||||||||
7
|
NOTE 3. NOTES
PAYABLE
|
||||||||
|
Notes
payable consist of the following:
|
||||||||
| September 30, 2008 | ||||||||
|
Due
Within
|
||||||||
|
Total
|
One
Year
|
|||||||
|
$20,000,000
Line of Credit
|
$ | 1,976,911 | $ | -- | ||||
|
Notes
Payable
|
6,602,639 | 263,882 | ||||||
| $ | 8,579,550 | $ | 263,882 | |||||
|
Payments
applicable to reduction of principal amounts will be required as
follows:
|
||||||||
|
Year Ending September 30,
|
||||||||
|
2009
|
$ | 263,882 | ||||||
|
2010
|
2,285,735 | |||||||
|
2011
|
332,303 | |||||||
|
2012
|
5,697,630 | |||||||
|
2013
& Thereafter
|
-- | |||||||
| $ | 8,579,550 | |||||||
|
For
the first nine months of 2008, interest expense was $256,522, net of
$131,864 interest capitalized to
|
||||||||
|
land
and development costs and construction in process, with interest of
$388,386 paid during the period.
|
||||||||
|
For
the first nine months of 2007, interest expense was $290,313, net of
$94,344 interest capitalized to land
|
||||||||
|
and
development costs, with interest of $384,657 paid during
the period.
|
||||||||
8
|
NOTE 4. STOCK OPTION
PLAN
|
||||||||||||||||
|
The
Company maintains a stock option plan ("the Plan") pursuant to which 500,000
shares of the Company's common stock may be issued. A summary of
share option
|
||||||||||||||||
|
activity
under the Plan as of September 30, 2008 and changes during the nine
months then ended is presented below:
|
||||||||||||||||
|
Wtd
Avg
|
||||||||||||||||
|
STOCK
OPTIONS FOR THE NINE MONTHS
|
Remaining
|
|||||||||||||||
|
ENDED
SEPTEMBER 30, 2008
|
Contractual
|
Aggregate
|
||||||||||||||
|
Wtd
Avg
|
Term
|
Intrinsic
|
||||||||||||||
|
Shares
|
Ex Price
|
(Years)
|
Value
|
|||||||||||||
|
Outstanding
at December 31, 2007
|
179,800 | $ | 59.04 | |||||||||||||
|
Granted
|
63,000 | $ | 54.45 | |||||||||||||
|
Exercised
|
(3,200 | ) | $ | 25.88 | ||||||||||||
|
Expired
|
-- | -- | ||||||||||||||
|
Oustanding
at September 30, 2008
|
239,600 | $ | 58.27 | 7.66 | $ | 453,996 | ||||||||||
|
Exercisable
at September 30, 2008
|
61,600 | $ | 52.02 | 6.50 | $ | 331,328 | ||||||||||
|
Wtd
Avg
|
||||||||||||||||
|
STOCK
APPRECIATION RIGHTS FOR THE NINE MONTHS
|
Remaining
|
|||||||||||||||
|
ENDED
SEPTEMBER 30, 2008
|
Contractual
|
Aggregate
|
||||||||||||||
|
Wtd
Avg
|
Term
|
Intrinsic
|
||||||||||||||
|
Shares
|
Fair Value
|
(Years)
|
Value
|
|||||||||||||
|
Outstanding
at December 31, 2007
|
179,800 | $ | 13.60 | |||||||||||||
|
Granted
|
63,000 | $ | 5.61 | |||||||||||||
|
Exercised
|
(3,200 | ) | $ | 10.52 | ||||||||||||
|
Expired
|
-- | -- | ||||||||||||||
|
Oustanding
at September 30, 2008
|
239,600 | $ | 4.54 | 7.66 | $ | 244,459 | ||||||||||
|
Exercisable
at September 30, 2008
|
61,600 | $ | 5.23 | 6.50 | $ | 178,407 | ||||||||||
|
In
connection with the exercise of 3,200 option shares, 1,709 shares of stock
were issued and
|
||||||||||||||||
|
1,491
shares of stock were withheld via net exercise to relieve the stock option
liability by $84,000. Cash
|
||||||||||||||||
|
proceeds
of $5,090 were received on the exercise of the stock
options.
|
||||||||||||||||
9
|
NOTE 5. PENSION
PLAN
|
||||||||||||||||
|
The
Company maintains a defined benefit pension plan for all employees who
have attained the
age of 21 and completed one year of service.
|
||||||||||||||||
|
The
pension benefits are based primarily on age, years of service and the
average compensation for the highest five years during the final ten years
of employment.
|
||||||||||||||||
|
The
benefit formula generally provides for a life annuity benefit.
During the three-months ended September 30, 2008, the fair market value of
the pension assets declined
|
||||||||||||||||
| $41,030 (exclusive of any contributions and withdrawls). | ||||||||||||||||
|
Following
are the components of the Net Perodic Benefit Cost:
|
||||||||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Service
Cost
|
$ | 84,092 | $ | 72,716 | $ | 252,276 | $ | 218,148 | ||||||||
|
Interest
Cost
|
108,800 | 100,683 | 326,400 | 302,049 | ||||||||||||
|
Expected
Return on Plan Assets
|
(130,116 | ) | (126,296 | ) | (390,348 | ) | (378,888 | ) | ||||||||
|
Net
Amortization
|
19,879 | 12,497 | 59,637 | 37,491 | ||||||||||||
|
Net
Periodic Benefit Cost
|
$ | 82,655 | $ | 59,600 | $ | 247,965 | $ | 178,800 | ||||||||
|
The
Company has made contributions totaling $770,893 in 2008 .
|
||||||||||||||||
NOTE 6
CONSTRUCTION AND DEVELOPMENT PROCESS
The Company has contracts in place for the construction of a 12
acre, 4 lot commercial complex, including a 23,000 square-foot "Class A" office
building, this is in addition to the construction of a road on the Company's
core Daytona Beach lands. These contracts totaled $6,496,255, of
which $4,669,427 was remaining to be paid at September 30, 2008.
10
|
NOTE 7. BUSINESS SEGMENT
DATA
|
|||||||||||||||
|
The
Company primarily operates in three business segments: real
estate, income properties, and golf. Real estate operations include
commercial real estate,
|
|||||||||||||||
|
land
sales and development, agriculture and leasing properties for oil and
mineral exploration.
|
|||||||||||||||
|
|
|||||||||||||||
|
The
Company evaluates performance based on income or loss from operations
before
income taxes. The Company's reportable segments are strategic
business units that
|
|||||||||||||||
|
offer
differents products. They are managed separately because each segment
requires
different management techniques, knowledge, and
skills.
|
|||||||||||||||
|
Information
about the Company's operations in different segments is
as follows (amounts in thousands):
|
|||||||||||||||
|
|
|||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
||||||||||||
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
|
Revenues:
|
|||||||||||||||
|
Real
Estate
|
$ | 98 | $ | 2,995 | $ | 2,359 | $ | 8,861 | |||||||
|
Income
Properties
|
2,380 | 2,207 | 6,875 | 6,538 | |||||||||||
|
Golf
|
814 | 930 | 3,482 | 3,907 | |||||||||||
|
General,
Corporate, and Other
|
681 | 966 | 1,330 | 1,851 | |||||||||||
| $ | 3,973 | $ | 7,098 | $ | 14,046 | $ | 21,157 | ||||||||
|
Income
(Loss):
|
|||||||||||||||
|
Real
Estate
|
$ | (247 | ) | $ | 2,368 | $ | 1,127 | $ | 4,027 | ||||||
|
Income
Properties
|
1,865 | 1,687 | 5,465 | 5,165 | |||||||||||
|
Golf
|
(718 | ) | (648 | ) | (1,436 | ) | (1,329 | ) | |||||||
|
General,
Corporate, and Other
|
(729 | ) | (78 | ) | (1,225 | ) | (3,674 | ) | |||||||
| $ | 171 | $ | 3,329 | $ | 3,931 | $ | 4,189 | ||||||||
|
Identifiable
Assets
|
|||||||||||||||
|
Real
Estate
|
$ | 36,038 | |||||||||||||
|
Income
Properties
|
116,910 | ||||||||||||||
|
Golf
|
8,008 | ||||||||||||||
|
General,
Corporate, and Other
|
10,549 | ||||||||||||||
| $ | 171,505 | ||||||||||||||
|
Depreciation
and Amortization
|
|||||||||||||||
|
Real
Estate
|
$ | 296 | |||||||||||||
|
Income
Properties
|
1,208 | ||||||||||||||
|
Golf
|
374 | ||||||||||||||
|
General,
Corporate, and Other
|
88 | ||||||||||||||
| $ | 1,966 | ||||||||||||||
|
Capital
Expenditures
|
|||||||||||||||
|
Real
Estate
|
$ | 2,903 | |||||||||||||
|
Income
Properties
|
12,347 | ||||||||||||||
|
Golf
|
32 | ||||||||||||||
|
General, Corporate, and Other
|
1,558 | ||||||||||||||
| $ | 16,840 | ||||||||||||||
|
Income
represents income (loss) from continuing operations before income
taxes.
|
|||||||||||||||
|
Identifiable
assets by segment are those assets that are used in the Company's
operations in each segment.
|
|||||||||||||||
|
General
corporate
assets and assets used in the Company's other operations consist primarily
of cash, investment securities, and property, plant, and
equipment.
|
|||||||||||||||
NOTE
8. FAIR VALUE MEASUREMENTS
On
January 1, 2008, the Company adopted Statement No. 157, “Fair Value
Measurement” (Statement 157). Statement 157 defines fair value, establishes a
framework for the measurement of fair value, and enhances disclosures about fair
value measurements. The statement does not require any new fair value measures.
The adoption of Statement 157 had no impact on the financial condition, results
of operations or cash flows of the Company. Delayed application of this
Statement is required for nonfinancial assets and nonfinancial liabilities,
except for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually), until fiscal years begining
after November 15, 2008, and interim periods within those fiscal years.
The Company is evaluating the impact of implementation. At the time the
Company's debt was refinanced in 2002, the Company entered into an interest rate
swap agreement. The fair market value of the interest rate swap agreement was
determined using Significant Other Observable Inputs (Level 2) under Statement
157. The Fair Market Value recorded on the Balance Sheet at September 30, 2008,
was a liability of $526,620.
11
The
Management’s Discussion and Analysis of Financial Condition and Results of
Operations is designed to be read in conjunction with the financial statements
and Management's Discussion and Analysis of Financial Condition and Results of
Operations in the last annual report on Form 10-K.
OPERATIONS
OVERVIEW
The
Company is primarily engaged in real estate land sales and development,
reinvestment of land sales proceeds into income properties, development of
income properties on Company lands, and golf course operations. The
Company owns approximately 11,200 acres in Florida, which form a substantial
portion of the western boundary of the City of Daytona Beach. The
Company lands are well-located in the growing central Florida Interstate
4/Interstate 95 corridor, providing an excellent opportunity for reasonably
stable land sales in the near-term future and following years.
With its
substantial land holdings in Daytona Beach, the Company has parcels available
for the entire spectrum of real estate uses. Along with land sales,
the Company selectively develops parcels primarily for commercial uses. Although
pricing levels and changes by the Company and its immediate competitors can
affect sales, the Company generally enjoys a competitive edge due to low costs
associated with long-time land ownership and a significant ownership position in
the immediate market.
Sales and
development activity performed by the Company and third party developers on and
around Company owned lands have been strong in the last several years. These
activities included the sale of 120 acres of land to Florida Hospital for the
construction of a new hospital, which is anticipated to open mid-year 2009, the
expansion of the Daytona Beach Auto Mall, the opening of a second office
building in the Cornerstone Office Park, continued development within the
250-acre Gateway Commerce Park (where a 32,000 square-foot industrial
building is currently under construction), and development of the 60-acre
Interstate Commerce Park, both adjacent to Interstate 95, and the sale of
approximately 100 acres of land west of Interstate 95 on which a private high
school was constructed and opened in August 2008. Construction nears
completion on the future City of Daytona Beach police headquarters, located
adjacent to Gateway Commerce Park. In the first half of 2008, development
also commenced on a 288-unit apartment complex, a medical office building, and a
townhouse residential community on the east side of Interstate 95. On
the west side of the interstate, development has commenced on a fire station, a
hotel, an elementary school, and a 59,000 square-foot furniture retail store in
the Interstate Commerce Park.
In 2000,
the Company initiated a strategy of investing in income properties utilizing the
proceeds of agricultural land sales qualifying for income tax deferral through
like-kind exchange treatment for tax purposes. At September 30, 2008,
the Company had invested approximately $120 million in twenty-six income
properties through this process. This
investment includes the April 2008 purchase of a Harris Teeter supermarket
in Charlotte, North Carolina, for approximately $9.7 million.
Lease
revenue of approximately $9.2 million is projected to be generated annually on
this investment base. This income, along with income from additional
net-lease income property investments, will continue to decrease earnings
volatility in future years and add to overall financial
performance. This strategy has enabled the Company to enter into the
business of building, leasing, and holding in its portfolio select income
properties that are strategically located on Company lands.
The
Company currently has two self-developed projects in process. The
first project is a two-building 31,000 square-foot flex office space complex
located within Gateway Commerce Park. Construction of these buildings
was completed in the third quarter of 2008. Leases are currently in
negotiation on this project. Also under development by the
Company is a 12 acre, 4-lot commercial complex, located at the corner of LPGA
and Williamson Boulevards. Site work, building plans, and permitting
are complete for this project. The parcel will include a 23,000
square-foot “Class A” office building. Construction of the building
began in July 2008 with the execution of a lease with Merrill Lynch for a
significant portion of the building. Leases are currently in
negotiation for additional space in the building.
Golf
operations consist of the operation of two golf courses, a clubhouse facility,
and food and beverage activities within the LPGA International mixed-use
residential community on the west side of Interstate 95, south and east of LPGA
Boulevard. The Champions course was designed by Rees Jones and the
Legends course was designed by Arthur Hills.
The
Company’s agricultural operations consist of growing, managing, and selling of
timber and hay on approximately 10,600 acres of Company lands on the west
side of Daytona Beach, Florida. The Company is currently in the
process of converting a significant portion of its timberlands to hay
production.
The
overall national and local economies continue to be weak and unstable with both
the residential and commercial real estate markets depressed. Based
on current market conditions, the Company's fourth quarter closing volume
will be lower than in recent years as some of our potential purchasers have
either put their expansions on hold or have requested extensions. One such event
was the cancellation of the $17.4 million contract for the sale of 25 acres of
land, intended for retail use, near the Florida Hospital site. This
contract was signed and previously reported in the third quarter of
2007. Despite these market conditions, the Company expects earnings
to be positive in the current year. Earnings and positive cash flow are expected
to be generated due to the Company’s low debt and significant revenue
generated from the Company's portfolio of net leased income
properties. During the current economic slowdown, which is
anticipated to continue for the foreseeable future, the Company is concentrating
on conversion of forestry lands into hay operations, and the leasing of our
self-development projects discussed above; as well as the design and permitting
of future roads, completing construction of Tournament Drive west of
Interstate-95 to connect to the new elementary school, and obtaining land use
entitlements, all of which we anticipate will enhance the long-term value of our
land holdings.
12
SUMMARY OF 2008 OPERATING
RESULTS
Net
income totaled $105,246, equivalent to $.02 per share, for the third quarter
of 2008. These profits represented a substantial decrease
from the profits of $2,102,564, equivalent to $.37 per share, generated in
the third quarter of 2007. The decline in earnings can be
attributed to lower profits from real estate sales as no real estate
transactions closed during the third quarter of 2008. The lower profits were
somewhat offset by increased earnings from income properties.
For the
nine months ended September 30, 2008, the Company realized net income amounting
to $2,432,562, equivalent to $.42 per share. This income represented
an 8% decline from the income of $2,634,692, equivalent to $.46 per share,
posted in 2007’s same period. The lower profits were primarily the
result of lower real estate sales volume, which was offset by higher
earnings from income properties and lower general and administrative expenses as
the result of an addition to income for decreased stock option
accruals.
The
Company also uses Earnings before Depreciation, Amortization, 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.
The
following is the calculation of EBDDT:
|
Three
Months Ended
|
||||||||
|
September
30,
|
September
30,
|
|||||||
|
2008
|
2007
|
|||||||
|
Net
Income
|
$
|
105,246
|
$
|
2,102,564
|
||||
|
Add
Back:
|
||||||||
|
Depreciation
and Amortization
|
676,733
|
616,964
|
||||||
|
Deferred
Taxes
|
321,607
|
445,854
|
||||||
|
Earnings
before Depreciation,
|
||||||||
|
Amortization
and Deferred Taxes
|
$
|
1,103,586
|
$
|
3,165,382
|
||||
|
Nine
Months Ended
|
||||||||
|
September
30,
|
September
30,
|
|||||||
|
2008
|
2007
|
|||||||
|
Net
Income
|
$
|
2,432,562
|
$
|
2,634,692
|
||||
|
Add
Back:
|
||||||||
|
Depreciation
and Amortization
|
1,966,494
|
1,848,214
|
||||||
|
Deferred
Taxes
|
1,137,206
|
636,391
|
||||||
|
Earnings
before Depreciation,
|
||||||||
|
Amortization
and Deferred Taxes
|
$
|
5,536,262
|
$
|
5,119,297
|
||||
EBDDT is
calculated by adding depreciation, amortization, and the change in deferred
income tax to net income as they represent non-cash charges. EBDDT is not a
measure of operating results or cash flows from operating activities as defined
by U.S. 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.
The
downturn in EBDDT for the third quarter of 2008 to $1,103,586 from $3,165,382 in
the prior year’s same period can be directly attributed to lower real
estate sales volume.
EBDDT
increased for the nine-month period in 2008, to $5,536,262 from $5,119,297 in
2007’s same period. This increase, on lower earnings, was due to the
increase in deferred taxes during the period. The rise in deferred
taxes was due to the increase in such taxes associated with like-kind
exchanges and stock options. Deferred taxes in 2007 were partially offset by the
reversal of deferred taxes on gains from a year-end 2006 transaction for which
the like-kind exchange process was not completed, as the Company was unable to
identify investment property which met established criteria.
REAL ESTATE
SALES
During
the third quarter of 2008, a loss totaling $247,320 was posted from real estate
sales, as no land sales transactions were closed during the
period. For the third quarter of 2007, profits amounting to
$2,367,558 and revenues totaling $2,994,820 were generated on the sale of 11
acres of land.
For the
first nine months of 2008, revenues and profits totaled $2,358,789 and
$1,126,881, respectively. These revenues and profits were realized on the sale
of 21 acres of land. For the same period of 2007, the sale of 104
acres of property, including a charitable contribution of 25 acres valued at
$1,500,000, generated revenues and profits of $8,860,680 and $4,027,242,
respectively. Also included in sales during the first nine months of
2007 was the sale of approximately $1,900,000 of impact fee credits. Costs and
expenses were substantially higher in 2007’s nine-month period with the higher
cost basis associated with both the charitable contribution and impact fee
credits.
INCOME
PROPERTIES
The
addition of the Harris Teeter supermarket, located in Charlotte, North Carolina,
to the Company’s inventory of income properties in April 2008 generated
increased revenues and profits for both the third quarter and first nine months
of 2008 when compared to the same periods of 2007. During the
third quarter of 2008, revenue and profit gains of 8% and 11%, respectively,
were realized. Revenues and profits totaled $2,380,052 and $1,864,627,
respectively, for the third quarter of 2008. Profits of
$1,687,198 were produced on revenues of $2,207,308 for the same period of
2007. A 5% gain in revenues for the first nine-months of 2008
produced a 6% increase in profits for the period. For the first nine-month
period of 2008, profits totaling $5,465,157 were produced on revenues of
$6,874,518. During 2007’s same period, revenues and profits amounting
to $6,537,982 and $5,164,790 were realized, respectively.
GOLF
OPERATIONS
A 12%
decline in golf operations revenues during the third quarter of 2008 produced an
11% increase in losses. Losses from golf operations totaled $717,416
in 2008’s third quarter on revenues of $814,067. During the same
period of 2007, losses of $647,559 were generated on revenues totaling
$930,164. Both golf and food and beverage activities contributed to
the decline. Revenues from golfing activities decreased 13% on a 26%
decline in the number of rounds played, offset by a 14% increase in the average
rate per round. Food and beverage revenues fell 12% during this
period. Golf operations costs and expenses decreased 3% due to lower
payroll and cost of sales on the lower volume during this period.
During
the first nine months of 2008, losses recorded from golf operations totaled
$1,435,487 on total revenues of $3,481,770. This loss represented an
8% increase over 2007’s same period loss of $1,329,516. During the
first nine months of 2007, revenues of $3,907,346 were produced. The
11% decrease in revenue for 2008 represented a decline in both golf and food and
beverage activities. Golf revenues were down 8% on a 16% fall in the
number of rounds played, offset by a 9% increase in the average rate per round
played. Revenues from food and beverage activities were 18% lower
during this period. For the nine-month period, golf operations costs
and expenses fell 6% when compared to the prior year. This
decline in costs and expenses was achieved as the lower volume reduced
payroll expenses and cost of sales.
GENERAL, CORPORATE, AND
OTHER
Profits
on the sale of other real estate interests totaled $590,439 and $794,696 for the
third quarter and first nine months of 2008, respectively. These
profits were realized on the release of subsurface rights on 772 acres, of which
the release of 537 acres occurred in the third
quarter. During the first nine months of 2007, profits on the release
of subsurface interests totaled $1,400,979, of which $816,235 was earned in the
third quarter. Releases were granted on 645 acres and 394 acres for
the nine months and third quarter of 2007, respectively.
Interest
and other income declined 39% during the third quarter of 2008 compared to
2007’s same period. The decrease, to $91,089, was due to lower
interest earned on lower balances for investment securities and funds held for
investment through the like-kind exchange process. These decreases were somewhat
offset by higher interest on mortgage notes receivable. Interest and
other income earned in 2007’s third quarter totaled $149,627.
For the
nine-month period, interest and other income rose 19% to
$535,839. Interest and other income totaled $450,420 during 2007’s
first nine-month period. The higher earnings were achieved on higher
interest from mortgage notes receivable in addition to increased interest on
funds held for reinvestment through the like-kind exchange
process. Lower interest earned on lower balances for investment
securities offset these increases for the nine-month period.
During
the third quarter of 2008, general and administrative expenses increased 35%
when compared to the same period of 2007. The increase, to $1,410,864, was the
result of higher stock option accruals along with increased legal and other
costs associated with shareholder relations. General and
administrative expenses amounted to $1,044,337 in 2007’s third
quarter.
For the
first nine months of 2008, general and administrative expenses decreased 54% to
$2,555,806, when compared to the prior year’s same period. General
and administrative expenses totaled $5,525,328 in the first nine months of 2007.
This significant variance was primarily the result of a $3,093,216 net
change in stock option expenses resulting from a decrease in the price
of Company stock in the first half of 2008, and an increase in stock price
during the first six months of 2007. Also contributing to the
variance were lower post-retirement benefit costs. These increases were
partially offset by higher legal and other costs related to shareholder
relations.
The
Company held cash, restricted cash, and investment securities totaling
$5,844,807 at September 30, 2008. This amount represented a decrease of
$15,599,663 from the balance of $21,444,470 held at December 31,
2007. The primary uses of these funds, in addition to the purchase of
the Harris Teeter income property, which cost approximately $9,700,000, were for
the payment of income taxes, development and construction activities, and the
continued conversion of Company timber lands to hay. Income taxes of
$3,325,000 were paid in the first nine months of 2008. Development
and construction activity approximated $5,000,000 during this nine-month period
and included construction of roads on the Company’s core lands adjacent to LPGA
Blvd. and the completion of the 31,000 square-foot flex office space complex in
Gateway Commerce Center. Additionally, construction commenced on the
23,000 square-foot “Class A” office building. Approximately
$2,742,000 was expended on clearing and planting of lands for hay
operations. Funds totaling $1,718,084 were used to pay dividends
of $0.30 per share.
Capital
expenditures anticipated for the remainder of 2008 consist of road
construction, conversion of timber lands to hay, and the development and
construction of the “Class A” office building on Company owned land. The
total amount of these capital expenditures is projected to be approximately
$2,000,000. The office building is approximately 40% pre-leased
to Merrill Lynch with the remainder held as speculative space at this
time. Financing of both the office building and the just completed
flex space buildings is anticipated to be put in place upon completion, in the
first quarter of 2009, at a 50% loan to value ratio.
Capital
to fund the planned expenditures in 2008 is expected to be provided from cash
and investment securities (as they mature), operating activities, and financing
sources that are currently in place, including the $20 million revolving line of
credit (of which approximately $1,975,000 was outstanding at September 30,
2008). The Company also beleives that it has the ability to borrow on a
non-recourse basis against its existing income properties, which are all free of
debt as of the date of this filing. As additional funds become
available through qualified sales, the Company expects to invest in additional
real estate opportunities.
The
Company’s Board of Directors and management continually review the allocation of
any excess capital with the goal of providing the highest return for all
shareholders over the long term. The reviews consider various alternatives,
including increasing or decreasing regular dividends, declaring special
dividends, commencing a stock repurchase program, and retaining funds for
reinvestment, including road development and hay conversion of timber lands. The
Board of Directors has reaffirmed its support for the continuation of the
1031 tax- deferred exchange strategy for investment of agricultural land sales
proceeds, self-development of income properties, and development of
infrastructure on Company owned lands.
14
The
profit on sales of real estate is accounted for in accordance with the
provisions of SFAS No. 66, “Accounting for Sales of Real Estate.” The
Company recognizes revenue from the sale of real estate at the time the sale is
consummated unless the property is sold on a deferred payment plan and the
initial payment does not meet criteria established under SFAS No. 66, or the
Company retains continuing involvement with the property. A majority
of the Company’s land sales contracts contain an anti-speculation
clause. This clause requires the buyer to begin construction of their
project within a specified period of time. If this requirement is not
met, the Company has the right, but not the obligation, to repurchase the
property at its original sales price.
During
2005 and 2006, the Company closed transactions for which it had post-closing
obligations to provide off-site utilities and/or road
improvements. Full cash payment was received at closing, and warranty
deeds were transferred and recorded. The sales contracts did not
provide any offsets, rescission, or buy-back if the improvements were not
completed. During the first six months of 2007, post-closing
obligations were competed, and revenues and profits of $667,252 and
$563,467 were recognized, respectively, on these transactions. No
post-closing obligations existed at September 30, 2008 and 2007, and in
accordance with SFAS No. 66 no revenues or profits were deferred.
The
Company acquires income properties with long-term leases in
place. Upon acquisition, the portion of the purchase price which
represents the market value associated with the lease is allocated to an
intangible asset. The amount of the intangible asset represents the
cost of replacing the tenant should the lease be
discontinued. Factors such as vacancy period, tenant improvements and
lease commissions, among others are considered in calculating the intangible
asset. The intangible asset is amortized over the remaining life of
the lease at the time of acquisition. At September 30, 2008, the
intangible asset associated with the income properties totaled $5,115,113 net of
amortization of $1,481,428.
In
accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets,” the Company has reviewed the recoverability of long-lived
assets, including real estate and development and property, plant, and equipment
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may or may not be recoverable. Real
estate and development is evaluated for impairment by estimating sales prices
less costs to sell. Impairment on income properties and other
property, plant, and equipment is measured using an undiscounted cash flow
approach. There has been no material impairment of long-lived assets reflected
in the consolidated financial statements.
At the
time the Company’s debt was refinanced in 2002, the Company entered into an
interest rate swap agreement. This swap arrangement changes the
variable-rate cash flow exposure on the debt obligations to fixed cash flows so
that the Company can manage fluctuations in cash flows resulting from interest
rate risk. This swap arrangement essentially creates the equivalent
of fixed-rate debt. The above-referenced transaction is accounted for
under SFAS No. 133, “Accounting for Derivative Instruments and Certain Hedging
Activities,” and SFAS No. 138, “Accounting for Certain Derivative Instruments
and Certain Hedging Activities, an Amendment of SFAS No. 133.” The
accounting requires the derivative to be recognized on the balance sheet at its
fair value and the changes in fair value to be accounted for as other
comprehensive income or loss. The Company measures the
ineffectiveness of the interest rate swap derivative by comparing the present
value of the cumulative change in the expected future cash flows on the variable
leg of the swap with the present value of the cumulative change in the expected
future interest cash flows on the floating rate liability. This
measure resulted in no ineffectiveness for the periods ended September 30, 2008
and September 30, 2007. A liability in the amount of $526,620 at
September 30, 2008 has been established on the Company’s balance sheet. The
change in fair value, net of applicable taxes, in the cumulative amount of
$323,476 at September 30, 2008 has been recorded as accumulated other
comprehensive loss, a component of shareholders’ equity.
The
Company maintains a stock option plan pursuant to which 500,000 shares of the
Company's common stock may be issued. The current Plan was approved
at the April 25, 2001 shareholders’ meeting. Under the Plan, the option exercise
price equals the stock market price on the date of grant, the options vest over
five years and all expire after ten years. The Plan provides for the
grant of (1) incentive stock options, which satisfy the requirements of Internal
Revenue Code (IRC) Section 422, and (2) non-qualified options, which are not
entitled to favorable tax treatment under IRC Section 422. No
optionee may exercise incentive stock options in any calendar year for shares of
common stock having a total market value of more than $100,000 on the date of
grant (subject to certain carryover provisions).
In
connection with the grant of non-qualified options, a stock appreciation right
for each share covered by the option may also be granted. The stock
appreciation right will entitle the optionee to receive a supplemental payment,
which may be paid in whole or in part in cash or in shares of common stock,
equal to a portion of the spread between the exercise price and the fair market
value of the underlying shares at the time of exercise. All options
granted to date have been non-qualified options, with a stock appreciation right
granted for each option share granted.
Both the
Company’s stock options and stock appreciation rights are liability classified
awards under SFAS No. 123R "Share Based Payment," and are required to be
remeasured to fair value at each balance sheet date until the award is
settled.
The
principal market risk (i.e. the risk of loss arising from adverse changes in
market rates and prices) to which the Company is exposed is interest rates. The
objective of the Company’s asset management activities is to provide an adequate
level of liquidity to fund operations and capital expansion while minimizing
market risk. The Company utilizes overnight sweep accounts and short-term
investments to minimize the interest rate risk. The Company does not actively
invest or trade in equity securities. The Company does not believe
that its interest rate risk related to cash equivalents and short-term
investments is material due to the nature of the investments.
The
Company manages its debt considering investment opportunities and risk, tax
consequences, and overall financial strategies. The Company is
primarily exposed to interest rate risk on its $8,000,000 ($6,602,639
outstanding at September 30, 2008) long-term loan. The borrowing
bears a variable rate of interest based on market rates. Management’s
objective is to limit the impact of interest rate changes on earnings and cash
flows and to lower the overall borrowing costs. To achieve this
objective, the Company entered into an interest rate swap agreement during the
second quarter of 2002. A hypothetical change in the interest rate of
100 basis points (i.e. 1%) would not materially affect the Company’s financial
position, results of operations, or cash flows.
As of the
end of the period covered by this report, an evaluation, as required by Rules
13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the “Exchange
Act”), was carried out under the supervision and with the participation of the
Company's management, including the Chief Executive Officer ("CEO") and Chief
Financial Officer ("CFO"), of the effectiveness of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the
Exchange Act). Based on that evaluation, the CEO and CFO have
concluded that the design and operation of the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized, and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms, and to provide
reasonable assurance that information required to be disclosed by the Company in
such reports is accumulated and communicated to the Company's management,
including its CEO and CFO, as appropriate to allow timely decisions regarding
required disclosure. There were no changes in the Company's internal
control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f)
under the Exchange Act) during the fiscal quarter ended September 30,
3008 that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.
There are
no material pending legal proceedings to which the Company or any of its
subsidiaries is a party.
Certain
statements contained in this report (other than statements of historical fact)
are forward-looking statements. The words “believe,” “estimate,” “expect,”
“intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,”
“predict,” “forecast,” “project,” 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.
We wish
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, 2008, 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 strength of the real estate
market in the City of Daytona Beach and Volusia County, Florida; the ability to
successfully execute acquisition or development strategies; any loss of key
management personnel; changes in local, regional, and national economic
conditions affecting the real estate development business and income properties;
the impact of environmental and land use regulations; the impact of competitive
real estate activity; variability in quarterly results due to the unpredictable
timing of land sales; the loss of any major income property tenants; and the
availability of capital. These risks and uncertainties may cause our actual
future results to be materially different than those expressed in our
forward-looking statements.
In
addition to the other information set forth in this report, you should carefully
consider the factors discussed in Part I “Item 1A. Risk Factors” in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2007. There
have been no material changes to those risk factors. The risks described in the
Annual Report on Form 10-K are not the only risks facing the Company. Additional
risks and uncertainties not currently known to the Company or that the Company
currently deems to be immaterial also may materially adversely affect the
Company.
While we
periodically reassesses material trends and uncertainties affecting our results
of operations and financial condition, we do not intend to review or revise any
particular forward-looking statement referenced herein in light of future
events.
(a)
Exhibits:
Exhibit
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 herein by reference.
Exhibit
3.2 - By-laws of Consolidated-Tomoka Land Co., as amended and restated on
October 24, 2007, filed as Exhibit 3.2 to the registrant's Current Report
on Form 8-K filed October 26, 2007, and incorporated herein by
reference.
Exhibit
31.1 - Certification furnished pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
Exhibit
31.2 - Certification furnished pursuant to Section 302 of Sarbanes-Oxley Act of
2002.
Exhibit
32.1 - Certification pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit
32.2 - Certification pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
16
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)
| November 10, 2008 By: | /s/William H. McMunn |
|
William
H. McMunn, President and
Chief Executive
Officer
|
| November 10, 2008 By: | /s/Bruce W. Teeters |
|
Bruce W.
Teeters, Senior Vice President
Finance and
Treasurer
|
17
EXHIBIT 31.1
CERTIFICATIONS
I,
William H. McMunn, certify that:
|
1.
|
I
have reviewed this Form 10-Q of Consolidated-Tomoka Land Co.;
|
|
2.
|
Based
on my knowledge, this 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
report;
|
|
3.
|
Based on my knowledge, the financial statements, and
other financial information included in this 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 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-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the Registrant and
have:
|
| (a) |
Designed
such disclosure controls and procedures, or caused such disclosure
controls and
procedures to be designed under our supervision, 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 report is being prepared;
|
| (b) |
Designed
such internal control over financial reporting, or caused such internal
control
over financial reporting to be designed under our supervision, to provide
reasonable
assurance regarding the reliability of financial reporting and the
preparation
of financial statements for external purposes in accordance with
generally
accepted accounting principles;
|
| (c) |
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and
presented in this report our conclusions about the effectiveness of the
disclosure
controls and procedures, as of the end of the period covered by this
report
based on such evaluation; and
|
| (d) |
Disclosed
in this report any change in the registrant's internal control over
financial
reporting that occurred during the registrant's most recent fiscal quarter
that
has materially affected, or is reasonably likely to materially
affect,
the registrant's internal
control over financial reporting; and
|
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors:
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have
a significant role in the registrant's internal control over financial
reporting.
|
By: /s/ William H.
McMunn
William
H. McMunn
President
and Chief Executive Officer
Date:
November 10, 2008
EXHIBIT 31.2
CERTIFICATIONS
I, Bruce
W. Teeters, certify that:
| 1. |
I
have reviewed this Form 10-Q of Consolidated-Tomoka Land Co.;
|
|
2.
|
Based
on my knowledge, this 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 he circumstances under which such statements
were made, not misleading with respect to the
period covered by this report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this 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
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-15(e) nd 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and
have:
|
| (a) |
Designed
such disclosure controls and procedures, or caused such disclosure
controls and
procedures to be designed under our supervision, to ensure that
materialinformation
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 report is being prepared;
|
| (b) |
Designed
such internal control over financial reporting, or caused such internal
control
over financial reporting to be designed under our supervision, to
providereasonable
assurance regarding the reliability of financial reporting and the
preparation
of financial statements for external purposes in accordance with
generally
accepted accounting principles;
|
| (c ) |
Evaluated the effectiveness of the registrant's
disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of
he disclosure
controls and procedures, as of the end of the period covered by
this report
based on such evaluation; and
|
| (d) |
Disclosed
in this report any change in the registrant's internal control over
financial
reporting that occurred during the registrant's most recent fiscal quarter
that
has materially affected, or is reasonably likely to materially affect, the
registrant's
internal control over financial reporting; and
|
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of
internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors:
|
| (a) |
All
significant deficiencies and material weaknesses in the design or
operation of internal
control over financial reporting which are reasonably likely to adversely
affect
the registrant's ability to record, process, summarize and report
financial information;
and
|
| (b) |
Any
fraud, whether or not material, that involves management or other
employees who have
a significant role in the registrant's internal control over financial
reporting.
|
By:/s/Bruce W.
Teeters
Bruce W.
Teeters
Senior
Vice President-Finance and
Treasurer
Date:
November 10, 2008
EXHIBIT 32.1
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 ended September 30, 2008, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”),
I, William H. McMunn, President and Chief Executive Officer 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 requirements 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/ William H.
McMunn
William
H. McMunn
President
and Chief
Executive Officer
November
10, 2008
Exhibit 32.2
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 ended September 30, 2008, 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 requirements 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
November
10, 2008