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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
---- OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
---- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(NO FEE REQUIRED)
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)
Registrant's Telephone Number, including area code
(386) 255-7558
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF
THE SECURITIES EXCHANGE ACT OF 1934:
Name of each exchange on
Title of each class which registered
COMMON STOCK, $1 PAR VALUE AMERICAN STOCK EXCHANGE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT:
NONE
(Title of Class)
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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. X
----
The aggregate market value of the voting stock held by non-affiliates of
the Registrant at February 23, 2001 was approximately $83,486,760.
The number of shares of the Registrant's Common Stock outstanding on
February 23, 2001 was 5,565,784.
Portions of the Proxy Statement of Registrant dated March 15, 2001 are
incorporated by reference in Part III of this report.
"Safe Harbor"
Statement under the Private Securities Reform Act of 1995
Certain statements contained in this report (other than the
financial statements and statements of historical fact), are
forward-looking statements. The words "before," "estimate," "intend,"
"anticipate," "will," "could," "may," "should," "plan," "potential,"
"predict," "forecast," 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.
The Company wishes 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, 2001,
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 market
demand of the Company's real estate parcels; the impact of
competitive real estate; changes in pricing by the
Company or its competitors; the costs and other effects of complying
with environmental and other regulatory requirements; losses
due to natural disasters and changes in national, regional or
local economic and political conditions, such as inflation,
deflation, or fluctuations in interest rates.
While the Company periodically reassesses material trends
and uncertainties affecting its results of operations and
financial condition, the Company does not intend to review or
revise any particular forward-looking statement referenced
herein in light of future events.
TABLE OF CONTENTS
PART I
Item 1. BUSINESS...............................................1
Item 2. PROPERTIES.............................................5
Item 3. LEGAL PROCEEDINGS......................................7
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....7
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS....................................7
Item 6. SELECTED FINANCIAL DATA................................8
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................9
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK...................................................15
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ..........15
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES...................15
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.....15
Item 11. EXECUTIVE COMPENSATION.................................15
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.............................................15
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.........15
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K...............................................16
PART I
Item 1. Business
------ --------
Consolidated-Tomoka Land Co. (the "Company") is primarily engaged
in the real estate industry through its wholly owned subsidiaries,
Indigo Group Inc.,Indigo Development Inc., Indigo International Inc.,
Indigo Group Ltd. and Palms Del Mar Inc. Real estate operations
include commercial real estate, real estate development, residential
and golf operations, property leasing, leasing properties for oil and
mineral exploration and the sale of forest products.
These operations are predominantly located in Volusia and
Highlands Counties in Florida.
On December 28, 1998, the Company entered into an agreement for
the sale of its citrus operations. The transaction closed
on April 7, 1999. The results of the citrus operations have been
reported separately as discontinued operations in the Consolidated
Statements of Income.
Due to the sale of the citrus operations, the Company's
continuing operations include only one segment. Thus
segmental disclosures are not applicable.
REAL ESTATE OPERATIONS
----------------------
Commercial Development. In August of 1989, the Company reached
an agreement in principle with the Ladies Professional Golf
Association ("LPGA") and the City of Daytona Beach, which called
for the planning and development of the site for the national
headquarters of the LPGA along with two championship golf
courses. The mixed-use development plan, located immediately
west of Interstate 95 in Daytona Beach, Florida, and known
as LPGA International, additionally provided for a clubhouse, resort
facilities, and residential communities along with other
commercial uses. This development is on approximately
3,300 acres owned by the Company's real estate development
subsidiary, Indigo Development Inc. ("IDI"), the City of
Daytona Beach, other developers, and individual homesite
owners. The LPGA International development is part of a 4,500-acre
tract located both west and east of Interstate 95 which
received Development of Regional Impact (DRI) approval in 1993.
The LPGA has successfully relocated its headquarters to
Daytona Beach and occupies facilities constructed in 1996,
within the development. The official opening of the
first LPGA International golf course occurred in July 1994 with
the second course opening in October 1998. In early 1996,
the Interstate 95 interchange at LPGA Boulevard, which
is the north and main entrance to the project, was opened
for use. On September 1, 1997, responsibility for the
operations of the LPGA International golf courses was
transferred from the City of Daytona Beach to a wholly
Item 1. Business (CONTINUED)
------ --------
owned subsidiary of the Company. The agreement with the City of
Daytona Beach provided for the second golf course and a clubhouse
to be constructed by the Company in return for a long-term lease
from the City on both golf courses. The first phase of the clubhouse,
which consists primarily of the cart barn, was completed in 1999.
Construction of the final phase of the clubhouse, consisting of
a 17,000 square-foot facility including a pro shop, locker rooms,
informal dining and banquet rooms, and a swimming pool, was completed
in December 2000 and opened for business in January 2001.
During 1999 the Company sold 180 acres plus 44 developed lots to Renar
Development Company ("Renar"). As part of this transaction, Renar
became the residential and commercial developer of the community,
while the Company maintained its position as master developer of the
project.
Indigo Commercial Realty Inc., a commercial real estate brokerage
company formed in 1991, is the Company's agent in the marketing
and management of commercial properties. In addition to the LPGA
development, approximately 50 acres of fully developed sites
located in the Daytona Beach area and owned by Indigo Group Inc.
were available for sale at December 31, 2000. All development
and improvement costs have been completed at these sites.
Residential. Until December 1993, the Company, through Indigo
Group Ltd. ("IG LTD"),operated in residential development, home
building and sales. At the end of 1993 IG LTD closed down the
development and building functions. IG LTD continues to sell its
remaining lot inventory in the following communities:
Riverwood Plantation, a 180-acre community in Port Orange, Florida,
with 44 lots remaining at December 31, 2000.
Tomoka Heights, a 180-acre development adjacent to Lake Henry in
Highlands County, Florida. There are approximately 107 developable
lots remaining to be sold including 64 fully developed lots.
The remaining lots within Indigo Lakes, a 200-acre development
located in Daytona Beach, were sold in 2000.
IG LTD also had an inventory of fully developed non-contiguous
lots in Palm Coast. The remaining lots were sold during 2000.
Income Properties. During 2000, the Company implemented a new
business strategy. This strategy involves becoming a company, over
time, with a more predictable earnings pattern from geographically
dispersed Florida real estate operations. To this end, the Company
acquired several income properties in 2000 and the first month of
2001. In December 2000, the Company purchased a 10,880 square-foot
building located in Tallahassee, Florida. This site is under a long-
term triple net lease with Eckerd. In January 2001, the Company
acquired two additional properties. The properties consist of a
28,000 square-foot retail building located in Daytona Beach, Florida,
Item 1. Business (CONTINUED)
------ --------
and an 18,150 square-foot building located in Lakeland, Florida. Both
of these properties are under long-term triple net leases with Barnes
& Noble.
Other rental property is limited to a 17,000 square-foot office
building and an automobile dealership site, both of which are located
in Daytona Beach, Florida, along with ground leases for billboards,
a communication tower site and a hunting lease. The office building
is under a lease/purchase agreement which is considered a direct
financing lease. The dealership site was purchased in 2000, and
is leased under an operating lease arrangement.
Prior to 2000, the Company had successfully implemented
a strategy of disposing of its inventory of miscellaneous
income properties. During 1998 the Company sold its 50% interest
in a 70,000 square-foot shopping center located in Marion
County, Florida. At the end of 1997, the Company sold the
office building located in Daytona Beach, known as Consolidated
Center. The Company continues to use a portion of the building as
its headquarters, as terms of the sale included a commitment to
lease 6,000 square feet for a period of at least three years. Also
in 1997, the 24,000 square-foot office building in Palm Coast,
Florida was sold. During 1996, the Company sold the 24,000
square-foot office building in Daytona Beach, which had been leased
to the LPGA as the principal tenant, along with the 70,000
square-foot Mariner Village shopping center located in Spring Hill,
Florida.
Forest Product Sales. The timber lands encompass approximately
13,000 acres west of Daytona Beach. Geographic location of the
timber tract is excellent. In addition to access by major
highways (Interstate 95, State Road 40, and International
Speedway Boulevard), the internal road system for forestry
purposes is good. Income from sales of forest products varies
considerably from year-to-year depending on economic conditions
and rainfall, which sometimes limits access to portions of
the woodlands. In addition, drought conditions sharply increase
the potential of forest fires, as occurred during the summer
of 1998. The wildfires which ravaged central Florida burned
approximately 9,000 acres of the Company's timberland. This
and the sale of the approximately 11,000-acre parcel to St.
Johns River Water Management District in 1997 will reduce
the Company's potential for future income from sales of forest
products; although, sales should more than cover expenses
associated with the forestry operation. These expenses
consist primarily of real estate taxes, with additional
expenses including the costs of installing and maintaining
roads and drainage systems, reforestation, and wild fire
suppression.
Subsurface Interests. The Company owns full or fractional subsurface
oil, gas, and mineral interests in approximately 530,000 "surface"
acres of land owned by others in various parts of Florida, equivalent
Item 1. Business (CONTINUED)
------ --------
to approximately 292,400 acres in terms of full interest. The
Company leases its interests to mineral exploration firms whenever
possible.
Leases on 800 acres have reached maturity; but, in accordance with
their terms, are held by the oil companies without annual rental
payments because of producing oil wells, on which the Company
receives royalties.
The purchasers of 82,543 surface acres in which the Company has a
one-half reserved mineral interest are entitled to releases of
the Company's rights if such releases are required for residential
or business development. Consideration for such releases on 72,137
of those acres would be at the rate of $2.50 per surface acre.
On other acres in Lee and Hendry Counties (where producing oil
wells exist), the Company's current policy is to grant no release
rights with respect to its reserved mineral rights. Periodically,
a release of surface entry rights might be granted upon request of a
surface owner who requires such a release for special financing or
development purposes. In counties other than Lee and Hendry, releases
are granted for a percentage of the surface value of a parcel of land.
At December 31, 2000 there were two producing oil wells on the
Company's interests. Volume in 2000 was 133,280 barrels and volume
in 1999 was 141,973 barrels from three producing wells.
Production for prior recent years was: 1998 - 138,664,
1997 - 125,356, and 1996 - 131,231 barrels.
Real Estate Held and Land Transactions. More than 90% of the
Company's lands have been owned by the Company or its affiliates
for more than fifty years. To date, the Company has not been in
the business of acquiring and holding real estate for sale.
Instead, portions of the Company's lands are put to what
management believes is their best economic use. Unsolicited sales
are made of parcels which do not appear to offer opportunities for
use in the foreseeable future.
GENERAL, CORPORATE AND OTHER OPERATIONS
---------------------------------------
Land development beyond that discussed at "Business - Real Estate
Operations" will necessarily depend upon the long-range economic
and population growth of Florida and may be significantly affected
by fluctuations in economic conditions, prices of Florida real
estate, and the amount of resources available to the Company for
development.
CITRUS
------
The Company, under the name Lake Placid Groves, owned
and operated approximately 3,900 acres of orange and grapefruit
groves located primarily on two large parcels in Highlands County,
Florida. On April 7, 1999, the Company's citrus business,
Lake Placid Groves, was sold. The Company harvested and sold both
Item 1. Business (continued)
------ --------
fresh and to-be-processed citrus from its groves. In connection
with the groves, the Company owned and operated an efficient fresh
fruit citrus packing plant, in which the portion of the crop which
was sold as fresh fruit was packed. Fresh fruit sales were
made by the Company to wholesale produce distributors and retail
grocery chains primarily in the Eastern and Midwestern regions of the
United States and Canada. In an effort to achieve optimum
utilization of the packing facility, the Company also handled the
fruit of other growers in the area.
That portion of the Company's citrus crop which was not sold
as fresh fruit was processed by Citrus World Incorporated
("Citrus World"), an agricultural cooperative, under a participating
marketing pool agreement. Citrus World, one of the larger
processors of citrus products in the United States, pooled its
own fruit with the fruit received from the Company and other
citrus growers, processed the pooled fruit, and sold the
products produced therefrom. Each participant in the pool,
including Citrus World, shared ratably in the proceeds from
the sales of these products, net of Citrus World's actual
processing and marketing costs, plus a per-unit handling fee.
Citrus World made periodic payments to all participants
on their pro rata share of net sales proceeds and made
final payment after all the products in the pool had
been sold. During the years 1999 and 1998, the Company's
sales under the above pooling agreement amounted to
$1,217,604 and $4,321,531, respectively.
Employees
---------
The Company has 17 employees and considers its employee relations
to be satisfactory.
Item 2. Properties
------- ----------
Land holdings of the Company and its affiliates, all of which are
located in Florida, include: approximately 15,000 acres (including
commercial/retail sites) in the Daytona Beach area of Volusia County;
approximately 80 acres in Highlands County, near Lake Placid; and full
or fractional subsurface oil, gas, and mineral interests in
approximately 530,000 "surface acres" in 20 Florida counties.
Approximately 8,300 acres of the lands located in Volusia County are
encumbered under a mortgage. The conversion and subsequent
utilization of these assets provides the base of the Company's
operations.
The Volusia County holdings include approximately 11,700 acres within
the city limits of Daytona Beach, approximately 3,200 acres within
the unincorporated area of Volusia County, and small acreages in
the Cities of Ormond Beach and Port Orange. Of the 11,700 acres
inside the city limits of Daytona Beach, approximately 3,300 acres
Item 2. Properties (CONTINUED)
------- ----------
have received development approval by governmental agencies. The
3,300 acres plus approximately 730 acres owned by the City of
Daytona Beach, 15 acres owned by Indigo Community Development
District, and 410 acres sold to others for development are the
site of a long-term, mixed-use development which includes
"LPGA International." LPGA International is made up of the national
headquarters of the Ladies Professional Golf Association
along with two "Signature" golf courses and a residential community,
a clubhouse, and a maintenance facility, and main entrance roads to
serve the LPGA community. Construction of homes around
the first golf course, on 70 acres of land sold to a residential
developer, began in 1995 with the first residences completed
in early 1996. In 1999, an additional 180 acres and 44
developed lots in LPGA International were sold to Renar. Renar has
become the new residential and commercial developer at the LPGA
International mixed-use development, while the Company continues as
master developer. The lands not currently being developed, including
those on which development approvals have been received, are involved
in an active forestry operation. Except for a 12-acre parcel at the
Interstate 95 and Taylor Road interchange in the Port Orange area
south of Daytona Beach, the tract straddles Interstate 95 for 6- 1/2
miles between International Speedway Boulevard (U. S. Highway 92) and
State Road 40, with approximately 13,500 acres west and 1,500 acres
east of the interstate. Subsidiaries of the Company are holders of
the developed Volusia County properties and are involved in
the development of additional lands zoned for residential,
commercial, or industrial purposes.
In Highlands County, located in south central Florida along U.S.
Highway 27, the Company sold its citrus operation of approximately
3,900 acres in 1999. The remaining Highlands County lands, located
near Lake Placid, Florida, which is about 75 miles east of Sarasota
and 150 miles northwest of Miami, total approximately 80 acres.
These are primarily in a subsidiary's inventory of residential or
industrial lands.
The Company's oil, gas, and mineral interests, which are equivalent to
full rights of 292,400 acres, were acquired by retaining subsurface
rights when acreage was sold many years ago.
From October 1990 until December 1993, IG LTD centered its operations
on residential community development, home construction, and sales.
In 1993, IG LTD discontinued its home building and sales activities
under lot marketing and sales arrangements. Residential lots
owned by IG LTD at December 31, 2000 are:
44 lots in Riverwood Plantation, a community of 180 acres
in Port Orange, Florida.
64 lots at the 180-acre Tomoka Heights development in
Highlands County, Florida. IG LTD is developing this
community, located adjacent to Lake Henry, and consisting
of single-family and duplex units.
6
Item 2. Properties (CONTINUED)
------- ----------
After the sale of the Consolidated Center and the Palm Coast office
buildings in 1997 and the 1998 sale of the Company's 50% interest in
the shopping center in Marion County, Florida, rental property was
limited to a three-story office building in downtown Daytona Beach,
adjacent to the Consolidated Center. The office building, containing
17,000 square feet, is under a lease/purchase agreement, and is
considered a financing lease.
During 2000, the Company added two new income properties with two
additional properties acquired in January 2001. The properties
acquired in 2000 include an automobile dealership site located on 12
acres in Daytona Beach, Florida. Also purchased in 2000, was a
10,880 square-foot retail building in Tallahassee, Florida, which is
under lease on a long-term triple net basis to Eckerd. The properties
purchased in 2001 are under lease on a long-term triple net basis to
Barnes & Noble and consist of buildings of 28,000 and 18,150 square-
feet located in Daytona Beach and Lakeland, Florida, respectively.
Other leasing activities of the Company include ground leases
for billboards, leases of communication tower sites, and a hunting
lease covering approximately 8,300 acres.
Item 3. Legal Proceedings
------ -----------------
There are no material pending legal proceedings to which
the Company or its subsidiaries are a party.
Item 4. Submission of Matters to a Vote of Security Holders
------ ---------------------------------------------------
No matters were submitted to a vote of security holders
during the fourth quarter of the year ended December 31, 2000.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
------ ----------------------------------------------------
COMMON STOCK PRICES AND DIVIDENDS
The Company's common stock trades on the American Stock Exchange
(AMEX) under the symbol CTO. The Company has paid dividends on a
continuous basis since 1976, the year in which its initial dividends
were paid. The following table summarizes aggregate annual dividends
paid over the five years ended December 31, 2000.
1996 $0.55 1999 $0.35
1997 $0.65 2000 $0.20
1998 $0.70
7
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters (CONTINUED)
------ ----------------------------------------------------
Indicated below are high and low sales prices for the quarters of
the last two fiscal years. All quotations represent actual
transactions.
2000 1999
--------------- ----------------
High Low High Low
----- ----- ----- -----
$ $ $ $
First Quarter 12-3/4 11 16-3/8 13-1/4
Second Quarter 12-9/16 11-3/16 16 12-7/8
Third Quarter 12-7/8 11-5/8 17-1/4 12-5/8
Fourth Quarter 12-3/4 11-3/8 13-13/16 11-11/16
Approximate number of shareholders of record as of December 31, 2000
(without regard to shares held in nominee or street name): 1,557
There have been no sales of unregistered securities within the
past three years.
Item 6. Selected Financial Data
------- -----------------------
The following selected financial data should be read in conjunction
with the Company's Consolidated Financial Statements and Notes
along with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in this report.
8
Item 6. Selected Financial Data (CONTINUED)
------- -----------------------
Five-Year Financial Highlights
(In thousands except per share amounts)
2000 1999 1998 1997* 1996*
$ $ $ $ $
Summary of Operations:
Revenues:
Real Estate 19,860 17,130 6,388 5,412 7,642
Profit on Sales of
Undeveloped Real Estate
Interest 1,379 2,115 132 7,725 385
Interest and Other Income 1,987 1,854 785 1,369 6,123
------------------------------------------
TOTAL 23,226 21,099 7,305 14,506 14,150
------------------------------------------
Operating Costs and Expenses 8,045 8,600 4,867 3,408 4,170
General and Administrative
Expenses 3,365 2,879 2,319 5,932 3,386
Income Taxes 2,956 3,261 19 1,836 2,493
------------------------------------------
Income from Continuing
Operations 8,860 6,359 100 3,330 4,101
Income from Discontinued
Operations (net of tax) -- 9,424 1,204 681 2,502
------------------------------------------
Net Income 8,860 15,783 1,304 4,011 6,603
==========================================
Basic and Diluted Earnings
per Share:
Income from Continuing
Operations 1.51 1.00 0.01 0.53 0.65
Net Income 1.51 2.48 0.20 0.64 1.05
Dividends Paid Per Share 0.20 0.35 0.70 0.65 0.55
Summary of Financial Position:
Total Assets 63,354 63,420 50,101 58,026 59,454
Shareholders' Equity 46,555 48,034 34,698 37,854 35,791
* Restated for Discontinued Operations - See Note 2 to Consolidated
Financial Statements.
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations
-------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
2000 Compared to 1999
Real Estate Operations
----------------------
Profits from real estate operations for 2000 escalated to $11,815,425.
These profits represent a 39% increase over 1999's profits totaling
9
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
$8,529,694. The higher profits are primarily attributable to higher
gross profits recognized on commercial real estate transactions.
During 2000 the sale of 391 acres of land produced gross profits
approximating $13,200,000. This compares to gross profits realized
during 1999 of $9,250,000 on the sale of 443 acres. Sales prices and
gross profits vary site to site based on location and intended use.
The average sales price per acre on 2000 sales was $39,600, a 33%
increase over 1999's average sales price of $29,800.
Revenues from golf operations rose 18% for the year 2000 to
$3,200,000, on a 33% increase in rounds played. The increase in
rounds played was somewhat offset by a 15% decline in average green
fees. Despite this climb in revenues overall profits from golf
operations fell 118% with a loss of $760,000 posted. This decline in
operating results occurred due to a 29% rise in expenses resulting
from increased depreciation and maintenance costs of the new cart
barn, higher course maintenance costs and increased costs associated
with the gain in number of rounds played.
Income properties net income rose 43% over prior year to $184,000.
The addition of the automobile dealership site located in Daytona
Beach, in October 2000, and the Eckerd retail building in December
2000 accounted for the gain in profits.
A 31% fall in forestry revenues led to a 37% drop in income from
forestry operations. Profits from forestry operations totaled
$125,000 during 2000 compared to $197,000 one year earlier. The
revenue decline was the result of lower harvesting as pricing levels
were depressed during the second half of the year.
General, Corporate and Other
----------------------------
The sale of 75 acres of land, along with the release of subsurface
interests on 2,551 acres during 2000 generated profits on sale of
undeveloped real estate interests amounting to $1,378,918. This
represents a 35% downturn from prior year's profits of $2,115,768.
Sales of undeveloped real estate interests in 1999 included the sale
of 100 acres of property in addition to the release of subsurface
interests on 3,918 acres.
Interest and other income earned during 2000 rose 7% to $1,986,608.
This gain was achieved on increased interest earned on notes
receivable and investment securities. Interest and other income
posted in calendar year 1999 totaled $1,853,808.
General and administrative expenses of $3,364,792 for the calendar
year 2000 represent a 17% increase over prior year's total cost of
$2,879,365. This rise can be attributed to higher stockholders'
expense, due to the increase in the number of shareholders resulting
from the September 1999 distribution of the Company's stock by Baker,
Fentress & Co., along with higher compensation costs and professional
fees.
10
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
The resolution, in the third quarter 2000, of several income tax
issues under examination with tax authorities resulted in the
reduction of deferred income taxes by $1,500,000 for the year.
Discontinued Citrus Operations
During the second quarter of 1999 the Company consummated the sale of
its citrus operations. An after-tax gain of $8,047,576 was realized
on the transaction. After-tax profits of $1,376,157 from operating
activities were recognized in 1999 through the sale date.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
1999 COMPARED TO 1998
Real Estate Operations
----------------------
Profits from real estate operations for the year ended
December 31, 1999 rose 461% when compared to the prior year.
Profits of $8,529,694 were realized in 1999 compared to $1,521,401
for the twelve months of 1998. These strong profits were generated
through commercial land sales, with sales of 443 acres
producing gross profits of $9,200,000 for the twelve-month
period of 1999. This compares to gross profits of $1,330,000 earned
on the sale of 90 acres during 1998. The transactions closed
during 1999 generated higher profit margins as pricing and profits
vary from property to property depending upon location and
intended use.
With a full year's operation of the second golf course, which
opened October 1998, golf revenues rose 11% to $2,700,000. This
increase was created on a 27% gain in rounds played. Depreciation
and maintenance costs associated with the new course caused a 30%
jump in golf expenses, resulting in an overall $436,000 downturn
in operating results when compared to the prior year.
A 59% decrease in revenues generated from forestry activities
resulted in a 69% decline in forestry profits for the year to
$197,000. This downturn resulted from limited harvesting during the
year due to depressed pricing and accelerated salvage harvesting in
1998 due to fire damage.
General, Corporate and Other
----------------------------
Profits on the sale of undeveloped real estate interests
totaled $2,115,768 during 1999, representing a substantial increase
over the $132,033 profit realized for the year in 1998. The profits
for 1999 were generated on the sale of 100 acres of property in
addition to the release of subsurface interests on 3,918 acres.
11
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
Profits on sale of undeveloped real estate interests produced during
1998 were realized on the release of subsurface interests on 2,229
acres.
Interest and other income earned during the twelve months of
1999 amounted to $1,853,808 representing a 136% increase over
prior year's interest and other income totaling $784,471. This
higher income was generated primarily on higher investment
interest earned on the proceeds received from the sale of the citrus
operations.
A 24% increase in general and administrative expenses was reported
for 1999 when compared to prior year. This increase was
attributed to lower interest and overhead costs capitalized
to development projects during the period. Substantial amounts of
interest were capitalized to the construction of the golf course and
LPGA International development during 1998.
Discontinued Citrus Operations
------------------------------
During the second quarter of 1999, the Company consummated the sale of
its citrus operations. An after-tax gain of $8,047,576 was realized
on the transaction. Operating activities through the sale date
resulted in income after tax of $1,376,157 during 1999. For the
calendar year 1998, after tax profits of $1,203,895 were generated.
The increase in operating profits, despite the short period, were
generated on substantially higher pricing, in particular fresh fruit
pricing. The rise in pricing was achieved due to a significantly
lower state crop for the 1998-1999 season, along with the impact of
the freeze experienced in California in late 1998.
FINANCIAL POSITION
Record earnings from continuing operations were posted during 2000,
as net income totaled $8,859,811, equivalent to $1.51 per share.
These earnings represent a 39% jump from 1999's income from continuing
operations of $6,358,959, equivalent to $1.00 per share. Net income
for 1999, including discontinued citrus operations and the gain posted
on the sale of that business, amounted to $15,782,692, equivalent to
$2.48 per share. The favorable results from continuing operating
activities are primarily the result of increased profits generated on
commercial real estate closings.
12
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
Following is the calculation of EBDDT:
Year Ended
----------------------------
December 31, December 31,
2000 1999
----------------------------
Income From Continuing Operations $ 8,859,811 $ 6,358,959
Add Back:
Depreciation 278,655 257,215
Deferred Taxes 3,411,291 586,908
Earnings Before Depreciation and ----------------------------
Deferred Taxes $12,549,757 $ 7,203,082
============================
EBDDT Per Share $2.14 $1.13
============================
EBDDT is not a measure of operating results or cash flows from
operating activities as defined by 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 is calculated by adding depreciation, amortization and deferred
income taxes to net income as they represent non-cash charges. Net
income in 1999 excludes discontinued citrus operations' net profits,
including the gain from sale of that business segment.
Due to the Company's new business strategy introduced at year end 1999
and implemented in 2000, the Company is introducing Earnings Before
Depreciation and Deferred Taxes ("EBDDT") as a new performance
measure. The new business strategy should produce significant
amounts of both depreciation and deferred taxes and this measure will
track results in this area.
Cash and investment securities decreased in excess of $12,000,000 for
the calendar year 2000. The primary uses of cash were $9,530,245
invested in property, plant and equipment additions, $9,152,351 used
to repurchase Company stock, and an additional $1,186,851 used to pay
dividends equivalent to $.20 per share. Offsetting these cash
outflows was $8,234,719 of cash provided by operating activities.
Funds used for additions to property, plant and equipment include
approximately $5,985,000 invested on the purchase of two income
properties and $3,300,000 expended on the completion of the clubhouse
facilities at the LPGA mixed-use development. The new income
properties consist of a 10,880 square-foot retail building located in
Tallahassee, Florida occupied by Eckerd under a long-term triple-net
lease, and a 12 acre auto dealership facility in Daytona Beach,
Florida, also under lease.
13
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
At December 31, 2000, the Company had two income properties under
contract at purchase prices totaling $8,725,000. These properties,
which were purchased in January 2001, are under long-term triple-net
leases with Barnes & Noble and consist of retail buildings of 28,000
square-feet and 18,150 square-feet located in Daytona Beach and
Lakeland, Florida, respectively. Additionally, a retail building in
Palm Bay, Florida, under long-term lease to Walgreens, was put under
contract at a purchase price of $4,260,000. The funds used for these
transactions were generated from year end 2000 real estate closings
and had been escrowed for this purpose. The Company intends to use
the proceeds available from 2001 real estate closings, which qualify
for like-kind exchange tax treatment, to invest in additional income
properties. Construction and development expenditures planned for
2001 approximate $2,000,000. These expenditures include the final
amounts due on the construction of the clubhouse, along with other
golf operations additions, and road and entrance feature additions on
lands adjacent to Interstate 95. Other capital requirements include
the continuation of the stock repurchase program. The funds needed
for these requirements will be available from cash and short-term
investments on hand, operating activities and, if necessary, financing
sources in place.
Activity in and around the LPGA International mixed-use development
was relatively strong during the year. Construction of the clubhouse
facilities was substantially complete by year end, and opened for
business the beginning of 2001. Development of five new residential
communities by Renar Development Company ("Renar") began during the
year with completion expected in the first quarter of 2001. This
development activity along with the new marketing program put in
place by Renar has strengthened the sales of homesites. Also adding
momentum to the project was the nationally televised Ladies
Professional Golf Association Arch Championship held at LPGA
International during November and the approval by the Florida section
of the United State Tennis Association ("USTA") of moving its
headquarters to Daytona Beach. The approximate 12 acre headquarter
site, which will be donated by the Company, is located adjacent to
the entrance of the LPGA development. The complex will include 24
lighted tennis courts, a grandstand, pro shop and clubhouse, and an
office complex. The USTA is obligated to sponsor a minimum of ten
tournaments each year for ten years.
Sales activity was strong during 2000, and included the sale of a 66
acre parcel at the southwest quadrant of the I-95 interchange at LPGA
Boulevard. This site will serve as the location for a new multi-
dealership auto mall, which is now under construction. A project of
this magnitude tends to increase interest and activity on the
surrounding lands. Although the national economy appears to be
slowing and the local economy is always subject to its influences, at
this time the local economy appears relatively strong and the Company
enters 2001 with a significant land sales contract backlog. These
facts lead to prospects for continued near-term profits.
14
Item 7. Management's Discussion and Analysis of Financial Condition
------- ------------------------------------------------------------
and Results of Operations (CONTINUED)
-------------------------
Ownership and investment in income properties has inherent risks, as
does all real estate. These risks include, but are not limited to:
the general health of the national and local economies, declines in
market values, deterioration of surrounding properties and related
values, financial stability of tenants and acts of God and nature.
The Company attempts to limit these risks through its knowledge of
real estate, due diligence efforts, and insurance practices.
The year 2000 was the first year of implementation of the Company's
business strategy, with the objective to become, over time, a company
with a more predictable earnings pattern from geographically
dispersed Florida real estate holdings. To this end, the Company
used funds generated from qualified land sales, to acquire income
properties utilizing tax deferred like-kind exchange transactions.
This strategy will be utilized in the future in conjunction with
management's continuing efforts to add value to its core Daytona
Beach land holdings through the master planning and development
process.
Item 7A Quantitative and Qualitative Disclosures about Market Risk
------- ---------------------------------------------------------
The Company has no material market risk associated with
interest rates, foreign currency exchange rates or
commodity prices.
Item 8. Financial Statements and Supplementary Data
------ --------------------------------------------------------
The Company's Consolidated Financial Statements appear
beginning on page F-1 of this report. See Item
14 of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting
------ and Financial Disclosures
----------------------------------------------------------
There were no disagreements with accountants on accounting
and financial disclosures.
PART III
The information required by Items 10, 11, 12, and 13 is
incorporated herein by reference to the registrant's 2001 annual
meeting proxy statement pursuant to Instruction G to Form 10-K.
On March 15, 2001, the registrant anticipates filing with the
Commission, pursuant to Regulation 14A under the Securities Exchange
Act of 1934, its definitive proxy statement to be used in connection
with its 2001 annual meeting of shareholders at which directors will
be elected for the ensuing year.
15
Executive Officers of the Registrant
------------------------------------
The executive officers of the registrant, their ages at January 31,
2001, their business experience during the past five years, and the
year first elected as an executive officer of the Company are as
follows:
Bob D. Allen, 66, chairman of the board since April 1998 and
chief executive officer since March 1990; president from March
1990 to January 2000.
William H. McMunn, 54, president and chief operating officer
since January 2000; president, Indigo Development Inc., a
subsidiary of the Company, since December 1990.
Bruce W. Teeters, 55, senior vice president-finance and
treasurer, since January 1988.
All of the above are elected annually as provided in the By-Laws.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
------- 8-K
------------------------------------------------------------
1. Financial Statements
--------------------
The following financial statements are filed as part of this
report:
Page No.
--------------
Report of Independent Certified Public Accountants F-1
Consolidated Balance Sheets as of December 31,
2000 and 1999 F-2
Consolidated Statements of Income for the
three years ended December 31, 2000 F-3
Consolidated Statements of Shareholders' Equity
for the three years ended December 31, 2000 F-4
Consolidated Statements of Cash Flows for the three
years ended December 31, 2000 F-5
Notes to Consolidated Financial Statements F-6
16
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
------- 8-K (CONTINUED)
-----------------------------------------------------------
2. Financial Statement Schedules
-----------------------------
Included in Part IV on Form 10-K:
Schedule III - Real Estate and Accumulated
Depreciation on page 21 of
Form 10-K
Schedule IV - Mortgage Loans on Real Estate
on page 22 of Form 10-K
Other Schedules are omitted because of the absence of conditions
under which they are required, materiality or because the
required information is given in the financial statements or
notes thereof.
3. Exhibits
See Index to Exhibits on page 20 of this Annual Report on
Form 10-K.
Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the last
quarter of the fiscal year ended December 31, 2000.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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)
3/15/01 By /s/ Bob D. Allen
Bob D. Allen, Chairman of the
Board and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
3/15/01 Chairman of the Board and
Chief Executive Officer
(Principal Executive
Officer), and Director By: /s/ Bob D. Allen
----------------
3/15/01 Senior Vice President-Finance,
Treasurer (Principal Financial
and Accounting Officer), and
Director /s/ Bruce W. Teeters
--------------------
3/15/01 Director /s/ David D. Peterson
---------------------
3/15/01 Director /s/ John C. Adams, Jr.
----------------------
3/15/01 Director /s/ Robert F. Lloyd
--------------------
18
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
Commission File No. 0-5556
CONSOLIDATED-TOMOKA LAND CO.
(Exact name of registrant as specified in the charter)
19
EXHIBIT INDEX
Page No.
(2.1) Agreement of Merger and Plan of Merger and Reorganization
dated April 28, 1993 between Consolidated-Tomoka Land Co.
and CTLC, Inc. filed with the registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1993 and
incorporated by this reference. *
(2.2) Certificate of Merger dated April 28, 1993 filed with the
registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993 and incorporated by this reference. *
(3.1) Articles of Incorporation of CTLC, Inc. dated February 26,
1993 and Amended Articles of Incorporation dated March 30,
1993 filed with the registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993 and incorporated
by this reference. *
(3.2) By-laws of CTLC, Inc. filed with the registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993 and
incorporated by this reference. *
10 Material Contracts:
(10.1) 1998-1999 Citrus World Marketing Agreement dated
September 1, 1998 between Citrus World, Inc. and
Consolidated-Tomoka Land Co. filed on Form 10-K
for the year ended December 31, 1998 and incorporated by
this reference. *
(10.2) The Consolidated-Tomoka Land Co. Unfunded Deferred
Compensation Plan filed with the registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1981
and incorporated by this reference. *
(10.3) The Consolidated-Tomoka Land Co. Unfunded Deferred
Compensation Plan executed on October 25, 1982 filed with
the registrant's Annual Report on Form 10-K for the year
ended December 31, 1982 and incorporated by this reference. *
(10.4) The Consolidated-Tomoka Land Co. Stock Option Plan
effective April 26, 1990 as amended and restated effective
April 26, 1995, filed with the Registrant's Form S-8 filed on
September 15, 1995 and incorporated by this reference. *
(10.5) Lease Agreement dated August 28, 1997 between the City
of Daytona Beach and Indigo International Inc., a wholly
owned subsidiary of Consolidated-Tomoka Land Co., filed
on Form 10-K for the year ended December 31, 1997 and
incorporated by this reference. *
(10.6) Development Agreement dated August 18, 1997 between the
City of Daytona Beach and Indigo International Inc., a
wholly owned subsidiary of Consolidated-Tomoka Land Co.,
filed on Form 10-K for the year December 31, 1997 and
incorporated by this reference. *
(10.7) Purchase and Sale Agreement dated December 28, 1998
between Alton D. Rogers and Wade H. Walker and
Consolidated-Tomoka Land Co. filed on Form 10-K for
the year ended December 31, 1998 and incorporated by
this reference. *
(21) Subsidiaries of the Registrant 23
(23) Report of Independent Certified Public Accountants on
Financial Statement Schedules. 24
(23.2) Consent of Arthur Andersen LLP. 25
* - Incorporated by Reference
20
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEAR ENDED DECEMBER 31, 2000
COSTS CAPITALIZED
INITIAL COST TO COMPANY SUBSEQUENT TO
ACQUISITION
-------------------------------------------------------------------------------
BUILDINGS &
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS
IMPROVEMENTS CARRYING COSTS
- ----------- -------------------------------------------------------------------------------
Income Properties:
Gary Yeomans Ford, Daytona Beach,FL -0- 1,403,615 2,399,685 -0- -0-
Eckerd, Tallahassee, FL -0- 590,800 1,595,000 -0- -0-
Miscellaneous -0- 728,582 -0- 1,099,921 -0-
-------------------------------------------------------------------------------
-0- 2,722,997 3,994,685 1,099,921 -0-
===============================================================================
GROSS AMOUNT AT WHICH
CARRIED AT CLOSE OF PERIOD
-----------------------------
DATE OF
ACCUMULATED COMPLETION OF DATE DEPR
LAND BUILDINGS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED LIFE
-------------------------------------------------------------------------------
Income Properties:
Gary Yeomans Ford,
Daytona Beach, FL 1,403,615 2,399,685 3,803,300 3,323 N/A 10/31/00 40Yrs.
Eckerd, Tallahassee, FL 590,800 1,595,000 2,185,800 9,999 N/A 12/13/00 40Yrs.
Miscellaneous 1,828,503 -0- 1,828,503 260,343 Various N/A 5-30Yrs.
----------------------------------------------
3,822,918 3,994,685 7,817,603 273,665
==============================================
2000 1999 1998
----------- ---------- ----------
Cost:
Balance at Beginning of Year 1,752,706 14,365,140 17,693,377
Improvements 6,071,748 148,774 172,322
Cost of Real Estate Sold (6,851) (12,761,208) (3,500,559)
----------------------------------------------
Balance at End of Year 7,817,603 1,752,706 14,365,140
==============================================
Accumulated Depreciation:
Balance at Beginning of Year 267,299 3,452,758 4,113,403
Depreciation and Amortization 6,366 120,182 423,570
Depreciation on Real Estate
Sold 0 (3,305,641) (1,084,215)
----------------------------------------------
Balance at End of Year 273,665 267,299 3,452,758
==============================================
21
SCHEDULE IV
CONSOLIDATED-TOMOKA LAND CO.
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 2000
PRINCIPAL
FINAL PERIODIC AMOUNT OF
INTEREST MATURITY PAYMENT PRIOR FACE CARRYING LOANS
DESCRIPTION RATE DATE TERMS LIENS AMOUNT AMOUNT (A) DELINQUENT
- ------------------------------------------------------------------------------------------------------------------
MORTGAGE N/R
SECURED BY
REAL ESTATE:
Volusia Co. 9.25% 09/03 Level, plus Balloon of $239,718 -- 299,650 269,685 --
Volusia Co. 7.75% 12/01 Balloon of $486,325 -- 1,969,541 486,325 --
Volusia Co. 8.50% 12/01 Level, plus Balloon of $1,004,020 -- 1,220,000 1,060,223 --
Volusia Co. 7.25% 12/00 Balloon of $612,845 -- 612,845 612,845 --
Volusia Co. 8.75% 09/03 Level, plus Balloon of $241,443 -- 284,050 269,848 --
Volusia Co. 7.75% 07/02 Balloon of $996,020 -- 1,372,000 996,020 --
Volusia Co. 7.75% 02/01 Balloon of $275,200 -- 275,200 275,200 --
Volusia Co. 10.50% 10/03 Level, plus Balloon of $1,547,424 -- 1,805,424 1,805,424 --
Volusia Co. 10.50% 03/01 Balloon of $1,040,000 -- 1,040,000 1,040,000 --
Volusia Co. 06/01 Balloon of $1,800,000 -- 1,800,000 1,800,000 --
Highlands Co. 6.00% 04/09 Level, plus Balloon of $1,753,415 -- 2,550,000 2,480,679 --
Highlands Co. -- 05/02 Level -- 600,000 400,000 --
Highlands Co. -- Various Balloon of $30,000 -- 30,000 30,000 --
-----------------------------------------
-- $13,858,710 $11,526,249 --
=========================================
(A) FOR FEDERAL INCOME TAX PURPOSES, THE AGGREGATE BASIS OF THE
LISTED MORTGAGES WAS $11,526,249.
(B) A RECONCILIATION OF THE CARRYING AMOUNT OF MORTGAGES FOR THE
THREE YEARS ENDED DECEMBER 31, 2000, 1999
AND 1998 IS AS FOLLOWS:
2000 1999 1998
------------------------------------
BALANCE AT BEGINNING OF YEAR $7,269,211 $ 4,260,347 $ 5,146,017
NEW MORTGAGE LOANS 4,795,644 5,438,494 628,343
COLLECTIONS OF PRINCIPAL ( 538,606) (2,429,630) ( 1,514,013)
------------------------------------
BALANCE AT END OF YEAR $11,526,249 $ 7,269,211 $ 4,260,347
====================================
22
EXHIBIT 21
Subsidiaries of the Registrant
Percentage of
Organized Voting Securities
Under Owned by
Laws of Immediate Parent
-------------------------------------
Consolidated-Tomoka Land Co. Florida --
Indigo Group Inc. Florida 100.0
Indigo Group Ltd. Florida 99.0*
(A Limited Partnership)
Indigo Development Inc. Florida 100.0
Indigo Commercial Realty Inc. Florida 100.0
Palms Del Mar Inc. Florida 100.0
Indigo International Inc. Florida 100.0
* Consolidated-Tomoka Land Co. is the limited partner of Indigo Group
Ltd., and owns 99.0% of the total partnership equity. Indigo Group
Inc. is the managing general partner of the partnership and owns an additional
1.0% of the partnership equity.
All subsidiaries are included in the Consolidated Financial Statements
of the Company and its subsidiaries appearing elsewhere herein.
23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
TO CONSOLIDATED-TOMOKA LAND CO.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Consolidated-Tomoka Land Co. included in
this Form 10-K, and have issued our report thereon dated January 25, 2001. Our
audits were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedules listed in item 14(a)2 are the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic consolidated financial statements. These schedules have been
subjected to the auditing procedures applied in the audits of the basic
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data, required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
Arthur Andersen LLP
Orlando, Florida
January 25, 2001
24
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 33-62679) of Consolidated-Tomoka Land Co. of our
report dated January 25, 2001, appearing on page F-1 of this Annual Report on
Form 10-K.
Arthur Andersen LLP
Orlando, Florida
March 16, 2001
25
CONSOLIDATED-TOMOKA LAND CO.
INDEX TO FINANCIAL STATEMENTS
Reports of Independent Certified Public Accountant F-1
Consolidated Balance Sheets as of December 31, 2000 and 1999 F-2
Consolidated Statements of Income for the three years ended
December 31, 2000 F-3
Consolidated Statements of Shareholders' Equity for the
three years ended December 31, 2000 F-4
Consolidated Statements of Cash Flows for the three years
ended December 31, 2000 F-5
Notes to Consolidated Financial Statements F-6
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
Consolidated-Tomoka Land Co.
We have audited the accompanying consolidated balance sheets of
Consolidated-Tomoka Land Co. and subsidiaries as of December 31, 2000 and
1999, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the years in the three-year period ended December
31, 2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Consolidated-Tomoka Land Co. and subsidiaries as of December 31, 2000 and 1999,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
Orlando, Florida Arthur Andersen LLP
January 25,2001
F-1
Consolidated Balance Sheets
December 31,
----------------------------
2000 1999
----------- -----------
Assets
Cash $12,909,722 $16,458,208
Investment Securities (Note 3) 8,178,186 16,689,438
Notes Receivable (Note 5) 11,602,477 7,365,754
Real Estate Held for Development and Sale (Note 6) 9,767,635 11,624,833
Deferred Income Taxes (Note 4) -- 1,239,853
Refundable Income Taxes (Note 4) 743,801 --
Other Assets 2,516,635 1,634,499
---------- ----------
45,718,456 55,012,585
---------- ----------
Property, Plant and Equipment
Land, Timber and Subsurface Interests 3,822,918 1,725,750
Golf Buildings, Improvements & Equipment 10,408,134 7,016,788
Income Properties Buildings & Improvements 3,994,685 --
Other Furnishings and Equipment 636,819 673,254
---------- ----------
Total Property, Plant and Equipment 18,862,556 9,415,792
Less Accumulated Depreciation and Amortization ( 1,227,098) ( 1,007,987)
---------- ----------
Net Property, Plant and Equipment 17,635,458 8,407,805
---------- ----------
Total Assets $63,353,914 $63,420,390
========== ==========
Liabilities
Accounts Payable $ 220,515 $ 251,241
Accrued Liabilities 4,561,561 4,232,820
Income Taxes Payable (Note 4) -- 631,528
Deferred Income Taxes (Note 4) 2,171,438 --
Notes Payable (Note 7) 9,845,827 10,270,837
---------- ----------
Total Liabilities 16,799,341 15,386,426
---------- ----------
Commitments and Contingencies (Note 12)
SHAREHOLDERS' EQUITY
Preferred Stock - 50,000 Shares Authorized,
$100 Par Value; None Issued -- --
Common Stock - 10,000,000 Shares Authorized;
$1 Par Value; 5,584,684 and 6,359,284
Shares Issued and Outstanding at
December 31, 2000 and 1999, respectively 5,584,684 6,359,284
Additional Paid-In Capital -- 3,588,751
Retained Earnings 40,969,889 38,085,929
---------- ----------
Total Shareholders' Equity 46,554,573 48,033,964
---------- ----------
Total Liabilities and Shareholders' Equity $63,353,914 $63,420,390
========== ==========
The accompanying notes are an integral part of these consolidated statements.
F-2
Consolidated Statements of Income
Calendar Year
------------------------------------------
December 31, December 31, December 31,
2000 1999 1998
Income: ----------- ----------- -----------
Real Estate Operations:
Sales and Other Income $19,860,503 $17,129,879 $ 6,388,289
Costs and Other Expenses ( 8,045,078) ( 8,600,185) (4,866,888)
---------- ---------- ----------
11,815,425 8,529,694 1,521,401
---------- ---------- ----------
Profit On Sales of Undeveloped
Real Estate Interests 1,378,918 2,115,768 132,033
---------- ---------- ----------
Interest and Other Income 1,986,608 1,853,808 784,471
---------- ---------- ----------
15,180,951 12,499,270 2,437,905
General and Administrative Expenses ( 3,364,792) ( 2,879,365) (2,318,730)
---------- ---------- ----------
Income From Continuing Operations Before
Income Taxes 11,816,159 9,619,905 119,175
Income Taxes (Note 4) ( 2,956,348) ( 3,260,946) (
18,956)
---------- ---------- ----------
Income From Continuing Operations 8,859,811 6,358,959 100,219
Income From Discontinued Citrus Operations,
Net of Tax (Note 2) -- 9,423,733 1,203,895
---------- ---------- ----------
Net Income $ 8,859,811 $15,782,692 $1,304,114
========== ========== ==========
Per Share Information:
Basic and Diluted
Income From Continuing Operations $1.51 $1.00 $0.01
Income From Discontinued Citrus Operations -- $1.48 $0.19
---------- ---------- ----------
Net Income $1.51 $2.48 $ .20
========== ========== ==========
The accompanying notes are an integral part of these consolidated statements.
F-3
Consolidated Statements of Shareholders' Equity
Additional
Common Paid-In Retained
Stock Capital Earnings Total
---------- ----------- ---------- ----------
Balance, December 31, 1997 $6,371,833 $3,793,066 $27,689,548 $37,854,447
Net Income -- -- 1,304,114 1,304,114
Cash Dividends ($.70 per share) -- -- ( 4,460,283) ( 4,460,283)
---------- --------- ---------- ---------
Balance, December 31, 1998 6,371,833 3,793,066 24,533,379 34,698,278
Net Income -- -- 15,782,692 15,782,692
Cash Dividends ($.35 per share) -- -- ( 2,230,142) ( 2,230,142)
Issuance of 4,651 Shares Pursuant
to Exercise of Stock Options 4,651 ( 4,640) -- 11
Repurchase of 17,200 Shares ( 17,200) ( 199,675) -- ( 216,875)
---------- --------- ---------- ----------
Balance, December 31, 1999 6,359,284 3,588,751 38,085,929 48,033,964
Net Income -- -- 8,859,811 8,859,811
Cash Dividends ($.20 per share) -- -- ( 1,186,851) ( 1,186,851)
Repurchase of 774,600 Shares ( 774,600) (3,588,751) ( 4,789,000) ( 9,152,351)
--------- --------- ---------- ----------
Balance, December 31, 2000 $5,584,684 -- $40,969,889 $46,554,573
========= ========= ========== ==========
The accompanying notes are an integral part of these consolidated statements.
F-4
Consolidated Statements of Cash Flows
Calendar Year
---------------------------------------
December 31, December 31, December 31,
2000 1999 1998
----------- ---------- ----------
Cash Flow from Operating Activities
Net Income $ 8,859,811 $15,782,692 $ 1,304,114
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used In) Operating Activities:
Discontinued Citrus Operations -- (9,423,733) (1,203,895)
Depreciation and Amortization 278,655 257,215 186,886
Loss (Gain) on Sale of Property,
Plant and Equipment 23,937 ( 2,177) 114,973
(Increase) Decrease in Assets:
Notes Receivable ( 4,236,723) 1,750,114 902,482
Real Estate Held for Development and Sale 1,857,198 1,973,134 221,101
Deferred Income Taxes (Note 4) 1,239,853 586,908 ( 94,483)
Refundable Income Taxes (Note 4) ( 743,801) 285,199 ( 285,199)
Other Assets ( 882,136) 19,495 ( 33,626)
(Decrease)Increase in Liabilities:
Accounts Payable ( 30,726) ( 41,405) ( 418,058)
Accrued Liabilities 328,741 ( 135,644) 515,061
Deferred Income Taxes (Note 4) 2,171,438 -- --
Income Taxes Payable (Note 4) ( 631,528) 631,528 (2,109,528)
--------- ---------- ----------
Net Cash Provided by (Used In)
Operating Activities 8,234,719 11,683,326 ( 900,172)
--------- ---------- ----------
Cash Flow from Investing Activities
Acquisition of Property, Plant and Equipment ( 9,530,245) ( 1,329,107) (4,818,717)
Net Decrease (Increase) in Investment
Securities (Note 3) 8,511,252 (15,498,048) ( 164,711)
Proceeds from Sale of Property, Plant and
Equipment -- 20,883 2,304,277
Cash From Discontinued Citrus Operations (Note 2) -- 24,216,186 1,692,939
Net Cash (Used In) Provided by Investing ---------- ---------- ---------
Activities ( 1,018,993) 7,409,914 ( 986,212)
---------- ---------- ---------
Cash Flow from Financing Activities
Proceeds from Notes Payable (Note 7) 1,471,000 2,469,000 5,577,000
Payments on Notes Payable (Note 7) ( 1,896,010) ( 2,940,226) (8,332,460)
Cash Used to Repurchase Common Stock ( 9,152,351) ( 216,864) --
Dividends Paid ( 1,186,851) ( 2,230,142) (4,460,283)
---------- ---------- ---------
Net Cash Used in Financing Activities (10,764,212) ( 2,918,232) (7,215,743)
---------- ---------- ---------
Net (Decrease) Increase in Cash ( 3,548,486) 16,175,008 (9,102,127)
Cash, Beginning of Year 16,458,208 283,200 9,385,327
---------- ---------- ---------
Cash, End of Year $12,909,722 $16,458,208 $ 283,200
========== ========== =========
F-5
Consolidated Statements of Cash Flows
continued
Supplemental Disclosure of Operating Activities:
In connection with the sale of real estate, the Company received, as
consideration, mortgage notes receivable of $4,935,624, $2,268,895 and
$628,343 for the years 2000, 1999, and 1998, respectively.
In addition, the Company received letters of credit totaling $632,495 as
consideration for real estate sales in 2000, which is included in other
assets.
In connection with the sale of the citrus operations, the Company received
as consideration, notes receivable of $3,150,000 for the year 1999.
Total interest paid was $867,134, $901,988, and $1,040,737 for the years
2000, 1999, and 1998, respectively.
Total income taxes paid were $920,387, $8,870,891, and $3,069,525 for the
years 2000, 1999, and 1998, respectively.
The accompanying notes are an integral part of these consolidated
statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of
Consolidated-Tomoka Land Co. and its wholly owned subsidiaries:
Indigo Group Inc., Indigo Group Ltd., Indigo International Inc.,
Indigo Development Inc. and Palms Del Mar Inc. (collectively, the
Company). All significant intercompany accounts and transactions
have been eliminated in consolidation.
Nature of Operations
The Company is primarily engaged, through its wholly owned
subsidiaries, in the real estate industry. Real estate operations,
which are primarily commercial in nature, also include residential,
golf operations, incom properties and forestry operations. These
operations are predominantly located in Volusia and Highlands Counties
in Florida. From time to time, the Company sells unimproved real estate
considered surplus to its operating needs. The latter function is not
considered part of the Company's ordinary operations. See Note 2,
"Discontinued Citrus Operations" regarding citrus activities.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
F-6
Cash
At December 31, 2000, the Company held $12,623,427 in escrow to
complete the purchase of income properties.
Real Estate Held for Development and Sale
The carrying value of real estate held for development and sale
includes the initial acquisition costs of land, improvements thereto,
and other costs incidental to the acquisition or development of land.
These costs are allocated to properties on a relative sales value basis
and are charged to costs of sales as specific properties are sold.
No interest or property taxes were capitalized to real estate held for
development and sale during 2000 and 1999, as there was no significant
development during the periods.
Property, Plant and Equipment
Property, plant and equipment are stated at cost, less accumulated
depreciation and amortization. Such properties are depreciated on a
straight-line basis over their estimated useful lives. Renewals
and betterments are capitalized to property accounts. The cost of
maintenance and repairs is expensed as incurred. The cost of property
retired or otherwise disposed of, and the related accumulated
depreciation or amortization, are removed from the accounts, and any
resulting gain or loss is taken into income.
F-7
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The amount of depreciation and amortization taken for the years 2000,
1999 and 1998 was $278,655, $257,215, and $186,886, respectively.
The range of estimated useful lives for property, plant and equipment
is as follows:
Golf Buildings & Improvements 10-40 Years
Golf Equipment 5-10 Years
Income Properties Buildings & Improvements 40 years
Other Furnishings & Equipment 5-25 years
Long-Lived Assets
The Company has reviewed the recoverability of long-lived assets,
including real estate held for development and sale, property, plant
and equipment and certain identifiable intangibles, for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. There has been no material
impairment of long-lived assets reflected in the consolidated financial
statements for the three years ended December 31, 2000.
Sale of Real Estate
The profit on sales of real estate is accounted for in accordance with
the provisions of the Statement of Financial Accounting Standards No.
66, (SFAS) "Accounting for Sales of Real Estate (SFAS 66)." 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 66. No income was deferred for the three years in the period ended
December 31, 2000.
Unfunded Deferred Compensation Plans
The Company maintains two unfunded deferred compensation plans. One
plan is established for the Board of Directors of the Company, with
the second plan established for the officers and key employees of the
Company. Under the plans, any member of the Board of Directors,
officer or key employee may elect to defer all or a portion of his
compensation. The amount of deferred compensation shall increase
annually by an amount which is equal to interest on the deferred
compensation at the rate of return earned by the Company on
its short-term investments. Compensation credited to a participant
shall be deferred until such participant ceases to be a member of the
Board of Directors, officer or key employee, at which time the amounts
accumulated shall be distributed in the manner elected. The plans are
nonqualified plans as defined by the Internal Revenue Service. The
amount of deferred compensation reflected in accrued liabilities on
the consolidated balance sheets at December 31, 2000 and 1999 were
$3,898,787 and $3,591,613, respectively.
Pensions
The Company has a funded, non-contributory defined benefit pension plan
covering all eligible full-time employees. The Company's method of
funding and accounting for pension costs is to fund and accrue all
normal costs plus an amount necessary to amortize past service cost
over a period of 30 years. (See Note 9 "Pension Plan").
F-8
Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash, investment
securities, accounts receivables and notes receivable.
Fair Value of Financial Instruments
The carrying amounts of the Company's financial assets and liabilities,
including cash, accounts receivable and accounts payable at December
31, 2000 and 1999, approximate fair value because of the short
maturity of these instruments. The carrying amount of the Company's
notes receivable and notes payable approximates fair value at December
31, 2000 and 1999, since the notes are at floating rates or fixed
rates which approximate current market rates for notes with similar
risks and maturities.
Reclassifications
Certain reclassifications were made to the 1999 accompanying
consolidated financial statements to conform to the 2000 presentation.
NOTE 2 DISCONTINUED CITRUS OPERATIONS
On December 28, 1998, the Company entered into an agreement for the
sale of its citrus operations. The transaction closed on April 7,
1999. The results of the citrus operations have been reported
separately as discontinued operations in the Consolidated Statements
of Income. Summary financial information of the citrus operations
is as follows:
Year Ended December 31,
-----------------------
2000 1999 1998
-------- ---------- ----------
Revenues from Discontinued
Citrus Operations -- $ 5,393,171 $11,726,251
======== ========== ==========
Income from Discontinued Citrus
Operations Before Tax -- $ 2,206,440 $ 1,930,247
Income Tax Expense from Discontinued
Citrus Operations -- ( 830,283) ( 726,352)
Gain on Sale of Citrus Operations
(Net of Income Tax of $4,721,536) -- 8,047,576 --
-------- --------- ----------
Net Income from Discontinued
Citrus Operations -- $ 9,423,733 $ 1,203,895
======== ========= =========
Following is a summary of significant accounting policies related to
the citrus operations.
F-9
NOTE 2 DISCONTINUED CITRUS OPERATIONS (CONTINUED)
Until the sale of the citrus operations in April 1999,the Company
harvested and sold both fresh and to-be-processed citrus from
its bearing groves, all of which were located in Highlands County,
Florid. Fresh fruit sales were made by the Company through the Company
owned packing plant to wholesale produce distributors and retail
grocery chains primarily in the Eastern and Midwestern regions of the
United States and Canada. Revenues and related costs of sales were
recognized at time of shipment. The to-be-processed fruit was sent to
Citrus World, Inc. (Citrus World), an agricultural cooperative owned by
the Company and twelve other growers. The cooperative processed the
fruit and marketed it under several names on a regional and national
basis. Citrus World pooled its own fruit with the fruit purchased from
the Company and other citrus growers, processed the pooled fruit and
sold the products produced.
Each participant in the pool, including Citrus World, shared ratably
in the proceeds from the sale of products, net of Citrus World's actual
processing and marketing costs, plus a per-unit handling fee. Citrus
World made periodic payments to all participants based on their pro
rata share of net sales proceeds and made final payment after all the
products in the pool had been sold. The Company recorded estimated
revenues at the time of delivery of the fruit to Citrus World and
finalized revenues after all the products in the pool had been sold.
During the years 1999 and 1998, the Company's estimated pro rata share
of net sales proceeds under the above pooling agreement amounted to
$1,217,604 and $4,321,531, respectively.
Direct and allocated indirect costs incurred in connection with the
production of crops were capitalized into cost of fruit on trees. As
the crop was harvested and sold, the related costs were charged to
production expense, pro-rata based on the boxes harvested and sold
to the estimated total boxes expected to be harvested and sold.
The cost of fruit on trees was carried at the lower of cost or market.
NOTE 3 INVESTMENT SECURITIES
The Company accounts for investment securities under Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities (SFAS 115)." This standard
requires classification of the investment portfolio into three
categories: held to maturity, trading, and available for sale. The
Company classifies as held to maturity those securities which the
Company has the intent and ability to hold through their stated
maturity date. Investment securities which are classified as held to
maturity are carried at cost, adjusted for amortization of premiums and
accretion of discounts. Gains and losses are determined
using the specific indentification method. Investment securities
as of December 31, 2000 and 1999 are as follows:
F-10
NOTE 3 INVESTMENT SECURITIES (CONTINUED)
2000 1999
---------- -----------
Investments Held to Maturity
----------------------------
Debt Securities Issued by States
and Political Subdivisions of States $5,590,047 $ 9,875,329
Corporate Debt Securities 526,169 4,118,141
Preferred Stocks 2,052,081 2,665,732
Mortgage-Backed Securities 9,889 30,236
--------- ----------
Total Investments Held to Maturity $8,178,186 $16,689,438
--------- ----------
The contractual maturities of investment securities held to maturity
are as follows:
Maturity Date Amount
---------------- ---------
Within 1 year $3,978,752
1-5 Years 1,511,702
6-10 Years 1,450,296
After 10 Years 1,237,436
---------
$8,178,186
=========
F-11
NOTE 4 INCOME TAXES
The Company accounts for income taxes under SFAS No. 109, "Accounting
for Income Taxes."
The provision for income taxes is summarized as follows:
2000 1999 1998
---- ---- ----
Current Deferred Current Deferred Current Deferred
-------- --------- --------- -------- ------- --------
Federal $(609,756) $2,921,385 $2,258,051 $496,686 $134,271 $(122,538)
State 154,813 489,906 415,987 90,222 (20,832) 28,055
-------- --------- --------- ------- ------- -------
Total $(454,943) $3,411,291 $2,674,038 $586,908 $113,439 $( 94,483)
======== ========= ========= ======= ======= =======
Deferred income taxes have been provided to reflect temporary
differences that represent the cumulative difference between taxable or
deductible amounts recorded in the financial statements and in the tax
returns. The sources of these differences and the related deferred
provision (credit) and deferred income tax assets (liabilities) are
summarized as follows:
Provision (Credit) Deferred Taxes
--------------------------------- -----------------------
2000 1999 1998 2000 1999
--------- ------- -------- --------- --------
Depreciation $ 54,166 $(123,690) $ 66,778 $( 136,218) $( 82,052)
Sales of Real
Estate 5,051,395 ( 1,379) ( 103,981) (4,634,012) 417,383
Deferred
Compensation ( 118,493) (198,122) ( 179,984) 1,503,957 1,385,464
Basis Difference in
Joint Venture ( 61,775) ( 25,288) 79,707 1,254,020 1,192,245
Revolving Fund
Certificates 5,449 ( 58,231) ( 13,798) 404,825 410,274
Charitable
Contributions
Carryforward 1,772,841 527,115 700,043 115,725 1,888,566
Other ( 36,686) 413,625 ( 34,418) ( 82,782) ( 119,468)
Less-Valuation
Allowance (3,255,606) 52,878 ( 608,830) ( 596,953) (3,852,559)
--------- ------- -------- --------- ---------
$3,411,291 $ 586,908 $( 94,483)$(2,171,438) $1,239,853
========= ======= ======== ========= =========
F-12
NOTE 4 INCOME TAXES (CONTINUED)
Following is a reconciliation of the income tax computed at the federal
statutory rate of 35 percent for 2000 and 1999, and 34 percent for 1998.
Calendar Year
-----------------------------------
2000 1999 1998
--------- --------- ---------
Income Tax Computed at Federal
Statutory Rate $4,135,656 $3,366,967 $ 40,520
Increase (Decrease) Resulting from:
State Income Tax, Net of Federal
Income Tax Benefit 419,067 342,035 4,768
Tax Exempt Interest Income ( 190,474) (274,687) ( 150,461)
Adjustment to Valuation Allowance (1,375,000) (155,000) 120,000
Other Reconciling Items ( 32,901) ( 18,369) 4,129
--------- --------- ---------
Provision for Income Taxes $2,956,348 $3,260,946 $ 18,956
========= ========= =========
During 2000, certain tax issues under examination with tax authorities
were resolved. The resolution of these issues resulted in a $1,500,000
reduction in the valuation allowances associated with deferred income
taxes.
NOTE 5 NOTES RECEIVABLE
Notes Receivable consisted of the following:
December 31,
-------------------------
2000 1999
----------- ----------
Mortgage Notes Receivable
Various notes with interest rates ranging
from 0% to 10.5% with payments due from 2001
through 2009. Collateralized by real
estate mortgages held by the Company $11,126,249 $6,669,211
Other Notes Receivable
Interest at prime rate, receivable in
monthly installments of principal and
interest to amortize the original note
over a period of 15 years, due January
2004 76,228 96,543
Payable in three annual installments
of $200,000 through May 2002 400,000 600,000
---------- ---------
Total Notes Receivable $11,602,477 $7,365,754
========== =========
The prime rate of interest was 9.50% and 8.50% at
December 31, 2000 and 1999, respectively.
F-13
NOTE 5 NOTES RECEIVABLE (CONTINUED)
The required annual principal receipts are as follows:
Year ending December 31, Amount
-----------
2001 $ 5,887,589
2002 1,327,641
2003 2,138,130
2004 89,883
2005 92,767
2006 and Thereafter 2,066,467
----------
$11,602,477
==========
NOTE 6 REAL ESTATE HELD FOR DEVELOPMENT AND SALE
Real estate held for development and sale as of December 31, 2000 and
1999 is summarized as follows:
December 31,
---------------------------
2000 1999
--------- ----------
Undeveloped Land $ 89,253 $ 844,523
Land and Land Development 9,581,357 10,683,285
Completed Houses 97,025 97,025
--------- ----------
$9,767,635 $11,624,833
========= ==========
F-14
NOTE 7 NOTES PAYABLE
Notes Payable consisted of the following:
December 31,
--------------------------
2000 1999
--------- ----------
Mortgage Notes Payable
Mortgage notes payable are collateralized
by real estate mortgages held by the
lender. As of December 31, 2000 and 1999,
mortgage notes payable consisted of the
following:
Payments of $266,783, including interest
at 8.8% payable quarterly through
April 2002; principal balance due
July 2002 $8,299,674 $ 8,618,697
Interest payable quarterly at 10%,
principal and outstanding interest
due October 2005 1,200,000 1,200,000
Industrial Revenue Bonds
Industrial revenue bonds payable are
collateralized by real estate.
Interest at 80.65% of prime rate,
payable in monthly installments of
principal and interest to amortize
the original debt over a period
of 18 years, due January 2004 346,153 452,140
Line of Credit
A line of credit totaling $7,000,000
payable on demand, with interest at
the lower of prime rate minus .75% or
the LIBOR Market Index rate plus 1.5% -- --
--------- ----------
$9,845,827 $10,270,837
========= ==========
F-15
NOTE 7 NOTES PAYABLE (CONTINUED)
The required annual principal payments on notes payable are as
follows:
Year Ending December 31, Amount
------------------------ ----------
2001 $ 445,199
2002 8,065,999
2003 123,854
2004 10,775
2005 1,200,000
----------
$ 9,845,827
==========
Interest expense was $867,134, $901,988, $1,070,737 for 2000, 1999,
and 1998, respectively. Interest of $159,649 and $59,058 was
capitalized to property, plant and equipment for the years 2000 and
1999, respectively.
NOTE 8 PENSION PLAN
The Company maintains a defined benefit plan for all employees who
have attained the age of 21 and completed one year of service. The
pension benefits are based primarily on years of service and the
average compensation for the highest five years during the final 10
years of employment. The benefit formula generally provides for a
life annuity benefit. During 1998 the Company adopted SFAS
No. 132 "Employer's Disclosures About Pension and Other
Post-Retirement Benefits."
Due to the sale of the citrus operations, the Company recognized a
curtailment and settlement gain during 1999. Consequently, income
from discontinued citrus operations includes a gain of $636,724,
resulting from the settlement and curtailment.
The Company's net periodic pension cost included the following
components:
December 31,
-----------------------------------
2000 1999 1998
-------- ------- -------
Service Cost $ 169,060 $257,773 $251,669
Interest Cost on Projected Benefit
Obligation 284,442 329,624 315,598
Actual Return on Plan Assets (409,113) (197,462) (581,457)
Net Amortization ( 18,031) (268,759) 133,627
Accelerated Recognition of
Unrecognized net gain under FAS 88 -- (117,020) --
-------- ------- -------
Net Periodic Pension Cost $ 26,358 $ 4,156 $119,437
======== ======= =======
F-16
NOTE 8 PENSION PLAN (CONTINUED)
The change in benefit obligation is as follows:
December 31,
-----------------------
2000 1999
--------- ---------
Benefit Obligation at Beginning of Year $3,792,902 $4,784,088
Service Cost 169,060 166,538
Interest Cost 284,442 290,367
Actuarial Loss 369,057 10,219
Benefits Paid ( 231,068) ( 545,320)
Curtailment and Settlement ( 186,779) ( 912,990)
--------- ---------
Benefit Obligation at End of Year $4,197,614 $3,792,902
========= =========
The change in plan assets is as follows:
Fair Value of Plan Assets at Beginning of
Year $4,754,047 $5,101,905
Actual Return on Plan Assets 409,113 197,462
Curtailment and Settlement ( 193,490) ( 304,176)
Plan Expenses Paid ( 83,986) ( 97,394)
Benefits Paid ( 147,082) ( 143,750)
-------- ---------
Fair Value of Plan Assets at End of Year $4,738,602 $4,754,047
========= =========
The accrued pension liability consists
of the following:
Plan Assets In Excess of
Projected Benefit Obligation $ 540,988 $ 961,145
Unrecognized Prior Service Cost 3,585 4,112
Unrecognized Net Gain ( 160,397) ( 546,478)
Unrecognized Transition Asset ( 82,878) ( 95,078)
-------- --------
Prepaid Pension Liability $ 301,298 $ 323,701
======== ========
The actuarial assumptions made to determine the projected benefit obligation
and the fair value of plan assets are as follows:
December 31,
------------------
2000 1999
----- ----
Weighted Average Discount Rate 7.0% 7.0%
Weighted Average Asset Rate of Return 9.0% 9.0%
Compensation Scale 5.0% 5.0%
F-17
NOTE 9 POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS
The Company sponsors two defined benefit postretirement plans of
certain health care and life insurance benefits for eligible retired
employees. All full-time employees become eligible to receive these
benefits if they retire after reaching age 55 with 20 or more years of
service. The postretirement health care plan is contributory, with
retiree contributions adjusted annually; the life insurance plan is
non-contributory up to $5,000 of coverage. The accounting for the
health care plan reflects caps on the amount of annual
benefit to be paid to retirees as stipulated by the plan. The Company
pays for the plan as costs are incurred.
The Company recognizes postretirement expenses in accordance with
adopted SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" (SFAS 106), which requires that expected
costs of postretirement benefits be charged to expense during the
years the employees render service. The Company elected to amortize
the unfunded obligation measured at adoption of SFAS 106 over a
period of 20 years. The effect of this amortization expense
recognized in 2000, 1999 and 1998 was $67,781, $70,160 and
$98,532, respectively. The accrued post retirement benefit cost
reflected in the consolidated balance sheet at December 31, 2000 and
1999 was $147,097 and $154,283, respectively.
NOTE 10 STOCK OPTION PLAN
The Company maintains a stock option plan (the Plan) pursuant to which
530,000 shares of the Company's common stock may be issued. 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) nonqualified 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 nonqualified 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 all or
a portion of the spread between the exercise price and the fair market
value of the underlying share at the time of exercise.
The Company accounts for the Plan under Accounting Principles Board
Opinion No. 25. Had compensation cost for the Plan been determined
consistent with SFAS Statement No. 123,"Accounting for Stock Based
Compensation", the Company's net income and earnings per share would
not have been materially different than reported.
On September 24, 1999, Baker, Fentress & Company distributed its 79%
ownership in the Company, resulting in a change in control and thus
vesting of all outstanding options (Note 13).
The stock option plan expired on April 26, 2000, and no new options
can be issued.
F-18
NOTE 10 STOCK OPTION PLANS (CONTINUED)
A summary of the status of the Company's stock option plan for the
three years ended December 31, 2000 and changes during the years then
ended is as follows:
2000 1999 1998
--------------- --------------- ---------------
Wtd Avg Wtd Avg Wtd Avg
Shares Ex Price Shares Ex Price Shares Ex Price
------- -------- ------ -------- ------- --------
Outstanding at beginning
of year 220,000 $15.95 196,800 $15.91 148,800 $15.36
Granted -- 48,000 $14.75 48,000 $17.62
Exercised -- ( 22,400) $13.17 --
Expired -- ( 2,400) $14.04 --
------ ------ -------
Outstanding at
end of year 220,000 $15.95 220,000 $15.95 196,800 $15.91
======= ======= =======
Exercisable at
end of year 220,000 $15.95 220,000 $15.95 108,480 $15.07
======= ======= =======
Weighted average fair value
options granted during
the year -- $4.63 $5.58
======= ======= =======
Of the 220,000 options outstanding at December 31, 2000, 76,000 have
exercise prices between $12.12 and $17.15 with a weighted average
exercise price of $15.09 and a weighted average contractual life of
4.2 years. The remaining 144,000 options have exercise prices between
$14.75 and $17.62, with a weighted average exercise price of $16.41
and a weighted average contractual life of 7 years. All options
outstanding are exercisable.
F-19
NOTE 11 EARNINGS PER SHARE
Basic earnings per common share were computed by dividing income by
the weighted average number of shares of common stock outstanding
during the year. Diluted earnings per common share were determined
based on the assumption of the conversion of stock options using the
treasury stock method at average cost for the periods.
2000 1999 1998
--------- ---------- ---------
Income Available to Common Shareholders:
Income from Continuing Operations $8,859,811 $ 6,358,959 $ 100,219
Income from Discontinued Citrus Operations -- 9,423,733 1,203,895
--------- ---------- ---------
Net Income $8,859,811 $15,782,692 $1,304,114
========= ========== =========
Weighted Average Shares Outstanding 5,877,047 6,373,490 6,371,833
Common shares Applicable to Stock Options
Using the Treasury Stock Method -- 3,754 11,834
--------- --------- ---------
Total Shares Applicable to Diluted Earnings
Per Share 5,877,047 6,377,244 6,383,667
========= ========= =========
Basic and Diluted Earnings Per Share
Income from Continuing Operations $1.51 $1.00 $0.01
Income from Discontinued Citrus Operations -- $1.48 $0.19
-------- --------- ---------
Net Income $1.51 $2.48 $0.20
======== ========= =========
NOTE 12 COMMITMENTS AND CONTINGENCIES
The Company leases certain equipment, land and improvements under
operating leases.
Minimum future rental payments under non-cancelable operating leases
having remaining terms in excess of one year as of December 31,
2000, are summarized as follows:
Year Ending December 31, Amounts
--------
2001 $ 317,980
2002 305,139
2003 313,729
2004 146,083
2005 111,396
2006 and Thereafter 6,450,000
---------
$7,644,327
=========
F-20
NOTE 12 COMMITMENTS AND CONTINGENCIES (CONTINUED)
Rental expense under all operating leases amounted to $561,737,
$357,469,and $400,053 for the years ended December 31, 2000, 1999
and 1998, respectively.
Additionally, the Company, as lessor, leases certain land, buildings
and improvements under operating leases.
Minimum future rental receipts under non-cancelable operating leases
having remaining terms in excess of one year as of December 31, 2000,
are summarized as follows:
Year Ending December 31, Amounts
---------
2001 $ 207,597
2002 204,303
2003 202,278
2004 202,278
2005 202,278
2006 and Thereafter 2,312,096
---------
$3,330,830
=========
Rental income under all operating leases amounted to $247,531,
$164,692 and $370,916 for the years ended December 31, 2000, 1999,
and 1998, respectively.
NOTE 13 RELATED PARTIES
Baker, Fentress & Company, a publicly owned, closed-end investment
company, owned approximately 79 percent of the Company's outstanding
common stock at December 31, 1998. On September 24, 1999, Baker,
Fentress & Company distributed its ownership in the Company to its
shareholders.
The Company owns non-voting stock, in the aggregate amount of
$1,049,447, in Citrus World. This non-voting stock is considered to
have no value for financial statement purposes until redeemed.
(See Note 2 "Discontinued Citrus Operations").
NOTE 14 SUBSEQUENT EVENTS
On January 11, 2001, the Company purchased two income producing
properties at prices totaling $8,725,000. The properties are a
28,000 square foot retail building located in Daytona Beach, Florida
with the second site consisting of an 18,150 square foot retail
building located in Lakeland, Florida. Both buildings are occupied
by Barnes & Noble as the sole tenant under long-term triple net
leases. The purchases were made with cash generated from year end
2000 real estate closings and escrowed for these transactions.
F-21
QUARTERLY FINANCIAL DATA (Unaudited)
(In thousands except per share amounts)
THREE MONTHS ENDED
March 31, June 30, September 30, December 31,
-------------------- -------------------- ------------------- ---------------------
2000 1999 2000 1999 2000 1999 2000 1999
--------- -------- -------- -------- -------- -------- --------- --------
Income:
Real Estate Operations:
Sales and Other Income $1,497,678 $1,287,026 $1,304,720 $5,992,136 $2,882,689 $6,381,248 $14,175,416 $ 3,469,469
Costs and Other Expenses (1,285,785)(1,142,128) (1,509,951) (1,667,480)(1,425,888)(4,517,593) (3,823,454)( 1,272,984)
--------- --------- --------- --------- --------- --------- ---------- ---------
211,893 144,898 ( 205,231) 4,324,656 1,456,801 1,863,655 10,351,962 2,196,485
--------- --------- --------- --------- --------- --------- ---------- ---------
Profit on Sales of
Undeveloped Real
Estate Interests 82,527 3,500 2,899 2,028,338 14,750 67,476 1,278,742 16,454
--------- ------- --------- --------- --------- --------- ---------- ---------
Interest and Other
Income 443,539 197,010 404,230 407,101 423,419 574,373 715,420 675,324
--------- ------- --------- --------- --------- --------- ---------- ---------
737,959 345,408 201,898 6,760,095 1,894,970 2,505,504 12,346,124 2,888,263
General and Administrative
Expenses (1,008,798) (990,206) ( 914,638) ( 878,483) ( 876,533) ( 868,726) (564,823) ( 141,950)
--------- ------- -------- ------- ------- -------- -------- ---------
Income (Loss) From Continuing
Operations Before
Income Taxes ( 270,839) (644,798) ( 712,740) 5,881,612 1,018,437 1,636,778 11,781,301 2,746,313
Income Taxes 100,003 250,575 263,689 (2,222,817) 1,124,811 ( 491,463) (4,444,851) ( 797,241)
------- ------- -------- --------- --------- --------- ---------- ---------
Net Income (Loss) From
Continuing Operations ( 170,836) ( 394,223) ( 449,051) 3,658,795 2,143,248 1,145,315 7,336,450 1,949,072
Income (Loss) From Discontinued
Citrus Operations -- 1,250,597 -- 7,859,660 -- ( 41,130) -- 354,606
-------- --------- --------- ---------- --------- --------- --------- ---------
Net Income (Loss) $( 170,836)$ 856,374 $( 449,051)$11,518,455 $2,143,248 $1,104,185 $7,336,450 $2,303,678
======== ========= ========= ========== ========= ========= ========= =========
Per Share Information:
Basic and Diluted
Income (Loss) From
Continuing Operations $(0.03) $(0.06) $(0.07) $0.57 $0.37 $ 0.19 $1.24 $0.30
Income (Loss) From Discontinued
Citrus Operations -- $ 0.19 -- $1.24 -- $(0.01) -- $0.06
---- ---- ---- ---- ---- ---- ---- ----
Net Income (Loss) $(0.03) $ 0.13 $(0.07) $1.81 $0.37 $ 0.18 $1.24 $0.36
==== ==== ==== ==== ==== ==== ==== ====
F-22