-----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, A3mGuXtsY0kHgoGyFI3vcFMRd+riMZBFfSgfWGEY2LqeXLzdiCM5mZa81rpvNV7Q /9xOCP8xWYqvwqeapqFWRA== 0001133884-02-000620.txt : 20020515 0001133884-02-000620.hdr.sgml : 20020515 ACCESSION NUMBER: 0001133884-02-000620 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALPROP CORP CENTRAL INDEX KEY: 0000016496 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 954044835 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06844 FILM NUMBER: 02648499 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 g10q-28552.txt 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 March 31, 2002 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 April 11, 2002: Number of Shares Title of Each Class Outstanding - ------------------------------ ----------------- Common Stock, no par value 10,254,005 CALPROP CORPORATION Part I Item I - Financial Information Set forth is the unaudited quarterly report for the quarters ended March 31, 2002 and 2001, for Calprop Corporation. The information set forth reflects all adjustments which were, in the opinion of management, necessary for a fair presentation. CALPROP CORPORATION CONSOLIDATED BALANCE SHEETS ASSETS
March 31, December 31, 2002 2001 (Unaudited) ------------------ ----------------- Real estate under development $80,595,843 $88,789,252 Other assets: Cash and cash equivalents 1,966,257 2,079,471 Deferred tax assets (note 2) 5,884,941 6,535,343 Other assets 951,014 774,882 Receivable from affiliates 1,046,448 788,752 ------------------ ----------------- Total other assets 9,848,660 10,178,448 ------------------ ----------------- Total assets $90,444,503 $98,967,700 ================== =================
(Continued) The accompanying notes are an integral part of these financial statements. 3
CALPROP CORPORATION CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31, 2002 2001 (Unaudited) ---------------- ---------------- Trust deeds and notes payable $47,585,175 $51,990,779 Related-party notes 23,615,458 26,219,560 ---------------- ---------------- Total trust deeds, notes payable and 71,200,633 78,210,339 related-party notes Accounts payable and accrued liabilities 4,079,138 5,334,450 Warranty reserves 658,242 670,115 ---------------- ---------------- Total liabilities 75,938,013 84,214,904 Stockholders' equity: Common stock, no par value Authorized - 20,000,000 shares Issued and outstanding - 10,254,005 shares at March 31, 2002 and December 31, 2001 10,254,005 10,254,005 Additional paid-in capital 25,845,986 25,845,986 Deferred compensation (51,000) (51,000) Stock purchase loans (516,039) (537,179) Accumulated deficit (21,026,462) (20,759,016) ---------------- ---------------- Total stockholders' equity 14,506,490 14,752,796 ---------------- ---------------- $90,444,503 $98,967,700 ================ ================
(Concluded) The accompanying notes are an integral part of these financial statements. 4
CALPROP CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, ------------------------------------- 2002 2001 ---------------- ---------------- Development operations: Real estate sales $21,292,270 $23,672,136 Cost of real estate sales 21,197,496 21,626,299 ---------------- ---------------- Income from development operations 94,774 2,045,837 Loss from investment in real estate venture (75,769) Other income: Interest and miscellaneous 62,048 33,183 Management fee 207,182 ---------------- ---------------- Total other income 269,230 33,183 Other expenses- General and administrative 555,446 734,843 Minority interests (Note 4) 235 ---------------- ---------------- (Loss) income before provision for income taxes (267,446) 1,344,177 Provision for income taxes (Note 2) ---------------- ---------------- Net (loss) income ($267,446) $1,344,177 ================ ================ Basic net (loss) income per share (Note 3) ($0.03) $0.13 ======= ===== Diluted net (loss) income per share (Note 3) ($0.03) $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 March 31, --------------------------------- 2002 2001 --------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income ($267,446) $1,344,177 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Minority interests 235 Loss from investment in real estate venture 75,769 Depreciation and amortization 10,680 13,541 Provision for warrantly reserves 58,000 105,475 Deferred income taxes 650,402 Change in assets and liabilities: Other assets (186,812) (24,255) Receivable from affiliates (257,696) Accounts payable and accrued liabilities (1,255,312) (439,951) Warranty reserves (69,873) (71,520) Additions to real estate under development (12,872,909) (14,982,364) Cost of real estate sales 20,990,314 21,626,299 Accrued interest for executive stock purchase loans (5,395) (5,607) --------------------------------- Net cash provided by operating activities 6,869,957 7,565,795 --------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under related-party notes 1,562,776 Payments under related-party notes (4,166,878) (1,067,970) Borrowings under trust deeds and notes payable 12,540,565 16,567,719 Payments under trust deeds and notes payable (16,946,169) (21,943,176) Repayment of stock purchase loans 26,535 --------------------------------- Net cash used in financing activities (6,983,171) (6,443,427) --------------------------------- Net (decrease) increase in cash and cash equivalents (113,214) 1,122,368 Cash and cash equivalents at beginning of period 2,079,471 2,394,310 --------------------------------- Cash and cash equivalents at end of period $1,966,257 $3,516,678 ================================= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for income taxes $20,000 $2,981
The accompanying notes are an integral part of these financial statements. 6 CALPROP CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PERIODS ENDED MARCH 31, 2002 AND 2001 (Unaudited) Note 1: Basis of presentation and significant accounting policies The unaudited, condensed, consolidated 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 accounting principles generally accepted in the United States of America for complete financial statements. The accompanying financial statements have not been audited by independent auditors in accordance with auditing standards generally accepted in the United States of America, but in the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position of Calprop Corporation ("the Company") and its 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. Recent accounting pronouncements - On October 3, 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 supercedes SFAS 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS 144 applies to all long-lived assets (including discontinued operations) and consequently amends Accounting Principles Board Opinion No. 30 (APB 30), Reporting Results of Operations Reporting the Effects of Disposal of a Segment of a Business. SFAS 144 develops one accounting model for long-lived assets that are to be disposed of by sale. SFAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal transaction. SFAS 144 is effective for the Company for all financial statements issued in fiscal 2002. The adoption of SFAS No. 144 did not have a material impact on the Company's financial position or its results of operations. The results of operations for the three months ended March 31, 2002 may not be indicative of the operating results for the year ending December 31, 2002. Note 2: Income taxes As of March 31, 2002, the Company had gross deferred tax assets of $7,499,363 offset by a deferred tax asset valuation allowance of $1,614,422. During the three months ended March 31, 2002, the Company increased the deferred tax asset valuation allowance by $209,599 which offset the net current benefit for the period. The Company has assessed its past earnings history and trends, sales backlog, budgeted sales, and expiration dates of net operating loss carryforwards and has determined that it is more likely than not that the $5,884,941 of deferred tax assets will be realized. As of March 31, 2002, the Company had net operating loss carryforwards for federal income tax purposes of approximately $16,255,700. For federal tax purposes the net operating loss carryforwards expire from 2007 through 2013. 7 Note 3: Earnings per share The following table sets forth the computation of basic and diluted net (loss) income per share:
Three Months Ended March 31, ------------------------- 2002 2001 ------------------------- Net (loss) income ($267,446) $1,344,177 Numberator for basic and diluted net (loss) income ($267,446) $1,344,177 per share ========================= Denominator for basic net (loss) income per share 10,254,005 10,290,535 (weighted average outstanding shares) Effect of dilutive stock options 125,840 ------------------------- Weighted average shares for dilutive net income per 10,254,005 10,416,375 share ========================= Basic net (loss) income per share ($0.03) $0.13 ========================= Diluted net (loss) income per share ($0.03) $0.13 =========================
Note 4: Minority interest The Company has consolidated the financial statements of the following entities:
- --------------------------------------------------------------------------------------------------------------------------------- Ownership interest at Entity March 31, 2002 Development - --------------------------------------------------------------------------------------------------------------------------------- Colorado Pacific Homes, Inc. ("CPH") 100% 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 99% 115 lots in Healdsburg, California ("Parkland") RGCCLPO Development Co., LLC ("RGCCLPO") 100% 382 lots in Milpitas, California PWA Associates, LLC ("PWA") 100% 68-unit apartment in Milpitas, California - ---------------------------------------------------------------------------------------------------------------------------------
CPH: The Company was entitled to receive eighty percent of the profits of CPH, and the other owner, an officer of the Company, was entitled to receive the remaining twenty percent of the profits. During November 2001, Calprop obtained all of the officer's ownership interest in CPH. 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 99% to the Company, and the other member, an officer of the Company, is entitled to receive the remaining one percent of the profits. 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. PWA: Pursuant to the operating agreement of PWA, the Company was entitled to receive fifty percent of the profits of PWA, and the other member, RGC Associates, LLC ("RGC Associates"), was entitled to receive the remaining fifty percent of the profits. During May 2001, the Company purchased all of RGC Associates ownership interest in PWA. During the three months ended March 31, 2002, $1,699 of the total income of $1,934 by the entities related to the minority interest was not allocated to the minority interest because the minority interest had an accumulated deficit interest in those entities. The Company does not reflect the deficit for the minority interest because the minority owners are not responsible for losses incurred beyond their equity. The unrecognized minority interest in deficit of the Company as of March 31, 2002 and December 31, 2001 was $64,166 and $65,865, respectively. As a result, the Company has recorded minority interest of $0 as of March 31, 2002 and December 31, 2001. 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 March 31, 2002, the Company had remaining loan commitments from financial institutions of approximately $18,950,000, 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 March 31, 2002, the Company had five residential housing projects in various stages of development, with five producing revenues from completed homes and townhomes: Parc Metropolitan, High Ridge Court, Saddlerock, Creekside Estates, and Montserrat Classics. As of March 31, 2002, the Company has 192 homes under construction, of which 119 are in escrow to be sold, and 19 model units. Additionally, the Company has an inventory of 134 lots under development. In addition to the construction and sale of single-family and multifamily housing, the Company is engaged in the development of apartments and townhomes available for lease. As of March 31, 2002, the Company had two projects under development (one project consists of a 25% equity interest in a real estate venture), the total projects consist of 180 units available for lease and 70 units under construction. As of March 31, 2002, the Company had 119 units in escrow ("backlog") compared with a backlog of 133 units as of March 31, 2001. The gross revenues of such backlog was $45,470,000 and $52,780,000 as of March 31, 2002 and 2001, respectively. Based on its agreements with its lenders, the Company believes that it will have sufficient liquidity to finance its construction projects in 2002 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 2002, minimize operating expenses, and maintain control over costs. With regard to the debt coming due in 2002, 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 2002. Results of operations Real estate sales for the three months ended March 31, 2002 decreased 10.1% to $21,292,270 from $23,672,136 for the three months ended March 31, 2001. In the first quarter of 2002, the Company sold 58 homes with an average sales price of $367,100, a 14.7% decrease in the volume of home sales compared to 68 homes with an average sales price of $348,100 for the first quarter of 2001. Income from development operations decreased to $94,774 in the first quarter of 2002 from $2,045,837 in the first quarter of 2001. The significant decrease of income from development operations during the first quarter of 2002 resulted from a slower absorption rate, and increased production overhead costs. The increased sales price was not sufficient to offset the increased direct construction cost, marketing and sales incentives, production overhead and interest costs. 10 General and administrative expenses decreased to $555,446 in the three months ended March 31, 2002 from $734,843 in the corresponding period. The decrease is due to the focus efforts to decrease corporate overhead costs. Item 3 Quantitative and Qualitative Disclosure about Market Risk The Company's exposure to market risk has not materially changed from what was reported on the Company's Form 10-K for the year ended December 31, 2001. 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 1, 2002 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, 2001 and unaudited consolidated financial statements for the quarter ended December 31, 2001, and under item 7(c) a press release announcing Calprop Corporations' 2001 annual and fourth 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) May 10, 2002 12 -----END PRIVACY-ENHANCED MESSAGE-----