0000898430-95-001576.txt : 19950815 0000898430-95-001576.hdr.sgml : 19950815 ACCESSION NUMBER: 0000898430-95-001576 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALPROP CORP CENTRAL INDEX KEY: 0000016496 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 954044835 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06844 FILM NUMBER: 95562757 BUSINESS ADDRESS: STREET 1: 5456 MCCONNELL AVE STREET 2: STE 245 CITY: LOS ANGELES STATE: CA ZIP: 90066 BUSINESS PHONE: 3123064314 MAIL ADDRESS: STREET 1: 5456 MCCONNELL AVE STREET 2: STE 245 CITY: LOS ANGELES STATE: CA ZIP: 90066 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 (Mark One) [X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1995 or ------------------------------ [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ------------------ ---------------------- Commission File Number 1-6844 ------------ CALPROP CORPORATION (Exact name of registrant as specified in its charter) California 95-4044835 ----------------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5456 McConnell Avenue, Los Angeles, California 90066 -------------------------------------------------- ------------- (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (310) 306-4314 ------------------ Not Applicable (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Number of shares outstanding of each of Registrant's classes of common stock, as of July 31, 1995: Number of Shares Title of Each Class Outstanding ------------------------------ ---------------- Common Stock, $1.00 par value per share 4,819,630 CALPROP CORPORATION ------------------- Part I ------ ITEM I - FINANCIAL INFORMATION ------------------------------ Set forth is the unaudited quarterly report for the quarters ended June 30, 1995 and 1994, for Calprop Corporation. The information set forth reflects all adjustments which were, in the opinion of management, necessary for a fair presentation. 2 CALPROP CORPORATION ------------------- BALANCE SHEETS --------------- ASSETS ------ (Unaudited)
June 30, December 31, 1995 1994 ------------ ------------- Real Estate Development $25,462,722 $22,700,482 Investment in Land 13,413,520 13,396,653 Allowance For Write Down to Net Realizable Value (Note 5) (7,747,146) (7,747,146) ----------- ----------- Net Investment In Land 5,666,374 5,649,507 Total Investment in Real Estate 31,129,096 28,349,989 Other Assets: Cash and cash equivalents 923,921 1,142,834 Prepaid Expenses 18,514 292,602 Deferred Loan Costs -- 458,333 Operating and Personal Properties, Net of Accumulated Depreciation 41,661 50,130 Trust Deeds Receivable, Net 79,110 139,477 ----------- ----------- Total Other Assets 1,063,206 2,083,376 ----------- ----------- Total Assets $32,192,302 $30,433,365 =========== ===========
The accompanying notes are an integral part of these financial statements. 3 CALPROP CORPORATION -------------------- BALANCE SHEETS --------------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ (Unaudited)
June 30, December 31, 1995 1994 ------------- ------------- Trust Deeds and Notes Payable $ 2,693,032 $ 4,774,683 Related Party Notes 8,675,000 5,207,084 ------------ ------------ Total Trust Deeds and Notes Payable 11,368,032 9,981,767 Community Facilities District Special Tax Bonds 2,336,544 2,381,432 Accounts Payable and Accrued Liabilities 1,997,361 2,031,868 Warranty Reserves (Note 7) 179,000 1,499,408 Accrued Dividends Payable on Preferred Stock (Note 6) 695,215 601,078 ------------ ------------ Total Liabilities 16,576,152 16,495,553 Stockholders' Equity Convertible Preferred Stock, No Par Value Authorized 6,000,000 Shares Outstanding-3,571,368 Shares at June 30, 1995 and 3,574,875 Shares at December 31, 1994 (Note 6) 4,571,351 4,575,840 Common Stock, $1 Par Value - Authorized--20,000,000 Shares Outstanding--4,819,630 Shares at June 30, 1995 and 4,813,641 Shares at December 31, 1994 4,819,630 4,813,641 Additional Paid-in Capital 25,902,580 25,902,955 Accumulated Deficit (19,677,411) (21,354,624) ------------ ------------ Total Stockholders' Equity 15,616,150 13,937,812 ------------ ------------ Total Liabilities and Stockholders' Equity $ 32,192,302 $ 30,433,365 ============ ============
The accompanying notes are an integral part of these financial statements. 4 CALPROP CORPORATION ------------------- STATEMENTS OF INCOME --------------------- (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED June 30, June 30, -------------------------- -------------------------- 1995 1994 1995 1994 ----------- ------------ ----------- ------------ Development Operations (Note 1): Real Estate Sales $4,263,810 $4,005,231 $7,741,835 $7,619,758 Cost of Real Estate Sales (Note 7) 3,505,857 4,054,570 6,850,336 7,531,178 ---------- ---------- ---------- ---------- Income (Loss) from Development Operations 757,953 (49,339) 891,499 88,580 Other Income (Note 4) 38,099 556,901 2,239,804 588,385 ---------- ---------- ---------- ---------- Other Expenses: General and Administrative Expenses 576,574 485,833 1,099,174 1,003,442 Investment Property Holding Costs 107,494 -- 107,494 -- Interest Expense 7,184 -- 17,026 9,750 ---------- ---------- ---------- ---------- Total Other Expenses 691,252 485,833 1,223,694 1,013,192 ---------- ---------- ---------- ---------- Income (Loss) Before (Provision) Benefit for Income Taxes 104,800 21,729 1,907,609 (336,227) ---------- ---------- ---------- ---------- Benefit (Provision) for Income Taxes (Note 2) -- -- -- -- ---------- ---------- ---------- ---------- NET Income (Loss) $ 104,800 $ 21,729 $1,907,609 ($336,227) ========== ========== ========== ========== Net (Loss) Per Share (Note 3) Primary (after giving effect to Preferred Stock Dividend) $ 0.00 ($0.02) $0.35 ($0.12) Fully Diluted $0.20
The accompanying notes are an integral part of these financial statements. 5 CALPROP CORPORATION STATEMENT OF CASH FLOWS (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30 ---------------------------- ----------------------------- 1995 1994 1995 1994 ----------- ----------- ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) 104,800 21,729 $ 1,907,609 $ (336,227) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 4,342 10,645 8,469 46,348 Other -- (956) -- (5,331) Change in assets and liabilities (Increase) decrease in investments in land (16,867) (11,172) (16,867) (11,172) (Increase) decrease in prepaid expenses 524,732 170,725 732,421 308,571 (Increase) decrease in assets held by lender -- 17,412 -- 17,412 Increase (Decrease) in accounts payable and accrued liabilities (1,256,633) (257,488) (1,354,916) (679,005) Payments on trust deeds receivable 1,845 289 60,367 1,115 Additions to real estate development in process (6,633,232) (2,903,849) (9,671,842) (5,879,391) Sales of real estate and investments 3,565,122 4,054,571 6,909,601 7,531,178 ----------- ----------- ------------ ----------- Net cash provided by (used in) operating activities (3,705,891) 1,101,906 (1,425,158) 993,498 CASH FLOWS FROM INVESTING ACTIVITIES: (Purchase) Disposals of Real and Personal Property -- 174,744 -- 174,744 ----------- ----------- ------------ ----------- Net cash provided by (used in) investing activities -- 174,744 -- 174,744 CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under construction loans 6,113,752 2,466,162 8,881,051 5,870,582 Payments under construction loans (3,078,905) (3,734,764) (7,494,786) (7,391,023) Payments of Preferred Stock Dividends -- -- (136,257) -- Paydown CFD liability (44,888) -- (44,888) -- Proceeds from issuance of Common Stock 1,125 -- 1,125 -- ----------- ----------- ------------ ----------- Net cash provided by (used in) financing activities 2,991,084 (1,268,602) 1,206,245 (1,520,441) Net increase (decrease) in cash and cash equivalents (714,807) 8,048 (218,913) (352,199) Cash and cash equivalents at beginning of periods 1,638,728 731,326 1,142,834 1,091,573 ----------- ----------- ------------ ----------- Cash and cash equivalents at end of periods $ 923,921 $ 739,374 $ 923,921 $ 739,374 =========== =========== =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the periods for: Interest (net of amount capitalized) 7,184 -- 17,026 9,750 NON CASH INVESTING AND FINANCING ACTIVITIES: -- -- -- -- Amortization of allowance for write down to net realizable value -- -- -- 272,396 Accrual of Preferred Dividend 115,802 115,872 230,394 230,510 Net Exercise (Cancellation) of Stock Incentive Plans -- (956) -- (5,331) Conversion of Preferred Stock to Common Stock 4,489 -- -- --
The accompanying notes are an integral part of these financial statements. 6 CALPROP CORPORATION ------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- PERIODS ENDED JUNE 30, 1995 and 1994 ------------------------------------- (Unaudited) Note 1: Basis of presentation and significant accounting policies --------------------------------------------------------- The unaudited, condensed, financial statements included herein have been prepared by the registrant pursuant to the instructions to Quarterly Report on Form 10-Q required to be filed with the Securities and Exchange Commission and do not include all information and footnote disclosure required by generally accepted accounting principles. The accompanying financial statements have not been examined by independent accountants in accordance with generally accepted auditing standards, but in the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments necessary to summarize fairly the Company's financial position and results of operations. The condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the registrant's latest Annual Report on Form 10-K, particularly with regard to disclosures relating to major accounting policies. The results of operations for the six months ended June 30, 1995 may not be indicative of the operating results for the year ending December 31, 1995. Note 2: Income taxes ------------ No provision for income taxes for the six months ended June 30, 1995, has been recorded as the Company applied net operating loss carryforwards against the entire income earned. As of June 30, 1995, the Company had net operating carryforwards for federal and state tax purposes of approximately $6,500,000 and $12,500,000, respectively. Note 3: Net income per share -------------------- Net income per share has been computed based upon the weighted average number of shares outstanding.
Three Months Ended Six Months Ended June 30, June 30, ------------------------------------------------ 1995 1994 1995 1994 --------------------- ------------------------ Weighted average number of common shares and common stock equivalents adjusted for stock dividends 4,816,520 4,762,379 4,815,088 4,762,119 Net income (loss) $104,800 $21,729 $1,907,609 $(336,227) Earnings (loss) per share Primary (after giving effect to $0.00 $(0.02) $0.35 $(0.12) preferred stock dividend) ========= ========= ========= ========= Fully Diluted $0.20 =========
7 Note 4: Other Income ------------ Other income for the six months ended June 30, 1995 consists primarily of approximately a net $2,100,000 of cash received as a result of a settlement of the California Department of Transportation (Caltrans) litigation. In addition to the legal settlement, other income for the six months ended June 30, 1995 includes approximately $139,000 in miscellaneous insurance and property tax refunds. Note 5: Net realizable allowances on properties --------------------------------------- The Company established net realizable reserves on its land held for investment as of December 31, 1993, in response to market conditions and economic events. The reserves are based on the Company's plans for development and build out, the costs estimated to complete and sell the projects and does not purport, for a specific project, to represent the current sales price that the Company could obtain from third parties at their current stage of development. The reserves may be reversed as the properties are sold or if there is a change in the economic climate. The company had reserves of $7,747,146 at June 30, 1995 and December 31, 1994. Note 6: Preferred Stock ---------------- On September 15, 1993 the Company completed an offering of 3,576,301 shares of Convertible Preferred Stock, to existing shareholders at $1.28 per share. The sales price of the 3,576,301 shares sold was $4,577,665, of which $3,017,663 was paid by the conversion of existing indebtedness, and $1,560,002 in cash proceeds. Each share of Convertible Preferred Stock is convertible to 1.28 shares of Common Stock at the option of the shareholder. Each share of Convertible Preferred Stock is entitled to receive dividends of $0.13 per annum, payable in cash, however, the Company's loan agreements had previously prohibited the payment of dividends. On March 28,1995, the Company paid preferred stock dividends of $136,257. As of June 30, 1995, there is $695,215 of dividends in arrears on the Preferred Stock. The Convertible Preferred Stock is also entitled to a liquidation preference of $1.28 per share, and may be redeemed by the Company at a redemption price of $1.28 per share, plus accrued dividends. Note 7: Cost of Real Estate Sales ------------------------- Cost of Real Estate Sales was reduced by approximately $730,000 resulting from the reduction of warranty reserves associated with the settlement in May, 1995 of a lawsuit filed against the Company for general damages caused by alleged land subsidence. 8 Item 2 Management's Discussion and Analysis of Financial Condition and Results ------ ----------------------------------------------------------------------- of Operations ------------- The Company has continued to be impacted by the general economic downturn, and the soft California housing market through the second quarter of 1995. The Company's sales revenue during the second quarters of the last two years increased from $4,005,231 in 1994 to $4,263,810 in 1995. During the first six months of the last two years, sales revenues increased from $7,619,758 in 1994 to $7,741,835 in 1995. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Company's liquidity changes during the course of the year depending upon the status of the Company's real estate projects in process. The Company's liquidity decreases as it enters a project cycle and increases as the completed homes are sold at the end of the cycle. In large part, the Company historically funded its operations through the utilization of cash flow from one project to fund the construction and development of another project. The Company is currently in an expansion program that requires additional sources of financing. In order to acquire the additional funds needed, the Company is increasing its external financing through the use of land loans, lot development loans, construction loans and the use of its unsecured credit lines. In an effort to increase working capital, the Company has continued to institute cost reduction programs in all areas of its operations and converted other assets to liquid funds. Additionally, the Company is actively seeking joint venture partners and additional financing to fund its operations. In September of 1994, First Interstate Bank of California extended the pre- existing Secured Line of Credit in the amount of $3,500,000 and made three additional loans totaling $5,920,000 to the Company in the Summertree Park project in Windsor, California. Two of the loans are construction loans to fund the construction of the next 46 units in the Summertree Park project. The third loan is to finance the Summertree Park models, which were originally constructed with Company funds. The Secured Line of Credit provides for interest at the prime rate plus 0.5%, and the other notes provide for interest at the prime rate plus 2% and loan service charges of two points. All four of these loans mature on September 23, 1995. As of June 30, 1995, the combined balances of these four loans from First Interstate Bank totaled $1,356,986. In February of 1995, United Savings Bank made a $2,185,000 construction loan to the Company for the construction of 15 units in the Cypress Cove project in Half Moon Bay, California. The note provides for interest at the prime rate plus 2% and a loan service charge of two points. The loan provides for paydowns with each closing, however, all principal and interest is due no later than March 1, 1996. Per the terms of the loan, a six month extension is available should it be required. As of June 30, 1995, the outstanding balance existing on the loan totaled $662,958. In May of 1994, the Curci-Turner Company made two loan commitments for $1,000,000 and $1,750,000 totaling $2,750,000, to the Company for the construction of 22 units in the Cypress Cove project in Half Moon Bay, California. The notes provide for interest at 12%, and a loan service charge totaling $275,000, payable in four installments. The notes provide for paydowns with each home sale, however, all principal and interest is due no later than December 31, 1995. As of June, 30, 1995, the $1,000,000 loan had been paid off in its entirety and the outstanding balance on the remaining loan totaled $1,350,000. 9 In the third quarter of 1994, the Company obtained a $2,000,000 loan from the Curci-Turner Company, secured by the Company's Mission Gorge land, located in San Diego, California. The loan provides for interest at 10%, contains a profit sharing provision and a loan service charge of $300,000 payable in monthly installments. The loan matures on September 30, 1997 and as of June 30, 1995, the balance of this loan was $2,000,000. In April , 1995, the Company obtained a $4,000,000 loan from the Curci- Turner Company, secured by the Company's Elk Grove land, located in Sacramento County, California. This note bears interest at prime plus 1.5% and contains a profit sharing provision. The note provides for paydowns with each closing, however, all principal and interest is due no later than March 31, 1997. As of June 30, 1995, the balance of this loan was $3,500,000. During the first quarter of 1995, Mr. Zaccaglin, Chairman of the Board and Chief Executive Officer, made two loans to the Company of $500,000 each for working capital purposes. The loans provide for interest at prime plus 2%. The maturity for the first $500,000 note has been extended to October 6, 1995, and the second $500,000 note is due on demand. In July of 1994, the Company obtained a construction loan of $2,200,000 from CenFed Bank. These funds are for the construction of the first ten units in the Company's Pleasant Oaks Estates project, located in Thousand Oaks, California. The loan provides for interest at prime plus 2% and a loan service charge of two points. The loan matures on July 30, 1995 with two six month extensions available per the terms of the loan agreement. As of June 30, 1995 the balance on this loan was $420,101. In December 1994, the Company obtained a construction loan of $800,000 from Brentwood Bank. These funds are for the construction of the last 3 units in the Company's Pleasant Oaks Estates project, located in Thousand Oaks, California. The loan provides for interest at prime plus 2% and a loan service charge of two points. The loan matures on December 1, 1995. As of June 30, 1995, the balance on this loan was $69,815. As of June 30, 1995, the Company had four projects with a combined total of six phases in various stages of development with three of the four projects producing revenues from completed homes: Pleasant Oaks Estates, Cypress Cove, and Summertree Park at Windsor. The other project, Summertree Park in Sacramento County, is in the early stages of development. As of June 30, 1995, the Company has 24 homes in escrow, of which 5 are completed and 19 are under construction. The Company has an additional 29 homes, of which 9 are completed and 20 are under construction. The Company has remaining inventory of 8 model units, 156 improved lots and 548 entitled lots. The Company believes that, based on its agreements with its existing institutional lenders, and the Curci-Turner Company, even with the continued slowdown in certain of its marketplaces, it will have sufficient liquidity to finance its construction projects in 1995 through funds generated from operations and funds available under its existing loan commitments. In addition, the Company believes that if necessary, additional funds could be obtained by using its internally financed real estate development in process as collateral for additional loans. RESULTS OF OPERATIONS --------------------- Net Income increased from $21,729 in the second quarter of 1994 to $104,800 in the second quarter of 1995. It should be noted that the net income in the second quarter of 1994 is the result of non-operating items included in Other Income, and is not the result of operations. Furthermore, the increase in the net income for the second quarter of 1995 is the result of the Company recognizing approximately $730,000 in warranty reserves as a reduction of cost of sales. Net income/loss for the first six months changed from a loss of $336,227 in 1994 to income of $1,907,609 in 1995. This increase in income for the respective six month periods is primarily due to the net cash settlement of approximately $2,100,000 in the California department of transportation litigation, and the reduction of cost of sales by approximately $730,000 from excess warranty reserves. 10 Gross profit increased from a loss of $49,339 for the second quarter of 1994 to income of $757,953 for the second quarter of 1995. For the six months period ended June 30, gross profit increased from $88,580 in 1994 to $891,499 in 1995. Increase in the gross profit is primarily a result of the recognition of the $730,000 in excess warranty reserves. During the second quarters of the last two years, gross revenues increased from $4,005,231 in 1994 to $4,263,810 in 1995. During the first six months of the year, gross revenues increased from $7,619,758 in 1994 to $7,741,835 in 1995. In the second quarter of both 1994 and 1995, the Company sold 20 homes with an average sales price of $200,262 in 1994, compared to an average sales of $213,191 in 1995. In first six months of 1994 and 1995, the Company sold 41 and 39 homes respectively, with an average sales price in the first six months of 1994 of $185,849, compared to an average sales price in the first six months of 1995 of $198,508. The increase in gross revenue and average sales price between the second quarters of 1994 and 1995, and the first six months of 1994 and 1995, is primarily due to a change in the product mix as the company began closing homes in the Pleasant Oaks Estates project in Thousand Oaks, California, where the average sales price of a home is approximately $440,000. 11 Item 6. Exhibits and Reports on Form 8-K ------- -------------------------------- (a) Exhibits - 27 Financial Data Schedule SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CALPROP CORPORATION By: /s/ Mark F. Spiro . --------------------------------------------- Mark F. Spiro Vice President/Secretary/Treasurer (Chief Financial and Accounting Officer) August 9, 1995 12 EX-27 2 FIN. DATA SCH. ART. 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 923,921 0 0 0 31,129,096 923,921 792,234 754,309 32,192,302 2,871,576 0 4,819,630 4,571,351 0 6,225,169 32,192,302 7,741,835 9,981,639 6,850,336 8,074,030 1,099,174 0 17,026 1,907,609 0 1,907,609 0 0 0 1,907,609 .348 .203