-----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, AtEr4De5M4rrGyW5J3FL4x8n880V5uAkfGW7IQRoKXeStDm6Mr9k3ugyzV+idnZW HX8D3fA9hlV5KtA6oBm8TA== 0001005477-99-003564.txt : 19990812 0001005477-99-003564.hdr.sgml : 19990812 ACCESSION NUMBER: 0001005477-99-003564 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990811 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: SEC FILE NUMBER: 001-06844 FILM NUMBER: 99684148 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 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, 1999 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 July 22,1999: Number of Shares Title of Each Class Outstanding - ------------------- ---------------- Common Stock, no par value 10,279,935 CALPROP CORPORATION Part I Item I - Financial Information Set forth is the unaudited quarterly report for the quarters ended June 30, 1999 and 1998, 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, December 31, 1999 1998 (Unaudited) ------------- ------------- Real estate development $68,484,512 $65,282,197 Other assets: Cash and cash equivalents 3,064,329 1,590,403 Prepaid expenses 61,980 88,775 Deferred tax asset 4,800,000 4,800,000 Other assets 776,033 760,514 ------------- ------------- Total other assets 8,702,342 7,239,692 ------------- ------------- Total assets $77,186,854 $72,521,889 ============= ============= The accompanying notes are an integral part of these financial statements. 3 CALPROP CORPORATION CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 1999 1998 (Unaudited) ------------ ------------ Trust deeds and notes payable $ 42,085,265 $ 37,524,507 Related party notes 20,052,034 20,870,286 ------------ ------------ Total trust deeds and notes payable 62,137,299 58,394,793 Accounts payable and accrued liabilities 5,653,968 5,056,010 Warranty reserves 355,509 284,624 ------------ ------------ Total liabilities 68,146,776 63,735,427 Minority interest (note 4) 184,180 326,941 Stockholders' equity: Common stock, no par value Authorized - 20,000,000 shares Issued and outstanding - 10,279,935 and 10,284,135 shares at June 30, 1999 and December 31, 1998, respectively 10,279,935 10,284,135 Additional paid-in capital 25,850,818 25,851,130 Deferred compensation (231,930) (241,130) Stock purchase loans (485,472) (474,134) Accumulated deficit (26,557,453) (26,960,480) ------------ ------------ Total stockholders' equity 8,855,898 8,459,521 ------------ ------------ Total liabilities and stockholders' equity $ 77,186,854 $ 72,521,889 ============ ============ 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, ---------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Development operations: Real estate sales $ 18,381,700 $ 7,632,478 $ 26,164,559 $ 10,438,264 Cost of real estate sales 17,870,491 6,932,486 24,916,897 9,820,775 ------------ ------------ ------------ ------------ Income from development operations 511,209 699,992 1,247,662 617,489 Other income 30,536 11,370 55,739 47,351 Other expenses: General and administrative expenses 634,793 446,521 994,353 832,497 Interest expense 40,766 37,486 48,782 106,053 ------------ ------------ ------------ ------------ Total other expenses 675,559 484,007 1,043,135 938,550 Minority interests (note 4) (208,648) 121,688 (142,761) 114,786 Income (loss) before benefit for income taxes 74,834 105,667 403,027 (388,496) ============ ============ ============ ============ Net income (loss) $ 74,834 $ 105,667 $ 403,027 $ (388,496) ============ ============ ============ ============ Basic and diluted net income (loss) per share (note 3) $ 0.01 $ 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, ---------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 74,834 $ 105,667 $ 403,027 $ (388,496) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Minority interests (208,648) 121,688 (142,761) 114,786 Depreciation and amortization 14,325 10,705 28,087 20,290 Provision for warranty reserves 29,224 73,601 95,230 90,601 Change in assets and liabilities: (Increase) in deferred and other assets (101,666) (240,113) (5,984) (663) Decrease in prepaid expenses 13,398 11,574 26,795 23,149 Increase (decrease) in accounts payable and accrued liabilities and warranty reserves 1,698,054 (1,040,483) 573,613 903,462 (Additions) to real estate development in process (13,970,998) (12,036,920) (28,002,075) (18,356,729) Cost of real estate sales 17,753,354 6,932,486 24,799,760 9,820,775 ------------ ------------ ------------ ------------ Net cash provided by (used in) operating activities 5,301,877 (6,061,795) (2,224,308) (7,772,825) CASH FLOWS FROM INVESTING ACTIVITIES - Capital expenditures (23,856) (13,175) (37,622) (33,792) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under construction loans-related parties 346,930 4,121,212 1,942,049 6,171,212 Payments under construction loans-related parties (2,133,187) (250,024) (2,760,301) (1,854,116) Borrowings under construction loans 11,775,603 8,241,168 24,181,195 14,310,510 Payments under construction loans (13,414,280) (6,058,316) (19,620,437) (8,818,969) Contributions from joint venture partner -- 377,920 -- 669,558 Distributions to joint venture partner -- (1,100,000) -- (1,100,000) Proceeds from issuance of common stock 4,688 -- 4,688 306,639 Accrue interest for executive stock purchase loans (5,731) -- (11,338) -- ------------ ------------ ------------ ------------ Net cash (used in) provided by financing activities (3,425,977) 5,331,960 3,735,856 9,684,834 ------------ ------------ ------------ ------------ Net increase in cash and cash equivalents 1,852,044 (743,010) 1,473,926 1,878,217 Cash and cash equivalents at beginning of periods 1,212,285 3,721,255 1,590,403 1,100,028 ------------ ------------ ------------ ------------ Cash and cash equivalents at end of periods 3,064,329 2,978,245 $ 3,064,329 $ 2,978,245 ============ ============ ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the periods for - Interest (net of amount capitalized) 40,766 37,486 48,782 65,567 NON-CASH INVESTING AND FINANCING ACTIVITIES: Receipt of executive loan from issuance of shares -- -- -- 447,813
The accompanying notes are an integral part of these financial statements 6 CALPROP CORPORATION NOTES TO FINANCIAL STATEMENTS PERIODS ENDED JUNE 30, 1999 AND 1998 (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, 1999 may not be indicative of the operating results for the year ending December 31, 1999. Note 2: Income taxes At June 30, 1999, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $23,400,000 and $8,700,000, respectively. For federal and state tax purposes the net operating loss carryforwards expire from 2007 through 2013, and from 1999 through 2003, respectively. Note 3: Net income 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, ------------------------- ------------------------- 1999 1998 1999 1998 ------------------------- ------------------------- Numerator for basic and diluted net income (loss) per share $ 74,834 $ 105,667 $ 403,027 $ (388,496) ========================= ========================= Denominator for basic net income (loss) per share 10,279,657 10,154,785 10,280,516 9,846,674 Effect of dilutive stock options 322,585 283,638 311,997 -- ------------------------- ------------------------- Denominator for dilutive net income (loss) per share 10,602,242 10,438,423 10,592,513 9,846,674 ========================= ========================= Basic net income (loss) per share $ 0.01 $ 0.01 $ 0.04 $ (0.04) ========================= ========================= Diluted net income per share $ 0.01 $ 0.01 $ 0.04 $ (0.04) ========================= =========================
Options and warrants to purchase 874,250 and 799,000 shares of common stock were outstanding as of June 30, 1999 and 1998, respectively. For the three months ended June 30, 1999 and the six months ended June 30, 1999, 63,500 and 335,650 options and warrants were not included in the computation of 7 diluted net income because their exercise prices were higher than the average market price per share of common stock, respectively. Note 4: Minority interest The Company has consolidated the financial statements of Colorado Pacific Homes, Inc. ("CPH"), a corporation formed for the purpose of developing real estate in the state of Colorado; DMM Development, LLC ("DMM"), a joint-venture formed for the development of the Cierra del Lago and Antares projects; Montserrat II, LLC ("Mont II"), a joint-venture formed for the development of 119 lots adjacent to the Company's original Montserrat project; Parkland Farms Development Co., LLC ("Parkland"), a joint-venture formed for the development of 115 lots in Healdsburg, California; and RGCCLPO Development Co., LLC ("RGCCLPO"), a joint venture formed for the development of 382 lots in Milpitas, California. Colorado Pacific Homes, Inc. is owned eighty percent by Calprop Corporation ("Calprop") and twenty percent by the President of CPH. Calprop is entitled to receive two-thirds of the profits of DMM, and the other member, RGC Courthomes, Inc. ("RGC"), is entitled to receive the remaining one-third of the profits. As of June 30, 1999, RGC's ownership percentage in DMM was fifty percent. Pursuant to the operating agreement of Montserrat II, LLC, Calprop is entitled to receive ninety nine percent of the profits of Montserrat II, LLC, and the other member, an officer of the Company, is entitled to receive the remaining one percent of the profits. As of June 30, 1999, the officer of the Company's ownership percentage is Montserrat II, LLC was one percent. Pursuant to the operating agreement of Parkland Farms Development Co., LLC, Calprop is entitled to receive ninety nine percent of profits of Parkland, and the other member, an officer of the Company, is entitled to receive the remaining one percent of the profits. As of June 30, 1999, the officer of the Company's ownership percentage in Parkland was one percent. Calprop is entitled to receive fifty percent of the profits of RGCCPLO, and the other member, RGC, is entitled to receive the remaining fifty percent of the profits. As of June 30, 1999, RGC's ownership percentage in RGCCPLO was fifty percent. As a result of the consolidations, the Company has recorded minority interest of $302,488 and $326,941 as of June 30, 1999 and December 31, 1998, respectively. 8 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and capital resources As of June 30, 1999, the Company had remaining loan commitments from financial institutions of approximately $18,650,000, 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, 1999, the Company had ten residential housing projects in various stages of development, with four producing revenues from completed homes: Summertree Park, Montserrat Estates, Antares, and Parkland Farms. The remaining six projects, Creekside at Mockingbird Canyon (formerly Mockingbird Canyon), Parc Metropolitan, Parcwest Apartments, High Ridge Court, Saddlerock, and Templeton Heights, are in the initial stages of development. As of June 30, 1999, the Company controlled 1,288 lots, of which, 1,001 were owned by the company and in various stages of development, and 287 were in escrow to be purchased by the Company. Of the 1,001 owned lots, the Company had 25 homes completed (12 were in escrow, including 8 models and 13 were models not yet released for sale), 180 homes under construction (130 were in escrow and 50 were available for sale), 796 lots under development. As of June 30, 1999, the Company had 134 units in escrow ("backlog") compared with a backlog of 151 units as of June 30, 1998. The gross revenues of such backlog was $31,100,000 and $31,700,000 as of June 30, 1999 and 1998, respectively. The Company believes that, based on agreements with its existing institutional lenders and the Curci-Turner Company, it will have sufficient liquidity to finance its construction projects in 1999 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 unencumbered real estate developments as collateral for additional loans. Year 2000 Readiness The Company utilizes computer technologies throughout its business to effectively carry out its day to day operations. Similar to most companies, the Company must determine whether its systems are capable of recognizing and processing date sensitive information properly as the year 2000 approaches. The Company has reviewed each of its systems and programs and has determined that it is Year 2000 compliant. No material costs have been or will be incurred related to the Year 2000 compliance issue. The Company has initiated evaluation of its significant suppliers, customers, and critical business partners to determine the extent to which the Company may be vulnerable in the event that those parties fail to properly remediate their own year 2000 issues. The Company will develop appropriate contingency plans in the event that a significant exposure is identified relative to the dependencies on third-party systems. While the Company is not presently aware of any such significant exposure, there can be no guarantee that the systems of third-parties on which the Company relies will be converted in a timely manner, or that a failure to properly convert by another company would not have a material adverse effect on the Company. Results of operations Gross revenues for the three months ended June 30, 1999 increased 140.8% to $18,381,700 from $7,632,478 for the three months ended June 30, 1998. For the six months ended June 30, 1999, gross revenues increased 150.7% to $26,164,559 from $10,438,264 in the year-earlier period. The increase in gross revenues for the three and six month periods of 1999 was primarily due to the higher volume of production and home sales. In the second quarter of 1999, the Company sold 80 homes with an average sales price of $229,800, 128.6% increase in the volume of home sales compared to 33 homes with an average sales price of $235,900 for the second quarter of 1998. During the first six months of 1999, the Company sold 113 homes with an average sales price of $231,600, 117.3% increase in the volume of home sales compared to 52 homes with an average sales price of $201,000 for the six months of 1998. The higher average sales price for the six months in 9 1999 is due to sales price increases made during the current year to the Montserrat Estates and Antares projects. In addition, the Company sold 11 homes in the higher priced Parkland Farms project during the second quarter in 1999 with an average sales price of $263,400 with expected future sales price increases. Income from development operations decreased to $511,209 in the second quarter of 1999 from $699,992 in the second quarter of 1998. As a percentage of gross revenues, income from development operations decreased by 6.39 percentage points to 2.78% in the second quarter of 1999 compared to 9.17% in the second quarter of 1998. The significant decrease of income from development operations as a percentage of gross revenues during the second quarter of 1999 results from the revised estimates to complete the construction costs of approximately $615,000 in the Cierra Del Lago project. The project was completed in early 1998 and all homes were sold in the third quarter of 1998. The Company does not expect to incur additional construction costs related to this project which will be significant. In addition, during the second quarter 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 of approximately $330,000. For the six months ended June 30, 1999, income from development operations increased to $1,247,662 from $617,489 in the corresponding period of 1998. As a percentage of gross revenues, income from development operations decreased to 4.77% in the first half of 1999 from 5.92%. General and administrative expenses increased to $634,793 in the three months ended June 30, 1999 from $446,521 in the corresponding 1998 period. As a percentage of gross revenues, general and administrative expenses decreased 2.4 percentage points to 3.45% in the second quarter of 1999 from 5.85% for the year-earlier period. For the six months ended June 30, 1999, general and administrative expenses increased to $994,353 from $832,497 in the corresponding 1998 period. As a percentage of gross revenues, general and administrative expenses decreased 4.18 percentage points to 3.8% for the first six months of 1999 from 7.98% in the corresponding period in 1998. The improvement in the general and administrative expense ratio reflects the Company's commitment to obtaining operating efficiencies as it grows its businesses. 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 March 31, 1999 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, 1998 and unaudited consolidated financial statements for the quarter ended December 31, 1998, 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 3, 1999 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, 1999, 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 11, 1999 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Calprop Corporation and is qualified in it's entirety by reference to such financial statements. 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 3,064,329 0 0 0 68,484,512 8,702,342 0 0 77,186,854 68,146,776 0 0 0 10,279,935 8,855,898 77,186,854 26,164,559 26,164,559 24,916,897 24,916,897 1,043,135 0 48,782 403,027 0 403,027 0 0 0 403,027 .04 .04
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