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 June
30, 2008
__ TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from ___ to
___
CONSOLIDATED-TOMOKA LAND
CO.
(Exact
name of registrant as specified in its charter)
|
Florida
(State
or other jurisdiction of incorporation or organization)
|
59-0483700
(IRS
Employer Identification No.)
|
|||
|
1530
Cornerstone Boulevard, Suite 100
Daytona
Beach, Florida
(Address
of principal executive offices)
|
32117
(Zip
Code)
|
|||
|
(386)
274-2202
(Registrant’s
telephone number, including area code)
|
||||
|
Not
Applicable
(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
_____
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
definitions
of “large accelerated filer," "accelerated filer,” and "smaller reporting
company" 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 ____
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
August 8,
2008
$1.00 par
value 5,727,515
1
| PART I - FINANCIAL INFORMATION |
Page
No.
|
|
Item
1. Financial Statements
|
|
|
June 30, 2008 (Unaudited) and December 31, 2007
|
3
|
|
Three Months and Six-Months ended June 30, 2008 and 2007
|
|
|
(Unaudited)
|
4
|
|
|
|
|
Comprehensive Income -
|
|
|
Six Months Ended June 30, 2008
|
|
|
(Unaudited)
|
5
|
|
Six
Months Ended June 30, 2008 and 2007
|
|
|
(Unaudited)
|
6
|
|
7-10
|
|
|
11-15
|
|
|
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.
60;
(Unaudited)
|
JUNE
30,
|
|
|
DECEMBER
31,
|
|
|||
|
|
|
|
2008
|
|
|
2007
|
|
|
ASSETS
|
|||||||
|
Cash
|
$
|
533,569
|
$
|
863,826
|
|||
|
Restricted Cash
|
--
|
10,387,550
|
|||||
|
Investment Securities
|
6,447,664
|
10,193,094
|
|||||
|
Notes Receivable
|
4,203,693
|
5,164,421
|
|||||
|
Land and Development Costs
|
16,208,954
|
15,654,456
|
|||||
|
Intangible Assets, Net
|
5,220,405
|
4,717,699
|
|||||
|
Other Assets
|
7,750,483
|
7,899,810
|
|||||
|
40,364,768
|
54,880,856
|
||||||
|
Property,
Plant, and Equipment:
|
|||||||
|
Land, Timber and Subsurface Interests
|
9,479,729
|
7,793,594
|
|||||
|
Golf Buildings, Improvements, and Equipment
|
11,736,143
|
11,713,046
|
|||||
|
Income Properties Land, Buildings, and Improvements
|
113,830,870
|
104,820,647
|
|||||
|
Other Building, Equipment, and Land Improvements
|
3,215,209
|
2,909,057
|
|||||
| Construction in Process | 2,393,767 | -- | |||||
|
Total Property, Plant, and Equipment
|
140,655,718
|
127,236,344
|
|||||
|
Less, Accumulated Depreciation and Amortization
|
(11,356,762
|
)
|
(10,284,670
|
)
|
|||
|
Net - Property, Plant, and Equipment
|
129,298,956
|
116,951,674
|
|||||
|
TOTAL ASSETS
|
$
|
169,663,724
|
$
|
171,832,530
|
|||
|
LIABILITIES
|
|||||||
|
Accounts Payable
|
$
|
524,057
|
$
|
452,090
|
|||
|
Accrued Liabilities
|
8,773,701
|
8,684,175
|
|||||
|
Accrued Stock Based Compensation
|
1,614,762
|
3,277,821
|
|||||
|
Income Taxes Payable
|
422,232
|
3,058,049
|
|||||
|
Deferred Income Taxes
|
33,697,998
|
32,882,399
|
|||||
|
Notes Payable
|
6,671,682
|
6,807,388
|
|||||
|
TOTAL LIABILITIES
|
51,704,432
|
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
|
108,194,023
|
107,012,038
|
|||||
|
Accumulated Other Comprehensive Loss
|
(1,180,201
|
)
|
(1,197,810
|
)
|
|||
|
TOTAL SHAREHOLDERS' EQUITY
|
117,959,292
|
116,670,608
|
|||||
|
TOTAL LIABILITIES AND
|
|||||||
|
SHAREHOLDERS' EQUITY
|
$
|
169,663,724
|
$
|
171,832,530
|
See Accompanying Notes to Consolidated Financial
Statements.
3
CONSOLIDATED-TOMOKA
LAND CO.
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
June
30,
|
June
30,
|
June
30,
|
June
30,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Income
|
|
|
|
|
||||||||||||
|
Real
Estate Operations:
|
||||||||||||||||
|
Real
Estate Sales
|
||||||||||||||||
|
Sales
and Other Income
|
$ |
2,186,210
|
$ |
1,189,294
|
$ |
2,261,054
|
$ |
5,865,860
|
||||||||
|
Costs
and Other Expenses
|
(469,075 | ) | (439,160 | ) | (886,853 | ) | (4,206,176 | ) | ||||||||
|
1,717,135
|
750,134
|
1,374,201
|
1,659,684
|
|||||||||||||
|
Income
Properties
|
||||||||||||||||
|
Leasing
Revenues and Other Income
|
2,320,993
|
2,169,889
|
4,494,466
|
4,330,674
|
||||||||||||
|
Costs
and Other Expenses
|
(464,693 | ) | (427,866 | ) | (893,936 | ) | (853,082 | ) | ||||||||
|
1,856,300
|
1,742,023
|
3,600,530
|
3,477,592
|
|||||||||||||
|
Golf
Operations
|
||||||||||||||||
|
Sales
and Other Income
|
1,288,152
|
1,410,975
|
2,667,703
|
2,977,182
|
||||||||||||
|
Costs
and Other Expenses
|
(1,768,806 | ) | (1,801,926 | ) | (3,385,774 | ) | (3,659,139 | ) | ||||||||
| (480,654 | ) | (390,951 | ) | (718,071 | ) |
(681,957
|
) | |||||||||
|
Total
Real Estate Operations
|
3,092,781
|
2,101,206
|
4,256,660
|
4,455,319
|
||||||||||||
|
Profit
on Sales of Other
|
||||||||||||||||
|
Real
Estate Interests
|
196,257
|
550,000
|
204,257
|
584,744
|
||||||||||||
|
Interest
and Other Income
|
142,122
|
150,084
|
444,750
|
300,793
|
||||||||||||
|
Operating
Income
|
3,431,160
|
2,801,290
|
4,905,667
|
5,340,856
|
||||||||||||
|
General
and Administrative Expenses
|
76,058 | (996,286 | ) | (1,144,942 | ) | (4,480,991 | ) | |||||||||
|
Income
Before Income Taxes
|
3,507,218 | 1,805,004 | 3,760,725 | 859,865 | ||||||||||||
|
Income
Taxes
|
(1,336,026
|
) |
(689,064
|
) |
(1,433,409
|
) |
(327,737
|
) | ||||||||
|
Net
Income
|
$ |
2,171,192
|
$ |
1,115,940
|
$ |
2,327,316
|
$ |
532,128
|
||||||||
|
Per
Share Information:
|
||||||||||||||||
|
Basic
and Diluted Income Per Share
|
$ | 0.38 | $ | 0.20 | $ | 0.41 | $ | 0.09 | ||||||||
|
Dividends
|
$ |
0.10
|
$ |
0.09
|
$ |
0.20
|
$ |
0.18
|
||||||||
See Accompanying Notes to Consolidated Financial
Statements
4
CONSOLIDATED-TOMOKA
LAND CO.
AND
COMPREHENSIVE INCOME
(UNAUDITED)
|
|
Common
Stock
|
|
|
Additional
Paid-
In Capital
|
|
|
Retained
Earnings
|
|
|
Accumulated
Other
Comprehensive Income
|
|
|
Total
Shareholders' Equity
|
|
|
Comprehensive
Income
|
|||
|
Balance,
December 31, 2007
|
$
|
5,725,806
|
$
|
5,130,574
|
$
|
107,012,038
|
$
|
(1,197,810
|
)
|
$
|
116,670,608
|
||||||||
|
Net
Income
|
2,327,316
|
|
2,327,316
|
|
$
|
2,327,316
|
|
||||||||||||
|
Other
Comprehensive Income: Cash Flow
|
|||||||||||||||||||
|
Hedging Derivative, Net of Tax
|
17,609
|
|
17,609
|
|
17,609
|
|
|||||||||||||
|
Comprehensive
Income
|
$
|
2,344,925
|
|
||||||||||||||||
|
Exercise
of Liability Classified Stock
Options
|
1,709
|
87,381
|
89,090
|
||||||||||||||||
|
Cash
Dividends ($.20 per share)
|
(1,145,331
|
)
|
(1,145,331
|
)
|
|||||||||||||||
|
Balance,
June 30, 2008
|
$
|
5,727,515
|
$
|
5,217,955
|
$
|
108,194,023
|
$
|
(1,180,201
|
)
|
$
|
117,959,292
|
See accompanying Notes to Consolidated Financial Statements.
5
See
CONSOLIDATED-TOMOKA
LAND CO.
|
(Unaudited)
Six
Months Ended
|
|||||||
|
|
June
30,
|
June
30,
|
|||||
|
2008
|
2007
|
||||||
|
Cash
Flow from Operating Activities
|
|||||||
|
Net Income
|
$
|
2,327,316
|
|
$
|
532,128
|
||
|
Adjustments
to Reconcile Net Income to Net Cash
|
|||||||
|
Provided By Operating Activities:
|
|||||||
|
Depreciation and Amortization
|
1,289,761
|
1,231,250
|
|||||
| Loss on Sale of Property, Plant, and Equipment | 11,743 | 110,608 | |||||
|
Deferred Income Taxes
|
815,599
|
190,537
|
|||||
|
Non-Cash Compensation
|
(1,542,744
|
) |
1,725,103
|
||||
|
Decrease
(Increase) in Assets:
|
|||||||
| Notes Receivable | 960,728 | -- | |||||
|
Land and Development Costs
|
(554,498
|
) |
620,870
|
|
|||
|
Refundable Income Taxes
|
--
|
|
(282,717
|
) | |||
|
Other Assets
|
149,327
|
(891,352
|
) | ||||
|
Increase
(Decrease) in Liabilities:
|
|||||||
|
Accounts Payable
|
71,967
|
81,653
|
|||||
|
Accrued Liabilities and Accrued Stock Based Compensation
|
107,135
|
606,977
|
|
||||
|
Deferred Profit
|
--
|
|
(563,467
|
)
|
|||
|
Income Taxes Payable
|
(2,635,817
|
) |
--
|
|
|||
|
Net Cash Provided By Operating Activities
|
1,000,517
|
3,361,590
|
|
||||
|
Cash
Flow From Investing Activities:
|
|||||||
|
Acquisition of Property, Plant, and Equipment
|
(13,447,007
|
)
|
(2,942,376
|
)
|
|||
| Acquisition of Intangible Assets | (704,485 | ) | -- | ||||
|
Decrease (Increase) in Restricted Cash for Acquisitions
|
|||||||
|
Through the Like-Kind Exchange Process
|
10,387,550
|
|
(124,598
|
)
|
|||
|
Decrease In Investment Securities
|
3,745,430
|
|
2,531,245
|
||||
|
Net Cash Used in Investing Activities
|
(18,512
|
)
|
(535,729
|
) | |||
|
Cash
Flow from Financing Activities:
|
|||||||
|
Proceeds from Notes Payable
|
4,898,000
|
1,776,000
|
|||||
|
Payments on Notes Payable
|
(5,033,706
|
)
|
(1,900,677
|
)
|
|||
|
Cash Proceeds from Exercise of Stock Options
|
5,090
|
13,747
|
|||||
|
Cash Used to Settle Stock Appreciation Rights
|
(36,315
|
)
|
(933,352
|
)
|
|||
|
Dividends Paid
|
(1,145,331
|
)
|
(1,026,800
|
)
|
|||
|
Net Cash Used in Financing Activities
|
(1,312,262
|
)
|
(2,071,082
|
)
|
|||
|
Net
(Decrease) Increase in Cash
|
(330,257
|
) |
754,779
|
|
|||
|
Cash,
Beginning of Year
|
863,826
|
738,264
|
|||||
|
Cash,
End of Period
|
$
|
533,569
|
$
|
1,493,043
|
|||
See
Accompanying Notes to Consolidated Financial Statements.
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1.
PRINCIPLES OF INTERIM STATEMENTS
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.
| Three Months Ended Six Months Ended | ||||||||||||||||
|
June
30,
|
June
30,
|
June
30,
|
June
30,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Income
Available to Common Shareholders:
|
||||||||||||||||
|
Net
Income
|
$ |
2,171,192
|
$ |
1,115,940
|
$ |
2,327,316
|
$ |
532,128
|
||||||||
|
Weighted
Average Shares Outstanding
|
5,726,848
|
5,715,885
|
5,726,848
|
5,710,009
|
||||||||||||
|
Common
Shares Applicable to Stock
|
|
|||||||||||||||
|
Options
Using the Treasury Stock Method
|
--
|
--
|
--
|
20,207
|
||||||||||||
|
Total
Shares Applicable to Diluted Earnings Per Share
|
$ |
5,726,848
|
$ |
5,715,885
|
$ |
5,726,848
|
$ |
5,730,216
|
||||||||
|
Per
Share Information:
|
||||||||||||||||
|
Basic
and Diluted Income Per Share
|
||||||||||||||||
|
Net
Income
|
$ |
0.38
|
$ |
0.20
|
$ |
0.41
|
$ |
0.09
|
||||||||
No impact was
considered on the conversion of stock options during the periods as the effect
would be antidilutive.
7
NOTE 3.
NOTES PAYABLE
Notes
Payable consist of the following:
|
|
June
30, 2008
|
||||||
|
|
Total
|
Due
Within
One
Year
|
|||||
|
$20,000,000
Line of Credit
|
$
|
--
|
$
|
--
|
|||
|
Notes
Payable
|
6,671,682
|
259,092
|
|||||
|
Total
|
$
|
6,671,682
|
$
|
259,092
|
|||
Payments
applicable to reduction of principal amounts will be required as follows:
Year Ending June 30,
|
2009
|
$
|
259,092
|
||
|
2010
|
303,218
|
|||
|
2011
|
326,271
|
|||
|
2012
|
5,783,101
|
|||
|
2013
& thereafter
|
--
|
|||
|
|
$
|
6,671,682
|
During
the first six months of 2008, interest expense was $154,832, net of
$102,056 interest capitalized to land and development costs and construction in
process, with interest of $256,888 paid during the period.
For the
first six months of 2007, interest expense was $194,276, net of $59,943 interest
capitalized to land and development costs, with interest of $254,219 paid during
the six month period.
NOTE 4.
STOCK OPTION PLAN
The
Company maintains the 2001 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 June 30,
2008, and changes during the six months then
ended is presented below:
STOCK
OPTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2008:
|
|
Shares
|
Wtd
Avg
Ex.
Price
|
Wtd.
Avg. Remaining
Contractual
Term
(Years)
|
|
Aggregate
Intrinsic
Value
|
||||||||
|
Outstanding
December 31, 2007
|
179,800
|
$
|
59.04
|
||||||||||
|
Granted
|
63,000
|
$
|
54.45
|
||||||||||
|
Exercised
|
(3,200
|
)
|
$
|
25.88
|
|||||||||
|
Expired
|
--
|
--
|
|||||||||||
|
Outstanding
June 30, 2008
|
239,600
|
$
|
58.27
|
7.91
|
$
|
410,248
|
|||||||
|
Exercisable
at June 30, 2008
|
61,600
|
$
|
52.02
|
6.75
|
$
|
306,048
|
STOCK
APPRECIATION RIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2008:
|
|
Shares
|
Wtd.Avg.
Fair
Value
|
Wtd.
Avg.
Remaining
Contractual
Term
(Years)
|
|
Aggregate
Intrinsic
Value
|
||||||||
|
Outstanding
December 31, 2007
|
179,800
|
$
|
13.60
|
||||||||||
|
Granted
|
63,000
|
$
|
5.61
|
||||||||||
|
Exercised
|
(3,200
|
)
|
$
|
10.52
|
|||||||||
|
Expired
|
--
|
--
|
|||||||||||
|
Outstanding
June 30, 2008
|
239,600
|
$
|
4.50
|
7.91
|
$
|
220,903
|
|||||||
|
Exercisable
at June 30, 2008
|
61,600
|
$
|
5.18
|
6.75
|
$
|
164,795
|
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.
8
NOTE 5.
PENSION PLAN
The
Company maintains the Retirement Plan for Employees of Consolidated-Tomoka Land
Co., 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
provides
for a life annuity benefit.
Following
are the components of the Net Period Benefit Cost:
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
June
30,
|
June
30,
|
June
30,
|
June
30,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Service
Cost
|
$ |
84,092
|
$ |
72,716
|
$ |
168,184
|
$ |
145,432
|
||||||||
|
Interest
Cost
|
108,800
|
100,683
|
217,600
|
201,366
|
||||||||||||
|
Expected
Return on Plan Assets
|
(130,116 | ) | (126,296 | ) | (260,232 | ) | (252,592 | ) | ||||||||
|
Net
Amortization
|
19,879
|
12,497
|
39,758
|
24,994
|
||||||||||||
|
Net
Periodic Benefit Cost
|
$ |
82,655
|
$ |
59,600
|
$ |
165,310
|
$ |
119,200
|
||||||||
|
It
is anticipated that contributions in 2008 will approximate $600,000 to
$700,000
|
||||||||||||||||
NOTE 6. 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,
leasing properties for oil and mineral exploration, and agricultural
operations.
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 different 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 (amount in
thousands):
9
|
NOTE 6. BUSINESS
SEGMENT DATA (continued)
|
||||||||||||||||
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
June
30,
|
June
30,
|
June
30,
|
June
30,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
Revenues:
|
||||||||||||||||
|
Real
Estate
|
$ |
2,186
|
$ |
1,189
|
$ |
2,261
|
$ |
5,866
|
||||||||
|
Income
Properties
|
2,321
|
2,170
|
4,494
|
4,331
|
||||||||||||
|
Golf
|
1,288
|
1,411
|
2,668
|
2,977
|
||||||||||||
|
General,
Corporate & Other
|
339
|
700
|
649
|
885
|
||||||||||||
| $ |
6,134
|
$ |
5,470
|
$ |
10,072
|
$ |
14,059
|
|||||||||
|
Income
(Loss):
|
||||||||||||||||
|
Real
Estate
|
$ |
1,717
|
$ |
750
|
$ |
1,374
|
$ |
1,660
|
||||||||
|
Income
Properties
|
1,856
|
1,742
|
3,601
|
3,478
|
||||||||||||
|
Golf
|
(481 | ) | (391 | ) | (718 | ) | (682 | ) | ||||||||
|
General,
Corporate & Other
|
415 | (296 | ) | (496 | ) | (3,596 | ) | |||||||||
| $ |
3,507
|
$ |
1,805
|
$ |
3,761
|
$ |
860
|
|||||||||
|
June
30,
|
||||||||||||||||
|
2008
|
||||||||||||||||
|
Identifiable
Assets
|
$ | |||||||||||||||
|
Real
Estate
|
34,622
|
|||||||||||||||
|
Income
Properties
|
116,552
|
|||||||||||||||
|
Golf
|
8,080
|
|||||||||||||||
|
General, Corporate & Other
|
10,410
|
|||||||||||||||
| $ |
169,664
|
|||||||||||||||
|
Depreciation
and Amortization
|
||||||||||||||||
|
Real
Estate
|
$ |
192
|
||||||||||||||
|
Income
Properties
|
791
|
|||||||||||||||
|
Golf
|
250
|
|||||||||||||||
|
General, Corporate & Other
|
57
|
|||||||||||||||
| $ |
1,290
|
|||||||||||||||
|
Capital
Expenditures
|
||||||||||||||||
|
Real
Estate
|
$ |
1,937
|
||||||||||||||
|
Income
Properties
|
11,405
|
|||||||||||||||
|
Golf
|
22
|
|||||||||||||||
|
General, Corporate & Other
|
83
|
|||||||||||||||
| $ |
13,447
|
|||||||||||||||
| 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 7. RECENT ACCOUNTING STANDARDS
In June
2000, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based
Payment Transactions are Participating Securities" (“The Staff
Position”). The Staff Position holds that unvested share-based
payment awards that contain nonforfeitable rights to dividends or dividend
equivalents are “participating securities” as defined in EITF 03-6 and therefore
should be included in computing earnings per share using the two-class
method. The Staff Position is effective for financial statements
issued in fiscal years beginning after December 15, 2008, and interim periods
within those years. The Company has evaluated the impact of the Staff Position
and does not believe it will have an impact on its financial
statements.
In
March 2008, the FASB issued SFAS No. 161, "Disclosures
about Derivative Instruments and Hedging Activities - an amendment of FASB
Statement No. 133" ("SFAS 161"). This Statement requires enhanced
disclosures about an entity's derivative and hedging activities, including (a)
how and why and entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under SFAS 133, Accounting
for Derivative Instruments and Hedging Activities, and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity's financial position, financial performance, and cash flows,
SFAS 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. The Company is in the
process of evaluating the effect, if any, the adoption of SFAS 161 will have on
its financial statements.
In May
2008, the FASB issued SFAS No. 162, "The
Hierarchy of Generally Accepted Accounting Principles" ("SFAS 161"). SFAS
162 is effective 60 days following the SEC's approval of the public Company
Accounting Oversight Board amendments to AU Section 411, "The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles." This statement identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements that are presented in conformity with
generally accepted accounting principles.
On
January 1, 2008 the Company adopted Statement of Financial Accounting Standards
No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities -
including an amendment of FASB Statement No. 115 (Statement
159).” Statement 159 gives the Company the irrevocable option to
carry most financial assets and liabilities at fair value that are
not currently required to be measured at fair value. If the fair
value option is elected, changes in fair value would be recorded in earnings at
each subsequent reporting date. The adoption of Statement 159 had no
impact on the Company’s financial condition, results of operations or cash
flows, as the fair value option was not elected by the
Company.
10
NOTE
7. RECENT ACCOUNTING STANDARDS (continued)
On
January 1, 2008 the Company also 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 permitted 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 has elected to
defer the implementation of Statement 157 related to nonfinancial assets and
nonfinancial liabilities. 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. A liability in th eamount of $516,618 at June 30, 2008, has been
established on the Company's balance sheet.
In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations,”
which requires an acquirer to recognize the identifiable assets acquired, the
liabilities assumed, any noncontrolling interest in the acquiree at the
acquisition date, measured at their fair values as of that date, with limited
exceptions specified in the statement. SFAS No. 141R applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of an entity’s fiscal year that begins after
December 15, 2008. The Company is in the process of evaluating the impact
of this standard. The adoption of SFAS No. 141R will not
have an effect on its financial condition, results of operations or cash flows.
The Company will reassess the impact of SFAS 141(R) if and when a future
acquisition occurs.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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
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 facility 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, the continued development within the
250-acre Gateway Commerce Park and 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 is under development
and anticipated to open in August 2008. Construction is underway on
the future site of the City of Daytona Beach police headquarters. The
building, which is located adjacent to Gateway Commerce Park, is also
anticipated to be completed
and occupied this year. 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 I-95. On the west side of
the interstate, development commenced on a fire station and an elementary
school.
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 June 30, 2008, the
Company had invested approximately $120 million in twenty-six income properties
through this process. This investment base 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 30,000 square-foot flex office space complex
located within Gateway Commerce Park. Construction of these buildings
was substantially completed in the second 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. 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.
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 sale of
timber and hay products on approximately 11,000 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.
The
residential real estate market continues to be depressed from its peak in
mid-to-late 2005, with the commercial market also measurably
slowing. Despite the weakness in the real estate market, in addition
to the overall weak national and local economies, the Company expects its
earnings to be positive in the current year due to the Company’s low debt,
significant revenue generated from the portfolio of net leased income properties
and the backlog of contracts to be closed. During the slowdown, the
Company is concentrating on self-development projects discussed above; as well
as the design, permitting, construction of roads, and planning for the eventual
upturn.
11
SUMMARY OF 2008 OPERATING
RESULTS
Net
income totaled $2,171,192, equivalent to $.38 per share, for the second quarter
of 2008. These profits represent a substantial increase
over the profits of $1,115,940, equivalent to $.20 per share, generated in
the second quarter of 2007. The increase in earnings can be
attributed to higher profits from real estate sales, increased earnings from
income properties, and lower general and administrative expenses due to an
addition to income for decreased stock option accruals.
For the
six months ended June 30, 2008, the Company realized net income amounting to
$2,327,316, equivalent to $.41 per share. This income compared
favorably to income of $532,128, equivalent to $.09 per share produced in 2007’s
same period. The improved results were achieved on higher earnings
from income properties and increased interest income, along with lower general
and administrative expenses as the result of an addition to income for the
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
|
||||||||
|
June
30,
|
June
30,
|
|||||||
|
2008
|
2007
|
|||||||
|
Net
Income
|
$ |
2,171,192
|
$ |
1,115,940
|
||||
|
Add
Back:
|
||||||||
|
Depreciation
and Amortization
|
664,831
|
621,457
|
||||||
|
Deferred
Taxes
|
1,248,616 |
(116,692
|
) | |||||
|
Earnings
before Depreciation,
|
||||||||
|
Amortization
and Deferred Taxes
|
$ |
4,084,639
|
$ |
1,620,705
|
||||
|
Six
Months Ended
|
||||||||
|
June
30,
|
June
30,
|
|||||||
|
2008
|
2007
|
|||||||
|
Net
Income
|
$ |
2,327,316
|
$ |
532,128
|
||||
|
Add
Back:
|
||||||||
|
Depreciation
and Amortization
|
1,289,761
|
1,231,250
|
||||||
|
Deferred
Taxes
|
815,599
|
190,537
|
||||||
|
Earnings
before Depreciation,
|
||||||||
|
Amortization
and Deferred Taxes
|
$ |
4,432,676
|
$ |
1,953,915
|
||||
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.
EBDDT
totaling $4,084,639 and $4,432,676 for the second quarter and first six months
of 2008, respectively, was significantly higher than 2007’s second quarter and
first six months EBDDT amounting to $1,620,705 and $1,953,915
respectively. Higher profits and increased deferral of real
estate gains for income tax purposes was the primary cause of the favorable
results. The net decrease of deferred taxes in the second quarter of
2007 was due to 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.
12
REAL ESTATE
SALES
During
the second quarter of 2008, land sales of 21 acres of land produced revenues and
profits of $2,186,210 and $1,717,135, respectively. Revenues totaling
$1,189,294 were generated on the sale of 10 acres of property, which produced
profits totaling $750,134, during the second quarter of 2007.
Profits
of $1,374,201 were recorded during the first six months of 2008 on revenues
totaling $2,261,054 from the sale of 21 acres of land. During the
same period of 2007, the sale of 93 acres of land, including a charitable
contribution of 25 acres valued at $1,500,000, produced revenues and profits
from land sales totaling $5,865,860 and $1,659,684,
respectively. Also included in sales during the first six months of
2007 was the sale of approximately $1,900,000 of impact fee
credits. Cost and expenses were substantially higher in 2007’s
six-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 second quarter and first six months
of 2008 when compared to the same periods of 2007. During the
second quarter of 2008, revenue and profit gains of 7% were realized with 4%
increases recognized for the six-month period. Revenues and profits
totaled $2,320,993 and $1,856,300, respectively, for the second quarter of
2008, with six-month profits of $3,600,530 produced on revenues totaling
$4,494,466. During 2007’s second quarter and six-month periods,
revenues amounting to $2,169,899 and $4,330,674, respectively, produced profits
of $1,742,023 and $3,477,592 for these periods, respectively.
GOLF
OPERATIONS
Revenues
from golf operations fell 9%, to $1,288,152, in the second quarter of 2008 when
compared to the second quarter of 2007. This revenue decline resulted
in a loss of $480,654, a 23% increase over the prior year. Revenues
from golfing activities decreased 4% during the period on a 12% decline in the
number of rounds played, offset by a 9% increase in the average rate per
round. Food and beverage revenues fell 19% during the
period. Golf operations cost and expenses were down 2% in the second
quarter on the lower volume. Losses of $390,951 were generated during
the second quarter of 2007 on revenues of $1,410,975.
Losses
from golf operations totaled $718,071 during the first six months of
2008. These losses, which represent a 5% increase over 2007’s same
period loss of $681,957, were realized on revenues of
$2,667,703. During the first six months of 2007, revenues of
$2,977,182 were produced. The 10% decrease in revenue for 2008
represented a decline in both golf and food and beverage
activities. Golf revenues were down 6% on an 11% fall in the number
of rounds played, offset by a 6% increase in the average rate per round
played. Revenues from food and beverage activities were 21% lower
during this period. For the six-month period, golf operations costs
and expenses were down 7% when compared to the prior year. This
decline in costs and expenses was achieved on the lower volume in addition to
cost controls put in place.
GENERAL, CORPORATE, AND
OTHER
Profits
on the sale of other real estate interests totaled $196,257 and $204,257 for the
second quarter and first six months of 2008, respectively. These
profits were realized on the release of subsurface rights on 235 acres, of which
the release of 234, acres occurred in the second
quarter. During the first half of 2007, profits on the release of
subsurface interests totaled $584,744, of which $550,000 was earned in the
second quarter. Releases were granted on 215 acres and 158 acres for
the six months and second quarter of 2007, respectively.
Interest
and other income declined 5% during the second quarter of 2008 compared to
2007’s same period. The decrease to $142,122 was due to lower
interest earned on lower balances for investment securities and funds held for
investment through the like-kind exchange process, offset by higher interest on
mortgage notes receivable. Interest and other income earned in 2007’s
second quarter totaled $150,084.
For the
six-month period interest and other income rose 48% to
$444,750. Interest and other income totaled $300,793 during 2007’s
first six-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.
During
the second quarter of 2008, general and administrative expenses resulted in
addition to income of $76,058. This addition was the result of a
$1,360,675 credit for stock option expenses due to the lower price of Company
stock. Excluding the credit from the Stock Option Accrual, general
and administrative expenses increased on higher legal, pension and stockholders
expenses. General and administrative expenses amounted to $996,286 in
2007’s second quarter.
For the
first six months of 2008, general and administrative expenses decreased 74%, to
$1,144,942, when compared to the prior year’s same period. This
significant variance was primarily the result of a $3,267,847 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. General and
administrative expenses totaled $4,480,991 in the first half of
2007.
13
Cash,
restricted cash, and investment securities, which totaled $6,981,233 at June 30,
2008, decreased $14,463,237 since 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 $3,265,000 were paid in the
first six months of 2008. Development and construction activity
approximated $3,000,000 during this six-month period and included construction
of roads on the Company’s core lands adjacent to LPGA Blvd. and the construction
of the 30,000 square-foot flex office space complex in Gateway Commerce
Center. Approximately $1,686,000 was expended on clearing and
planting of lands for the hay operation. Additionally, funds totaling
$1,145,331 were used to pay dividends of $.20 per share.
Capital
expenditures for the remainder of 2008 are projected to approximate $5 million.
These funds are intended to be used on road construction, conversion of timber
lands to hay, and the development and construction of the income properties on
Company owned land. The first property, which was substantially
completed in the second quarter, is the two building 30,000 square-foot flex
office space complex located in Gateway Commerce Park. The second
property, which commenced construction in July, will be a 23,000 square-foot
office building located on LPGA Boulevard. This office building will
be approximately 40% pre-leased to Merrill Lynch with the remainder held as
speculative space at this time. These two self-developed projects are
expected to be 50% financed upon completion.
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. The Company also 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 and self-development of income properties and development of
infrastructure on Company owned lands.
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.
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 June 30, 2008 and 2007, and in accordance
with SFAS No. 66 no revenues or profits were deferred.
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 June 30, 2008 and
June 30, 2007. A liability in the amount of $516,618 at June 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 $317,333 at June 30,
2008, has been recorded as accumulated other comprehensive loss, a component of
shareholders’ equity.
14
CRITICAL
ACCOUNTING POLICIES (continued)
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.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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 ($6,671,682
outstanding at June 30, 2008) long-term mortgage. 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.
ITEM 4.
CONTROLS AND PROCEDURES
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 six months covered by this report 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.
The
information required by this Item has been previously reported in Item 8.01 of
the Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on April 25, 2008. Such information is incorporated herein by
reference.
(a)
Exhibits:
Exhibit 3.1 - Articles of
Incorporation of CTLC, Inc. dated Frbruary 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.
&#
160;
(Registrant)
|
|
Date
August 11, 2008 By: /s/ William H.
McMunn
William H.
McMunn
President and
Chief Executive Officer
|
|
0; Date
August 11, 2008 By: /s/ Bruce W.
Teeters
;
0;
Bruce W. Teeters
Senior Vice
President-Finance and
Treasurer
|
&
#160;
17
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:
August 11, 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 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
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 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/Bruce
W. Teeters
Bruce W.
Teeters
Senior
Vice President-Finance and
Treasurer
Date:
August 11, 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 June 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.
|
By:/s/William H.
McMunn
William
H. McMunn
President
and Chief
Executive Officer
August 11,
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 June 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.
By: /s/Bruce W.
Teeters
Bruce W.
Teeters
Senior
Vice President-Finance and Treasurer
August
11, 2008