CONSOLIDATED TOMOKA LAND CO - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
___ OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

___ TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___

Commission file number 0-5556

CONSOLIDATED-TOMOKA LAND CO.

(Exact name of registrant as specified in its charter)

Florida 59-0483700
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1530 Cornerstone Blvd., Suite 100
Daytona Beach, Florida 32117
(Address of principal executive offices) (Zip Code)

(386) 274-2202
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90 days.

Yes X No
----- -----
Indicate by check mark whether the registrant is an accelerated filer
(as defined by rule 12b-2 of the Exchange Act).

Yes X No
------ ------

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

Class of Common Stock Outstanding
Aug 1, 2004

$1.00 par value 5,636,936

1

CONSOLIDATED-TOMOKA LAND CO.

INDEX

Page No.
--------

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
June 30, 2004 and December 31, 2003 3

Consolidated Condensed Statements of Income -
Three Months and Six Months Ended
June 30, 2004 and 2003 4

Consolidated Statement of Shareholders' Equity -
Six Months Ended June 30, 2004 5

Consolidated Condensed Statements of Cash Flows -
Six Months Ended June 30, 2004 and 2003 6

Notes to Consolidated Condensed Financial Statements 7-10

Item 2. Management's Discussion & Analysis of
Financial Condition and Results of Operations 11-17

Item 3. Quantitative and Qualitative Disclosures About
Market Risk 17

Item 4. Controls and Procedures 17

PART II -- OTHER INFORMATION 18

SIGNATURES 19

2

CONSOLIDATED BALANCE SHEETS

(Unaudited)
June 30, December 31,
2004 2003
--------------------------

ASSETS
Cash $ 975,880 $ 1,026,210
Restricted Cash -- 19,359,098
Investment Securities 3,599,191 3,891,697
Notes Receivable 6,617,918 9,150,217
Real Estate Held for Development and Sale 12,524,418 11,659,581
Intangible Assets 2,805,045 1,270,307
Other Assets 2,299,066 2,665,653
---------- ----------
28,821,518 49,022,763
---------- ----------
Property, Plant and Equipment:
Land, Timber and Subsurface Interests 1,991,378 1,984,529
Golf Buildings, Improvements and Equipment 11,318,409 11,277,853
Income Properties Land, Buildings and Improvements 58,708,711 38,442,481
Other Furnishings and Equipment 904,660 954,575
---------- ----------
Total Property, Plant and Equipment 72,923,158 52,659,438
Less Accumulated Depreciation and Amortization (4,143,063) (3,776,223)
---------- ----------
Net - Property, Plant and Equipment 68,780,095 48,883,215
---------- ----------
TOTAL ASSETS $97,601,613 $97,905,978
========== ==========
LIABILITIES
Accounts Payable $ 322,306 $ 105,922
Accrued Liabilities 3,768,654 3,510,824
Income Taxes Payable 149,434 25,868
Deferred Income Taxes 17,551,831 17,344,499
Deferred Profit 1,131,135 1,131,135
Notes Payable 8,820,792 10,129,951
---------- ----------
TOTAL LIABILITIES 31,744,152 32,248,199
---------- ----------
SHAREHOLDERS' EQUITY
Common Stock 5,635,894 5,623,442
Additional Paid in Capital 1,842,425 1,514,339
Retained Earnings 58,814,087 59,129,692
Accumulated Other Comprehensive Loss (434,945) (609,694)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 65,857,461 65,657,779
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $97,601,613 $97,905,978
========== ==========

3

CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
--------------------------- -----------------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
--------------------------- -----------------------

$ $ $ $
INCOME:

Real Estate Operations:
Real Estate Sales
Sales and Other Income 1,951,488 720,303 2,988,491 4,038,772
Costs and Expenses (813,394) (574,176) (1,532,551) (1,237,037)
--------- --------- ---------- ----------
1,138,094 146,127 1,455,940 2,801,735
--------- --------- ---------- ----------
Income Properties
Leasing Revenues and Other Income 1,210,446 826,385 2,110,460 1,542,122
Costs and Other Expenses (213,241) (147,161) (385,721) (277,631)
--------- --------- ---------- ----------
997,205 679,224 1,724,739 1,264,491
--------- --------- ---------- ----------
Golf Operations
Sales and Other Income 1,232,714 1,173,970 2,624,516 2,446,688
Costs and Other Expenses (1,491,551)(1,471,569) (2,903,526) (2,833,357)
--------- --------- ---------- ----------
(258,837) (297,599) (279,010) (386,669)
--------- --------- ---------- ----------
Total Real Estate Operations 1,876,462 527,752 2,901,669 3,679,557

Profit on Sales of Other
Real Estate Interests 17,225 164,039 53,552 523,151
--------- --------- ---------- ----------
Interest and Other Income 162,328 228,583 373,327 485,590
--------- --------- ---------- ----------
Operating Income 2,056,015 920,374 3,328,548 4,688,298

General and Administrative Expenses (1,262,187)(1,291,073) (2,747,399) (2,268,607)
--------- --------- ---------- ----------

Income (Loss) Before Income Taxes 793,828 (370,699) 581,149 2,419,691
Income Taxes (302,795) 138,643 (221,155) (919,048)
--------- --------- ---------- ----------
Net Income (Loss) 491,033 (232,056) 359,994 1,500,643
========= ========= ========== ==========
PER SHARE INFORMATION:
Basic and Diluted
Net Income (Loss) $0.08 ($0.04) $0.06 $0.27
========= ========= ========== ==========
Dividends $0.06 $0.05 $0.12 $0.10
========= ========= ========== ==========

4

CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)

Accumulated
Additional Other Total
Common Paid-In Retained Comprehensive Shareholders' Comprehensive
Stock Capital Earnings Loss Equity Income
--------- -------- ---------- ---------- ---------- -----------

Balance,
December 31, 2003 $5,623,442 $1,514,339 $59,129,692 ($609,694) $65,657,779

Net Income 359,994 359,994 359,994

Other Comprehensive Income:
Cash Flow Hedging
Derivative, Net of Tax 174,749 174,749 174,749
---------
Comprehensive Income $534,743
=========
Stock Options 12,452 328,086 340,538

Cash Dividends
($.12 per share) (675,599) (675,599)

--------- --------- ---------- ---------- -----------
Balance,
June 30, 2004 $5,635,894 $1,842,425 $58,814,087 ($434,945) $65,857,461
========= ========= ========== ========== ===========

5

CONSOLIDATED-TOMOKA LAND CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)
Six Months Ended
--------------------------
June 30, June 30,
2004 2003
---------- -----------

CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 359,994 $ 1,500,643

Adjustments to Reconcile Net Income to Net Cash
Provided By Operating Activities:
Depreciation and Amortization 615,947 550,178
Loss on Sale of Property, Plant and Equipment 6,045 --
Non Cash Compensation 328,086 354,583

Decrease (Increase) in Assets:
Notes Receivable 2,532,299 824,050
Real Estate Held for Development (864,837) (2,268,327)
Refundable Income Taxes - 143,939
Other Assets 366,587 500,235

Increase (Decrease) in Liabilities:
Accounts Payable 216,384 (109,923)
Accrued Liabilities 432,579 611,465
Income Taxes Payable 123,566 --
Deferred Income Taxes 207,332 692,351
--------- ---------
Net Cash Provided By Operating Activities 4,323,982 2,799,194
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of Property, Plant, and Equipment (20,464,529) (12,988,703)
Intangible Assets (1,589,081) --
Decrease in Restricted Cash for Acquisitions
Through the Like-Kind Exchange Process 19,359,098 9,596,366
Net Proceeds from Calls or Maturities of
Investment Securities 292,506 361,907
---------- ----------
Net Cash Used In Investing Activities (2,402,006) (3,030,430)
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from Notes Payable 1,349,000 2,535,000
Payments on Notes Payable (2,658,159) (2,640,101)
Cash Proceeds from Exercise of Stock Options 12,452 3,324
Dividends Paid (675,599) (561,558)
---------- ----------
Net Cash Used in Financing Activities (1,972,306) (663,335)
---------- ----------
Net Decrease In Cash (50,330) (894,571)
Cash, Beginning of Year 1,026,210 1,019,976
---------- ----------
Cash, End of Period $ 975,880 $ 125,405
========== ==========

6

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. Principles of Interim Statements. The unaudited consolidated
condensed financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission.
Certain information and note disclosures, which are normally included
in annual financial statements prepared in accordance with accounting
principles generally accepted in the United States of America, have
been condensed or omitted pursuant to those rules and regulations.
The consolidated condensed financial statements reflect all
adjustments which are, in the opinion of management, necessary to
present fairly the Company's financial position and the results of
operations for the interim periods. The consolidated condensed
format is designed to be read in conjunction with the last
annual report. For further information refer to the
consolidated financial statements and the notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December
31, 2003.

The consolidated condensed financial statements include the
accounts of the Company and its wholly owned subsidiaries.
Inter-company balances and transactions have been eliminated
in consolidation.

2. Common Stock and Earnings Per Share. Basic earnings (loss) per
common share are computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding
during the period. Diluted earnings per common share are determined
based on the assumption of the conversion of stock options at
the beginning of each period using the treasury stock method
at average cost for the periods.

7

2. Common Stock and Earnings Per Common Share (Continued)

Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
---------- ---------- ---------- ---------

Income Available to Common
Shareholders:
Net Income (Loss) $ 491,033 $ (232,056) $ 359,994 $1,500,643
========= ========= ========== ==========
Weighted Average Shares Outstanding 5,635,569 5,615,545 5,632,458 5,616,065

Common Shares Applicable to Stock
Options Using the Treasury Stock Method 59,671 55,566 22,730
--------- --------- ---------- ----------
Total Shares Applicable to Diluted
Earnings Per Share 5,695,240 5,615,545 5,688,024 5,638,795
========= ========= ========== ==========
Basic and Diluted Earnings Per Share:
Net Income (Loss) $0.08 ($0.04) $0.06 $0.27
========= ========= ========== ==========

3. Notes Payable. Notes payable consist of the following:

June 30, 2004
------------------------------
Due Within
Total One Year
------------------------------

$10,000,000 Line of Credit $ -- $ --
Mortgage Notes Payable 8,820,792 211,290
---------- ---------
$ 8,820,792 $ 211,290
========== =========

Payments applicable to reduction of principal amounts will be
required as follows:

Year Ending June 30
------------------------

2005 $ 211,290
2006 1,427,569
2007 245,091
2008 263,488
2009 299,247
2010 & thereafter 6,374,107
----------
$ 8,820,792
==========
In the first six months of 2004 and 2003, interest totaled $346,062
and $354,435 respectively.

8

4. Stock Options.

In December 2002, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure"
(SFAS 148). SFAS 148 provides alternative methods of accounting for
stock-based employee compensation. In addition, SFAS 148 amends the
disclosure requirements of SFAS No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123), to require more prominent and frequent
disclosures in financial statements about the effects of stock-based
compensation. As permitted under SFAS 123 and SFAS 148, the Company
will continue to follow the accounting guidelines pursuant to
Accounting Principles Board Option No. 25,"Accounting for Stock Issued
to Employees" (APB 25), for stock-based compensation and to furnish
the pro forma disclosures as required under SFAS 148. The Company
accounts for its stock-based compensation plans under the recognition
and measurement principles of APB 25, and related interpretations,
requiring that compensation expense be recorded equal to the intrinsic
value of the award at the measurement date.

Had compensation expense for these options been determined in
accordance with SFAS No. 123, the Company's net income (loss) and
income (loss) per share would have been as follows:

9

5. Pension Plan. The Company maintains a defined benefit pension
plan. The pension benefits are based primarily on years of service
and average compensation. The benefit formula provides for a life
annuity benefit.

Following are the components of the Net Period Benefit Cost:

Three Months Ended Six Months Ended
----------------------- -------------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
-------- -------- ------- -------

Service Cost $ 56,988 $ 48,045 $ 113,976 $ 96,090
Interest Cost 77,416 75,164 154,832 150,328
Expected Return on
Plan Assets (111,056) (223,538) (222,112) (447,076)
Net Amortization 3,433 127,580 6,866 255,160
-------- --------- --------- --------
Net Periodic
Benefit Cost $ 26,781 $ 27,251 $ 53,562 $ 54,502
========= ========= ========= ========

As previously disclosed in the Company's financial statements for
the year ended December 31, 2003,the Company expects the plan
to be fully funded for 2004. As a result, no contribution is
anticipated for this period.

6. Business Segment Data. Other than the acquisition of income
properties at a cost approximating $21,800,000, of which $19.3
million of restricted cash (included in General Corporate and Other
Assets at December 31, 2003) was utilized, and the revenues and
income as herein presented on the Consolidated Condensed
Statements of Income the business segment data has not
materially changed from that presented in the financial
statements dated December 31, 2003.

Depreciation & Amortization totaled $615,947 for the six months ended
June 30, 2004. Depreciation & Amortization from income properties
and golf operations amounted to $364,436 & 206,551, respectively.

10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS.
--------------------------

The Management's Discussion and Analysis of Financial Condition and
Results of Operations is designed to be read in conjunction with the
financial statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations in the last annual
report.

"Safe Harbor"
STATEMENT UNDER THE 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 "believe," "estimate," expect," "intend,"
"anticipate," "will," "could, "may," "should," "plan," "potential,"
predict," "forecast," "project," and similar expressions and
variations thereof identify certain of such forward-looking statements
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, 2004, 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 for the Company's real estate
parcels, golf activities, income properties, timber and other
products; 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
fluctuation 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.

OPERATIONS OVERVIEW

Consolidated-Tomoka Land Co. (the "Company") is primarily engaged in real
estate land sales and development, investment in income property and golf
operations. The Company has substantial land holdings in the Daytona
Beach, Florida area, including its golf operations. The Company has
property available for the entire spectrum of real estate uses. Along
with land sales, selective parcels are developed, primarily for
commercial uses. Over the last two years, sales and development activity
on and around Company owned land has been strong.

11

During the first six months of 2004, the development of Cornerstone
Office Park was completed, with the first office building opened in
January. Development of the Gateway Commerce Center, a 250-acre
industrial, warehouse and distribution park located on the east side of
Interstate 95 in Daytona Beach, has commenced with the completion of the
first phase forecast prior to year end. The first sale within the
development closed in February 2004. Development, by a third party, of
the second phase of Daytona Beach Auto Mall also commenced in the first
quarter of 2004. These development and sales activities, along with
additional activities such as development of a residential community, and
surgical and imaging center along with the relocation of the Halifax
Medical center in future years, on formerly Company-owned lands, tend to
spur additional buyer interest and sales opportunities.

A strong backlog of contracts is in place for closing in 2004 and future
years. Management's priority is to convert this backlog into closings.
As closings occur, the Company intends to reinvest proceeds into income
properties. At June 30, 2004, the Company had an inventory of sixteen
income properties with an approximate value of $61 million. Fourteen
of these properties are located throughout Florida with two properties
located in the Atlanta, Georgia market. Acquisitions of five of these
properties, valued at $21.8 million, closed in the first half of 2004.
As the inventory of these income properties grows management will look
to diversify through other real estate investments as opportunities
arise.

RISKS AND COMPETITION

The real estate business is subject to a number of economic factors
including the impact of rising and falling interest rates, which affect
the ability of purchasers to obtain financing, and population growth,
which impacts supply and demand for new homes, as well as goods and
services; and hence land to meet those needs. Also impacting the
ability to sell land are the availability of roads and utilities,
environmental impacts, density limitations, urban growth boundaries,
and other factors associated with national, regional or local economic
and political conditions. All of these factors have an impact on the
Company's three lines of business and their success. Most directly
impacted is the real estate sales and development business currently
centered in the Daytona Beach market. Pricing levels and changes by
the Company and its immediate competitors can affect sales, although
the Company generally enjoys a competitive edge due to low costs
associated with long time land ownership and a significant ownership
position in the immediate market.

RESULTS OF OPERATIONS

The Three- and Six-Months Ended June 30, 2004
Compared to
The Three- and Six-Months Ended June 30, 2003

Summary of Operating Results

For the quarter ended June 30, 2004, the Company posted a profit of
$491,033, equivalent to $.08 per share. This profit compares to the loss
of $232,056, equivalent to $.04 per share, reported in the prior year's
same period. The upturn in profitability was primarily the result of
higher land sales volume and increased profits from income properties due
to the addition of five new properties during the first six months of
2004.

12

Lower land sales volume, offset by increased profitability from income
properties, resulted in a 76% downturn in profits for the first half of
2004. For the first six months of 2004, profits of $359,994, equivalent
to $.06 per share, were realized, compared to profits of $1,500,643,
equivalent to $.27 per share, recognized in 2003's same period. Real
estate sales in 2003's first half included the sale of 365 acres of land
for a residential development.

The Company also uses Earnings Before Depreciation, Amortization and
Deferred Taxes ("EBDDT") as a performance measure. The Company's
strategy of investing in income properties through the deferred tax like-
kind exchange process produces significant amounts of depreciation and
deferred taxes. This measure tracks results in this area.

Following is the calculation of EBDDT:

Quarter Ended
-----------------------------------
June 30, June 30,
2004 2003
-----------------------------------

Net Income (Loss) $ 491,033 $ (232,056)
Add Back:
Depreciation and Amortization 330,488 257,822
Deferred Taxes 627,622 (267,911)
---------- ----------
Earnings (Loss)Before Depreciation, Amortization
and Deferred Taxes $ 1,449,143 $ (242,145)
========== ==========

Six Months Ended
----------------------------------
June 30, June 30,
2004 2003
----------------------------------

Net Income $ 359,994 $ 1,500,643
Add Back:
Depreciation and Amortization 615,947 550,178
Deferred Taxes 207,332 692,351
----------- ---------
Earnings Before Depreciation, Amortization
and Deferred Taxes $ 1,183,273 $ 2,743,172
=========== =========

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.

13

EBDDT is calculated by adding depreciation, amortization and deferred
income taxes to net income(loss) as they represent non-cash charges.
EBDDT rose during the second quarter of 2004 when compared to 2003's same
period not only due to improved earnings but also due to the increased
add back of depreciation, with the addition of properties during the year
and higher deferred income taxes with the deferral of gains, and related
income taxes via like-kind exchange transactions.

Year-to-date through June 30, 2004, EBDDT compared to 2003's same period
was reduced on lower earnings along with the reduced add back of deferred
income taxes. The add back for deferred income taxes was not as great,
as gains on land sales deferred through the like-kind exchange process
were at lower levels in 2004. In addition, the collection of a note
receivable, which originally had been treated as an installment sale for
tax purposes, triggered the reversal of a deferred tax item in 2004.

Real Estate Operations
- ----------------------
Real Estate Sales
- -----------------
Profits from real estate sales for the second quarter of 2004 totaled
$1,138,094 on revenues of $1,951,488. These profits and revenues were
recognized on the sale of 11 acres of land during the period. During
2003's second quarter the sale of 6 acres of land produced profits of
$146,127 on revenues totaling $720,303.

For the first six months of 2004, revenues and profits from real estate
sales posted declines of 26% and 48%, respectively. The sale of 19 acres
of property produced profits of $1,455,940 on revenues totaling
$2,988,491 for 2004's six-month period. During 2003's same period,
profits of $2,801,735 were recognized on revenues totaling $4,038,772
from the sale of 380 acres of land. Land sales during 2003 included he
sale of 365 acres of the Company's western Daytona Beach land holdings
to a single buyer to be used for residential development.

Income Properties
- -----------------
Revenues from income properties grew 46% in the second quarter of 2004
when compared to 2003's same period. This revenue growth, to $1,210,446,
along with the corresponding 47% growth in profits to $997,205, was due
to the addition of five new properties during the first half of 2004.
Income properties costs and expenses rose 45% during the period on the
additional depreciation associated with the new properties. Revenues and
profits generated in 2003's second quarter totaled $826,385 and $679,224,
respectively.

For the first six months of 2004, income properties produced revenues of
$2,110,460 and generated profits amounting to $1,724,739. The additional
income properties again accounted for increases over the prior year's
first half results, as revenues increased 37% and net profits grew 36%
over 2003's first six month results. Profits of $1,264,491 were realized
on revenues totaling $1,542,122 in 2003's first half.

14

Golf Operations
- -----------------
Bottom line results from golf operations improved 13% in the second
quarter of 2004 when compared to 2003's same period, with a loss of
$258,837 posted. This improvement was realized on a 5% growth in
revenues, to $1,232,714, while costs and expenses rose only 1%. The
revenue growth was attributable to a 6% gain in revenues from golf
activities coupled with a 3% increase in food and beverage revenues. The
number of rounds played during the quarter rose 14%, but was somewhat
offset by a 7% decline in average green fee per round. A loss of $297,599
was recorded in 2003's second period on revenues totaling $1,173,970.

Golf operations realized a $279,010 loss for the first six months of
2004. This loss represents a 28% reduction from the loss of $386,669
generated in 2003's first half. Revenues amounting to $2,624,516 were
produced in the first half of 2004 and represent a 7% rise over 2003's
same period revenues totaling $2,446,688. Both golf and food and
beverage activities contributed to the revenue gain with golf increasing
9% and food and beverage rising 4%. Year-to-date through June the number
of golf rounds played increased 9% over the prior year while the average
green fee per round decreased 2%. Golf operations costs and expenses
increased 2% over the prior year's first six months on the increased
activity.

General Corporate and Other
- ---------------------------

Profits on the sale of other real estate interests totaled $17,225 and
$53,552 for the second quarter and first six months of 2004,
respectively. These profits were generated on the release of subsurface
interests on 1,079 acres of which 617 were released in the second
quarter. During 2003's first half, profits on the sale of other real
estate interests amounted to $164,039 for the second quarter and $523,151
for the six months. The release of subsurface interests on 5,225 acres
in the second period and 8,175 acres during the first half generated
these profits in 2003.

Interest and other income decreased 29% for the second quarter and 23%
for the six months to $162,328 and $373,327, respectively. These declines
from $228,583 and $485,590 for the corresponding periods of 2003 were the
result of lower interest earned on lower invested funds and lower
interest earned on mortgage notes receivables due to reduced balances.

General and administrative expenses decreased 2% during the second
quarter of 2004, primarily due to lower expenses associated with stock
options, somewhat offset by higher compensation related expenses.

For the first six month of 2004, general and administrative expenses
increased 21% as a rise in the price of the Company's stock, primarily
during the first quarter of the year, caused a significant rise in
expenses associated with stock options and stock appreciation rights.
Also contributing to the increase in general and administrative expenses
were costs related to corporate governance and compensation.

15

Liquidity and Capital Resources
- -------------------------------
At June 30, 2004, the Company had cash and investment securities totaling
$4,575,071. For the first six months of 2004, operating activities
generated cash flow of $4,323,982, with investing activities using
$2,402,006 and financing activities using an additional $1,972,306. Cash
provided from operating activities included the collection of notes
receivable totaling $2,532,299. The purchase of five income properties
at a cost approximating $21.8 million was included in investing
activities. Funds totaling $19,359,098 generated from 2003 closings shown
as restricted cash on the December 31, 2003 balance sheet, along with
funds generated from current year operations, were used to purchase these
properties. A portion of the purchase price was allocated to the value
of leases in place on these properties and is reflected as intangible
assets on the balance sheet. The reduction of outstanding debt by
$1,309,159 and the payment of dividends amounting to $675,599 equivalent
to $.12 per share, were the primary uses of cash from financing
activities.

Capital requirements for the remainder of 2004 approximate $1,000,000.
These expenditures are centered on roads and development on Company lands
east of Interstate 95 in Daytona Beach. The Company declared a $.07 per
share dividend payable on August 31, 2004, a 17% increase over the
previous quarterly dividend. Capital to fund these planned expenditures
will be provided from cash and investment securities on hand, as they
mature, operating activities and existing financing sources currently in
place. The Company had no outstanding balance on its $10.0 million
revolving line of credit at June 30, 2004. In addition to these sources,
the Company has the ability to borrow against its income properties, as
they are currently free of debt. As additional funds become available
through qualified sales, the Company expects to invest in additional
income properties.

Critical Accounting Policies
- ----------------------------
The profit on sales of real estate is accounted for in accordance with
the provisions of SFAS No. 66, "Accounting for Sales of Real Estate."
The Company recognizes revenue from the sale of real estate at the
time the sale is consummated unless the property is sold on a deferred
payment plan and the initial payment does not meet criteria
established under SFAS 66, or the Company retains some form of continuing
involvement with the property. No income was deferred for the first six
months of 2004 or 2003 as sales have met the established criteria.

In accordance with SFAS 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets," the Company has reviewed the recoverability of
long-lived assets, including real estate held for development and sale
and property, plant, and equipment for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset
may or may not be recoverable. There has been no material impairment of
long-lived assets reflected in the consolidated financial statements.

The Company refinanced its debt during 2002, and at that time the Company
entered into an interest rate swap agreement. This swap arrangement
changes the variable-rate cash flow exposure on the debt obligations to
fixed cash flows so that the Company can manage fluctuations in cash
flows resulting from interest rate risk. This swap arrangement
essentially creates the equivalent of fixed-rate debt. The above

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referenced transaction is accounted for under SFAS No. 133, "Accounting
for Derivative Instruments and Certain Hedging Activities" and SFAS No.
138 "Accounting for Certain Derivative Instruments and Certain Hedging
Activity, an Amendment of SFAS 133." The accounting requires the
derivative to be recognized on the balance sheet at its fair value and
the changes in fair value to be accounted for as other comprehensive
income or loss. At June 30, 2004, a liability of $708,089 had been
established on the Company's balance sheet and included in accrued
liabilities. Other comprehensive loss of $434,945 ($708,089 net of
income taxes of $273,144) has also been recorded to date.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------- ---------------------------------------------------------

The principal market risk (i.e., the risk of loss arising from adverse
changes in market rates and prices) to which the Company is exposed is
interest rates. The objective of the Company's asset management
activities is to provide an adequate level of liquidity to fund
operations and capital expansion, while minimizing market risk. The
Company utilizes overnight sweep accounts and short-term investments to
minimize the interest rate risk. The Company does not actively invest or
trade in equity securities. The Company does not believe that its
interest rate risk related to cash equivalents and short-term investment
securities is material due to the nature of the investments.

The Company manages its debt, considering investment opportunities and
risk, tax consequences and overall financial strategies. The Company
is primarily exposed to interest rate risk on its $8,000,000 ($7,620,792
at June 30,2004) long-term mortgage. The borrowing bears a variable rate
of interest based on market rates. Management's objective is to limit
the impact of interest rate changes on earnings and cash flows and to
lower the overall borrowing costs. To achieve this objective the Company
entered into an interest rate swap agreement during the second quarter
of 2002, which effectively fixed the interest rate paid by the Company.

ITEM 4. CONTROLS AND PROCEDURES.
- ---------------------------------
As of the end of the period covered by this report, an evaluation was
carried out under the supervision and with the participation of the
Company's management, including the Chief Executive Officer ("CEO")
and Chief Financial Officer ("CFO"), of the effectiveness of the
Company's disclosure controls and procedures (as defined in Rules 13a-
15(e) or 15d-15(e)). Based on that evaluation, the CEO and CFO have
concluded that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by the
Company in reports that it files or submits under the Securities and
Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange
Commission rules and forms. There were no changes in the Company's
internal control over financial reporting (as defined in Rules 13a-
15(f) or 15d-15(f)) during the second fiscal quarter covered by this
report that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial
reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There are no material pending legal proceedings to which
the Company or its subsidiaries is a party.

Item 2 through 5.

Not Applicable

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

Exhibit 11 - Incorporated by Reference on Page 8
of this 10-Q report.

Exhibit 31.1 - Certification furnished pursuant to
Section 302 of the Sarbanes-Oxley
Act of 2002.

Exhibit 31.2 - Certification furnished pursuant to
Section 302 of Sarbanes-Oxley Act of
2002.

Exhibit 32.1 - Certification pursuant to 18 U.S.C.
Section 1350, as Adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002.

Exhibit 32.2 - Certification pursuant to 18 U.S.C.
Section 1350, as Adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002.

(b) Reports on Form 8-K

On July 15, 2004, a Form 8-K was furnished
reporting under Item 12, "Results of Operations
and Financial Condition," the Company's earning
release for the quarter and six months ended
June 30, 2004.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned there
unto duly authorized.

CONSOLIDATED-TOMOKA LAND CO.
(Registrant)

Date: August 6, 2004 By:/s/ William H. McMunn
----------------------------
William H. McMunn, President
and Chief Executive Officer

Date: August 6, 2004 By:/s/ Bruce W. Teeters
----------------------------
Bruce W. Teeters, Senior
Vice President - Finance
and Treasurer

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