-----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, UDAkt++GIxvX2+jrKmyT7CwLgo4QVxoK0T9nTyAeVaAi3kiPhjlHSfClKKMOmWL6 je2H3yvtfPPBh208vA5EBg== 0000055742-96-000016.txt : 19960917 0000055742-96-000016.hdr.sgml : 19960917 ACCESSION NUMBER: 0000055742-96-000016 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960916 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: 96630576 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 July 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 July 31, 1996 3 Consolidated Condensed Statements of Operations for the 4 Three Months Ended July 31, 1996 and 1995 Consolidated Statements of Cash Flows for the Three Months 5 Ended July 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 7/31/96 (Unaudited) Cash $ 462,956 Cash in improvement trust funds 165,234 Accounts and notes receivable 7,462,848 Land contracts receivable 668,107 Less: Allowance for uncollectibles (152,795) Investments in joint ventures 609,081 Real estate held for development and sale 31,123,674 Property under contract for sale 353,258 Other property, plant and equipment 19,565,426 Less: Allowance for depreciation (3,703,329) Other assets 241,380 __________ TOTAL ASSETS $ 56,795,840 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable & other accrued expenses $ 3,747,305 Income taxes payable 1,554,689 Accrued interest 481,810 Customers' deposits 1,509,312 Debt 22,398,096 Deferred improvement revenue 815,329 Deferred income taxes 5,240,003 Deferred profit 1,697,167 __________ TOTAL LIABILITIES $ 16,938,299 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 12,362,242 __________ TOTAL STOCKHOLDERS' EQUITY 19,352,129 __________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 56,795,840 ========== See Notes to Consolidated Condensed Financial Statements
Page Three of Twelve KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended 7/31/96 7/31/95 (Unaudited) (Unaudited) INCOME: Net sales of land $ 2,793,984 $ 878,440 Sales of residential construction 155,000 - Interest income 146,381 177,026 Commission income 54,171 47,830 Revenues from operating golf and country club and inn 970,041 866,890 Income from joint ventures 76,862 1,729 Other revenues 21,016 83,503 __________ _________ Total 4,217,455 2,055,418 EXPENSES: Cost of land sold 1,873,560 602,466 Cost of residential construction 178,954 - Commissions and selling expenses 274,457 223,493 Operating costs of golf and country club and inn 988,992 779,460 Interest expense 125,534 81,519 Depreciation 210,974 182,491 Property taxes 56,823 81,910 General & administrative costs 300,456 433,925 Other Cost & Expenses - 21,746 _________ _________ TOTAL EXPENSES 4,009,750 2,407,010 NET INCOME (LOSS) BEFORE INCOME TAXES 207,705 (351,592) Income tax provision (benefit) 78,160 (133,590) _________ _________ NET INCOME (LOSS) $ 129,546 $ (218,002) ========== ========== NET INCOME (LOSS) PER SHARE $ .09 $ (0.15) ========== ========== DIVIDENDS PER SHARE NONE NONE See Notes to Consolidated Condensed Financial Statements
Page Four of Twelve KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended 7/31/96 7/31/95 (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 129,546 (218,002) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 210,974 182,491 Changes in operating assets in liabilities: Accounts and notes receivable 132,607 117,329 Residential construction in process 158,305 1,500 Real estate held for development and sale 2,197,903 (384,756) Other assets 504 49,692 Accounts payable (1,571,018) 20,657 Interest payable 33,846 172,933 Deferred income (182,250) (190,985) Income taxes payable (251,840) (133,590) Other liabilities (9,425) 38,431 Income from joint venture (76,862) (1,729) __________ __________ Net cash from operating activities: 772,290 (346,029) ___________ __________ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (2,746,652) (4,873) Distributions from (investment in) joint ventures (456,114) 18,407 ___________ ___________ Net cash from investing activities (3,202,765) 13,534 ___________ ___________ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans 5,657,730 526,746 Principal payments on debt (2,924,446) (612,871) ____________ ___________ Net cash from financing activities 2,733,284 (86,125) ___________ ___________ NET DECREASE IN CASH 302,809 (418,620) CASH - Beginning of period 160,147 507,277 ___________ ___________ CASH - End of period $ 462,956 $ 88,657 =========== =========== Supplemental Information Cash Paid: Interest paid was $91,687 and $349,669 for fiscal 1997 and 1996, respectively. Income tax was $330,000 in 1996. See Notes to Consolidated Condensed Financial Statements
Page Five of Twelve PART I. KILLEARN PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS JULY 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. For further information, refer to the complete consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10KSB for the year ended April 30, 1996. NOTE 2. Debt On June 18, 1996 the Company borrowed $3 million from a bank to finance the completion of construction and furnishing of a 60 room Inn located on the Company's Georgia property. NOTE 3. 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 4. 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 July 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 bear interest at 7% and 10% per annum. The remaining $700,000 of the sale is scheduled to be closed during the remainder of fiscal 1997, for cash. The $9.2 million of debt assumed was paid in full by July 31, 1996. At July 31, 1996 there remains approximately $1.6 million of gross profit to be recognized over the next 3 years as the cash is collected. Page Six of Twelve NOTE 5. Subsequent Event On August 1, 1996, the Company entered into an agreement pursuant to which it will transfer certain of its assets, comprised principally of the Eagle's Landing Golf Course and Country Club, the Inn at Eagle's Landing, approximately $2 million cash and approximately 250 acres of commercial and industrial real estate, subject to certain liabilities, to a newly-formed wholly owned subsidiary of the Company ("NewSub"), and the subsequent transfer of all of the outstanding capital stock of NewSub to J.T. Williams, Jr., the Company's Chairman of the Board and Chief Executive Officer, in exchange for 551,321 shares of Common Stock owned by Mr. Williams and the cancellation of his option to purchase an additional 100,000 shares of Common Stock. The Company's obligations under the agreement are subject to the approval of the transaction by the holders of a majority of the outstanding common stock, other than shares held by J. T. Williams, Jr.. The agreemeent is being submitted to the shareholders of the Company for approval at the Company's annual meeting, which is schedueled to be held on September 30, 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales of land increased approximately $1.9 million (318%) during the current three month period compared to the same period a year ago. The primary reason for the increase for the current three months was a result of increased bulk land sales in the Company's Georgia operations to various unrelated purchasers. Cost of land sold, as a percentage of net sales of land, remained relatively consistent with 67.1% for the current three month period compared to 68.6% for the same period a year ago. Interest income decreased approximately $31,000 during the current three month period compared to the same period a year ago, primarily due to a decrease in the interest on notes receivable from the sale of substantially all the Florida assets. As the principal is repaid, the related interest income is reduced. Sale of residential construction and cost of residential construction were $155,000 and $178,954 respectively for the current quarter compared to no activity the same quarter a year ago. During the current quarter, the Company sold the last home constructed by the Company. The Company currently has no intention of engaging in residential construction in its Georgia operations. Commission income increased $6,340 in the current quarter 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. Correspondingly, the commissions and sales expenses increased $50,964 in the current quarter for the same reason. Page Seven of Twelve Income from joint venture increased approximately $75,000 in the current quarter due to increase in residential lot sales in the Florida joint venture. General and administrative expenses decreased $133,120 in the current quarter due primarily to a prior year contribution to the Company's profit sharing plan with no corresponding contribution this year, and a reduction in salary and employee benefits in the current year. The operating statements for the current three months are not necessarily indicative of the results expected for the year. Liquidity and Capital Resources The Company finances its operations with operating cash flow and bank borrowings. On July 31, 1996 the Company had available lines of credit of approximately $95,000 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 June 18, 1996 the Company borrowed $3 million from a bank to finance the completion of construction and furnishing of a 60 room Inn located on the Company's Georgia property. 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 July 31, 1996 was $6.2 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 property and certain contracts receivable. Upon the sale of collateralized property, release prices, which vary with the development, are applied against the loan balance owed to the bank. The Company historically secures development loans from other lenders in an amount sufficient to pay the release price and all development costs, which are ultimately satisfied with proceeds from the sale of the properties. 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. Based upon the Company's relationship with its lender, management believes this debt will be extended, as it has been in the past. In addition, the Company has other debt maturing in the amount of approxi- mately $3.2 million in fiscal 1997 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. Page Eight of Twelve PART II - OTHER INFORMATION ITEM 5. OTHER INFORMATION On August 1, 1996, the Company entered into an agreement pursuant to which it will transfer certain of its assets, comprised principally of the Eagle's Landing Golf Course and Country Club, the Inn at Eagle's Landing, approximately $2 million cash and approximately 250 acres of commercial and industrial real estate, subject to certain liabilities, to a newly-formed wholly owned subsidiary of the Company ("NewSub"), and the subsequent transfer of all of the outstanding capital stock of NewSub to J.T. Williams, Jr., the Company's Chairman of the Board and Chief Executive Officer, in exchange for 551,321 shares of Common Stock owned by Mr. Williams and the cancellation of his option to purchase an additional 100,000 shares of Common Stock. The Company's obligations under the agreement are subject to the approval of the transaction by the holders of a majority of the outstanding common stock, other than shares held by J. T. Williams, Jr.. The agreemeent is being submitted to the shareholders of the Company for approval at the Company's annual meeting, which is scheduled to be held on September 30, 1996. 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 Page Nine of Twelve 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 11 Page Eleven of Twelve EX-27 2
5 3-MOS JUL-31-1996 JUL-31-1996 628,190 0 8,130,955 152,795 31,476,932 40,324,662 19,565,426 3,703,329 56,795,840 5,783,804 31,659,906 143,873 0 0 19,208,256 56,795,840 3,973,196 4,217,455 3,315,963 773,947 0 0 125,534 207,705 78,160 129,546 0 0 0 0 .09 .09
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