-----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, NzmZqNVu0GEMZXZTJs0maWi9mSSD2+NKs1jJiXYrU5SoTyd+NPfQdEGQePmFjSOj EBPQ7OWXuxX6isu+ybdSWQ== 0000055742-96-000008.txt : 19960319 0000055742-96-000008.hdr.sgml : 19960319 ACCESSION NUMBER: 0000055742-96-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960318 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: KILLEARN PROPERTIES INC CENTRAL INDEX KEY: 0000055742 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 591095497 STATE OF INCORPORATION: FL FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-06762 FILM NUMBER: 96535931 BUSINESS ADDRESS: STREET 1: 100 EAGLES LANDING WAY CITY: STOCKBRIDGE STATE: GA ZIP: 30281 BUSINESS PHONE: 4043892020 MAIL ADDRESS: STREET 1: 100 EAGLES LANDING WAY CITY: STOCKBRIDGE STATE: GA ZIP: 30281 FORMER COMPANY: FORMER CONFORMED NAME: KILLEARN ESTATES INC DATE OF NAME CHANGE: 19730911 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15[d] OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 1996 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT For the transition period from to Commission file number 1-6762 KILLEARN PROPERTIES, INC. (Exact name of small business issuer as specified in its charter ) Florida 59-1095497 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 100 Eagle's Landing Way Stockbridge, GA 30281 (Address of principal executive offices) Issuer's telephone number (770)389-2020 Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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] State the number of shares outstanding of each of the issuer's classes of common equity, as of the last practicable date: 1,438,733. Transitional Small Business Disclosure Format: No [X]. Page One of Twelve Exhibit Index on Page Eleven KILLEARN PROPERTIES, INC. AND SUBSIDIARIES INDEX Part I. Financial Information Item 1. Consolidated Condensed Financial Statements (Unaudited): Consolidated Condensed Balance Sheet as of January 31, 1996 3 Consolidated Condensed Statements of Operations for the 4 Three Months and Nine Months Ended January 31, 1996 and 1995 Consolidated Statements of Cash Flows for the Nine Months 5 Ended January 31, 1996 and 1995 Notes to Consolidated Condensed Financial Statements 6 - 7 Item 2. Management's Discussion and Analysis of Financial Condition 8 - 9 and Results of Operations Part II Other Information Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 10 Exhibit Index 11 Page Two of Twelve PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS 1/31/96 (Unaudited)* Cash $ 29,013 Cash in improvement trust funds 162,974 Accounts and notes receivable 7,723,009 Land contracts receivable 450,072 Less: Allowance for uncollectibles (231,050) Investments in joint ventures 264,220 Residential real estate held for sale 158,306 Real estate held for development and sale 34,581,169 Property under contract for sale 420,518 Other property, plant and equipment 12,992,468 Less: Allowance for depreciation (3,453,101) Construction under development 1,521,825 Utility deposits 2,000 Other assets 189,179 __________ TOTAL ASSETS $ 54,810,602 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable & other accrued expenses $ 3,495,790 Income taxes payable 1,486,153 Accrued interest 219,004 Customers' deposits 1,409,894 Debt 21,019,767 Deferred improvement revenue 918,340 Deferred income taxes 5,363,795 Deferred profit 1,930,763 __________ TOTAL LIABILITIES $ 35,843,506 STOCKHOLDERS' EQUITY Common stock - par value $.10 per share; authorized 6,000,000 shares; issued 1,438,733 shares 143,873 Additional paid-in capital 6,846,014 Retained earnings 11,977,209 TOTAL STOCKHOLDERS' EQUITY 18,967,096 __________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 54,810,602 ========== *Subject to year-end audit adjustments See Notes to Consolidated Condensed Financial Statements
Page Three of Twelve KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended 1/31/96 1/31/95 1/31/96 1/31/95 (Unaudited)* (Unaudited)*(Unaudited)* (Unaudited)* INCOME: Net sales of land $ 3,389,837 $3,652,889 $12,566,137 $12,252,352 Sales of residential construction 0 189,500 45,500 189,500 Interest income 92,448 111,057 542,785 466,186 Commission income 93,506 80,649 215,928 356,845 Revenues from operating golf and country club 692,391 753,911 2,328,677 2,276,068 Income from joint ventures 10,980 21,037 541,350 54,993 Other revenues 85,370 18,679 83,885 68,477 __________ _________ __________ __________ Total 4,364,532 4,827,722 16,324,262 15,664,421 EXPENSES: Cost of land sold 2,477,611 2,452,786 9,469,631 8,033,222 Cost of residential construction 0 217,558 42,063 217,558 Commissions and selling expenses 376,727 382,652 841,737 1,171,872 Operating costs of golf and country clubs 708,196 800,617 2,212,540 2,335,980 Interest expense 65,253 65,567 220,002 442,766 Depreciation 182,785 170,805 548,378 511,292 Property taxes 89,560 63,576 224,690 205,838 General & administrative costs 402,678 289,350 1,181,338 1,097,037 _________ _________ __________ __________ TOTAL EXPENSES 4,302,810 4,442,911 14,740,379 14,015,565 NET INCOME BEFORE INCOME TAXES 61,722 384,811 1,583,883 1,648,856 Income tax provision 23,226 186,904 596,015 692,521 _________ _________ __________ _________ NET INCOME $ 38,496 $ 197,907 $ 987,868 $ 956,335 ========== ========== ========== ========= NET INCOME PER SHARE $ .03 $ 0.14 $ 0.69 $ 0.66 ========== ========== ========= ======== DIVIDENDS PER SHARE NONE NONE NONE NONE *Subject to year end audit adjustments See Notes to Consolidated Condensed Financial Statements
Page Four of Twelve KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended 1/31/96 1/31/95 (Unaudited)*(Unaudited)* CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 987,868 $ 956,335 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 548,378 511,292 Decrease/(Increase) in accounts and notes receivable 312,745 (6,973,199) Decrease in residential construction in process 537,798 192,227 Increase in real estate held for development and sale (5,818,213) (8,688,118) Decrease in other assets 79,830 109,812 Decrease in accounts payable (208,278) (209,390) Decrease in interest payable (2,609) (186,008) Increase (decrease) in deferred income (2,374,063) 5,031,806 Increase in income taxes payable 586,015 534,597 Increase in other liabilities 212,693 1,327,910 Income from joint venture (541,350) (54,993) Decrease in residential construction in process and real estate held for development and sale resulting from the sale of such properties 3,417,687 5,543,636 Decrease in property under contract for sale 243,578 14,468,227 ___________ __________ Net cash (used in) provided by operating activities: (2,017,921) 12,564,134 ___________ __________ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment - net (67,423) (120,522) Provided by (investment in) joint ventures 660,301 (712,054) ___________ ___________ Net cash provided by (used in) investing activities 592,878 (832,576) ___________ ___________ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans 5,033,452 6,746,363 Principal payments on debt (4,086,673) (18,908,227) ____________ ___________ Net cash provided by (used in) financing activities 946,779 (12,161,864) ___________ ___________ NET DECREASE IN CASH (478,264) (430,306) CASH - Beginning of period 507,277 527,527 ___________ ___________ CASH - End of period $ 29,013 $ 97,221 =========== =========== Supplemental Information Cash Paid: Interest paid was $1,574,914 and $1,736,791 for 1996 and 1995, respectively. *Subject to year-end adjustments See Notes to Consolidated Condensed Financial Statements
Page Five of Twelve PART I. KILLEARN PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS JANUARY 31, 1996 NOTE 1. Basis of Presentation The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the instructions for Form 10-QSB and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and changes in financial position in conformity with generally accepted accounting principles. The information furnished reflects all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim period covered, including appropriate estimated provision for bonus and profit sharing arrangements normally determined or settled at year end. NOTE 2. Accounting Change During the first quarter of fiscal 1995, the Company adopted Statement of Financial Accounting Standards No. 114, "Accounting for Creditors for Impairment of a Loan" ("SFAS No. 114"), as required by such Statement. Given the relatively low level of delinquencies and foreclosures experienced by the Company, the adoption of SFAS No. 114 by the Company did not have a material effect on its financial statements. NOTE 3. Debt Interest rates on mortgages and notes payable ranged from 0.00% to 11.5% at January 31, 1996. The aggregate maturities of long-term debt are as follows: For the Year Ended January 31 1997 $12,279,109 1998 6,728,268 1999 1,389,011 2000 111,992 2001 113,840 Thereafter 397,547 ___________ $21,019,767 =========== Substantially all of the Company's assets are mortgaged or pledged as collateral for its indebtedness. Further information with respect to debt follows: Notes payable secured by contracts receivable and real estate Credit lines - prime plus 1% to prime plus 2% payable to financial institutions, secured by contracts receivable and real estate $19,691,981 Page Six of Twelve NOTE 3. Debt (cont'd) 9.00% to 11.5% payable to individuals and financial institutions, secured by contracts receivable and real estate $ 1,235,327 Other notes payable - 0% to 11.5% due in various installments through 1997 92,459 ___________ $21,019,767 =========== Interest expense for the three and nine months ended January 31, 1996 reflects a reduction of $427,715 and $1,357,134, respectively, for interest capitalized in accordance with FASB 34. NOTE 4. Earnings Per Share Primary and fully diluted earnings per share are calculated based on the following number of weighted average shares of stock outstanding including stock options as common stock equivalent. The number of shares outstanding for all periods presented was 1,438,733. NOTE 5 - Sale of Florida Assets On November 14, 1993, the Company entered into two agreements to sell substantially all of its Florida assets to an unrelated purchaser for approximately $25.7 million. As of January 31, 1996, approximately $25.0 million of the sale has closed, with the purchaser assuming debt of the Company of approximately $9.2 million, paying approximately $7.7 million in cash and issuing notes to the Company, secured by second mortgages on most of the assets purchased, totalling approximately $8.1 million. The notes are payable over the next 3 years, and most of the notes bear interest at 10% per annum. The remaining $700,000 of the sale is scheduled to be closed during the remainder of fiscal 1996, for cash. Of the $9.2 million of debt assumed, at January 31, 1996 there remains approximately $593,000 due, on which the Company remains secondarily liable. At January 31, 1996 there remains approximately $1.9 million of gross profit to be recognized over the next 3 years as the cash is collected. Page Seven of Twelve ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales of land decreased approximately $263,000 (7.2%) during the current three month period and increased $314,000 (2.6%) during the current nine month period compared to the same periods a year ago. The primary reason for the decrease for the current three months was a result of the recognition during the comparable period a year ago of $250,000 of income related to the sale of substantially all of the Florida assets on November 14, 1993. The sale of substantially all of the Florida assets also resulted in significant decreases in both sales and cost of residential construction during the current three and nine month periods. (See Note 5 to the Consolidated Condensed Financial Statements.) In addition, income from joint ventures decreased approximately $10,000 (47.8%) during the current three month period and increased approximately $486,000 (884%) during the current nine month period. The significant increase in the current nine months was due primarily to the non-recurring sale of a joint venture for $484,000 during the second quarter of fiscal 1996. Cost of land sold, as a percentage of net sales of land, increased to 73.1% for the current three month period compared to 67.1% for the same period a year ago. Cost of land sold for the current nine month period increased to 75.4% compared to 65.6% for the same period a year ago. The increase in cost of land sold for the current three month period and, to a lesser extent, nine month period resulted primarily from the volume discounted sales price of the land which was sold in the prior year primarily in connection with the Florida operations. In addition, in both the three months and nine months ended January 31, 1996, more lots were sold in Georgia than in Florida. In Georgia, utility costs to the Company are higher than such costs in Florida. Interest income decreased approximately $19,000 during the current three month period compared to the same period a year ago and increased approximately $77,000 for the current nine month period compared to the same period a year ago. The fluctuations relate primarily to the interest on notes receivable from the sale of substantially all the Florida assets. The Company is reporting interest income on such sale as money is received. The interest from the sale is due every six months and, therefore, the interest income from the sale varies on a quarter by quarter basis. Commission income increased $13,000 in the current quarter and decreased $141,000 for the current nine month period due to a change in the second quarter of fiscal 1996 in the method of marketing the Company's homes in some of the Company's Georgia developments by using independent brokers rather than Company-employed salespersons. Commissions and sales expenses decreased $5,900 in the current quarter and $330,000 for the current nine month period due partially to the change in marketing and due to the sale of substantially all the Florida assets a year ago. (See Note 5 to the Consolidated Condensed Financial Statements.) During August 1995, the Company entered into an agreement to sell its Atlanta golf and country club buildings to an independent third party under which the Company would retain ownership of the land and other Page Eight of Twelve related assets surrounding the golf course. That contract was terminated in November 1995 when the Company refused to extend the time to close. The Company continues to discuss such sale with that party and certain others. If a sale does close, future revenues and costs of operating the country club will be significantly reduced, and certain debt encumbering the sold property will be retired with the proceeds. The operating statements for the current three months and nine months are not necessarily indicative of the results expected for the year. Liquidity and Capital Resources The Company finances its operations with cash flow from operations and bank borrowings. On January 31, 1996 the Company had available lines of credit of approximately $187,000 which may be drawn as needed for the development of the Company's property and other working capital needs. The Company continues to look for additional sources of lines of credit and other financing alternatives and believes that such sources are available on acceptable terms should the need for additional financing arise. On January 11, 1996, the Company modified its loan agreements with a bank involving its Georgia operations. The modified agreement effectively combined a $1.5 million revolving loan with a term loan with a balance of $6.1 million. The outstanding principal amount of the modified loan at January 31, 1996 was $7.6 million. The agreement provides for interest to be paid at the bank's prime rate plus 1 1/2%, and extends the due date to December 10, 1996. The loan is collateralized by first mortgages on substantially all the undeveloped land in the Company's Georgia project and certain contracts receivable. Upon the sale of collateralized property, approximately 30% of the net proceeds are applied against the loan balances owed to the bank. The Company has been able to secure development loans from other lenders in an amount sufficient to pay the release price and all development costs. The failure of the bank to extend the Company's loan, or the failure of the Company to obtain replacement financing, could have a material adverse effect on the Company's financial condition. However, management knows of no reason the loan will not be extended, as it has been in the past, and if for any reason the loan is not extended, the Company believes that replacement financing would be available on acceptable terms. On July 20, 1994, the Company modified its loan agreement with a bank involving its Florida operations. The balance due the bank at January 31, 1996 was approximately $593,000 which is due on June 30, 1997. The pur- chaser of the Florida assets assumed this loan, and the Company remains only secondarily liable. (See Note 5 to the Consolidated Condensed Financial Statements.) In addition, the Company has other debt maturing in the amount of approxi- mately $930,000 in fiscal 1996 and $3.6 million in the following fiscal year. The Company anticipates that these obligations will be paid with the proceeds of land sales from normal operations, extension of debt or new borrowings. During the quarter ended January 31, 1996, the Company expended $850,000 for the construction of a 60 room inn adjoining its country club in Atlanta. The Company expects to spend an additional $4.9 million on Page Nine of Twelve such inn, including its furnishings, during the next two quarters. These capital expenditures have been financed with working capital funds. In the future it is expected that these capital expenditures will be fin- anced with working capital funds and a first mortgage loan on the land and improvements. PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION On March 15, 1996, the Company engaged Coopers & Lybrand L.L.P. as independent accountants to audit the Company's financial statements for the fiscal year ending April 30, 1996 and elected not to renew the engagement of the Company's previous independent accountants, BDO Seidman. No adverse opinions or disclaimers of opinion were given by BDO Seidman during the fiscal years ended April 30, 1993, 1994, or 1995, nor were any of their opinions qualified as to uncertainty, audit scope, or accounting principle, during the time BDO Seidman was engaged. There was no disagreement of any nature between the Company and BDO Seidman. This decision was approved by the Company's Audit Committee and Board of Directors. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following exhibit is being filed with this report: Exhibit No. Description 27 Financial Data Schedule (b) Reports on Form 8-K None SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. KILLEARN PROPERTIES, INC. (Registrant) Date:_____________________________ _________________________________ J. T. Williams, Jr. President Date:_____________________________ ______________________________ David K. Williams Chief Financial Officer Page Ten of Twelve EXHIBIT INDEX Exhibit No. Description Page No. 27 Financial Data Schedule 12 Page Eleven of Twelve EX-27 2
5 9-MOS APR-30-1996 JAN-31-1996 191,987 0 8,173,081 231,050 35,159,193 43,294,011 12,992,468 3,453,101 53,810,602 5,200,947 27,793,456 143,873 0 0 18,823,223 54,810,602 15,697,592 16,324,262 12,565,971 2,770,423 0 0 220,002 1,583,883 596,015 987,868 0 0 0 987,868 .69 .69
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