SEC Filing - CTO Realty Growth

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, 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 November 1, 1996 _____________________ _________________ $1.00 par value 6,261,272 1

CONSOLIDATED-TOMOKA LAND CO. INDEX Page No. ________ PART I - - FINANCIAL INFORMATION Consolidated Condensed Balance Sheets - September 30, 1996 and December 31, 1995 3 Consolidated Condensed Statements of Income and Retained Earnings - Three Months and Nine Months Ended September 30, 1996 and 1995 4 Consolidated Condensed Statements of Cash Flows - Nine Months Ended September 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) September 30, December 31, 1996 1995 ------------ ------------ ASSETS Cash $ 129,361 $ 203,829 Investment Securities 967,697 1,603,887 Notes Receivable 10,127,773 10,937,614 Accounts Receivable 2,847,161 2,143,305 Inventories 741,623 802,515 Cost of Fruit on Trees 3,299,946 2,658,126 Real Estate Held for Development and Sale 14,043,908 13,801,477 Net Investment in Direct Financing Lease 731,760 792,530 Prepaid Income Taxes 1,048,113 -- Other Assets 432,835 499,272 Property, Plant, and Equipment - Net 22,608,025 26,250,913 ---------- ---------- TOTAL ASSETS $56,978,202 $59,693,468 ========== ========== LIABILITIES Accounts Payable $ 166,768 $ 1,213,692 Notes Payable 21,553,655 20,921,298 Accrued Liabilities 3,673,134 2,569,848 Customer Deposits 103,850 52,411 Deferred Income Taxes 69,466 69,466 Income Taxes Payable -- 2,123,691 ---------- ---------- TOTAL LIABILITIES 25,566,873 26,950,406 ---------- ---------- MINORITY INTEREST 87,713 110,535 ---------- ---------- SHAREHOLDERS' EQUITY Common Stock 6,261,272 6,261,272 Additional Paid-in Capital 1,782,105 1,782,105 Retained Earnings 23,280,239 24,589,150 ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 31,323,616 32,632,527 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $56,978,202 $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 Nine Months Ended -------------------------- -------------------------- September 30, September 30, September 30, September 30, 1996 1995 1996 1995 ------------ ------------ ------------ ------------ INCOME: Citrus Operations: Sales of Fruit and Other Income $ 49,536 $ 21,118 $ 9,836,762 $ 5,794,311 Production and Selling Expenses ( 536,792) ( 448,902) ( 6,837,919) ( 5,741,660) ---------- ---------- ---------- ---------- ( 487,256) ( 427,784) 2,998,843 52,651 ---------- ---------- ---------- ---------- Real Estate Operations: Sales and Other Income 733,116 1,380,354 4,514,824 3,938,205 Costs and Other Expenses ( 712,665) ( 1,157,023) ( 2,763,866) ( 3,285,894) ---------- ---------- ---------- ---------- 20,451 223,331 1,750,958 652,311 ---------- ---------- ---------- ---------- Profit On Sales of Undeveloped Real Estate Interests 550 500 3,806 1,485,939 ---------- ---------- ---------- ---------- Interest and Other Income 181,507 180,549 1,003,978 460,535 ---------- ---------- ---------- ---------- OPERATING INCOME (LOSS) ( 284,748) ( 23,404) 5,757,585 2,651,436 GENERAL AND ADMINISTRATIVE EXPENSES ( 760,732) ( 819,530) ( 2,439,223) ( 2,682,709) ---------- ---------- ---------- ---------- INCOME (LOSS) BEFORE INCOME TAXES ( 1,045,480) ( 842,934) 3,318,362 ( 31,273) INCOME TAXES 415,107 333,672 ( 1,183,573) 37,942 ---------- ---------- ---------- ---------- NET INCOME (LOSS) ( 630,373) ( 509,262) 2,134,789 6,669 RETAINED EARNINGS, Beginning of Period 25,788,994 22,250,392 24,589,150 22,986,715 DIVIDENDS ( 1,878,382) ( 1,565,318) ( 3,443,700) ( 2,817,572) ---------- ---------- ---------- ---------- RETAINED EARNINGS, End of Period $23,280,239 $20,175,812 $23,280,239 $20,175,812 ========== ========== ========== ========== PER SHARE INFORMATION: Average Shares Outstanding 6,261,272 6,261,272 6,261,272 6,261,272 ========== ========== ========== ========== Net Income (Loss) Per Share $(.10) $(.08) $.34 -- ========== ========== ========== ========== DIVIDENDS PER SHARE $ .30 $ .25 $.55 $.45 ========== ========== ========== ========== See Accompanying Notes to Consolidated Condensed Financial Statements. 4

CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended ---------------------------- September 30, September 30, 1996 1995 ------------- ------------- CASH FLOW FROM OPERATING ACTIVITIES: CASH RECEIVED FROM: Citrus Sales and Other Income $ 8,948,340 $ 6,006,455 Real Estate Sales and Other Income 5,463,337 6,797,296 Sales of Undeveloped Real Estate 47,076 1,485,939 Interest and Other Income 369,842 453,571 ---------- ---------- Total Cash Received from Operating Activities 14,828,595 14,743,261 ---------- ---------- CASH EXPENDED FOR: Citrus Production and Selling Expenses 7,280,600 6,359,068 Real Estate Costs and Expenses 1,570,348 2,732,137 General and Administrative Expenses 1,643,287 1,039,480 Interest 1,233,732 1,432,010 Income Taxes 4,355,376 2,203,775 ---------- ---------- Total Cash Expended for Operating Activities 16,083,343 13,766,470 ---------- ---------- Net Cash Provided by (Used In) Operating Activities ( 1,254,748) 976,791 ---------- ---------- CASH FLOW FROM INVESTING ACTIVITIES: Acquisition of Property, Plant, and Equipment ( 324,741) ( 997,711) Net (Increase) Decrease in Investment Securities 636,190 ( 2,710,971) Direct Financing Lease 60,770 65,402 Proceeds from Sale of Property, Plant, and Equipment 3,619,404 1,234,560 ---------- ---------- Net Cash Provided by (Used in) Investing Activities 3,991,623 ( 2,408,720) ---------- ---------- CASH FLOW FROM FINANCING ACTIVITIES: Cash Proceeds from Debt 3,450,000 6,750,000 Payments of Debt ( 2,817,643) ( 1,955,478) Dividends Paid ( 3,443,700) ( 2,817,572) ---------- ---------- Net Cash Provided by (Used in) Financing Activities ( 2,811,343) 1,976,950 ---------- ---------- NET INCREASE (DECREASE) IN CASH ( 74,468) 545,021 CASH, BEGINNING OF YEAR 203,829 503,545 ---------- ---------- CASH, END OF PERIOD $ 129,361 $ 1,048,566 ========== ========== 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 lesser extent, its forestry activities are seasonal in nature. Accordingly, results for the nine months ended September 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 September 30, 1996 and 1995 are summarized as follows (in thousands): Twelve Months Ended September 30, ------------------------------------------------- 1996 1995 --------------------- ------------------------ Revenues Income(Loss) Revenues Income(Loss) --------- ----------- -------- ------------ Citrus Operations $12,862 $ 3,575 $ 7,746 $ ( 27) Real Estate Operations 8,319 3,987 12,343 6,243 General Corporate & Other 6,184 2,944 5,033 1,864 ------ ----- ------ ----- Total Revenues $27,365 $25,122 ====== ====== Income from Continuing Operations Before Income Taxes 10,506 8,080 Income Taxes ( 3,958) (3,019) Income from Continuing Operations 6,548 5,061 Loss From Discontinued Resort Operations (net of income taxes) -- ( 1) ------ ----- Net Income $ 6,548 $5,060 ====== ===== 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: September 30, 1996 ----------------------------- Due Within Total One Year ---------- ----------- Consolidated-Tomoka Land Co. ---------------------------- $ 7,000,000 Line of Credit $ 3,450,000 $ 3,450,000 Mortgages Payable 9,483,033 240,414 Industrial Revenue Bonds 2,927,058 283,607 ---------- ---------- 15,860,091 3,974,021 ---------- ---------- Indigo Group Ltd. ----------------- Industrial Revenue Bonds 1,950,100 56,400 Mortgages Payable 3,743,464 34,439 ---------- ---------- 5,693,564 90,839 ---------- ---------- Total $21,553,655 $ 4,064,860 ========== ========== Indigo Group Ltd. ("IG LTD.") is a limited partnership in the real estate business owned 100% by the Company and its subsidiaries. Included in notes payable is a $2,543,464 mortgage note collateralized by developed real estate in a joint venture project. IG Ltd.'s 50% partner in the joint venture project is jointly liable on the note. Payments applicable to reduction of principal amounts will be required as follows: Consolidated- Indigo Tomoka Group Year Ending Sept. 30, Land Co. Ltd. Total ---------------------- ------------- ----------- ----------- 1997 $ 3,974,021 $ 90,839 $ 4,064,860 1998 596,249 94,324 690,573 1999 647,822 2,527,501 3,175,323 2000 703,865 56,400 760,265 2001 764,764 56,400 821,164 Thereafter 9,173,370 2,868,100 12,041,470 ---------- --------- ---------- $15,860,091 $ 5,693,564 $21,553,655 ========== ========= ========== 7

In the first nine months of 1996 interest totaled $1,253,922 of which $137,795 was capitalized to land held for development and sale. Total interest for the nine months ended September 30, 1995 was $1,646,632, of which $97,976 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 ----------------- With the harvesting season completed in late spring, losses were posted from citrus operations for the third period of 1996 as well as 1995. The $487,256 loss for the three months ended September 30, 1996 was 14% greater than the $427,784 loss recorded one year earlier. The increased loss can be attributed primarily to repairs and maintenance at the packinghouse. Substantially higher fruit production combined with improved fruit pricing resulted in a significant gain in citrus profitability for 1996's nine months to date when compared to prior year s same period. Profits of $2,998,843 were posted for 1996's first nine months compared to 1995's profits of $52,651. Revenues jumped 70% to $9,836,762 as boxes of fruit harvested and sold increased 51% to 1,050,488 for the period. During 1995's first nine months revenues of $5,794,311 were produced on the sale of 696,056 boxes. Also contributing to the revenue gain was a 12% increase in average fruit pricing, with the sale of both fresh and processed fruit contributing to this gain. The significantly larger fruit volume accounted for a 19% increase in production and selling expenses. Real Estate Operations ______________________ Real estate operations profits amounted to $20,451 for the third quarter of 1996, a 91% decline from 1995's same period profit of $223,331. This downturn can primarily be attributed to the lack of commercial land closings in the third quarter of 1996. Profits of $1,750,958 from real estate activities for the first nine months of 1996 represent a 168% improvement over 1995's same period results. Commercial land transactions account for this gain in profits with the sale of 22 acres in 1996 generating revenues and gross profits of $1,625,000 and $1,430,000, respectively. This compares to the sale of 32 acres in 1995's first nine months producing revenues of $849,000 and gross profits of $390,000. Sales pricing and profits may vary substantially from property to property based on the location and its intended use. Profits from income properties increased slightly for the third quarter and rose in excess of $100,000 for the nine month period to date. These gains are due to higher occupancy and higher leasing rates. Total revenues from income properties fell 12% and 4% for the three month and nine month periods, respectively as the increases achieved from occupancy and leasing rates were offset by the May 1995 sale of the 18,000 square foot Mariner Towne Square shopping center and the June 1996 sale of the 70,000 square foot Mariner Village shopping center both located in Spring Hill, Florida. 9

Profits from forestry operations were down 53% and 20% for the three month and nine month periods of 1996, respectively when compared to 1995. An approximate $100,000 decline in profits to $93,000 for the third quarter and $446,000 year to date is the direct result of a fall in revenue on decreased harvesting. General, Corporate and Other ---------------------------- The sale of undeveloped real estate interests produced minimal profits for the third quarter of both 1996 and 1995, as well as the first nine months of 1996. Profits of $1,485,939 were realized for the first nine months of 1995 on the sale of 389 acres located primarily in Highlands County, Florida. Interest and other income of $181,507 posted during 1996's third period was in line with the $180,549 posted for the third period of 1995. Year to date through September 30th interest and other income totaled $1,003,978 representing a 118% increase over 1995's $460,535 same period results. This increase is primarily the result of the approximate $450,000 gain realized on the sale of the Mariner Village shopping center which occurred in June 1996. Decreased interest expense on lower outstanding borrowings primarily led to a 7% decline in general and administrative expenses for the third quarter and a 9% fall year-to-date. 10

FINANCIAL POSITION The $630,373 loss, equivalent to $.10 per share, posted in the third quarter of 1996 is typical for the third period due to the seasonality of the citrus operation. Year-to-date earnings of $2,134,789, equivalent to $.34 per share, continue to represent a substantial turnaround from 1995's same period breakeven results. The stronger results were led by citrus operations with significantly increased fruit volume along with stronger pricing of both fresh and processed fruit. Real estate operations contributed to the improvement with the sale of higher profit margin commercial property. Cash decreased for the nine months by $74,468, including the payment of dividends totaling $3,443,700, equivalent to $.55 per share. The dividend payment represents a 22% increase over the $.45 per share paid in 1995. Cash used in operating activities amounted to $1,254,748 with cash generated from investing activities providing $3,991,623 and cash used in financing activities totaling $2,811,343 including the dividend payment. Included in cash from investing activities was $3,619,404 from proceeds on sale of property, plant and equipment, which consists primarily of the sale of the 70,000 square foot Mariner Village shopping center. Cash requirements needed to fund capital expenditures for the remainder of 1996 approximate $750,000 and are anticipated to be funded from operations and, if necessary, available outside financing sources. These expenditures are centered on the LPGA mixed-use development. The 1996-1997 citrus crop year is underway. The quality of Company fruit appears to be very good. Production from Company groves is expected to be approximately 1,200,000 boxes. The USDA citrus crop forecast for the 1996-1997 season was released in early October. The estimate for Florida oranges totals 220 million boxes and represents an 8% increase over the 203.2 million boxes harvest for the 1995-1996 season. The large crop forecast was anticipated and is not expected to have a significant impact on pricing. Pricing at this time remains stable. The major landscaping upgrade of the Interstate 95 interchange at LPGA Boulevard is well under way. Installation of irrigation systems including wells, laying of cable for outdoor lighting, and planting of numerous trees and bushes has already taken place. Plant formations spelling out "Daytona Beach" and "LPGA Boulevard" can now be seen as you approach the interchange on I-95. When completed at year end, the landscape project will include numerous palm trees, water fountains, flower gardens and night time lighting. The upscale landscape design will provide an eye catching gateway into the LPGA International community, and the thousands of additional Company owned acres surrounding the interchange. With the relatively strong citrus crop and citrus pricing, coupled with the commercial contract backlog in place the outlook for near term profits looks positive. The Company continues to focus on the growth of real estate sales activity in the Daytona Beach area and sale of fresh fruit from citrus operations. 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 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 (for SEC use only) (b) Reports on Form 8-K None 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: 11/7/96 By: /s/ Bob D. Allen -------------------- Bob D. Allen, President and Chief Executive Officer Date: 11/7/96 By: /s/ Bruce W. Teeters -------------------- Bruce W. Teeters, Sr. Vice President Finance and Treasurer 13

EXHIBIT INDEX Page No. -------- No. 11 Computation of Earnings Per Common Share 15 No. 27 Financial Data Schedule (for SEC use only) 16 14

EXHIBIT 11 CONSOLIDATED-TOMOKA LAND CO. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE For the Three Months Ended For the Nine Months Ended -------------------------- ------------------------- Sept. 30, Sept. 30, Sept. 30, Sept.30, 1996 1995 1996 1995 ----------- ----------- ---------- ----------- PRIMARY EARNINGS PER SHARE NET INCOME (LOSS) (630,373) (509,262) 2,134,789 6,669 ========= ========= ========= ========= 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 79,594 47,837 86,218 28,594 --------- --------- --------- --------- TOTAL PRIMARY SHARES 6,340,866 6,309,109 6,347,490 6,289,866 ========= ========= ========= ========= PRIMARY EARNINGS (LOSS) PER COMMON SHARE ($0.10) ($0.08) $0.34 $0.00 ========= ========= ========= ========= FULLY DILUTED EARNINGS PER SHARE TOTAL PRIMARY SHARES 6,347,490 6,289,866 6,347,490 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 0 17,602 0 6,365 --------- --------- --------- --------- TOTAL FULLY DILUTED SHARES 6,340,490 6,326,711 6,347,490 6,296,231 ========= ========= ========= ========= FULLY DILUTED EARNINGS (LOSS) PER SHARE ($0.10) ($0.08) $0.34 $0.00 ========= ======== ========= ========= 15

5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED-TOMOKA LAND CO.'S SEPTEMBER 30, 1996 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

9-MOS DEC-31-1996 SEP-30-1996 129,361 967,697 12,974,934 0 18,085,477 0 35,083,660 12,475,635 56,978,202 0 0 0 0 6,261,272 25,062,344 56,978,202 14,355,392 15,359,370 6,967,655 9,601,785 1,768,217 0 671,006 3,318,362 1,183,573 2,134,789 0 0 0 2,134,789 0.44 0.44