-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SA4joLX9Kh8+zHaWWLRQXe/s8bh4eEqAm1pllbNlWLfVQUul7eg1zqwtOa+8w8Un A8dmL9N8HrmzHz/ZIhEW/A== /in/edgar/work/20000814/0001005477-00-005788/0001005477-00-005788.txt : 20000921 0001005477-00-005788.hdr.sgml : 20000921 ACCESSION NUMBER: 0001005477-00-005788 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALPROP CORP CENTRAL INDEX KEY: 0000016496 STANDARD INDUSTRIAL CLASSIFICATION: [1531 ] IRS NUMBER: 954044835 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06844 FILM NUMBER: 699960 BUSINESS ADDRESS: STREET 1: 13160 MINDANAO WAY STREET 2: STE 180 CITY: MARINA DEL REY STATE: CA ZIP: 90292 BUSINESS PHONE: 3103064314 MAIL ADDRESS: STREET 1: 13160 MINDANAO WAY STREET 2: STE 180 CITY: MARINA DEL REY STATE: CA ZIP: 90292 10-Q 1 0001.txt 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, 2000 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.) 13160 Mindanao Way, Suite 180, Marina Del Rey, California 90292 - --------------------------------------------------------- ---------- (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 June 29, 2000: Number of Shares Title of Each Class Outstanding - ------------------- ---------------- Common Stock, no par value 10,290,535 CALPROP CORPORATION Part I Item I - Financial Information Set forth is the unaudited quarterly report for the quarters ended June 30, 2000 and 1999, 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 CONSOLIDATED BALANCE SHEETS ASSETS June 30, 2000 December 31, (Unaudited) 1999 ------------ ------------ Real estate under development $ 95,873,178 $ 79,070,791 Other assets: Cash and cash equivalents 966,611 1,405,663 Prepaid expenses 54,689 84,219 Deferred tax asset (note 2) 6,500,000 6,500,000 Other assets 1,017,078 756,970 ------------ ------------ Total other assets 8,537,378 8,746,852 ------------ ------------ $104,411,556 $ 87,817,643 ============ ============ The accompanying notes are an integral part of these financial statements 3 CALPROP CORPORATION CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, 2000 December 31, (Unaudited) 1999 ------------- ------------- Trust deeds and notes payable $ 66,599,892 $ 48,216,139 Related party notes 22,355,692 24,860,032 ------------- ------------- Total trust deeds, notes payable and related party notes 88,955,584 73,076,171 Accounts payable and accrued liabilities 7,573,385 6,391,621 Warranty reserves 508,981 358,287 ------------- ------------- Total liabilities 97,037,950 79,826,079 Minority interests (note 4) 228,191 Stockholders' equity: Common stock, no par value Authorized - 20,000,000 shares Issued and outstanding - 10,290,535 and 10,293,735 shares at June 30, 2000 and December 31, 1999, respectively 10,290,535 10,293,735 Additional paid-in capital 25,849,961 25,849,961 Deferred compensation (167,127) (170,327) Stock purchase loans (508,272) (496,934) Accumulated deficit (28,091,491) (27,713,062) ------------- ------------- Total stockholders' equity 7,373,606 7,763,373 ------------- ------------- $ 104,411,556 $ 87,817,643 ============= =============
The accompanying notes are an integral part of these financial statements 4 CALPROP CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, -------------------------- ---------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ------------ Development operations: Real estate sales $ 10,214,099 $ 18,381,700 $ 17,797,462 $ 26,164,559 Cost of real estate sales 9,400,957 17,870,491 17,307,159 24,916,897 ------------ ------------ ------------ ------------ Income from development operations 813,142 511,209 490,303 1,247,662 Other income 36,822 30,536 74,873 55,739 Other expenses: General and administrative 618,544 634,793 1,254,549 994,353 Interest 36,764 40,766 53,526 48,782 ------------ ------------ ------------ ------------ Total other expenses 655,308 675,559 1,308,075 1,043,135 Minority interests (note 4) -- (208,648) (226,393) (142,761) Income (loss) before benefit for income taxes 194,656 74,834 (516,506) 403,027 Benefit for income taxes (note 2) -- 138,077 ------------ ------------ ------------ ------------ Net income (loss) $ 194,656 $ 74,834 ($ 378,429) $ 403,027 ============ ============ ============ ============ Basic and diluted net income (loss) per share (note 3) $ 0.02 $ 0.01 ($ 0.04) $ 0.04 ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements 5 CALPROP CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ----------------------------- ----------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 194,656 $ 74,834 $ (378,429) $ 403,027 Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Minority interests -- (208,648) (226,393) (142,761) Depreciation and amortization 16,134 14,325 31,620 28,087 Provision for warranty reserves 403,125 29,224 375,530 95,230 Change in assets and liabilities: Increase in other assets (224,434) (101,666) (273,935) (5,984) Decrease in prepaid expenses 14,765 13,398 29,530 26,795 Increase in accounts payable and accrued liabilities 205,323 1,734,458 1,181,764 573,613 Warranty expenditures (367,735) (36,404) (224,836) -- Additions to real estate under development (19,268,276) (13,970,998) (34,109,546) (28,002,075) Cost of real estate sales 9,400,956 17,753,354 17,307,159 24,799,760 Accrued interest for executive stock purchase loans (5,669) (5,731) (11,338) (11,338) ------------ ------------ ------------ ------------ Net cash (used in) provided by operating activities (9,631,155) 5,296,146 (16,298,874) (2,235,646) CASH FLOWS FROM INVESTING ACTIVITIES - Capital expenditures (10,551) (23,856) (17,793) (37,622) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under related party notes 1,850,000 346,930 3,850,000 1,942,049 Payments under related party notes (3,689,105) (2,133,187) (6,354,340) (2,760,301) Borrowings under trust deeds and notes payable 26,006,996 11,775,603 39,712,222 24,181,195 Payments under trust deeds and notes payable (14,513,436) (13,414,280) (21,328,469) (19,620,437) Proceeds from issuance of common stock -- 4,688 -- 4,688 Distributions to joint venture partner -- -- (1,798) -- ------------ ------------ ------------ ------------ Net cash provided by (used in) financing activities 9,654,455 (3,420,246) 15,877,615 3,747,194 ------------ ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents 12,749 1,852,044 (439,052) 1,473,926 Cash and cash equivalents at beginning of periods 953,862 1,212,285 1,405,663 1,590,403 ------------ ------------ ------------ ------------ Cash and cash equivalents at end of periods $ 966,611 $ 3,064,329 $ 966,611 $ 3,064,329 ============ ============ ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the periods for - Interest (net of amount capitalized) $ 36,764 $ 40,766 $ 53,526 $ 48,782 Income taxes -- -- 3,395 --
The accompanying notes are an integral part of these financial statements 6 CALPROP CORPORATION NOTES TO FINANCIAL STATEMENTS PERIODS ENDED JUNE 30, 2000 AND 1999 (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 financial position of Calprop Corporation ("the Company") 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 three months ended June 30, 2000 may not be indicative of the operating results for the year ending December 31, 2000. Note 2: Income taxes As of June 30, 2000, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $24,000,000 and $6,400,000, respectively. For federal and state tax purposes the net operating loss carryforwards expire from 2007 through 2013, and from 2000 through 2003, respectively. Benefit for income taxes in 2000 represents the net refund resulting from a claim filed for the carryback of losses related to certain qualifying expenses incurred in 1994 of $141,488. Note 3: Earnings per share The following table sets forth the computation of basic and diluted net income (loss) per share:
Three Months Ended Six Months Ended June 30, June 30, ------------------------------------------------------- 2000 1999 2000 1999 ------------------------------------------------------- Net income (loss) $ 194,656 $ 74,834 $ (378,429) $ 403,027 ======================================================= Weighted average shares for basic net income (loss) per share 10,291,673 10,279,657 10,291,673 10,280,516 Effect of dilutive stock options 175,105 322,585 -- 311,997 ------------------------------------------------------- Weighted average shares for dilutive net income per share 10,466,778 10,602,242 10,291,673 10,592,513 ======================================================= Basic net income (loss) per share $ 0.02 $ 0.01 $ (0.04) $ 0.04 ======================================================= Diluted net income (loss) per share $ 0.02 $ 0.01 $ (0.04) $ 0.04 =======================================================
Options to purchase 1,104,300 and 874,250 shares of common stock were outstanding as of June 30, 2000 and 1999, respectively. For the three months ended June 30, 2000, 598,500 options were not 7 included in the computation of diluted net income because their exercise prices were higher than the average market price per share of common stock. For the six months ended June 30, 2000, options were not included in the computation of diluted net loss per common share because the effect would be antidilutive to the net loss in the period. Note 4: Minority interest The Company has consolidated the financial statements of the following entities:
------------------------------------------------------------------------------------------------------------------------------ Ownership interest at Entity June 30, 2000 Development ------------------------------------------------------------------------------------------------------------------------------ Colorado Pacific Homes, Inc. ("CPH") 80% Real estate in the state of Colorado DMM Development, LLC ("DMM") 67% Cierra del Lago and Antares projects, California Montserrat II, LLC ("Mont II") 99% Montserrat Estate project, California Parkland Farms Development Co., LLC ("Parkland") 99% 115 lots in Healdsburg, California RGCCLPO Development Co., LLC ("RGCCLPO") 100% 382 lots in Milpitas, California PWA Associates, LLC ("PWA") 50% 68 unit apartment in Milpitas, California ------------------------------------------------------------------------------------------------------------------------------
DMM: The Company is entitled to receive two-thirds of the profits of DMM, and the other owner, RGC Courthomes, Inc. ("RGC"), is entitled to receive the remaining one-third of the profits. Mont II: Pursuant to the operating agreement of Mont II, income was allocated first to PICal Housing Associates, L.P. ("PICaL") to obtain the return of its capital. Subsequent income is allocated 100% to the Company. Parkland: Pursuant to the operating agreement of Parkland, the Company is entitled to receive ninety-nine percent of the profits of Parkland, and the other member, an officer of the Company, is entitled to receive the remaining one percent of the profits. RGCCLPO: Pursuant to the operating agreement of RGCCLPO, the Company was entitled to receive fifty percent of the profits of RGCCLPO, and the other member, RGC, was entitled to receive the remaining fifty percent of the profits. During December 1999, the Company purchased all of RGC's ownership interest in RGCCLPO. As a result of the consolidation, the Company has recorded minority interest of $0 and $228,191 as of June 30, 2000 and December 31, 1999, respectively. 8 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion relates to the consolidated financial statements of the Company and should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. Statements contained in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" that are not historical facts may be forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. You are cautioned not to place undue reliance on these forward-looking statements. Liquidity and capital resources As of June 30, 2000, the Company had remaining loan commitments from financial institutions of approximately $58,100,000, which may be drawn down by the Company upon the satisfaction of certain conditions. The Company continues to seek joint venture partners and additional financing to fund its operations. As of June 30, 2000, the Company had nine residential housing projects in various stages of development, with four producing revenues from completed homes: Summertree Park, Parkland Farms, High Ridge Court and Creekside Estates. The remaining five projects, Montserrat Classics, Parc Metropolitan, Parcwest Apartments, Saddlerock, and McGuire Luxury Apartments are in various stages of development. As of June 30, 2000, the Company has 400 homes under construction, of which 182 are sold, and 22 model units. Additionally, the Company has an inventory of 624 lots under development. As of June 30, 2000, the Company had 182 units in escrow ("backlog") compared with a backlog of 134 units as of June 30, 1999. The gross revenues of such backlog was $57,440,000 and $31,100,000 as of June 30, 2000 and 1999, respectively. Based on its agreements with its lenders, the Company believes that it will have sufficient liquidity to finance its construction projects in 2000 through funds generated from operations, funds available under its existing bank commitments, funds generated from new lending institutions, and, if necessary, funds that could be obtained by using its internally financed real estate development in process as collateral for additional loans. Management's plan, with respect to managing cash flow includes the following components: pay off debt that is coming due in 2000, minimize operating expenses, and maintain control over costs. With regard to the debt coming due in 2000, management expects to extend the maturity dates of various loans and pay the remaining loans off through cashflow from operations, prior to their maturity date. With regard to minimizing operating expenses, management plans to achieve this by continuing to closely examine overhead items. Management anticipates that the funds generated from operations, including borrowings from existing loan commitments, will be adequate to allow the Company to continue operations throughout 2000. Results of operations Gross revenues for the three months ended June 30, 2000 decreased 44.4% to $10,214,099 from $18,381,700 for the three months ended June 30, 1999. For the six months ended June 30, 2000, gross revenues decreased 31.9% to $17,797,462 from $26,164,559 in the year-earlier period. The decrease in gross revenues for the three and six month periods of 2000 was primarily due to the low volume of inventory of completed homes for sales compared to the significant increase in volume of projects in the early stages of construction. In the second quarter of 2000, the Company sold 42 homes with an average sales price of $243,200, a 47.5% decrease in the volume of home sales compared to 80 homes with an average sales price of $229,800 for the second quarter of 1999. During the first six months of 2000, the Company sold 75 homes with an average sales price of $237,300, a 33.6% decrease in the volume of home sales compared to 113 homes with an average sales price of $231,600 for the six months of 1999. Income from development operations increased to $813,142 in the second quarter of 2000 from $511,209 in the second quarter of 1999. As a percentage of gross revenues, income from development operations increased by 5.18 percentage points to 7.96% in the second quarter of 2000 compared to 2.78% in the second quarter of 1999. The increase in income from development operations as a percentage of gross 9 revenues during the second quarter of 2000 results primarily from warranty costs of the Cierra Del Lago project of approximately $650,000 recognized in the second quarter of 1999. For the six months ended June 30, 2000, income from development operations decreased to $490,303 from $1,247,662 in the corresponding period of 1999. As a percentage of gross revenues, income from development operations decreased to 2.75% in the first half of 2000 from 4.77%. General and administrative expenses decreased to $618,544 in the three months ended June 30, 2000 from $634,793 in the corresponding 1999 period. For the six months ended June 30, 2000, general and administrative expenses increased to $1,254,549 from $994,353 in the corresponding 1999 period. The increase is due to the significant growth in the number of projects under development. 10 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - 27 Financial data schedule (b) Reports on Form 8-K A Current Report on Form 8-K dated April 19, 2000 was filed with the Securities and Exchange Commission (the "Commission") and included under item 7(a) its audited consolidated financial statements for the year ended December 31, 1999 and unaudited consolidated financial statements for the quarter ended December 31, 1999, and under item 7(c) a press release announcing Calprop Corporations' 1999 annual and fourth quarter results. A Current Report on Form 8-K dated May 17, 2000 was filed with the Securities and Exchange Commission (the "Commission") and included under item 7(a) its unaudited consolidated financial statements for the quarter ended March 31, 2000, and under item 7(c) a press release announcing Calprop Corporations' first quarter results. 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 14, 2000 11 -----END PRIVACY-ENHANCED MESSAGE-----