-----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, VVueM7oWmEd/1CPEWGeIhXMfV5HmT185Fh04WPkIlj2qV2LRFfs9uV3TPa8b72mI 8guzcPX6NNtigGpPf6sllQ== /in/edgar/work/0001005477-00-007766/0001005477-00-007766.txt : 20001114 0001005477-00-007766.hdr.sgml : 20001114 ACCESSION NUMBER: 0001005477-00-007766 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 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: 761963 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 September 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 October 26, 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 September 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 September 30, December 31, 2000 1999 (Unaudited) ------------ ------------ Real estate under development $104,798,403 $ 79,070,791 Other assets: Cash and cash equivalents 2,040,252 1,405,663 Prepaid expenses 90,231 84,219 Deferred tax asset (note 2) 6,233,074 6,500,000 Other assets 802,480 756,970 ------------ ------------ Total other assets 9,166,037 8,746,852 ------------ ------------ $113,964,440 $ 87,817,643 ============ ============ The accompanying notes are an integral part of these financial statements. 3 CALPROP CORPORATION CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31, 2000 1999 (Unaudited) ------------- ------------- Trust deeds and notes payable $ 73,982,281 $ 48,216,139 Related party notes 22,694,288 24,860,032 ------------- ------------- Total trust deeds, notes payable and related party notes 96,676,569 73,076,171 Accounts payable and accrued liabilities 8,548,829 6,391,621 Warranty reserves 473,526 358,287 ------------- ------------- Total liabilities 105,698,924 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 September 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 (514,002) (496,934) Accumulated deficit (27,193,851) (27,713,062) ------------- ------------- Total stockholders' equity 8,265,516 7,763,373 ------------- ------------- $ 113,964,440 $ 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 Nine Months Ended September 30, September 30, ------------------------------------------------------------ 2000 1999 2000 1999 ------------ ------------ ------------ ------------ Development operations: Real estate sales $ 16,525,836 $ 15,730,888 $ 34,323,298 $ 41,895,447 Cost of real estate sales 14,765,814 15,100,809 32,072,973 40,017,706 ------------ ------------ ------------ ------------ Income from development operations 1,760,022 630,079 2,250,325 1,877,741 Recognition of impairment of real estate Development (note 1) -- (2,519,521) -- (2,519,521) ------------ ------------ ------------ ------------ Income (loss) from development operations 1,760,022 (1,889,442) 2,250,325 (641,780) Other income 112,339 24,424 187,212 80,163 Other expenses: General and administrative 718,548 572,261 1,973,097 1,566,614 Interest (40,008) 8,742 13,518 57,524 ------------ ------------ ------------ ------------ Total other expenses 678,540 581,003 1,986,615 1,624,138 Minority interests (note 4) 10,000 26,973 (216,393) (115,788) Income (loss) before income taxes (benefit for income taxes) 1,183,821 (2,472,994) 667,315 (2,069,967) Income taxes (benefit for income taxes) (note 2) 286,181 (3,400,000) 148,104 (3,400,000) ------------ ------------ ------------ ------------ Net income $ 897,640 $ 927,006 $ 519,211 $ 1,330,033 ============ ============ ============ ============ Basic and diluted net income per share (note 3) $0.09 $0.09 $0.05 $0.13 ===== ===== ===== =====
The accompanying notes are an integral part of these financial statements. 5 CALPROP CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------------------------------------ 2000 1999 2000 1999 ------------ ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 897,640 $ 927,006 $ 519,211 $ 1,330,033 Adjustments to reconcile net income to net cash used in operating activities: Minority interests 10,000 26,973 (216,393) (115,788) Depreciation and amortization 15,454 15,447 47,074 43,534 Recognition of impairment of real estate under -- 2,519,521 -- 2,519,521 development Provision for warranty reserves (240,759) 30,001 134,771 125,231 Change in assets and liabilities: Decrease (increase) in other assets 209,327 (1,326,977) (64,608) (1,332,961) Decrease (increase) in deferred tax assets 266,926 (3,400,000) 266,926 (3,400,000) Decrease in prepaid expenses (35,542) (36,994) (6,012) (10,199) Increase (decrease) in accounts payable and accrued 975,444 (221,368) 2,157,208 352,245 liabilities Increase (decrease) in warranty reserves 205,304 -- (19,532) -- Additions to real estate under development (23,691,039) (11,429,559) (57,800,585) (39,431,634) Cost of real estate sales 14,765,814 12,698,425 32,072,973 37,498,185 Accrued interest for executive stock purchase loans (5,730) (5,731) (17,068) (17,069) ------------ ------------ ------------ ------------ Net cash used in operating activities (6,627,161) (203,256) (22,926,035) (2,438,902) CASH FLOWS FROM INVESTING ACTIVITIES - Capital expenditures (10,183) (25,520) (27,976) (63,142) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under related party notes 1,800,000 928,791 5,650,000 2,870,840 Payments under related party notes (1,461,404) (1,052,905) (7,815,744) (3,813,206) Borrowings under trust deeds and notes payable 24,495,323 16,541,311 64,207,545 40,722,506 Payments under trust deeds and notes payable (17,112,934) (17,908,460) (38,441,403) (37,528,897) Proceeds from issuance of common stock -- -- -- 4,688 Distributions to joint venture partner (10,000) (92,637) (11,798) (92,637) ------------ ------------ ------------ ------------ Net cash provided by (used in) financing activities 7,710,985 (1,583,900) 23,588,600 2,163,294 ------------ ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents 1,073,641 (1,812,676) 634,589 (338,750) Cash and cash equivalents at beginning of periods 966,611 3,064,329 1,405,663 1,590,403 ------------ ------------ ------------ ------------ Cash and cash equivalents at end of periods $ 2,040,252 $ 1,251,653 $ 2,040,252 $ 1,251,653 ============ ============ ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the periods for - Interest (net of amount capitalized) $(40,008) $8,742 $13,518 $57,524 Income taxes (122,217) 21,727 (118,822) 21,727
The accompanying notes are an integral part of these financial statements 6 CALPROP CORPORATION NOTES TO FINANCIAL STATEMENTS PERIODS ENDED SEPTEMBER 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 Company regularly reviews the carrying value of its real estate developments for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flows is less than the carrying amount of the asset, the Company recognizes an impairment loss. The Company introduced two new product lines at the Summertree Park, Elk Grove project during the second quarter of 1999 to increase the absorption rate and these were primarily sold during the third quarter. The increase in sales price was not sufficient to offset the increased direct construction cost, marketing and sales incentives, production overhead and interest costs and as a result the Company recorded an impairment loss on real estate under development of $2,519,521 during the third quarter of 1999. The results of operations for the nine months ended September 30, 2000 may not be indicative of the operating results for the year ending December 31, 2000. Note 2: Income taxes As of September 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. Income taxes in 2000 includes the net refund resulting from a claim filed for the carryback of losses related to certain qualifying expenses incurred in 1994 of $141,488. 7 Note 3: Earnings per share The following table sets forth the computation of basic and diluted net income per share:
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------------------------------- 2000 1999 2000 1999 ----------------------------------------------------- Net income $ 897,640 $ 927,006 $ 519,211 $ 1,330,033 ===================================================== Weighted average shares for basic net income per share 10,291,673 10,279,657 10,291,673 10,280,516 Effect of dilutive stock options 186,299 437,215 183,716 356,559 ----------------------------------------------------- Weighted average shares for dilutive net income per share 10,477,972 10,716,872 10,475,389 10,637,075 ===================================================== Basic net income per share $0.09 $0.09 $0.05 $0.13 ===================================================== Diluted net income per share $0.09 $0.09 $0.05 $0.13 =====================================================
Options to purchase 1,091,200 and 874,250 shares of common stock were outstanding as of September 30, 2000 and 1999, respectively. For the three and six months ended September 30, 2000, 587,200 options were not included in the computation of diluted net income because their exercise prices were higher than the average market price per share of common stock. Note 4: Minority interest The Company has consolidated the financial statements of the following entities:
- ------------------------------------------------------------------------------------------------------------------------------------ Ownership interest at Development Entity September 30, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ 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. 8 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 September 30, 2000 and December 31, 1999, respectively. 9 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 September 30, 2000, the Company had remaining loan commitments from financial institutions of approximately $55,200,000, 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 September 30, 2000, the Company had eight residential housing projects in various stages of development, with four producing revenues from completed homes: Parkland Farms, Parc Metropolitan, High Ridge Court and Creekside Estates. The remaining four projects, Montserrat Classics, Parcwest Apartments, Saddlerock, and McGuire Luxury Apartments are in various stages of development. As of September 30, 2000, the Company has 390 homes under construction, of which 147 are sold, and 22 model units. Additionally, the Company has an inventory of 578 lots under development. As of September 30, 2000, the Company had 147 units in escrow ("backlog") compared with a backlog of 98 units as of September 30, 1999. The gross revenues of such backlog was $50,720,000 and $23,330,000 as of September 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 September 30, 2000 increased 5.1% to $16,525,836 from $15,730,888 for the three months ended Sepember 30, 1999. For the nine months ended September 30, 2000, gross revenues decreased 18.1% to $34,323,298 from $41,895,447 in the year-earlier period. The decrease in gross revenues for the nine month period 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. During the nine months of 2000, the Company sold 131 homes with an average sales price of $262,000, a 27.2% decrease in the volume of home sales compared to 180 homes with an average sales price of $232,750 for the nine months of 1999. Gross profit increased to $1,760,022 in the third quarter of 2000 from $630,079 in the third quarter of 1999. As a percentage of gross revenues, gross profit increased by 6.7 percentage points to 10.7% in the third quarter of 2000 compared to 4.0% in the third quarter of 1999. The significant increase of gross profit as a percentage of gross revenues during the third quarter of 2000 results from the increase in the number of home sales in the higher profit margin projects Parc Metropolitan, Parkland Farms, and High Ridge Court compared to the lower profit margin projects Summertree Park and Antares primarily sold during 1999. For the nine months 10 ended September 30, 2000, gross profit increased to 6.6% from 4.5% for the corresponding period in 1999. The increase results from the homes sold in the higher profit margin projects during the nine months ended September 30, 2000. In addition, during the nine months of 1999, numerous sales offices were in the process of opening, thus, marketing expenses associated with the development of product awareness were incurred for the Parc Metropolitan, Parkland Farms, and High Ridge Court projects, which entailed significant nonrecurring startup marketing costs. The Company introduced two new product lines at the Summertree Park, Elk Grove project during the second quarter of 1999 to increase the absorption rate and these were primarily sold during the third quarter. The increase in sales price was not sufficient to offset the increased direct construction cost, marketing and sales incentives, production overhead and interest costs and as a result the Company recorded an impairment loss on real estate under development of $2,519,521 during the third quarter of 1999. General and administrative expenses increased to $718,548 in the three months ended September 30, 2000 from $572,261 in the corresponding 1999 period. For the nine months ended September 30, 2000, general and administrative expenses increased to $1,973,097 from $1,566,614 in the corresponding 1999 period. The increase is due to the significant growth in the number of lots under development. 11 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 A Current Report on Form 8-K dated August 15, 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 June 30, 2000, and under item 7(c) a press release announcing Calprop Corporations' second 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) November 13, 2000 12 EX-27 2 0002.txt FDS -- FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 2,040,252 0 0 0 104,798,403 0 0 0 113,964,440 0 0 0 0 10,290,535 8,265,516 113,964,440 34,323,298 34,323,298 32,072,973 32,072,973 1,973,097 0 13,518 667,315 148,104 519,211 0 0 0 519,211 0.05 0.05
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