-----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, R2RusIQY2w1q4nG3ab2Yzto6qXgSGB3bdNFDSSxSiPj2LprHWu0z3fyiD1JSx98Y b2WcerY7LODG+Q8kDGbV+g== 0000055742-97-000006.txt : 19970730 0000055742-97-000006.hdr.sgml : 19970730 ACCESSION NUMBER: 0000055742-97-000006 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970729 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: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-06762 FILM NUMBER: 97646978 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 10KSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 (FEE REQUIRED) For the fiscal year ended April 30, 1997 Commission File Number 1-6762 KILLEARN PROPERTIES, INC. (Exact name of small business issuer in its charter) Florida 59-1095497 (State or other jurisdiction (I.R.S. Employer Identification No.) incorporation or organization) 100 Eagle's Landing Way Stockbridge, Georgia 30281 (Address of principal executive offices) Issuer's telephone number, including area code: (770) 389-2020 Securities registered pursuant to Section 12 (b) of the Act: Title of Each Class: Common Stock Name of Each Exchange on which Registered: ($.10 Par Value) American Stock Exchange, Inc. Securities registered pursuant to Section 12 (g) of the Act: NONE Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act of 1934 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__ No _______. Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB ( ) Revenues for the fiscal year ended April 30, 1997 were $14,247,174. As of July 16, 1997, the aggregate market value of the voting stock held by non-affiliates of the Issuer was approximately $3,726,774. This is based upon a closing market price of $4.50 per share of common stock, as reported on the American Stock Exchange - composite transaction tape. The number of shares outstanding of the registrant's common stock as of July 1, 1997 was 887,412. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Issuer's Proxy Statement in connection with its 1997 Annual Meeting of Shareholders (Part III) PART I ITEM 1. BUSINESS Killearn Properties, Inc. (the "Company") was organized as a Florida corporation in 1964. The Company is engaged primarily in the development of planned communities (see "ITEM 1. BUSINESS - Land Development," below) in the vicinity of Henry County, Georgia (see "ITEM 2. PROPERTIES," below). The Company's principal executive offices are located at 100 Eagle's Landing Way, Stockbridge, Georgia 30281, (770) 389-2020. Recent Developments In May 1996, Proactive Technologies, Inc. ("Proactive"), the Company's second largest shareholder, proposed to the Company a transaction pursuant to which the Company would 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 551,321 shares of Common Stock owned by Mr. Williams (approximately 42% of the outstanding Common Stock, the "Redemption Shares") and the cancellation of his option to purchase an additional 100,000 shares of Common Stock. On August 1, 1996 the Company entered into an agreement, subject to shareholder approval, pursuant to which it agreed to transfer assets comprised principally of the Eagle's Landing Golf Course and Country Club, the Inn at Eagle's Landing, approximately 250 acres of commercial and industrial real estate, land sufficient to construct an additional nine hole golf course, the Company's interest in certain joint ventures and approximately $2 million cash in order to redeem Mr. Williams' common stock interests. The agreement provided that the transaction would be effective as of May 1, 1996. On September 30, 1996, the shareholders of the Company approved the transfer agreement, and the transaction closed on November 16, 1996. The net assets transferred in exchange for the redemption shares had a historical cost basis of approximately $17,191,000 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, prior year results of operations have been restated to reflect the transferred assets as discontinued operations in the accompanying statements of operations and cash flows. See Item 6. "Management's Discussion and Analysis and Summary of Operations" and Note 3 to the Company's Consolidated Financial Statements included in Item 7. Henry County, Georgia In April 1986, the Company purchased approximately 2,600 acres of property, known as the Eagle's Landing (see ITEM 2. "PROPERTIES," below), which is located in Henry County, Georgia. During fiscal 1987, the Company purchased 217 additional acres and obtained options to purchase 45 additional acres. Additionally, the Company purchased approximately 88 acres in fiscal 1997. Henry County is an attractive location for industrial, commercial and residential development due to its close proximity to the Atlanta International Airport and downtown Atlanta. The property is on an I-75 interchange. Henry County is a part of the metropolitan Atlanta area. Its principal cities are McDonough and Stockbridge. A portion of the Company's property is within the City of Stockbridge. It is estimated that Henry County, at present, has a population of approximately 87,000 persons and is projected to reach a population of approximately 111,200 persons by the year 2000. The greatest influence on the economy of Henry County is the service industry, followed by manufacturing, retail and trade administration. Sale of Tallahassee, Florida Assets During fiscal 1994 and the first quarter of fiscal 1995, the Company sold substantially all of its Tallahassee properties to an entity that later merged with Proactive Technologies, Inc. See Item 2. "Properties", Item 6. "Management's Discussion and Analysis and Summary of Operations" and Note 12 to the Company's Consolidated Financial Statements included in Item 7. Prior to the sale, the Company had developed communities in Tallahassee for thirty years, and had been the largest land developer in Leon County, Florida. On April 30, 1997, the Company had approximately 29 fully developed lots remaining to be sold in Tallahassee, Florida. It is anticipated these lots will be sold in fiscal 1998. Land Development Historically, the Company has acquired large areas of unimproved real estate, and has subdivided, developed and then resold the developed real estate in smaller parcels to individuals and builders. Following the acquisition of a large area of unimproved real estate, the Company retains a landscape architect who, together with personnel of the Company, prepares a master land use plan for the entire subdivision. The subdivision is platted and divided into units and the units are further divided into lots. After securing the necessary zoning and other applicable regulatory approvals from local, state and federal authorities, the Company commences the development of the subdivision by developing one or more units located within each such subdivision. In units where lots are sold, the Company generally makes provision for water lines, storm drainage, underground or overhead electrical service, telephone lines and paved streets. (See "Item 1. BUSINESS - Liability for Improvements," below.) In all units where lots are sold by the Company, arrangements are made with appropriate governmental agencies and utility companies for police and fire protection and for electricity, telephone and water service. The Company believes it is the largest land developer in Henry County, Georgia. At April 30, 1997, the Company had approximately 232 platted lots available for immediate sale and approximately 995 acres of undeveloped land available for immediate or future development. The property remaining is presently zoned approximately 11% for industrial uses, 76% residential uses and 13% for commercial and other uses. The Company intends to continue to develop and divide its Henry County property into lots and to sell certain parcels to other developers. The management of the Company believes that, if the Company does not acquire any additional real estate and if the Company makes no bulk dispositions of real estate, the Company's present inventory of land is sufficient, at present levels of land sales, for at least six years of operation. Liability for Improvements The Company is obligated to complete the improvements to each partially developed lot sold by it on a specified date no later than one year from the date of sale of each such lot. Pursuant to an agreement with the Leon County Commission and the Division of Florida Land Sales, the Company was required to maintain an improvement trust fund as partial assurance to provide funds to complete improvements to its Florida properties. During fiscal 1997, the Company applied the cash balance of this improvement trust fund towards the cost of these improvements, leaving no balance in this trust fund at April 30, 1997. The total cost to complete the improvements to units from which sales of partially developed lots have been made is estimated to be approximately $135,000 at April 30, 1997, all of which is expected to be made in fiscal 1998. The Company is obligated to provide sewer in specified areas of the Florida property which it previously owned and sold to other developers for investment and resale. The estimated cost to the Company is $278,000, all of which is expected to be paid in fiscal 1998. Sales and Marketing The Company's sales force consists of 3 full-time salespersons at July 1, 1997. These salespersons are compensated by the Company on a salary plus commission or commission-only basis. In addition, the Company retains independent salespersons, employed by an unrelated sales broker who work out of the Company's sales office. These independent salespersons primarily sell the Company's land and are compensated on a commission-only basis. Lots are sold by the Company primarily to builders and to persons who presently reside or who plan to reside in the Company's developments. Sales of lots to builders and prospective individual home buyers and sales of commercial tracts are made by the Company primarily for cash. (See notes 1, 2 and 4 of Notes to Consolidated Financial Statements of the Company.) Employees At April 30, 1997, the Company had approximately 13 employees, including salespersons. Management of the Company believes that its relationship with its employees is good. Competition The land development industry in the State of Georgia is highly competitive. Land development firms located in all geographic areas of Georgia, many of which possess greater sales and financial resources than the Company, compete to attract local residents, retired persons, and other persons who are relocating. The Company competes with such firms on the basis of a number of interrelated factors, including reputation, location, design, quality and price. Individual resales of residential units and lots provide additional competition. The Company believes that it is the largest land developer in Henry County, but it competes with larger developers in the metropolitan Atlanta area, as well as with smaller developers. Regulations As a land developer, the Company is subject to environmental, building, zoning and real estate sales regulation by, among others, local zoning and planning authorities, the Division of Georgia Land Sales and various state and federal environmental protection agencies. All of the necessary local, state and federal regulatory approvals for the development of its presently active subdivision projects in Henry County, Georgia have been secured by the Company. Additional permits and approvals may be required as new subdivisions are constructed; however, the Company does not anticipate any difficulty in securing such permits and approvals. (See "Item 2. Properties", below.) The Company's management is not presently aware of any anticipated revocation or amendment of any of its regulatory approvals. However, in the event that any regulatory approvals presently secured by the Company are revoked or materially altered, the business of the Company could be adversely affected. Economic Conditions The Company's business, as well as the real estate industry in general, is affected by a number of economic factors, including interest rates and inflation. Interest rates affect both the cost to individuals and builders of purchasing homes and lots from the Company and the carrying costs of undeveloped land. During the past fiscal year, interest rates on residential mortgage loans remained stable. In the past, the Company has increased the price of lots offered for sale to offset increased inflation. Such increases reduce the number of persons who are able to afford the lots and homes offered by the Company. If interest rates and inflation increase substantially, the real estate and construction industries would be adversely affected and the Company's ability to sell its real estate could be significantly adversely affected. ITEM 2. PROPERTIES The Company's principal subdivisions are as follows: Eagle's Landing (formerly known as Atlanta Tech Center) Eagle's Landing comprises approximately 3,000 acres in Henry County, Georgia, and is approximately 23 miles south of downtown Atlanta and 15 miles south of the Atlanta International Airport. This "mixed use" development is presently zoned to allow development in the categories of office, industrial, retail, multi-family residential, single-family residential, lodging, schools, municipal services, religious institutions, parks and recreation, golf course, open space and lakes. The community is planned around Eagle's Landing golf course and country club, both of which were originally developed by the Company. At April 30, 1997, approximately 930 residential lots and 554 acres of other property had been sold by the Company. Approximately 232 platted residential lots remained to be sold and approximately 995 acres of other property remained to be platted and/or sold. In addition, the Company had approximately 199 acres which will be used for road right-of-way, utility easements and green areas. Tallahassee Properties The Company developed two major subdivisions in northeast Tallahassee, Florida. During fiscal 1994 and the first quarter of fiscal 1995, substantially all of the Company's remaining Tallahassee properties were sold to an entity that later merged with Proactive Technologies, Inc., see Item 6. "Management's Discussion and Analysis and Summary of Operations" and Note 12 to the Company's Consolidated Financial Statements included in Item 7. At April 30, 1997, the Company owned 29 platted lots in Tallahassee, Florida. All of the properties are expected to be sold within fiscal 1998. Encumbrances Substantially all of the land owned by the Company in the above described subdivisions serve as collateral for the indebtedness of the Company. See Notes 6 and 12 of Notes to the Company's Consolidated Financial Statements included in Item 7. ITEM 3. LEGAL PROCEEDINGS The Company is a party to certain legal proceedings in the ordinary course of business. In the opinion of the management of, and general counsel to the Company, none of these proceedings, alone or in the aggregate, should have a material adverse effect upon the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted by the Company to a vote of its security holders during the fourth quarter of fiscal 1997. PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Common Stock has been traded on the American Stock Exchange since 1980. Quarterly sales prices for the fiscal years ended April 30, 1997 and 1996 were as follows: Quarter of 1997 1996 Fiscal Year High Low High Low First 10 1/4 8 1/4 5 1/4 4 5/8 Second 9 3/4 7 1/8 6 1/2 4 9/16 Third 8 1/4 5 3/4 6 5/8 5 Fourth 7 1/4 5 9 7/8 5 1/2 The Company has never declared nor paid dividends. As of July 1, 1997 there were approximately 538 shareholders of record of the Company's Common Stock, excluding security position listings. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND SUMMARY OF OPERATIONS Liquidity and Capital Resources During the two year period ended April 30, 1997, the Company generated positive cash flows from operations due to the opening of several phases of the Company's subdivisions, new marketing strategies employed during the current fiscal year, and the receipt of principal and interest payments on notes received from the sale of the Company's Tallahassee properties. Subsequent to the Company's year end, the Company restructured its loan agreement (with a balance of approximately $8,152,000 at April 30,1997) with a bank, involving its Georgia operations. The loan is collateralized by first mortgages on substantially all of the undeveloped land in the Company's Georgia property. Interest on this loan is payable at prime rate plus 1.25% per annum, and the maturity of the loan is in July 2000. Upon the sale of the property serving as collateral, release prices, which vary with the development, are applied against the loan balance owed to the bank. As these properties are developed, the Company has been able to secure development loans from 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. During the next two fiscal years, the Company has other debt maturing in the amounts of approximately $9.6 million and $1.5 million, respectively. The Company normally borrows its development loans for its Georgia properties from banks. Although the notes are short-term, the debt historically has been renewed or extended each year. The Company anticipates that such debt will be paid through funds generated by its normal operations, an extension of debt or new borrowings on the same collateral. During the past fiscal year, the Company reduced its debt by approximately $10.6 million and had new borrowings totaling approximately $10.9 million. The Company continues to seek lines of credit to satisfy its capital requirements. During fiscal 1998, the Company anticipates completing improvements of partially developed lots and tracts at a cost estimated to be $135,000 and improving undeveloped land at a cost of approximately $6.3 million. The Company anticipates financing these improvements through: (1) funds generated in the normal course of the Company's business; (2) utilization of existing lines of credit; and (3) securing additional lines of credit. The Company anticipates that funds available from these sources will be sufficient to meet the needs of the Company during fiscal 1998. At April 30, 1997, the Company had available lines of credit totaling $2.3 million. These lines of credit will be drawn as needed for the development of the Company's property and operational expenses. Results of Operations During fiscal 1997, lot sales increased approximately $700,000 (12.7%) while other land sales decreased $3.4 million (31.8%) over fiscal 1996. The increase in lot sales was primarily the result of the Company's development of new residential units in its Georgia property in the current fiscal year. The net decrease in the other land sales was primarily the result of the recognition in of $8.6 million in fiscal 1996 resulting from the sale of substantially all of the Florida assets. Sales in the Georgia property increased by $5.2 million (495.3%)in the current fiscal year when compared to fiscal 1996 primarily as a result of the Company initiating a modified sales program intended to expand its marketing efforts. The Company discontinued its residential construction activities in fiscal 1994 and sold its remaining home in fiscal 1997. Equity in income from joint ventures decreased $435,232 in the current year over the prior year income due to the prior year recognition of $490,464 from a sale of a facility built by the joint venture. Interest income decreased approximately $273,000 due primarily to the reduction in principal of notes receivable received from the sale of the Tallahassee properties (see Note 12 to the Company's Consolidated Financial Statements). Gross profit on lot sales increased to 40.7% in fiscal 1997 from 29.5% in fiscal 1996. This increase is a result of the Company's strong lot sales in the middle- to higher-priced subdivisions in the current year. Gross profit on other land sales was 36.9% and 24.6% in fiscal 1997 and 1996, respectively. Most of the Company's other land sales in the current year sales were of property in its Georgia project, while the majority of the prior years' other land sales were from the discounted bulk sale of the Tallahassee, Florida properties in November 1993. Commissions and selling expenses (net of commission income) as a percentage of net sales of lots, land and residential construction increased to 11.0% during fiscal 1997 compared to 7.8% in fiscal 1996. This is as a result of the bulk sale of the Company's Tallahassee, Florida properties recognized in 1996 having no related sales commission. Depreciation and property taxes decreased by $17,600 and $29,000, respectively, in the current fiscal year when compared to the prior year. General and administrative expenses decreased approximately $217,000 fiscal 1997 when compared to fiscal 1996, as a result of the transfer of certain of the Company's assets discussed below. On November 14, 1993, the Company entered into agreements to sell substantially all of its Florida assets for $25.7 million. As of April 30, 1997, $25.4 million of the sale had closed with the purchaser assuming $9.2 million of the Company's debt; issuing notes to the Company totaling $8.1 million and paying $8.1 million in cash. The notes are payable over the next 2 years. The remaining $300,000 of the sale is scheduled to close during fiscal 1998, for cash. The Company remained as guarantor on the debt assumed, however such debt was fully repaid by April 30, 1997. (See Note 12 of the Notes to the Company's Consolidated Financial Statements). In May 1996, Proactive Technologies, Inc. ("Proactive"), the Company's second largest shareholder, proposed to the Company a transaction pursuant to which the Company would 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 551,321 shares of Common Stock owned by Mr. Williams (approximately 42% of the outstanding Common Stock, the "Redemption Shares") and the cancellation of his option to purchase an additional 100,000 shares of Common Stock. On August 1, 1996 the Company entered into an agreement, subject to shareholder approval, pursuant to which it agreed to transfer assets comprised principally of the Eagle's Landing Golf Course and Country Club, the Inn at Eagle's Landing, approximately 250 acres of commercial and industrial real estate, land sufficient to construct an additional nine hole golf course, the Company's interest in certain joint ventures and approximately $2 million cash. The agreement provided that the transaction would be effective as of May 1, 1996. On September 30, 1996, the shareholders of the Company approved the transfer agreement, and the transaction closed on November 16, 1996. The net assets transferred had a historical cost basis of approximately $17,191,000 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 account 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. The prior year results of the transferred assets have been reflected as discontinued operations resulting in a loss of $33,876 in the accompanying statement of operations, and a net use of $2,378,902 in the statement of cash flows. Additionally, 1997 statement of retained earnings and the balance sheet reflect a net reduction of $17,191,000 as a result of the net transfer of assets. Inflation The effect of inflation was negligible in fiscal 1997 and 1996. If inflation and interest rates return to their previously higher levels, they could have a material adverse effect upon the real estate and construction industries and could significantly and adversely affect the Company's ability to sell its real estate. ITEM 7. FINANCIAL STATEMENTS To the Board of Directors and Stockholders Killearn Properties, Inc. We have audited the consolidated balance sheet of Killearn Properties, Inc. and Subsidiaries as of April 30, 1997, and the related consolidated statements of earnings, changes in stockholders' equity, and cash flows for the years ended April 30, 1997 and 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Killearn Properties, Inc. and Subsidiaries as of April 30, 1997 and 1996 and the consolidated results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Atlanta, Georgia June 28, 1997 KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended April 30 -------------------- 1997 1996 ---- ---- Revenues Sales of lots $ 6,130,617 $ 5,437,540 Other land sales 7,294,544 10,691,633 Less: Estimated uncollectible sales (230,803) (85,285) ---------- ---------- Net sales of lots and land 13,194,358 16,043,888 Sales of residential construction 155,000 45,500 Commission income 189,555 321,803 Interest income 626,071 899,115 Equity in income from joint venture 55,232 490,464 Other income 26,958 31,375 ---------- ---------- Total revenues 14,247,174 17,832,145 Costs and expenses: Cost of lots sold 3,635,661 3,833,208 Cost of other land sold 4,603,253 8,059,027 Cost of residential construction sold 179,879 42,063 Commissions and selling expenses 1,663,933 1,583,636 Interest expense 710,413 443,996 Depreciation 93,823 111,458 Property taxes 153,237 182,216 Litigation settlement and expenses 0 27,197 General and administrative expenses 1,372,656 1,589,409 ---------- ---------- Total costs and expenses 12,412,855 15,872,210 ---------- ---------- Earnings before income taxes 1,834,319 1,959,935 Income taxes 738,996 682,904 --------- ---------- Net income before discontinued operations 1,095,323 1,277,031 Discontinued operations: Net loss from transferred operations (net of income tax benefit of $18,008) 0 (33,676) --------- ---------- Net income $ 1,095,323 $ 1,243,355 ========= ========== Earnings per share before discontinued operations $ 1.23 $ .86 Discontinued operations 0 (.02) Earnings per share $ 1.23 $ .84 ========= ========== Weighted average number of common shares 887,412 1,438,733
The accompanying notes are integral part of these consolidated financial statements. KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET April 30, 1997
ASSETS Cash (including restricted cash of $9,500) $ 269,194 Accounts receivable 238,371 Notes receivable from related parties 6,602,103 Notes receivable 25,140 Land contracts receivable Retail 127,052 Other 705,770 --------- Total receivables 7,698,436 Less: Allowance for uncollectibles (313,882) --------- Net receivables 7,384,554 --------- Investment in joint ventures 1,410 Residential house inventory 172,542 Real estate held for development and sale, at cost Land developed and under development 21,065,586 Real estate under contract for sale 3,194,374 ---------- 24,259,960 ---------- Property under contract for sale 181,580 ---------- Property and equipment, at cost Buildings 487,111 Machinery, equipment and vehicles 367,646 Furniture and fixtures 208,966 --------- Total property and equipment 1,063,723 Less: Allowance for depreciation (538,581) ---------- Property and equipment - net 525,142 ---------- Other assets 17,135 ---------- Total assets $ 32,811,517 ==========
The accompanying notes are an integral part of these consolidated financial statements. KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET April 30, 1997 LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities: Accounts payable and other accrued expenses $ 1,452,747 Income taxes payable 2,539,347 Accrued interest 476,038 Customers' deposits 130,900 Debt (including current maturities 19,948,364 of $17,737,441 - see Note 6) Deferred income 1,823,823 Deferred income taxes 3,313,236 ---------- Total liabilities 29,684,455 ---------- Stockholders' equity: Common stock - $ .10 par value - authorized 6,000,000 shares, 887,412 shares issued and outstanding 88,741 Additional paid-in capital 1,942,998 Retained earnings 1,095,323 ---------- Total stockholders' equity 3,127,062 ---------- Total liabilities and stockholders' equity $ 32,811,517 ===========
The accompanying notes are an integral part of these consolidated financial statements. KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Year Ended April 30 ------------------- 1997 1996 ---- ---- Common Stock: Balance at beginning of year $ 143,873 $ 143,873 Stock redemption (55,132) 0 --------- --------- Balance at end of year 88,741 143,873 Additional paid-in capital: Balance at beginning of year 6,846,014 6,846,014 Stock redemption (4,903,016) 0 --------- --------- Balance at end of year 1,942,998 6,846,014 Retained earnings: Balance at beginning of year 12,232,696 10,989,341 Net earnings 1,095,323 1,243,355 Stock redemption (12,232,696) 0 ---------- ---------- Balance at end of year 1,095,323 12,232,696 ---------- ---------- Total stockholders' equity $ 3,127,062 $ 19,222,584 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended April 30 ------------------- 1997 1996 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,095,323 $ 1,243,355 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 93,823 111,458 (Gain) Loss on disposition of assets (1,681) 4,552 Equity in income from joint ventures (55,232) (490,464) Loss from discontinued operations 0 33,676 Changes in operating assets and liabilities: Accounts receivable 76,400 (231,026) Notes receivable 755,823 703,807 Deferred income (880,583) (2,456,790) Residential house inventory (14,236) 537,798 Real estate held for development and sale 2,091,807 1,036,345 Utility deposits 0 22,000 Other assets 207,088 57,901 Accounts payable (665,187) 609,385 Current and deferred income taxes payable (1,193,949) 782,599 Customers' deposits (144,397) 163,154 Other liabilities 28,075 226,351 ----------- --------- Net cash provided by operating activities 1,393,074 2,354,101 ----------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment, net of non-cash transactions (52,170) (81,443) Investment in joint ventures 0 (31,791) Distributions from joint ventures 55,232 802,747 Proceeds from sale of fixed assets 6,800 16,574 Net change in assets from discontinued operations 0 (2,964,125) ----------- --------- Net cash used in investing activities 9,862 (2,258,038) ----------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans 8,904,246 6,751,358 Principal payments on debts (10,224,982) (7,124,498) ----------- ------------ Net cash used in financing activities (1,320,736) (373,140) ----------- ------------ NET CHANGE IN CASH 82,200 (277,077) Cash - beginning of year 186,994 464,071 ----------- ---------- Cash - end of year $ 269,194 $ 186,994 =========== ==========
Supplemental Information Cash paid: Interest, net of amounts capitalized, was $619,483 and $225,415 in fiscal 1997 and 1996, respectively. Income taxes were $1,234,276 and $10,000 in fiscal 1997 and 1996, respectively. Supplemental Schedules of Non-Cash Investing and Financing Activities, which are not reflected above: During fiscal 1995, $7,592,343 in debt was assumed by the purchaser in a land sale transaction, of which there was no outstanding balance at April 30, 1997, and $90,374 was outstanding at April 30, 1996. See Note 3 for description of non-cash stock redemption. The accompanying notes are an integral part of these consolidated financial statements. KILLEARN PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Two Year Period Ended April 30, 1997 NOTE 1 - Summary of Significant Accounting Policies (a) Principles of Consolidation The consolidated financial statements include the accounts of Killearn Properties, Inc. and its wholly-owned subsidiaries (the "Company"). Investments in which the Company owns less than a majority interest, but does not have a unilateral controlling interest, or has shared control, are accounted for under the equity method. Additionally, all significant intercompany accounts and transactions have been eliminated. (b) Revenue Recognition Lot Sales The Company sells fully developed and partially developed homesites primarily in Henry County, Georgia to builders and individuals under contracts, which generally provide for small down payments and monthly installments. Profit from lot sales is recorded on the full accrual, percentage of completion, or cost recovery method depending upon the terms of the sale. On sales to builders, a small down payment is made at the time of sale and a total of 20% to 100% is required at the time the builder receives a deed and gives the Company a mortgage securing the balance due. Sales prices are discounted to produce a minimum yield on the contract balance over its life. The amount of revenue recognized at the time a sale is recognized is measured by the relationship of costs already incurred to total estimated costs to be incurred. If certain improvements are incomplete, the portion of revenue related to costs not yet incurred is recognized as the costs are incurred. Until the required down payment percentage (generally 10% for individuals and 20% to 100% for builders) and other accounting criteria are met, all collections, including interest, are recorded as deposits, commissions paid to salesmen, if any, are deferred, and the related land cost is segregated in inventory. Once the required down payment has been received, a sale is recognized, previously deferred commissions are charged to expense, the related land costs and any improvements are charged to cost of sales, the interest portion of the deposit is recorded as income and the balance reduces the principal amount due from the purchaser. Upon cancellation of a contract, the difference between the unpaid contract receivable balance and the cost of the related land is charged to the allowance for uncollectible contracts. When a contract cancels before qualifying as a sale, deferred selling costs are charged to expense and deposits forfeited are credited to income. The amount of the provision for uncollectible sales is based on the Company's contract receivable cancellation history. Additionally, the allowance includes a provision relating to all other receivables where management believes collection is doubtful. Other Land Sales Sales of bulk land tracts are accounted for in accordance with Statement of Financial Accounting Standards (SFAS) No. 66. Under the Statement, the buyer's commitment must meet certain minimum requirements as to initial and continuing investment (generally 10% to 25%) before revenue and profit are recognized. As appropriate, some sales are accounted for on the installment basis. (c) Cash The Company classifies as cash equivalents any investment which can be readily converted to cash and has an original maturity of less than three months. At times, cash balances at a limited number of banks and financial institutions may exceed insurable amounts. The Company believes it mitigates its risks by depositing cash in sound financial institutions. (d) Real Estate Held for Development and Sale Real estate held for development and sale is recorded at the lower of cost or estimated net realizable value. Expenditures for land development are capitalized and allocated to development projects by the specific identification method. Costs are allocated to specific lots based on the ratio of the lot sales price to the estimated total project sales price times the total project costs. Interest and property taxes are capitalized while development is in progress. Total interest and property taxes capitalized during 1997 and 1996 were as follows: 1997 1996 --------- --------- Interest 1,590,450 1,786,914 Property Taxes 97,978 187,115 (e) Property and Equipment, and related depreciation The Company periodically reviews the carrying value of its long-lived assets (primarily property and equipment) to assess the recoverability of these assets; any impairments would be recognized in operating results if a permanent diminution in value were to occur. As part of this assessment, the Company reviews the expected future net operating cash flows from its facilities, as well as the values included in any of its facilities, which have periodically been obtained in connection with various refinancings. Provision for depreciation is made primarily on the straight-line method over the estimated useful lives of the related assets, as follows: Years ----- Buildings 10-40 Machinery, equipment and vehicles 5-10 Furniture and fixtures 5-10 Expenditures for repairs and maintenance are charged to expense as incurred. Additions, improvements, and major renewals are capitalized. Upon the sale or retirement of properties, the cost of the assets and accumulated depreciation and amortization are removed from the accounts, and any resulting gains or losses are included in income. (f) Income Taxes The Company utilizes the asset and liability method of accounting for deferred taxes. Deferred income taxes are recognized for the future tax consequences of temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. Valuation allowances are established when necessary to reduce a deferred tax asset to the amount expected to be realized. Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities. (g) Disclosures about Fair Value of Financial Instruments: The amounts recorded in the financial statements for the Company's receivables, payables, and investment in unconsolidated joint ventures are carried at amounts that approximate fair value. Long-term debt is carried at amounts which approximate fair value based on current borrowing rates for loans with similar terms. (h) Earnings Per Share The weighted average number of shares outstanding is adjusted to recognize the dilutive effect, if any, of outstanding stock options in calculating earnings per share. (i) Reclassifications Certain amounts in the 1996 financial statements and notes to consolidated financial statements have been reclassified to conform with the 1997 presentation. (j) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. NOTE 2 - Land Contracts Receivable Land contracts receivable, arising from sales of lots to individuals and builders, are generally due over periods which range from one to three years and provide for stated interest ranging from 9% to 11.5% per annum. The weighted average stated interest rate of retail land contracts receivable was 10.12% at April 30, 1997. Retail contracts receivable at April 30, 1997 are all due in fiscal 1998. NOTE 3 - Stock Redemption On August 1, 1996, the Company entered into an agreement, subject to shareholder approval, pursuant to which it agreed to acquire the 551,321 shares of common stock in the Company held by J.T. Williams, Jr., the Company's former Chairman of the Board and Chief Executive Officer, and the cancellation of his option to purchase an additional 100,000 shares of common stock through the transfer of certain of its assets and liabilities. 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, subject to certain mortgages and other liabilities. The agreement provided that subject to shareholder approval, the redemption would 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 approved the redemption, and the transaction closed on November 16, 1996. The historical cost basis of approximately $17,191,000 of the net assets transferred has been reflected as retired treasury stock in the accompanying balance sheet and statement of changes in stockholders' equity. 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 for the year ended April 30, 1997. The prior year results have been adjusted to reflect the net operating results of the transferred assets as discontinued operations. Revenues from discontinued operations for fiscal 1996 were approximately $3.0 million. The following table reflects the assets and liabilities transferred in exchange for the shares held by J. T. Williams prior to the retirement of these shares: Description Amount Assets: Cash $ (26,847) Accounts receivable 433,402 Investment in joint ventures 74,695 Real estate 7,402,242 Fixed assets, net 12,017,479 Other assets 182,894 ---------- Total assets 20,083,865 Less: Liabilities Accounts payable 2,474,388 Customers' deposits 1,243,440 Debt (1,604,287) Deferred income taxes payable 779,480 ---------- Total liabilities 2,893,021 ---------- Net assets transferred 17,190,844 ========== NOTE 4 - Real Estate Held for Development and Sale Information with respect to real estate held for development and sale at April 30, 1997 is as follows: Land developed and under development: Land fully developed $ 5,462,022 Land under development 15,603,564 ----------- $ 21,065,586 =========== Real estate under contract for sale: Lot sales $ 1,217,585 Other land sales 1,976,789 ----------- $ 3,194,374 =========== Included in land under development are portions of the properties undergoing development activity which have not reached the stage at which they can be offered for sale. NOTE 5 - Customers' Deposits At April 30, 1997, customers' deposits includes receipts relating to real estate under contract for sale which have not yet been recorded as sales of approximately $67,400, and deposits on contracts being negotiated of $63,500. NOTE 6 - Debt At April 30, 1997, the Company had various note agreements with financial institutions and individuals. These note agreements are summarized as follows: April 30, 1997 Balance -------------- Term notes payable to Bank (A) $ 8,152,279 Term notes payable (B) 3,184,518 Development notes payable to a Bank (C) 2,313,184 Other notes payable (D) 6,334,383 ---------- $ 19,984,364 ========== (A) Subsequent to the Company's year end, the Company restructured its loan agreement with a bank, involving its Georgia operations. The loan is collateralized by first mortgages on substantially all of the undeveloped land in the Company's Georgia project and certain contracts receivable. Upon the sale of the property serving as collateral, release prices, which vary with the development, are applied against the loan balance owed to the bank. As these properties are developed, 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, which are ultimately satisfied with proceeds from the sale of the properties. Interest on this loan is payable at the Bank's prime rate plus 1.25% per annum, and the maturity of the loan is in July 2000. (B) On November 16, 1996, the Company, upon closing the agreement discussed in Note 3, signed a note payable in the amount of approximately $3.3 million. The terms of the note call for interest at the rate of 10.5% per annum, with the principal balance being due in August 1997. (C) The Company normally borrows its development loans for its Georgia properties from a bank. The approximate balance of such loans at April 30, 1997 was $2.3 million and at April 30, 1996 was $3 million. The terms of such loans require interest at the bank's prime rate plus 1.5% or 2%. The bank's prime rate on April 30, 1997 was 8.5%. The principal reduction of these loans is from lot release prices which vary with the development. Normally, the loan is due one year from the date of the loan and is extended for one year, if necessary. (D) The Company has other notes payable, which are due in various installments through 2001 and bear interest at 8.89% to 12% at April 30, 1997. Maturities of debt outstanding at April 30, 1997 follow: Fiscal Years of Maturity Amount ------------------------ ------ 1998 $ 17,737,440 1999 1,545,756 2000 346,537 2001 318,631 ------------- $ 19,948,364 ============= Substantially all of the Company's assets are mortgaged or pledged as collateral for its indebtedness. Most of the agreements with the lenders provide that the Company will not declare or pay dividends to its stockholders. NOTE 7 - Liability for Improvements On partially developed lots, the Company is obligated to complete the land improvements on various specified dates. Under an agreement with the Leon County Commission and the Division of Florida Land Sales, the Company was required to maintain an improvement trust fund as partial assurance to provide funds to complete improvements to its Florida properties. During fiscal 1997, the Company applied the cash balance of this fund towards the cost of these improvements, leaving no balance in the fund at April 30, 1997. The total cost to complete the improvements to tracts from which sales have been made is estimated to be $135,000 at April 30, 1997, which pertains to lots and land previously sold. The Company is required to provide improvements in settlement of litigation (see Note 11) regarding future Government permits for assets sold in its Florida sale. The estimated $278,214 cost of these improvements is included in the accompanying balance sheet. Anticipated expenditures for land improvements to complete all of the areas from which sales have been made through April 30, 1997 are expected to be incurred in the year ending April 30, 1998. These anticipated expenditures do not include any future expenditures on new communities or areas in existing communities which have not yet been offered for sale. NOTE 8 - Income Taxes The Company had net operating loss carryforwards for state income tax purposes of $4,645,809 and $7,626,356 at April 30, 1997 and April 30, 1996, respectively. The state net operating loss carryforwards expire in years 2002 through 2010. The Company has recorded a deferred tax liability for the expected reversal of the taxable temporary differences. For financial reporting purposes, a valuation allowance has not been recognized to offset the deferred tax asset related to the net operating loss carryforwards. The provision for income taxes consists of the following: Income taxes 1997 1996 Current $ 1,918,477 $ 1,289,010 Deferred (1,179,481) (624,114) --------- --------- Total provision $ 738,996 $ 664,896 ========= ======== Significant components of the Company's deferred tax liability as of April 30, 1997 and April 30, 1996 are as follows: Tax effect of 1997 1996 Net Operating Loss Carryforwards $ (268,552) $ (464,715) Taxable Temporary Differences: Differences in the timing of Profit Recognition of Sale of Real Estate 805,558 914,138 Differences in Land Basis 2,813,508 5,111,353 Depreciation 18,870 461,363 Deferred Compensation 0 (699,445) Other (56,148) (50,497) ---------- ---------- Net Deferred Tax Liability $ 3,313,236 $ 5,272,197 ========== ========= Deferred tax expenses results from temporary differences in the recognition of certain items for tax and financial reporting purposes. The deferred income tax liability was reduced during the current year as a result of the transfer of assets agreement discussed in Note 3 to the Consolidated Financial Statements. This reduction of $779,480 to deferred taxes is related to temporary differences in book and tax bases of land and buildings transferred. The difference between the total income tax expense and the amount computed by applying the U.S. federal statutory tax rate to pre-tax income was not material. NOTE 9 - Employee Benefit Plans In the past years, substantially all of the Company's full-time employees participated in the Company's 401(k) retirement plan. However, during the current year, the Company terminated its plan due to the decreased number of employees remaining after the transfer of net assets discussed in Note 3. The Company has a defined contribution employee profit-sharing plan (covering all full-time employees) which provides for discretionary contributions by the Company based on its consolidated net earnings. The Company made no contribution in the year ended April 30, 1997, and contributed $53,960 for the year ended April 30, 1996. Subsequent to year end, the Company terminated the profit sharing plan. Pursuant to the agreement discussed in Note 3, the Company entered into employment agreements with J.T. Williams, Jr. and David K. Williams, whereby they will continue to serve the Company for periods of ten years and three years, respectively. The employment agreement for J. T. Williams, Jr. will provide for an annual salary for the first five years of $200,000 and $150,000 thereafter, and the employment agreement for David K. Williams will provide for an annual salary of $96,242 and an annual bonus of $20,000, in each case plus cost of living increases of 5% per year. Additionally, the Company also funds a retirement plan for two key employees of the Company. The required payments to the employees are being funded by the purchase of insurance. NOTE 10 - Stock Options The Company has a Stock Option Plan which provided for issuance of shares to employees at prices not less than the fair market value on dates of grant (not less than 110% of fair market value for options granted to persons owning 10% or more of the Company's common stock.) The Company granted 25,000 stock options to certain employees at an exercise price of $5.125 per share, all of which expired during the fiscal 1996. There were no stock options exercised or granted under the plan for years ended April 30, 1997 and 1996. On April 24, 1992, the Board of Directors issued a five year non-qualified option to the President of the Company to purchase 100,000 shares of the Company's stock for $3.60, which was 10% above the market value on such date. These options were canceled during the current fiscal year in connection with the transaction discussed in Note 3. NOTE 11 - Commitments and Contingencies In fiscal 1994, a Florida appellate court issued a final order in the Company's lawsuit with the Department of Community Affairs, State of Florida, regarding most of the Company's undeveloped property in Florida. Among other things, the court ruled that sanitary sewer had to be extended to some properties that had been sold and developed by other developers. As of April 30, 1996 the estimated cost is $278,214, which is included in the accompanying balance sheet, and is expected to be incurred over the next fiscal year. The Company is a party to certain other legal proceedings in the ordinary course of business. In the opinion of management, none of these proceedings should have a material adverse effect upon the Company. NOTE 12 - Sale of Florida Properties On November 14, 1993, the Company entered into two agreements to sell substantially all of its Florida assets to Capital First, Inc., whose parent company subsequently became a shareholder of the Company, for approximately $25.7 million. As of April 30, 1997, approximately $25.4 million of the sale had closed, with the purchaser assuming approximately $9.2 million of the Company's debt, on which the Company remains liable; issuing notes to the Company, secured by a second mortgage on most of the assets purchased, totaling approximately $8.1 million; and paying approximately $8.1 million in cash. The notes are payable to the Company over the next 2 years and bear interest at 7% and 10% per annum. The amount of the notes due the Company at April 30, 1997 was $5.8 million, which is included in notes receivable from related parties in the accompanying consolidated balance sheet. The remaining $300,000 of the sale is scheduled to be closed during fiscal 1998, for cash. The Company's cost of the assets sold, and to be sold, is approximately $18.9 million. The resulting gross profit is being reported by the Company on the installment method over 5 fiscal years, beginning with fiscal 1994. At April 30, 1997, there remains approximately $1.5 million of gross profit to be recognized over the next 2 years as cash is collected. Note 13 - Related Party Transactions During fiscal 1997, the Company sold a building for $550,000 to a company that later was purchased by Proactive Technologies, Inc., whose President is Mark A. Conner. The purchaser signed a promissory note in the amount of $550,000 that is included in notes receivable in the accompanying balance sheet and that bears interest at 9% per annum. The related unrecognized gain of approximately $82,000 from the sale of this asset is included in deferred income on the accompanying balance sheet, and will be recognized upon collection of the note. During fiscal 1997, the Company paid $125,000 in consulting fees to Proactive Technologies, Inc. NOTE 14 Significant Risks and Uncertainties As a land developer, the Company is subject to environmental, building, zoning and real estate sales regulation by, among others, local zoning and planning authorities, the Division of Georgia Land Sales and various state and federal environmental protection agencies. All of the necessary local, state and federal regulatory approvals for the development of its presently active subdivision projects in Henry County, Georgia have been secured by the Company. Additional permits and approvals may be required as new subdivisions are constructed; however, the Company does not anticipate any difficulty in securing such permits and approvals. The Company's management is not presently aware of any anticipated revocation or amendment of any of its regulatory approvals. However, in the event that any regulatory approvals presently secured by the Company are revoked or materially altered, the business of the Company could be adversely affected. The Company's business, as well as the real estate industry in general, is affected by a number of economic factors, including interest rates and inflation. Interest rates affect both the cost to individuals and builders of purchasing homes and lots from the Company and the carrying costs of undeveloped land. During the past fiscal year, interest rates on residential mortgage loans remained stable. In the past, the Company has increased the price of lots offered for sale to offset increased inflation. Such increases reduce the number of persons who are able to afford the lots and homes offered by the Company. If interest rates and inflation increase substantially, the real estate and construction industries would be adversely affected and the Company's ability to sell its real estate could be significantly adversely affected. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND ACCOUNTING AND FINANCIAL DISCLOSURE. None PART III ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE ISSUER Executive Officers of the Company Information with respect to the Company's executive officers as of April 30, 1997 is as follows: Name Age Position Held Since - ---- ----- -------- ---------- Mark A. Conner 31 President & Chrmn. of the Bd. 1996 David K. Williams 37 Executive Vice Pres. and Scty. 1994 James F. Heidenreich 41 Senior Vice President 1996 All executive officers of the Company serve at the pleasure of the Company's Board of Directors, with the exception of David K. Williams, who is employed by the Company pursuant to an employment agreement. Mark A. Conner has been President of the Company since September 1996. Mr. Conner has also been President of Proactive Technologies, Inc., a real estate company, since February 1996 and President of Capital First, Inc., a real estate company, since its incorporation in January of 1994. Mr. Conner earned a B.S. in Finance, with honors, from Florida State University in 1987. In October 1987, Mr. Conner founded Conner, White & Associates, Inc., a real estate company, which focused on the development of affordable housing for first time and mid-priced home buyers. David K. Williams has been Executive Vice President of the Company since May 1994. Mr. Williams has been employed by the Company since June 1983. He served as Vice President of Construction and Development from January 1987 until June 1989 and as President of Florida Operations from June 1989 until 1994. James F. Heidenreich has been Vice President of the Company since September 1996. Mr. Heidenreich has also been Vice President of Proactive Technologies, Inc. since February 1996 and Vice President of Capital First since its incorporation in January 1994. Mr. Heidenreich has been a licensed Real Estate Broker since 1985 and was President and owner of JFH Realty, Inc. which focused on commercial and large land tract sales, from 1988 to 1994. The information required by this Item 9 concerning the Directors of the Company will be contained in the Company's 1997 definitive proxy material to be filed with the Securities and Exchange Commission and is incorporated herein by this reference. ITEM 10. EXECUTIVE COMPENSATION The information required by this Item 10 will be contained in the Company's 1997 definitive proxy material to be filed with the Securities and Exchange Commission and is incorporated herein by this reference. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item 11 will be contained in the Company's 1997 definitive proxy material to be filed with the Securities and Exchange Commission and is incorporated herein by this reference. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item 12 will be contained in the Company's 1997 definitive proxy material to be filed with the Securities and Exchange Commission and is incorporated herein by this reference. ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Annual Report on Form 10-KSB: 1. Financial Statements. The following financial statements are included in Item 7 hereof: 1. Reports of Independent Certified Public Accountants 2. Consolidated Balance Sheet of the Company as of April 30, 1997 3. Consolidated Statements of Earnings for the fiscal years ended April 30, 1997 and 1996 4. Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended April 30, 1997 and 1996 5. Consolidated Statements of Cash Flows for the fiscal years ended April 30, 1997 and 1996 6. Notes to Consolidated Financial Statements 2. Exhibits. See Exhibit Index, below. (b) Reports on form 8 - K No reports on Form 8-K were filed during the fourth quarter of fiscal 1997. SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities and Exchange Act of 1934, the Issuer has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. KILLLEARN PROPERTIES, INC. Date: July 25, 1997 By: /s/ Mark A. Conner MARK A. CONNER, President and Chairman of the Board Pursuant to the requirements of the Securities and Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Issuer and in the capacities and on the date indicated. DATE: July 25, 1997 /s/ Mark A. Conner MARK A. CONNER, President and Chairman of the Board DATE: July 25, 1997 /s/ Langdon K. Flowers LANGDON K. FLOWERS, Director DATE: July 25, 1997 /s/ Mallory E. Horne MALLORY E. HORNE, Director DATE: July 25, 1997 /s/ Robert E. Maloney, Jr. ROBERT E. MALONEY, JR., Director DATE: July 25, 1997 /s/ Melvin L. Pope, Jr. MELVIN L. POPE, JR., Director DATE: July 25, 1997 /s/ David K. Williams DAVID K. WILLIAMS, Director and Executive Vice President (Principal Financial and Accounting Officer) DATE: July 25, 1997 /s/ J.T. Williams, Jr. J.T. WILLIAMS, JR., Director EXHIBIT INDEX Page No. or Incorporated by Reference Exhibit No. Description to the Document Listed Below (3) Articles of Incorporation as 1981 Form 10-K amended and Bylaws of the Company (10.1) Executive Compensation Plan and Arrangements (10.1) 1992 Incentive Stock Option Plan for 1994 Form 10-K Employees (10.2) Agreement to Purchase and Sell Report on Form 8-K between the Company and Capital dated November 22, First Inc. 1993 (13) Annual Report to Shareholders for 1997 Form 10-K the fiscal year ended April 30, 1997 (22) Subsidiaries of the Company 1994 Form 10-K 26 27 EX-27 2
5 12-MOS APR-30-1997 APR-30-1997 269,194 0 7,698,436 313,882 24,614,082 32,286,375 1,063,723 538,581 32,811,517 4,599,032 25,085,423 88,741 0 0 3,038,321 32,811,517 13,194,358 14,247,174 10,082,726 12,412,855 0 0 710,413 1,834,319 738,996 1,095,323 0 0 0 1,095,323 1.23 1.23
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