-----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, AT6SZiXRaN56AemTPyDHX26EGaZ08fWV8bLWxv/u9nzgZsErytsqLA5815TrvNmp 8aIb3C1kvIJExRdHxWsbTQ== 0000055742-97-000003.txt : 19970314 0000055742-97-000003.hdr.sgml : 19970314 ACCESSION NUMBER: 0000055742-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970313 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: 97555773 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, 1997 [ ] 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: 887,412. Transitional Small Business Disclosure Format: No [X]. 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, 1997 3 Consolidated Condensed Statements of Operations for the Three 4 Months Ended and Nine Months Ended January 31, 1997 and 1996 Consolidated Statements of Cash Flows for the Nine Months 5 Ended January 31, 1997 and 1996 Notes to Consolidated Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition 7 and Results of Operations Part II Other Information Item 1. Legal Proceedings 9 Item 4. Submission of Matters to a Vote of Security Holders 9 Item 5. Other Information 9 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 10 Exhibit Index 11 PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEET
ASSETS 1/31/97 (Unaudited) Cash $ 123,156 Cash in improvement trust funds 167,756 Accounts and notes receivable 6,716,480 Land contracts receivable, net 363,864 Real estate held for development and sale 25,912,398 Property under contract for sale 212,653 Other property, plant and equipment, net 1,009,326 Other assets 31,247 __________ TOTAL ASSETS $ 34,536,880 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable & other liabilities $ 1,521,321 Income taxes payable 1,290,658 Mortgages & notes payable 22,176,402 Deferred improvement revenue 719,932 Deferred income taxes 5,207,686 Deferred profit 1,563,552 __________ TOTAL LIABILITIES $ 32,479,551 STOCKHOLDERS' EQUITY Common stock - par value $.10 per share; authorized 6,000,000 shares; issued 887,412 shares $ 88,741 Additional paid-in capital 6,846,014 Retained earnings 13,026,797 Net assets to be transferred for stock (17,904,223) __________ TOTAL STOCKHOLDERS' EQUITY $ 2,057,329 __________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 34,536,880 ========== See Notes to Consolidated Condensed Financial Statements
KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended 1/31/97 1/31/96 1/31/97 1/31/96 Unaudited Unaudited Unaudited Unaudited INCOME: Net sales of land $3,202,738 $3,389,837 $8,798,425 $12,566,137 Sales of residential construction 0 155,000 45,500 Interest income 137,071 92,448 448,787 542,785 Commission income 62,004 93,506 127,569 215,928 Income from joint ventures 55,232 483,533 Other revenues 18,161 85,370 51,138 83,885 _________ _________ _________ _________ Total 3,419,974 3,661,161 9,636,151 13,937,768 EXPENSES: Cost of land sold 1,864,202 2,477,611 5,355,698 9,469,631 Cost of residential construction 0 179,879 42,063 Commissions and selling expenses 332,496 511,687 1,143,752 1,134,017 Interest expense 143,848 64,397 413,530 216,093 Depreciation 25,862 26,294 82,807 81,549 Property taxes 67,343 64,507 146,544 149,533 General & administrative costs 340,744 402,678 1,033,752 1,181,338 _________ _________ _________ __________ TOTAL EXPENSES 2,774,495 3,547,174 8,355,962 12,274,224 Net income before income taxes and discontinued operations 645,479 113,987 1,280,189 1,663,544 Income tax provision 242,894 42,893 486,088 625,992 _________ _________ ________ _________ NET INCOME BEFORE DISCONTINUED OPERATIONS $ 402,585 $ 71,094 $ 794,101 $1,037,552 DISCONTINUED OPERATIONS: Net loss from transferred operations (net of income tax benefit of $19,667 and $29,976 for the three and nine months ended January 31, 1996, respectively)$ 0 $ (32,598) $ 0 $ (49,684) Net income $ 402,585 $ 38,496 $ 794,101 $ 987,868 ======= ========= ======= ======= Earnings per share before discontinued operations $ 0.45 $ 0.05 $ 0.89 $ 0.72 Discontinued operations $ 0.00 $ (0.02) $ 0.00 $ (0.03) _________ _________ ________ _________ NET INCOME PER SHARE $ 0.45 $ 0.03 $ 0.89 $ 0.69 ========= ========= ======== ========= Weighted average shares outstanding 887,412 1,438,733 887,412 1,438,733 DIVIDENDS PER SHARE NONE NONE NONE NONE See Notes to Consolidated Condensed Financial Statements
KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended 1/31/97 1/31/96 -------- -------- (Unaudited)(Unaudited) NET CASH FROM OPERATING ACTIVITIES: (2,626,336) (1,938,855) ___________ __________ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (52,171) (67,423) Distributions from joint ventures 129,927 602,484 Net change in assets from discontinued operations 0 (21,249) ___________ ___________ Net cash from investing activities 77,756 513,812 ___________ ___________ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans 9,569,345 5,033,452 Principal payments on debt (7,057,756) (4,086,673) ____________ ___________ Net cash from financing activities 2,511,589 946,779 ___________ ___________ NET INCREASE/(DECREASE) IN CASH (36,991) (478,264) CASH - Beginning of period 160,147 507,277 ___________ ___________ CASH - End of period $ 123,156 $ 29,013 =========== =========== Supplemental Information Cash Paid: Interest paid was $1,659,119 and $1,574,914 for fiscal 1997 and 1996, respectively. Income taxes paid were $983,207 and $10,000 in fiscal 1997 and 1996, respectively. See Notes to Consolidated Condensed Financial Statements
PART I. KILLEARN PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS JANUARY 31, 1997 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 for 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. Transfer of Assets On August 1, 1996, the Company entered into an agreement, subject to shareholder approval, pursuant to which it agreed to transfer certain of its assets and liabilities to J.T. Williams, Jr., the Company's former Chairman of the Board and Chief Executive Officer, in exchange for the 551,321 shares of common stock he held in the Company and the cancellation of his option to purchase an additional 100,000 shares of common stock. The net assets identified in the agreement consisted principally of the Eagle's Landing Golf Course and Country Club, the Inn at Eagle's Landing, a note for approximately $2 million and approximately 250 acres of commercial and industrial real estate, and certain mortgages and other liabilities, as more fully described in the Company's proxy statement filed on August 26, 1996. Such transfer, once approved, was agreed to be effective as of May 1, 1996. Accordingly, the net cash flows related to the transferred assets from the effective date (May 1, 1996) until the closing date would be transferred to or funded by J.T. Williams, Jr. On September 30, 1996, the shareholders of the Company (excluding J.T. Williams, Jr.) voted on and approved the transfer agreement, and the transfer closed on November 16, 1996. The net assets transferred had a historical cost basis of approximately $17,904,000 which has been reflected as a reduction to shareholders' equity in the accompanying balance sheet. The net operating results of the transferred assets have been removed from the statement of operations retroactively to the effective date and have not been considered in the determination of net income of the Company. Furthermore, adjustments to prior year results of operations have been made to accunt for the transferred assets. The prior year results of the transferred assets have been reflected as discontinued operations in the accompanying statements of operations and cash flows. NOTE 3 Earnings per share Earnings per share reflect the weighted average shares outstanding during each of the periods presented as reflected on the face of the income statement. As discussed in Note 2, the Company entered into an agreement to transfer certain net assets in exchange for 551,321 shares and the cancellation of an option to purchase 100,000 shares of the the Company's common stock. Based on the effective date of that agreement, earnings per share are computed based on the number of shares outstanding during the period as if such shares were transferred on the effective date. Had such transaction been completed on May 1, 1995, earnings per share for the nine months ended January 31, 1996 would have been $1.22. NOTE 4 Financing The Company obtained various additional credit facilities during the nine month period ending January 31, 1997. One such facility of approximately $1.8 million is being used for the acquisition and development of 75 additional acres of land located contiguous to the Company's property in Stockbridge, Georgia. Additional borrowings were for the financing of development cost under various development loans. These loans generally mature as the related lots are sold and bear interest rates at one point over prime rate. Additionally, on January 29, 1997, the Company modified its loan agreement with a bank involving its Georgia operations. The agreement provides for interest to be paid at the bank's prime rate plus 2% per annum, and extends the due date to April 10, 1997. 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. Upon maturity of this loan, 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. Management believes this debt will be extended, or refinanced with another lending institution, as it has been in the past. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales of land decreased approximately $187,000 (5.5%) during the current three month period and $3.8 million (30%) during the current nine month period compared to the same period a year ago. The primary reason for the decrease was a result of the recognition in the prior year of income in the Florida operations related to the sale of substantially all of the Florida assets in November 1993. However, net land sales in Georgia increased 59.6% for the current three month period, and 147% for the current nine month period, compared to the same period a year ago, as a result of the Company initiating a modified sales program intended to expand its marketing efforts. Cost of land sold, as a percentage of net sales of land, was 58.2% for the current three month period compared to 73.1% for the same period a year ago. The cost of land sold for the current nine month period decreased to 60.9% compared to 75.4% for the same period a year ago. These improvements in gross margins are reflective of the discounted sales price granted in the prior year on the bulk sale of land from the Florida operations. Interest income increased approximately $45,000 during the current three month period and decreased approximately $94,000 during the current nine month period when compared to the same period a year ago. The overall decrease is primarily due to a decrease in the interest on notes receivable from the sale of substantially all of the Florida assets. As principal is repaid, the related interest income is reduced. Commission income decreased approximately $32,000 in the current three month period, and decreased approximately $88,000 in the current nine month period as compared to the same period a year ago. Likewise, the commission and selling expenses decreased approximately $179,000 in the current three month period, and increased approximately $9,700 in the current nine month period These overall decreases resulted from the Company's change in its method of marketing homes in some of the Georgia developments in the second quarter of fiscal 1996. At that time, the Company began using independent brokers rather than Company-employed salespersons. Interest expense, when compared to the same periods a year ago, increased approximately $79,000 for the current three month period and $197,000 for the current nine month period. These increases are due to some interest expense incurred by the Company being ineligible for capitalization in accordance with Financial Accounting Standard 34. General and administrative expenses decreased $62,000 in the current three month period and $148,000 for the current nine month period when compared to the same period a year ago. These decreases are due to reduction of life insurance benefits and salaries to the Company's former Chief Executive Officer and other employees in relation to the asset transfer agreement discussed in Note 2. Additionally, the Company elected not to contribute to the Company's profit sharing plan in the current year; however, the nine months ending January 31, 1996 included a $45,000 contribution to the plan. Discontinued operations represents the results attributible to the net assets transferred to J.T. Williams, Jr. pursuant to the August 1, 1996 Agreement between the Company and Mr. Williams. Loss from discontinued operations was $32,598 and $49,684 respectively for the three and nine month ended January 31, 1996 (See Item 4). The operating statements for the current nine 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 January 31, 1997 the Company had available lines of credit of approximately $1.5 million 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 when the need for additional financing arise. On January 29, 1997, the Company modified its loan agreement with a bank involving its Georgia operations. The agreement provides for interest to be paid at the bank's prime rate plus 2% per annum, and extends the due date to April 10, 1997. 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. Upon maturity of this loan, 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. Management believes this debt will be extended, or refinanced with another lending institution, as it has been in the past. In addition, the Company has other debt maturing in the amount of approxi- mately $2.3 million in fiscal 1997 and $8.3 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. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On September 30, 1996, the shareholders approved the transfer by the Company (the "Split-off") of certain of its assets, comprised principally of the Eagle's Landing Golf Course and Country Club, the Inn at Eagle's Landing, a note for approximately $2 million 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 former 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 closing of the Split-off occurred on November 16, 1996; however, the effective date of the transfer of assets and liabilities was May 1, 1996. With 1,438,733 shares outstanding, 1,179,454 shares voted in favor of the proposed split-off, with 52,695 voting against, and 30,784 abstaining from voting. On September 30, 1996, the shareholders elected Mark A. Conner, Robert E. Maloney, Jr. and Langdon S. Flowers, Jr. to the Board of Directors. Additionally, Mark A. Conner was elected by the Board to be President and Chairman. With 1,438,733 shares outstanding, 1,259,234 shares voted in favor of, and 4,875 voted against the election of the new directors. ITEM 5. OTHER INFORMATION NONE 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: March 13, 1997 /s/ David K. Williams _________________________ DAVID K. WILLIAMS Chief Financial Officer Vice President EXHIBIT INDEX Exhibit No. Description Page No. ----------- ----------- -------- 27 Financial Data Schedule 12 10 10 EX-27 2
5 9-MOS APR-30-1997 JAN-31-1997 290,912 0 7,080,344 0 26,125,051 33,527,554 1,009,326 0 34,536,880 2,811,979 29,667,572 88,741 0 0 2,057,329 34,536,880 9,080,994 9,636,151 6,679,329 8,355,962 0 0 413,530 1,280,189 486,088 794,101 0 0 0 794,101 .89 .89
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