-----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, Moy5677A/DcrxwsNFqrr8Zhai+IYZucmkQ11ZRWuhTLJO8kpk/X5YsuLNPJtXm9C f+Bdgnd84TzCRexyfk+QXA== 0000055742-98-000035.txt : 19981216 0000055742-98-000035.hdr.sgml : 19981216 ACCESSION NUMBER: 0000055742-98-000035 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19981215 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: SEC FILE NUMBER: 001-06762 FILM NUMBER: 98769361 BUSINESS ADDRESS: STREET 1: 385 COUNTRY CLUB DRIVE CITY: STOCKBRIDGE STATE: GA ZIP: 30281 BUSINESS PHONE: 7703892020 MAIL ADDRESS: STREET 1: 385 COUNTRY CLUB DRIVE 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 October 31, 1998 [ ] 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) 385 Country Club Road 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 October 31, 1998 3 Consolidated Condensed Statements of Operations for the Three 4 Months Ended and October 31, 1998 and 1997 and the Six Months Ended and October 31, 1998 and 1997 Consolidated Statements of Cash Flows for the Six Months 5 Ended October 31, 1998 and 1997 Notes to Consolidated Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis or Plan of Financial Condition and Results of Operations 7 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 9 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 10/31/98 (Unaudited) Cash $ 192,510 Accounts and notes receivable 3,815,864 Land contracts receivable, net 319,757 Real estate held for development and sale 23,346,789 Other property, plant and equipment, net 438,351 Other assets 25,208 __________ TOTAL ASSETS $ 28,138,479 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable & other liabilities $ 1,940,989 Income taxes payable 2,807,643 Debt 16,388,412 Deferred liabilities 624,335 Deferred income taxes 2,178,147 Deferred income 405,617 __________ TOTAL LIABILITIES $ 24,345,143 STOCKHOLDERS' EQUITY Common stock - par value $.10 per share; authorized 6,000,000 shares; issued 887,412 shares $ 88,741 Additional paid-in capital 1,942,998 Retained earnings 1,761,597 __________ TOTAL STOCKHOLDERS' EQUITY $ 3,793,336 __________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 28,138,479 ========== The accompanying notes are an integral part of these consolidated financial statements.
KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended 10/31/98 10/31/97 10/31/98 10/31/97 (Unaudited)(Unaudited) (Unaudited)(Unaudited) REVENUES: Net sales of land $3,759,798 $4,399,707 $10,422,435 $8,523,210 Interest income 43,701 101,462 103,005 249,585 Commission income 102,660 39,737 185,336 83,135 Other revenues 2,000 69,467 3,500 70,967 __________ _________ __________ __________ Total Revenues $3,908,159 $4,610,374 $10,714,276 $8,926,898 EXPENSES: Cost of land sold $2,963,961 $3,659,568 $8,543,892 $6,396,872 Commissions and selling expenses 443,400 535,407 836,766 982,979 Interest expense 88,950 73,272 139,024 234,369 Depreciation 18,139 19,444 36,512 38,884 Property taxes 67,951 115,588 127,260 164,645 General & administrative costs 183,991 267,272 422,125 501,494 _________ _________ __________ __________ TOTAL COST AND EXPENSES $3,766,392 $4,670,551 $10,105,579 $8,319,243 Earnings before income taxes 141,767 (60,177) 608,697 607,655 Income tax 56,707 (22,645) 243,479 228,660 _________ ________ __________ __________ NET INCOME $ 85,060 $(37,533) $ 365,218 $ 378,995 ========== ========== ========== ========== EARNINGS PER SHARE $ .10 $ (.04) $ .41 $ .44 (basic and diluted) ========== ========== ========== ========== Weighted average shares outstanding887,412 887,412 887,412 887,412 DIVIDENDS PER SHARE NONE NONE NONE NONE The accompanying notes are an integral part of these consolidated financial statements.
KILLEARN PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended 10/31/98 10/31/97 -------- -------- (Unaudited) (Unaudited) NET CASH FROM OPERATING ACTIVITIES: $ (270,252) $ (361,734) ___________ __________ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment 2,139 (3,654) Distributions from joint ventures 0 50,000 ___________ __________ Net cash from investing activities 2,139 46,346 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loans 4,991,008 14,439,750 Principal payments on debt (4,896,439)(14,340,752) ___________ __________ Net cash from financing activities 94,569 98,998 ___________ __________ NET DECREASE IN CASH 173,544 216,390 CASH - Beginning of period 366,054 269,194 ___________ __________ CASH - End of period $ 192,510 $ 52,804 =========== ========== Supplemental Information Cash Paid: Interest paid was $211,478 and $138,654 for fiscal 1998 and 1999, respectively. Income taxes paid were $750,000 and $1,202,491 in fiscal 1998 and 1999, respectively. The accompanying notes are an integral part of these consolidated financial statements.
PART I. KILLEARN PROPERTIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OCTOBER 31, 1998 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 10-KSB for the year ended April 30, 1998. The operating statements for the current three and six month periods are not necessarily indicative of the results expected for the year. 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 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 six months ended October 31, 1998. NOTE 3 Earnings per share Effective April 30, 1998, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128") which replaces the presentation of primary earnings per share with basic earnings per share and which requires dual presentation of basic and diluted earnings per share on the Consolidated Statements of Operations. FAS 128 requires restatement of all prior-period earnings per share data presented. Basic net earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period, and diluted net earnings per share includes the effect of unexercised stock options using the treasury stock method. The treasury stock method assumes that common stock was purchased at the average market price during the period. Because there were no stock options outstanding for the three and six months ending October 31,1998 and 1997, both basic and diluted earnings per share were the same. NOTE 4 Financing The Company obtained additional credit facilities during the six month period ending October 31, 1998. In May 1998, the company borrowed $1,588,900 from a lender of which the Company used $1 million to reduce debt and used $588,900 to pay development cost. In addition, the Company had available $1,273,440 to draw from the lender for additional development cost. The agreement provides for interest to be paid at the bank's prime rate plus 1.0% per annum, and matures on May 18, 2000. The loan is collateralized by a first mortgage on 62.9 acres. Additionally, on October 8, 1998, the Company borrowed $1,328,935 from the lender of which the Company used $1.2 million to reduce debt and used $128,935 to pay initial development cost and closing cost. In addition the Company had available $4.3 million to draw from the lender for additional development cost and new land acquisitions. The agreement provides for interest to be paid at the bank's prime rates plus 1.0% per annum, and matures on October 8, 2001. Additional borrowings were for the financing of development costs under various development loans. These loans generally mature as the related lots are sold and bear interest rates at prime rate plus 1 to 1 3/4 points. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net sales of land decreased approximately $639,729(17%) during the current three month period due to a decrease in bulk sales for the period. However, net sales of land increased $1.9 million (18%) during the current six month period compared to the same period a year ago. The primary reason for the increase was the sale of approximately $4.4 million to Proactive Technologies, Inc. This sale was consummated pursuant to a settlement agreement entered into in January 1998 after the Company had made demand on Proactive Technologies, Inc. to pay notes which were in default. Cost of land sold, as a percentage of net sales of land, was 78.83% for the current three month period compared to 87.17% for the same period a year ago. The cost of land sold for the current six month period increased to 81.97% compared to 75.05% for the same period a year ago. The increase in gross margins for the three months ended October 31, 1998 was due to the sales at discounted prices made in the same three month period a year ago, on bulk sales of land. On a six months basis, the decrease in gross margin is primarily due to the $4.4 million sale in 1998 to Proactive Technologies, Inc. at a price slightly above book value. Interest income decreased approximately $57,761 during the current three month period and $146,580 during the current six month period compared to the same periods a year ago primarily due to a decrease in the interest on notes receivable from the sale of substantially all the Company's Florida assets. In addition the company is not recognizing interest on the $3.4 million receivable from International Realty Development Partners, LTD., L.L.C. which filed for Chapter 11 Bankruptcy in March 1998. Commission income increased approximately $62,923 in the current three month period and $102,201 in the current six month period compared to the same periods a year ago. Additionally, commission and selling expenses decreased approximately $92,007 in the current three month period and $146,213 in the current six month period. These overall changes resulted from the Company's change in its method of marketing homes in its Georgia developments in the first quarter of fiscal 1999. At this time, the Company is using Company-employed salespersons rather than independent brokers used last year. Interest expense, when compared to the same period a year ago, increased slightly by approximately $15,678 for the current three month period and decreased $95,345 for the current six month period. This decrease is due an overall reduction in debt of $3.7 million and some interest expense incurred by the Company being eligible for capitalization in accordance with Financial Accounting Standard 34. General and administrative expenses decreased approximately $83,281 in the current three month period and $79,369 in the current six month period when compared to the same periods a year ago. This decrease is primarily due to the reduction of salary and travel expenses. The operating statements for the current three and six month periods 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 October 31, 1998 the Company had available lines of credit of approximately $5.0 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 will be available on acceptable terms when the need for additional financing arise. In addition, the Company has other debt maturing in the amount of approximately $4.8 million in fiscal 1999 and $10.0 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. Other The company has reviewed the potential impact of Year 2000 compliance issues on its information systems and business operations, and has preliminarily determined that any cost, problems or uncertainties associated with the potential consequences of the Year 2000 issues will not have a material impact on its future operations or financial condition. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE ITEM 5. OTHER INFORMATION 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: December 14, 1998 /s/ David K. Williams _________________________ DAVID K. WILLIAMS President & CEO EXHIBIT INDEX Exhibit No. Description Page No. ----------- ----------- -------- 27 Financial Data Schedule 12 EX-27 2
5 6-MOS APR-30-1999 OCT-31-1998 192,510 0 3,815,864 0 23,346,788 27,700,127 1,056,367 618,016 28,138,479 4,748,632 19,596,511 88,741 0 0 3,704,595 28,138,479 10,422,435 10,701,151 8,543,892 10,092,454 0 0 139,024 608,697 243,479 365,218 0 0 0 365,218 .41 .41
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