SEC Filing - CTO Realty Growth

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) ___ OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 ___ TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission file number 0-5556 CONSOLIDATED-TOMOKA LAND CO. (Exact name of registrant as specified in its charter) Florida 59-0483700 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 149 South Ridgewood Avenue Daytona Beach, Florida 32114 (Address of principal executive offices) (Zip Code) (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. Class of Common Stock Outstanding May 1, 1997 $1.00 par value 6,261,272 1

CONSOLIDATED-TOMOKA LAND CO. INDEX Page No. PART I - FINANCIAL INFORMATION Consolidated Condensed Balance Sheets - March 31, 1997 and December 31, 1996 3 Consolidated Condensed Statements of Income and Retained Earnings - Three Months Ended March 31, 1997 and 1996 4 Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 1997 and 1996 5 Notes to Consolidated Condensed Financial Statements 6-8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9-10 PART II -- OTHER INFORMATION 11 SIGNATURES 12 2

PART I -- FINANCIAL INFORMATION CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) March 31, December 31, 1997 1996 --------- ------------ ASSETS Cash & Cash Equivalents $ 390,793 $ 1,760,835 Investment Securities 998,276 1,396,415 Notes Receivable 14,578,261 14,770,281 Accounts Receivable 1,726,843 2,217,584 Inventories 636,324 686,597 Cost of Fruit on Trees 1,916,832 2,179,989 Real Estate held for Development and Sale 14,691,618 14,499,495 Net Investment in Direct Financing Lease 689,958 710,990 Other Assets 603,185 354,473 Property, Plant, and Equipment - Net 20,958,716 21,095,863 ---------- ---------- TOTAL ASSETS $57,190,806 $59,672,522 ========== ========== LIABILITIES Accounts Payable $ 394,353 $ 680,935 Notes Payable 17,788,897 17,947,771 Accrued Liabilities 3,995,903 3,651,507 Deferred Income Taxes 406,930 406,930 Income Taxes Payable 465,416 1,193,994 ---------- ---------- TOTAL LIABILITIES 23,051,499 23,881,137 ---------- ---------- SHAREHOLDERS' EQUITY Common Stock 6,261,272 6,261,272 Additional Paid-in Capital 1,782,105 1,782,105 Retained Earnings 26,095,930 27,748,008 ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 34,139,307 35,791,385 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $57,190,806 $59,672,522 ========== ========== 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 --------------------------- March 31, March 31, 1997 1996 --------- ----------- INCOME: Citrus Operations: Sales of Fruit and Other Income $ 4,422,426 $ 5,168,901 Production and Selling Expenses ( 3,547,544) ( 3,474,465) ---------- ---------- 874,882 1,694,436 ---------- ---------- Real Estate Operations: Sales and Other Income 848,770 2,792,325 Costs and Expenses ( 793,629) ( 1,201,565) ---------- ---------- 55,141 1,590,760 ---------- ---------- Profit on Sales of Undeveloped Real Estate Interests 2,000 2,056 ---------- ---------- Interest and Other Income 298,634 172,315 ---------- ---------- General and Administrative Expenses ( 882,933) ( 850,479) ---------- ---------- Income Before Income Taxes 347,724 2,609,088 Income Taxes ( 121,420) ( 960,212) ---------- ---------- Net Income 226,304 1,648,876 Retained Earnings, Beginning of Period 27,748,008 24,589,150 Dividends ( 1,878,382) ( 1,565,318) ---------- ---------- Retained Earnings, End of Period $26,095,930 $24,672,708 ========== ========== PER SHARE INFORMATION: Average Shares Outstanding 6,261,272 6,261,272 ========== ========== Net Income Per Share $ .04 $ .26 ========== ========= Dividends Per Share $ .30 $ .25 ========== ========= See accompanying Notes to Consolidated Condensed Financial Statements. 4

CONSOLIDATED-TOMOKA LAND CO. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended -------------------------- March 31, March 31, 1997 1996 --------- --------- CASH FLOW FROM OPERATING ACTIVITIES: CASH RECEIVED FROM: Citrus Sales of Fruit and Other Income $ 4,895,613 $ 4,448,216 Real Estate Sales and Other Income 979,963 3,415,306 Sales of Undeveloped Real Estate Interests 2,000 44,827 Interest and Other Income 241,701 127,766 --------- --------- Total Cash Received from Operating Activities 6,119,277 8,036,115 --------- --------- CASH EXPENDED FOR: Citrus Production and Selling Expense 3,020,671 2,899,312 Real Estate Costs and Expenses 748,720 717,263 General and Administrative Expenses 854,815 638,118 Interest 316,235 369,032 Income Taxes 849,998 1,975,000 --------- --------- Cash Expended for Operating Activities 5,790,439 6,598,725 --------- --------- Net Cash Flow Provided by Operating Activities 328,838 1,437,390 --------- --------- CASH FLOW FROM INVESTING ACTIVITIES: Acquisition of Property, Plant, and Equipment ( 107,001) ( 144,480) Net (Increase) Decrease from Investment Securities 398,139 ( 200,572) Direct Financing Lease 21,032 20,003 Proceeds from Sale of Property, Plant and Equipment 26,206 5,275 --------- --------- Net Cash Provided by (Used In) Investing Activities 338,376 ( 319,774) --------- --------- CASH FLOW FROM FINANCING ACTIVITIES: Cash Proceeds from Notes Payable - 850,000 Payments on Notes Payable ( 158,874) ( 562,019) Dividends Paid ( 1,878,382) ( 1,565,318) --------- --------- Net Cash Used in Financing Activities ( 2,037,256) ( 1,277,337) --------- --------- Net Decrease In Cash and Cash Equivalents ( 1,370,042) ( 159,721) Cash and Cash Equivalents at Beginning of Period 1,760,835 1,167,373 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 390,793 $ 1,007,652 ========= ========= See accompanying Notes to Consolidated Condensed Financial Statements. 5

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. Principles of Interim Statements. The following unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures which are normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations. The 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, forestry activities are seasonal in nature. Accordingly, results for the three months ended March 31, 1997 and 1996 are not necessarily indicative of results to be expected for the full year. Results of operations for the twelve months ended March 31,1997 and 1996 are summarized as follows (in thousands): Twelve Months Ended March 31, ------------------------------------------------ 1997 1996 ------------------------------------------------ Revenues Income Revenues Income -------- ------------ -------- ----------- Citrus Operations $13,117 $ 3,192 $10,267 $ 2,096 Real Estate Operations 5,698 1,937 9,634 4,400 General Corporate & Other 6,634 3,215 7,064 3,684 ------ ----- ------ ----- Total Revenues $25,449 $26,965 ====== ====== Income Before Income Taxes 8,344 10,180 Income Taxes ( 3,164) ( 3,857) ------ ------ Net Income $ 5,180 $ 6,323 ====== ====== 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 periods. Primary and fully diluted earnings per share are the same for the periods. 6

In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128 "Earnings Per Share," (SFAS 128). SFAS 128 establishes new standards for computing and presenting earnings per share (EPS). Specifically, SAS 128 replaces the presentation of primary EPS with a presentation basic of EPS, requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital stuctures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997; earlier application is not permitted. EPS for the periods ended March 31, 1997 and March 31, 1996 computed under SFAS 128 would not be different than that previously computed. 4. Notes Payable. Notes payable consist of the following: March 31, 1997 ------------------------------------------- Due Within Total One Year ------------------------------------------- Consolidated-Tomoka Land Co. ---------------------------- $ 7,000,000 Line of Credit $ - $ - Mortgage Payable 9,365,441 251,109 Industrial Revenue Bond 2,774,936 295,142 ---------- -------- 12,140,377 546,251 ---------- -------- Indigo Group Ltd. ---------------- Industrial Revenue Bond 1,921,900 56,400 Mortgages Payable 3,726,620 36,139 ---------- -------- 5,648,520 92,539 ---------- -------- Total $17,788,897 $ 638,790 ========== ======== Indigo Group Ltd. ("IG LTD.") is a 100% owned limited partnership in the real estate business. Included in notes payable is a $2,526,620 mortgage note collateralized by developed real estate in a joint venture project. IG Ltd.'s 50% partner is jointly liable on the note. 7

Payments applicable to reduction of principal amounts will be required as follows: Consolidated- Indigo Tomoka Group Year Ending March 31, Land Co. Ltd. Total --------------------- ------------- ------- ----------- 1998 $ 546,251 $ 92,539 $ 638,790 1999 621,499 2,546,881 3,168,380 2000 675,262 56,400 731,662 2001 733,681 56,400 790,081 2002 797,167 1,696,300 2,493,467 Thereafter 8,766,517 1,200,000 9,966,517 ---------- ---------- ---------- $12,140,377 $5,648,520 $17,788,897 ========== ========== ========== In the first three months of 1997 interest totaled $427,945, of which $50,000 was capitalized to land held for development and sale. Total interest for three months ended March 31, 1996 was $426,827 of which $57,795 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 Operation Citrus profits declined 48% to $874,882 for the first three months of 1997 when compared to prior year's same period $1,694,436 profit. Revenues totaling $4,422,426 represent a 14% decrease as the result of an 8% fall in fruit harvested and sold combined with a 7% reduction in average fruit pricing. Boxes produced during 1997's first quarter amounted to 511,000 compared to 1996's total of 555,000 boxes. Pricing on both fresh and processed fruit contributed to the fall in average pricing. Production and selling expenses rose 2% during the period, the result of additional packing costs associated with a 4% increase in fresh fruit along with lower handling credits associated with a 95% reduction in outside growers fruit processed. Real Estate Operations Profits from real estate operations posted a 97% decline to $55,141. This compares to 1996's first quarter profit of $1,590,760. This downturn can be attributed to the absence of commercial real estate closings in 1997; whereas, closings of commercial real estate in the first quarter of 1996 totaled 22 acres and generated revenue and gross profits of $1,615,000 and $1,460,000, respectively. Revenue from income properties decreased 32%, producing a small loss compared to a small profit one year earlier. The sale of the 70,000 square foot shopping center located in Spring Hill, Florida which occurred in June 1996 and the December 1996 sale of the 24,000 square foot Daytona Beach, Florida office building accounted for these declines. Decreased harvesting resulted in a 17% decline in both revenues and profits from forestry operations, with profits totaling $181,808 in 1997's first quarter. A 125% gain was posted from subsurface income as both oil royalties, on increased production, and income from oil and mineral leases rose during the period, combining to add $55,780 to the bottom line. General, Corporate and Other Interest and other income rose 73% for the first quarter of 1997, primarily due to increased interest recorded on mortgage notes receivable from year end 1996 real estate closings. General and administrative expenses posted a nominal 4% increase for the period. 9

FINANCIAL POSITION Company profits of $226,304, equivalent to $.04 per share, for 1997's first quarter represent an 86% downturn from 1996's same period $1,648,876 profit, equivalent to $.26 per share. The fall in profits can be traced to the absence of commercial real estate closings, coupled with lower citrus volume and pricing. Dividends totaling $1,878,382, equivalent to $.30 per share, were paid during the period and represent a 20% increase over prior year's first quarter dividend payment of $.25 per share. Overall cash including the dividend payment declined $1,370,042. Cash flow from operating activities provided $328,838, with cash from investing activities adding $338,376 and cash used in financing activities which includes dividends totaling $2,037,256. Total notes payable decreased during the period $158,874. Capital spending was minimal for the first quarter with $2.3 million dollars projected to be expended the remainder of the year. These capital dollars will be funded through operations and if necessary available financing sources. Company citrus groves remain in good condition, despite a lack of rain during the late winter and early spring. The overall spring bloom and subsequent fruit set on Company groves was very good and leads to projections of a strong crop for the upcoming 1997-1998 crop year. The cold temperatures experienced in early 1997 appear to have had little effect on Company groves and the current crop statewide, with the Florida orange crop forecast for the 1996-1997 season at a record 221 million boxes. Pricing pressures from Brazilian fruit coupled with the abundant crop have led to relatively weak pricing for both fresh and processed fruit. Activity at the Ladies Professional Golf Association ("LPGA") mixed-use development has been strong. The East Florida Building Association's Parade of Homes was held in March with the community hosting the "Grand Showcase Home" and attracting thousands of visitors. In early May the LPGA Sprint Titleholders golf tournament was held at the LPGA International golf course giving national exposure to the development. The development of the clubhouse, hotel and second golf course will soon be underway. Development continues on new residential products selling in the low $100,000 to mid $150,000 price range. Interest remains strong for land within the development and surrounding lands. Commercial real estate contract backlog for closing in 1997 stands at $6.0 million on the sale of 213 acres with several additional transactions in the negotiation stage. The conversion of the existing commercial real estate contract backlog and contracts under negotiation into closed transactions will be a key to profitable full year earnings. Continued strong fruit production with relative stable pricing is also important to near term earnings. 10

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. Item 2 through 3 Not Applicable Item 4. Submission of matters to a vote of security holders. The annual meeting of Shareholders was held April 23, 1997 and the following votes were received for each of the three nominees for Class III directors: Number of Number of Number of Votes Votes Nominee votes for Withheld Abstaining Jack H. Chambers 6,100,326 1,232 5,165 William O. E. Henry 6,097,738 3,820 5,165 John H. Pace, Jr. 6,097,238 4,320 5,165 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: No reports on Form 8-K were filed by the Company during the quarter covered by this report. 11

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CONSOLIDATED-TOMOKA LAND CO. (Registrant) Date: May 7, 1997 By:/s/ Bob D. Allen ---------------------------- Bob D. Allen, President and Chief Executive Officer Date: May 7, 1997 By:/s/ Bruce W. Teeters ---------------------------- Bruce W. Teeters, Senior Vice President - Finance and Treasurer 12

EXHIBIT 11 CONSOLIDATED-TOMOKA LAND CO. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE For the Three Months Ended -------------------------- March 31, March 31, 1997 1996 --------- --------- PRIMARY EARNINGS PER SHARE NET INCOME 226,304 1,648,876 ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,261,272 6,261,272 COMMON SHARES APPLICABLE TO STOCK OPTIONS USING THE TREASURY STOCK METHOD AT AVERAGE MARKET PRICE FOR THE PERIOD 72,106 74,857 --------- --------- TOTAL PRIMARY SHARES 6,333,378 6,336,129 ========= ========= PRIMARY EARNINGS PER COMMON SHARE $0.04 $0.26 ========= ========= FULLY DILUTED EARNINGS PER SHARE TOTAL PRIMARY SHARES 6,333,378 6,336,129 COMMON SHARES APPLICABLE TO STOCK OPTIONS USED IN PRIMARY COMPUTATION DUE TO USE OF THE HIGHER OF AVERAGE MARKET PRICE OR PERIOD END MARKET PRICE -- 5,341 --------- --------- TOTAL FULLY DILUTED SHARES 6,333,378 6,341,470 ========= ========= FULLY DILUTED EARNINGS PER SHARE $0.04 $0.26 ========= =========

5 The schedule contains summary financial information extracted from Consolidated-Tomoka Land Co.'s March 31, 1997 10-Q and is qualified in its entirety by reference to such financial statements.

3-MOS DEC-31-1997 MAR-31-1997 390,793 998,276 16,305,104 0 17,244,774 0 32,845,567 11,886,851 57,190,806 0 0 0 0 6,261,272 27,878,035 57,190,806 5,273,196 5,571,830 3,582,525 4,341,173 675,586 0 207,347 347,724 121,420 226,304 0 0 0 226,304 .04 .04