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 June 30, 1996 _____ 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 59-0483700 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 149 South Ridgewood Avenue 32114 Daytona Beach, Florida (Zip Code) (Address of principal executive offices) (904) 255-7558 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding Class of Common Stock August 1, 1996 $1.00 par value 6,261,272 1CONSOLIDATED-TOMOKA LAND CO. INDEX Page No. PART I - - FINANCIAL INFORMATION Consolidated Condensed Balance Sheets - June 30, 1996 and December 31, 1995 3 Consolidated Condensed Statements of Income and Retained Earnings - Three Months Ended and Six Months Ended June 30, 1996 and 1995 4 Consolidated Condensed Statements of Cash Flows - Six Months Ended June 30, 1996 and 1995 5 Notes to Consolidated Condensed Financial Statements 6-8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 PART II -- OTHER INFORMATION 12 SIGNATURES 13 2
PART I -- FINANCIAL INFORMATION CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) June 30, December 31, 1996 1995 --------- ------------ ASSETS Cash $ 396,712 $ 203,829 Investment Securities 1,044,071 1,603,887 Notes Receivable 10,123,052 10,937,614 Accounts Receivable 4,233,642 2,143,305 Inventories 760,996 802,515 Cost of Fruit on Trees 2,254,564 2,658,126 Real Estate Held for Development and Sale 13,867,187 13,801,477 Net Investment in Direct Financing Lease 752,271 792,530 Other Assets 469,857 499,272 Property, Plant, and Equipment - Net 22,809,664 26,250,913 ---------- ---------- TOTAL ASSETS $56,712,016 $59,693,468 ========== ========== LIABILITIES Accounts Payable $ 675,299 $ 1,213,692 Notes Payable 18,656,595 20,921,298 Accrued Liabilities 3,198,331 2,569,848 Customer Deposits 49,842 52,411 Deferred Income Taxes 69,466 69,466 Income Taxes Payable 132,371 2,123,691 ---------- ---------- TOTAL LIABILITIES 22,781,904 26,950,406 ---------- ---------- MINORITY INTEREST 97,741 110,535 ---------- ---------- SHAREHOLDERS' EQUITY Common Stock 6,261,272 6,261,272 Additional Paid-in Capital 1,782,105 1,782,105 Retained Earnings 25,788,994 24,589,150 ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 33,832,371 32,632,527 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $56,712,016 $59,693,468 ========== ========== See accompanying Notes to Consolidated Condensed Financial Statements. 3
CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited) Three Months Ended Six Months Ended ------------------ ----------------- June 30, June 30, June 30, June 30, 1996 1995 1996 1995 ---------- ---------- ---------- --------- INCOME: Citrus Operations: Sales of Fruit and Other Income $ 4,618,325 $ 2,052,093 $ 9,787,226 $ 5,773,193 Production and Selling Expenses ( 2,826,662) ( 1,799,305) ( 6,301,127)( 5,292,758) ---------- ---------- ---------- ---------- 1,791,663 252,788 3,486,099 480,435 ---------- ---------- ---------- ---------- Real Estate Operations: Sales and Other Income 989,383 1,656,851 3,781,708 2,557,851 Costs and Other Expenses ( 849,636) ( 1,306,631) ( 2,051,201)( 2,128,871) ---------- ---------- ---------- ---------- 139,747 350,220 1,730,507 428,980 ---------- ---------- ---------- ---------- Profit On Sales of Undeveloped Real Estate Interests 1,200 1,425,741 3,256 1,485,439 ---------- ---------- ---------- ---------- Interest and Other Income 650,156 106,620 822,471 279,986 ---------- ---------- ---------- --------- OPERATING INCOME 2,582,766 2,135,369 6,042,333 2,674,840 GENERAL AND ADMINISTRATIVE EXPENSES ( 828,012) ( 908,786) ( 1,678,491)( 1,863,179) ---------- --------- ---------- ---------- INCOME BEFORE INCOME TAXES 1,754,754 1,226,583 4,363,842 811,661 INCOME TAXES ( 638,468) ( 456,154) ( 1,598,680) ( 295,730) ---------- --------- ---------- --------- NET INCOME 1,116,286 770,429 2,765,162 515,931 RETAINED EARNINGS, Beginning of Period 24,672,708 21,479,963 24,589,150 22,986,715 DIVIDENDS -- -- ( 1,565,318)( 1,252,254) ---------- ---------- ---------- ---------- RETAINED EARNINGS, End of Period $25,788,994 $22,250,392 $25,788,994 $22,250,392 ========== ========== ========== ========== PER SHARE INFORMATION: Average Shares Outstanding 6,261,272 6,261,272 6,261,272 6,261,272 ========== ========== ========== ========== Net Income Per Share $ .18 $ .12 $ .44 $ .08 ========== ========== ========== ========== Dividends Per Share $ -- $ -- $ .25 $ .20 ========== ========== ========== ========== See accompanying Notes to Consolidated Condensed Financial Statements. 4
CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Unaudited Six Months Ended ---------------------- June 30, June 30, 1996 1995 -------- -------- CASH FLOW FROM OPERATING ACTIVITIES: CASH RECEIVED FROM: Citrus Sales of Fruit and Other Income $ 8,682,366 $ 5,995,175 Real Estate Sales and Other Income 3,584,405 3,622,505 Sales of Undeveloped Real Estate 46,027 1,485,439 Interest and Other Income 246,016 270,355 ---------- ----------- Total Cash Received from Operating Activities 12,558,814 11,373,474 ---------- ---------- CASH EXPENDED FOR: Citrus Production and Selling Expenses 5,683,033 4,832,127 Real Estate Costs and Expenses 1,180,318 2,215,688 General and Administrative Expenses 1,270,255 1,364,944 Interest 765,913 1,059,069 Income Taxes 3,590,000 1,600,000 ---------- ---------- Total Cash Expended for Operating Activities 12,489,519 11,071,828 ---------- ---------- Net Cash Provided by Operating Activities 69,295 301,646 ---------- ---------- CASH FLOW FROM INVESTING ACTIVITIES: Acquisition of Property, Plant, and Equipment ( 265,961) ( 692,105) Net (Increase) Decrease in Investment Securities 559,816 ( 2,400,742) Direct Financing Lease 40,259 43,360 Proceeds from Sale of Property, Plant, and Equipment 3,619,495 1,225,167 ---------- ---------- Net Cash Provided by (Used In) Investing Activities 3,953,609 ( 1,824,320) ---------- ---------- CASH FLOW FROM FINANCING ACTIVITIES: Cash Proceeds of Debt 1,550,000 4,200,000 Payments of Debt ( 3,814,703) ( 1,801,906) Dividends Paid ( 1,565,318) ( 1,252,254) ---------- ---------- Net Cash Provided by (Used in) Financing Activities ( 3,830,021) 1,145,840 ---------- ---------- NET INCREASE (DECREASE) IN CASH 192,883 ( 376,834) CASH, BEGINNING OF YEAR 203,829 503,545 ---------- ---------- CASH, END OF PERIOD $ 396,712 $ 126,711 ========== =========== See accompanying Notes to Consolidated Condensed Financial Statements. 5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. Principles of Interim Statements. The information presented in the unaudited consolidated condensed financial statements reflects 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. The consolidated condensed financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. 2. Seasonal Operations. The company's citrus operations involve a single-crop agricultural commodity and are seasonal in nature. To a lessor extent, its forestry activities are seasonal in nature. Accordingly, results for the six months ended June 30, 1996 and 1995 are not necessarily indicative of results to be expected for the full year. Results of operations for the twelve months ended June 30, 1996 and 1995 are summarized as follows (in thousands): Twelve Months Ended June 30, ---------------------------------------------- 1996 1995 --------------------- ------------------------- Revenues Income Revenues Income(Loss) -------- ----------- -------- ----------- Citrus Operations $12,833 $ 3,634 $ 7,755 $( 37) Real Estate Operations 8,967 4,190 12,797 6,605 General Corporate & Other 6,183 2,884 5,310 1,957 ------ ----- ------ ------ Total Revenues $27,983 $25,862 ====== ====== Income From Continuing Operations Before Income Taxes 10,708 8,525 Income Taxes ( 4,039) ( 3,214) ------ ------ Income from Continuing Operations 6,669 5,311 Loss From Discontinued Resort Operations (net of income taxes) -- ( 230) ------ ------ Net Income $ 6,669 $ 5,081 ====== ====== 3. Common Stock and Earnings Per Common Share. Primary earnings per share are based on the average number of common shares and common share equivalents outstanding during the period. Primary and fully diluted earnings per share are the same for the periods. 6
4. Notes Payable. Notes payable consist of the following: June 30, 1996 -------------------------------------------- Due Within Total One Year ----------------- --------------- Consolidated-Tomoka Land Co. ---------------------------- $15,000,000 Line of Credit $ 400,000 $ 400,000 Mortgages Payable 9,539,937 235,239 Industrial Revenue Bonds 3,000,874 278,009 ---------- ---------- 12,940,811 913,248 ---------- ---------- Indigo Group Ltd. ----------------- Industrial Revenue Bonds 1,964,200 56,400 Mortgages Payable 3,751,584 33,619 ---------- ---------- 5,715,784 90,019 ---------- ---------- Total $18,656,595 $ 1,003,267 ========== ========== Indigo Group Ltd. ("IG LTD.") is a 100% owned limited partnership in the real estate business. Included in notes payable is a $2,551,784 mortgage note collateralized by developed real estate in a joint venture project. IG Ltd's 50% partner is jointly liable on the note. Payments applicable to reduction of principal amounts will be required as follows: Consolidated- Indigo Tomoka Group Year Ending June 30, Land Co. Ltd. Total ------------------- ------------- --------- ----------- 1997 $ 913,248 $ 90,019 $ 1,003,267 1998 584,012 93,422 677,434 1999 634,524 2,537,343 3,171,867 2000 689,414 56,400 745,814 2001 749,061 56,400 805,461 Thereafter 9,370,552 2,882,200 12,252,752 ---------- --------- ---------- $12,940,811 $ 5,715,784 $18,656,595 ========== ========== ========== 7
In the first six months of 1996, interest totaled $853,708 of which $87,795 was capitalized to land held for development and sale. Total interest for the six months ended June 30, 1995 was $1,124,335, of which $65,265 was capitalized to land held for development and sale. 8
MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------------------ The Management's Discussion and Analysis is designed to be read in conjunction with the financial statements and Management's Discussion and Analysis in the last annual report. RESULTS OF OPERATIONS --------------------- Citrus Operations Citrus operations achieved a dramatic improvement for the second quarter of 1996 with profits of $1,791,663 posted. This represents a 609% increase over 1995's same period $252,788 profit. The turnaround can be attributed to an 84% rise in fruit sold coupled with a 21% gain in average sales price. Fruit sold during 1996's second period totalled 495,785 boxes with 269,131 boxes sold for the same period one year earlier. The combined effect of the rise in pricing and the greater fruit volume resulted in a revenue increase of 125% to $4,618,325. Production and selling expenses rose 57% during the period as a result of the higher fruit volume, but were down on a per box basis due to the efficiencies achieved through the higher volume. An increased fruit harvest and higher average pricing also led to a significant rise in profits for 1996's first six month period. Fruit sold for 1996 to date totalled 1,050,488 boxes, a 51% increase over the 696,056 boxes sold during 1995's first half, while average fruit prices rose 12%. These gains resulted in a 70% jump in revenues realized to $9,787,226 and generated profits of $3,486,099, a 626% improvement over 1995's first six months profits totalling $480,435. On a per box basis production and selling expenses were lower; although, in total they increased 19% due to the gain in volume. Real Estate Operations ---------------------- Real estate profits fell 60% for the three months ended June 30, 1996 to $139,747. The absence of commercial real estate closings during the period is the primary factor for this downturn. These results compare to 1995's second quarter sales of 29 acres of commercial acreage which produced gross profits in excess of $230,000. For the first six months of 1996 the sale of 22 acres of commercial property generated gross profits of approximately $1,460,000 and account for the 303% increase in real estate operating income to $1,730,507. Gross profits of $295,000 were realized on the sale of 31 commercial acres during 1995's first six month period. Sales prices and profit margins vary significantly depending on the location and intended use of specific properties. The impact of higher occupancy and leasing rates produced a 57% increase in the bottom line from income properties for the second period and a 142% favorable impact for the six months through June 30, 1996 when compared to 1995's same periods. Revenues showed only modest changes for both periods as the gains achieved from leasing activity were offset by revenues lost due to the sale of the 18,000 square foot Mariner Towne Square shopping center in May 1995. 9
Forestry operating profits declined 25% during 1996's second quarter on an 27% decrease in revenues due to lower timber harvesting volume. Year- to-date forestry profits are in line with prior year, although revenues are down 11%. The revenue decline is offset by a 53% reduction in expenses which was achieved in the six month period due to the reorganization of the department which took place during the first quarter of 1995. General, Corporate and Other ---------------------------- Minimal profits from the sale of undeveloped real estate interests were recorded for both periods of 1996 to compared the $1,485,439 profit posted in 1995's six month period, of which $1,425,741 was realized in the second quarter. Sales of 389 acres of land, primarily located in Highlands County accounted for those profits in 1995's first half, of which 375 acres closed in the second quarter. The sale of the 70,000 square foot Mariner Village shopping center located in Spring Hill, Florida during June of 1996 generated profits in excess of $450,000 and account for the majority of the increase in interest and other income for the two periods of 1996 when compared to 1995. Also contributing to 1996's gain over 1995 was a small loss recorded on the sale of the Mariner Towne Square shopping center which occurred in May 1995. General and administrative expenses declined 9% and 10% for the second period and six months, respectively, due to reduced interest expense on lower outstanding borrowing. 10
FINANCIAL POSITION ------------------ Profits of $2,765,162, equivalent to $.44 per share, for the first six months of 1996 represent a strong improvement over 1995's same period $515,931 net income, equivalent to $.08 per share. These favorable results are led by citrus operations' large crop and higher pricing. Real estate operations also contributed to the increased earnings as the result of the greater commercial sales volume. Net cash generated for the six month period amounted to $192,883 after debt reduction totalling $2,264,703 and $1,565,318 in dividends paid. The dividends paid in 1996, equivalent to $.25 per share, represent a 20% increase over dividends paid in 1995's first six months equivalent to $.20 per share. Cash generated from operating activities totalled $69,295, with an additional $3,953,609 provided by investing activities. Cash realized from investing activities includes $3,619,495 from the sale of property, plant and equipment, primarily the sale of the 70,000 square foot Mariner Village shopping center located in Spring Hill, Florida. The acquisition of property, plant and equipment accounted for $265,961 in expenditures which consisted primarily of the addition and replacement of citrus vehicles and equipment, and forestry tree planting. Capital requirements for the remainder of 1996 approximate $2.7 million and will be funded through operations and if necessary current available financing sources. These expenditures consist primarily of development at the Ladies Professional Golf Association (LPGA) mixed-use project and citrus operations equipment additions and replacements. Company groves remain in excellent condition. Fruit harvesting for the 1995-1996 crop year has ended with Company groves producing 1,385,000 boxes, the largest crop in company history. To a great extent the abundant crop is due to the maturing of the groves planted from 1989- 1992. In the coming years as these trees continue to mature the volume of fruit harvested from these trees should grow. The final 1995-1996 USDA Florida orange crop estimate came in at just over 203 million boxes, the third largest orange crop in Florida's history. Pricing for both fresh and processed fruit remains relatively strong. Retail sales of processed juice products have shown some decline since retail prices have increased over the last several months, which may lead to weaker wholesale pricing. Commercial real estate sales for the remainder of 1996 appear strong with approximately 370 acres under contract for 1996 closing at a sales value in excess of $8 million. In addition to these sales contracts, negotiations are underway on several other parcels. Development activity at the LPGA mixed-use project continues to progress. Preliminary pre- construction work has begun on the clubhouse and second golf course. In August, a major landscape design project will commence on the new LPGA Boulevard I-95 interchange. This significant upgrade to the main LPGA International entry is projected to cost $400,000, of which $150,000 will be paid by a State of Florida grant. Profits for the near future look promising as portrayed by the large crop year citrus fruit volume and relatively strong citrus pricing coupled with the existing commercial real estate sales backlog. The Company continues to concentrate on these two core businesses while strengthening its balance sheet through debt reduction on the sale of its non-core assets. 11
PART II -- OTHER INFORMATION Item 1. Legal Proceedings There are no material pending legal proceedings to which the Company or its subsidiaries is a party. Items 2 through 3. Not Applicable Item 4. Submission of Matters to a Vote of Security Holders The annual meeting of shareholders was held May 8, 1996 and the following votes were received for each of the three nominees for Class II directors: Number of Number of Votes Number of Votes Nominee Votes for Withheld Abstaining --------- ----------- ----------------- ---------------- James P. Gorter 5,978,935 2,106 2,028 Robert F. Lloyd 5,978,635 2,406 2,028 Bruce W. Teeters 5,978,835 2,206 2,028 Item 5. Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit (11) - Computation of Earnings Per Common Share Exhibit (27) - Financial Data Schedule (b) Reports on Form 8-K None filed. 12
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: August 6, 1996 By: /s/ Bob D. Allen --------------------- Bob D. Allen President & Chief Executive Officer Date: August 6, 1996 By: /s/ Bruce W. Teeters ----------------------- Bruce W. Teeters Sr. Vice President- Finance & Treasurer 13
EXHIBIT INDEX Page No. ---------- No. 11 Computation of Earnings Per Common Share 15 No. 27 Financial Data Schedule 16 14
EXHIBIT 11 CONSOLIDATED-TOMOKA LAND CO. AND SUBSIDIARIES COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER COMMON SHARE For the Three Months Ended For the Six Months Ended -------------------------- ------------------------ June 30, June 30, June 30, June 30, 1996 1995 1996 1995 -------- --------- --------- --------- PRIMARY EARNINGS PER SHARE NET INCOME 1,116,286 770,429 2,765,162 515,931 ========= ========= ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,261,272 6,261,272 6,261,272 6,261,272 COMMON SHARES APPLICABLE TO STOCK OPTIONS USING THE TREASURY STOCK METHOD AT AVERAGE MARKET PRICE FOR THE PERIOD 89,604 28,594 89,604 28,594 --------- --------- --------- --------- TOTAL PRIMARY SHARES 6,350,876 6,289,866 6,350,876 6,289,866 ========= ========= ========= ========= PRIMARY EARNINGS PER COMMON SHARE $0.18 $0.12 $0.44 $0.08 ========= ========= ========= ========= FULLY DILUTED EARNINGS PER SHARE TOTAL PRIMARY SHARES 6,350,876 6,289,866 6,350,876 6,289,866 COMMON SHARES APPLICABLE TO STOCK OPTIONS IN ADDITION TO THOSE USED IN PRIMARY COMPUTATION DUE TO USE OF THE HIGHER OF AVERAGE MARKET PRICE OR PERIOD END MARKET PRICE 18,244 6,365 18,244 6,365 --------- --------- --------- --------- TOTAL FULLY DILUTED SHARES 6,369,120 6,296,231 6,369,120 6,296,231 ========= ========= ========= ========= FULLY DILUTED EARNINGS PER SHARE $0.18 $0.12 $0.44 $0.08 ========= ========= ========= ========= 15
5 6-MOS DEC-31-1996 JUN-30-1996 396,712 1,044,071 14,356,694 0 16,882,747 0 35,024,881 12,215,217 56,712,016 0 0 0 0 6,261,272 27,571,099 56,712,016 13,572,190 14,394,661 6,478,102 8,352,328 1,244,314 0 434,177 4,363,842 1,598,680 2,765,162 0 0 0 2,765,162 0.44 0.44