-----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, A22KUCwqdPleAtEMG/3NFIKrXU6kRxjVky1u/nRD2mPCYmtfknRuuJjf9Elx5w7u OuGvsVuB6/yeRVliuX7Hhw== 0001047469-97-004753.txt : 19971117 0001047469-97-004753.hdr.sgml : 19971117 ACCESSION NUMBER: 0001047469-97-004753 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD 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: 97718914 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 September 30, 1997 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 20,1997: Number of Shares Title of Each Class Outstanding - ------------------- ---------------- Common Stock, no par value 9,304,785 CALPROP CORPORATION PART I ITEM I - FINANCIAL INFORMATION Set forth is the unaudited quarterly report for the quarters ended September 30, 1997 and 1996, 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 (Unaudited) September 30, December 31, 1997 1996 ------------- ------------ Real estate development (notes 1 and 5) 21,056,258 21,908,164 Investment in land (notes 1 and 5) 2,979,658 4,037,187 ---------- ---------- Total investment in real estate 24,035,916 25,945,351 Other assets: Cash and cash equivalents 3,465,537 1,224,780 Prepaid expenses 34,723 29,587 Deferred and other assets 338,334 333,660 ---------- ---------- Total other assets 3,838,594 1,588,027 ---------- ---------- Total assets 27,874,510 27,533,378 ---------- ---------- ---------- ---------- The accompanying notes are an integral part of these financial statements. 3 CALPROP CORPORATION CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) September 30, December 31, 1997 1996 ------------- ------------ Trust deeds and notes payable 5,973,695 5,011,866 Related party notes 12,948,879 12,528,550 ----------- ----------- Total trust deeds and notes payable 18,922,574 17,540,416 Community facilities district special tax bonds 2,336,544 2,336,544 Accounts payable and accrued liabilities 3,343,952 3,025,783 Warranty reserves 236,543 261,401 ----------- ----------- Total liabilities 24,839,613 23,164,144 Minority interest (note 4) 10,883 10,000 Stockholders' equity: Common stock, no par value Authorized - 20,000,000 shares Issued and outstanding - 9,222,785 and 9,224,585 shares at September 30, 1997 and December 31, 1996, respectively 9,222,785 9,224,585 Additional paid-in capital 25,912,531 25,911,579 Deferred compensation (67,807) (68,655) Accumulated deficit (32,043,495) (30,708,275) ----------- ----------- Total stockholders' equity 3,024,014 4,359,234 ----------- ----------- Total liabilities and stockholders' equity 27,874,510 27,533,378 ----------- ----------- ----------- ----------- 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, ------------------------- ------------------------- 1997 1996 1997 1996 ----------- ----------- ------------ ----------- Development operations: Real estate sales 5,114,792 2,626,505 19,345,274 7,020,876 Cost of real estate sales 5,082,721 2,711,160 19,279,534 7,248,129 ----------- ----------- ------------ ----------- 32,071 (84,655) 65,740 (227,253) Recognition of impairment of real estate under development and land held for investment (note 1) -- (4,326,848) -- (4,326,848) ----------- ----------- ------------ ----------- Income (loss) from development operations 32,071 (4,411,503) 65,740 (4,554,101) Other income 27,080 29,334 62,412 40,406 Other expenses: General and administrative expenses 222,040 326,253 1,025,882 1,641,798 Interest expense 122,677 217,854 250,769 217,854 Investment property holding costs 34,638 75,600 185,838 229,759 ----------- ----------- ------------ ----------- Total other expenses 379,355 619,707 1,462,489 2,089,411 ----------- ----------- ------------ ----------- Minority interests (note 4) 5,140 -- 883 -- Net loss $ (325,344) $(5,001,876) $ (1,335,220) $(6,603,106) ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- Net loss per share (note 3) $(0.04) $(0.54) $(0.14) $(1.01) ------ ------ ------ ------ ------ ------ ------ ------
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, -------------------------- --------------------------- 1997 1996 1997 1996 ----------- ----------- ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (325,344) $(5,001,876) (1,335,220) (6,603,106) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Minority interests 5,140 -- 883 -- Depreciation and amortization 8,235 7,875 24,266 20,952 Recognition of impairment of real estate under development and land held for investment -- 4,326,848 -- 4,326,848 Provision for warranty reserves 43,316 75,578 175,469 182,087 Change in assets and liabilities: Increase in deferred and other assets (17,351) (9,532) (19,854) (49,844) Increase in investments in land -- (2,580) -- (4,453) (Increase) decrease in prepaid expenses (34,723) (80,985) (5,136) 248,329 (Decrease) increase in accounts payable and accrued liabilities and warranty reserves (327,755) (847,235) 117,842 39,506 Additions to real estate development in process (5,698,077) (3,563,752) (17,370,099) (9,534,298) Cost of real estate sales 5,082,721 2,711,160 19,279,534 7,248,129 ----------- ----------- ------------ ----------- Net cash (used in) provided by operating activities (1,263,838) (2,384,499) 867,685 (4,125,850) CASH FLOWS FROM INVESTING ACTIVITIES - Capital expenditures (866) -- (9,086) (73,875) ----------- ----------- ------------ ----------- Net cash used in investing activities (866) -- (9,086) (73,875) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under construction loans-related parties 2,000,000 2,270,029 6,628,078 4,185,029 Payments under construction loans-related parties (500,998) (1,077,241) (6,087,749) (2,698,041) Borrowings under construction loans 3,582,534 2,638,846 10,497,656 6,811,648 Payments under construction loans (2,204,201) (1,184,088) (9,535,827) (3,183,657) Contributions from joint venture partner -- -- 287,980 -- Distribution to joint venture partner (120,000) -- (407,980) -- Payments of preferred stock dividends -- (77,351) -- (77,351) Redemption of convertible preferred stock -- -- -- (242,116) ----------- ----------- ------------ ----------- Net cash provided by financing activities 2,757,335 2,570,195 1,382,158 4,795,512 ----------- ----------- ------------ ----------- Net increase in cash and cash equivalents 1,492,631 185,696 2,240,757 595,787 Cash and cash equivalents at beginning of periods 1,972,906 1,168,415 1,224,780 758,324 ----------- ----------- ------------ ----------- Cash and cash equivalents at end of periods $ 3,465,537 $ 1,354,111 $ 3,465,537 $ 1,354,111 ----------- ----------- ------------ ----------- ----------- ----------- ------------ -----------
The accompanying notes are an integral part of these financial statements 6 CALPROP CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- ------------------------ 1997 1996 1997 1996 --------- --------- --------- --------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the periods for - Interest (net of amount capitalized) 122,677 213,398 250,769 217,854 NON-CASH INVESTING AND FINANCING ACTIVITIES: Accrual of preferred dividend -- -- -- 202,247 Conversion of preferred stock to common stock -- -- -- 4,329,235 Conversion of accrued preferred dividends to notes payable -- -- -- 1,054,158 Exchange of loan from related party to minority interest -- -- 120,000 -- Exchange of real estate under development and loan payable for fifty percent interest in a joint venture 2,000,000 -- 2,000,000 --
The accompanying notes are an integral part of these financial statements 7 CALPROP CORPORATION NOTES TO FINANCIAL STATEMENTS PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 (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 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. During the third quarter of 1996, the Company recorded an impairment loss associated with the Victorville property, which was included as land held for investment, of $1,626,198. In addition, the Company recorded an impairment loss on its Pleasant Oaks Estates project and the Summertree Park, Elk Grove project of $925,545 and $1,775,105, respectively. The results of operations for the nine months ended September 30, 1997 may not be indicative of the operating results for the year ending December 31, 1997. Note 2: INCOME TAXES As of September 30, 1997, the Company had net operating carryforwards for federal and state tax purposes of approximately $13,100,000 and $16,800,000, respectively. For federal and state tax purposes the net operating carryforwards expire from 2007 through 2011, and from 1998 through 2007, respectively. 8 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 NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------- --------------------------- 1997 1996 1997 1996 ----------- ----------- ------------ ----------- Weighted average number of common shares and common stock equivalents adjusted for stock dividends 9,222,785 9,228,265 9,223,761 6,716,053 ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- Net loss $ (325,344) $(5,001,876) $(1,335,220) $(6,603,106) ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- Loss per share (after giving effect of preferred stock dividend in 1996): $(0.04) $(0.54) $(0.14) $(1.01) ------ ------ ------ ------ ------ ------ ------ ------
Note 4: MINORITY INTEREST The Company has consolidated the financial statements of DMM Development, LLC ("DMM"), a joint-venture formed for the development of the Cierra del Lago and Antares projects, and Montserrat Development Co., LLC ("MDC"), a joint-venture formed for the development of certain lots in the Montserrat project. Calprop Corporation 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. On February 10, 1997, the Company and an officer of the Company formed MDC. As part of the formation, the Company contributed 24 partially developed lots of its Montserrat project, in Murrieta, California, for a basis of $550,000, and the officer exchanged a $120,000 note due from the Company for a basis of $120,000. Ninety-nine percent of the profits or losses from the development of the 24 lots is to be received by Calprop Corporation, and the remaining 1 percent of the profits or losses is to be received by the officer. In July of 1997, the Company contributed an additional 29 partially developed lots to MDC to facilitate construction financing and based on the Company's agreement with the officer, the Company is to receive one hundred percent of the profits or losses from the development of these additional lots. During the third quarter of 1997, all of the initial 24 lots were sold, the officer was paid his equity and his share of the profits, and the Company became the sole owner of MDC. As of September 30, 1997, RGC's ownership percentage in DMM was fifty percent. As a result of the consolidations, the Company has recorded minority interest of $10,883 and $10,000 as of September 30, 1997, and December 31, 1996, respectively. Note 5: INVESTMENT IN LAND During the third quarter of 1997, the Company transferred $1,057,529, the value of the Mockingbird Canyon property in Riverside County, California, from Investment in Land to Real Estate Under Development because development activities commenced in the project. 9 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company's sales revenue during the third quarters of the last two years increased from $2,626,505 in 1996 to $5,114,792 in 1997. During the first nine months of the last two years, sales revenues increased from $7,020,876 in 1996 to $19,345,274 in 1997. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1997, the Company had remaining loan commitments from financial institutions of approximately $2,300,000, 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. During September of 1997, the Curci-Turner Company, a related party, made a $2,025,000 loan commitment to the company for the purchase, which occurred in October of 1997, of 115 entitled lots in Healdsburg, California. The loan provides for interest at 12% and provides that the Curci-Turner Company receive 50% of "Net Proceeds" as defined in the agreement, which is comparable to gross profit. All principal and interest is due no later than October 1, 2000. As of September 30, 1997, the outstanding balance on the loan was $2,000,000. During July of 1997, Imperial Bank made a $4,226,170 construction loan to the Company for the construction of 24 units in the Montserrat project in Murrieta, California. The note provides for interest at the prime rate plus 1.25% and a loan service charge of 1.25 points. The loan provides for paydowns with each closing, however, all principal and interest is due no later than July 23, 1998. As of September 30, 1997, the outstanding balance on the loan was $1,730,404. As of September 30, 1997, the Company had nine projects in various stages of development with two producing revenues from completed homes: Summertree Park and Montserrat. Additionally, during the third quarter of 1997, the Company sold the final home in the Cypress Cove project. The remaining four projects, Cierra del Lago, Antares, Montserrat Estates and Mockingbird Canyon, were in the initial stages of development. As of September 30 , 1997, the Company controlled 1,244 lots, of which, 944 were owned by the company and in various stages of development, and 300 were in escrow. Of the 944 owned lots, the Company had 27 homes completed (6 were in escrow, 14 were available for sale and 7 were models not yet released for sale), 65 homes under construction (30 were in escrow and 35 were available for sale), 304 improved lots and 548 unimproved entitled lots. 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 1997 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. RESULTS OF OPERATIONS Net loss decreased from $5,001,876 in the third quarter of 1996 to $325,344 in the third quarter of 1997. Net loss for the first nine months decreased from $6,603,106 in 1996 to $1,335,220 in 1997. The decrease in net loss for the three month and the nine month periods is primarily due to the write down of real estate under development and land held for investment of $4,326,848 in the third quarter of 1996. 10 Gross profit/loss changed from a loss of $84,655 for the third quarter of 1996 to a profit of $32,071 for the third quarter of 1997. For the nine month period ended September 30, gross profit/loss changed from loss of $227,253 in 1996 to a profit of $65,740 in 1997. The change in gross profit in both periods is primarily a result of an increase in total revenue. During the third quarters of the last two years, gross revenues increased from $2,626,505 in 1996 to $5,114,792 in 1997. During the first nine months of the year, gross revenues increased from $7,020,876 in 1996 to $19,345,274 in 1997. In the third quarter of 1996 the Company sold 14 homes with average sales prices of $187,608, and in the third quarter of 1997 the Company sold 24 homes with an average sales price of $213,116. In the first nine months of 1996 and 1997, the Company sold 36 and 84 homes, respectively, with average sales prices of $195,024 and $230,301, respectively. The increase in the number of sales and gross revenue between the first nine months of 1996 and 1997, is primarily due to an increase in available units for sale. The increase in average sales price from the first nine months of 1996 to the first nine months of 1997 is mainly a result of an increase in the number of homes sold in the Cypress Cove project as these homes have higher sales prices than those of the Company's other projects. 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) November 13, 1997 12 EX-27 2 FDS
5 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 3,465,537 0 0 0 24,035,916 3,838,594 0 0 27,874,510 3,580,495 0 0 0 9,222,785 (6,198,771) 27,874,510 19,345,274 19,407,686 19,279,534 19,279,534 1,462,489 0 250,769 (1,335,220) 0 (1,335,220) 0 0 0 (1,335,220) (0.14) 0
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