UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 1-9360
AMERICAN LAND LEASE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 84-1038736 | |
| (State or other jurisdiction of Incorporation or organization) |
(IRS Employer Identification No.) | |
| 29399 U.S. Hwy 19 North, Suite 320 Clearwater, Florida |
33761 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
Registrant’s telephone number, including area code (727) 726-8868
Indicate by check mark whether the registrant is an accelerated filer (As defined in Rule 126-2 of the Exchange Act). Yes x No ¨
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ¨.
As of May 7, 2004, approximately 7,225,000 shares of common stock were outstanding.
AMERICAN LAND LEASE, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
TABLE OF CONTENTS
| PAGE | ||||
| PART I. |
FINANCIAL INFORMATION: |
|||
| Item 1. Condensed Consolidated Financial Statements: |
||||
| Balance Sheets as of March 31, 2004 (unaudited) and December 31, 2003 |
1 | |||
| Statements of Income for the three months ended March 31, 2004 and 2003 (unaudited) |
2 | |||
| Statements of Cash Flows for the three months ended March 31, 2004 and 2003 (unaudited) |
3 | |||
| 4 | ||||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 | |||
| 25 | ||||
| 20 | ||||
| 22 | ||||
| 23 | ||||
| 23 | ||||
| 25 | ||||
| 32 | ||||
| Item 3. Quantitative and Qualitative Disclosures About Market Risk |
35 | |||
| Item 4. Controls and Procedures |
36 | |||
| PART II. |
OTHER INFORMATION: | |||
| Item 6. Exhibits and Reports on Form 8-K |
36 | |||
(i)
AMERICAN LAND LEASE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
| March 31, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Real estate, net of accumulated depreciation of $20,779 and $20,112, respectively, including real estate under development of $42,223 and $41,413, respectively |
$ | 231,293 | $ | 226,078 | ||||
| Cash and cash equivalents |
776 | 2,064 | ||||||
| Inventory |
11,330 | 10,403 | ||||||
| Other assets, net |
8,566 | 8,162 | ||||||
| Assets held for sale |
361 | 389 | ||||||
| Total Assets |
$ | 252,326 | $ | 247,096 | ||||
| LIABILITIES |
||||||||
| Secured long-term notes payable |
$ | 118,478 | $ | 119,194 | ||||
| Secured short-term financing |
13,495 | 10,659 | ||||||
| Accounts payable and accrued liabilities |
9,883 | 8,423 | ||||||
| Liabilities related to assets held for sale |
4 | 5 | ||||||
| 141,860 | 138,281 | |||||||
| MINORITY INTEREST IN OPERATING PARTNERSHIP |
14,319 | 14,014 | ||||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Preferred stock, par value $.01 per share, 1,000 shares authorized, no shares issued or outstanding |
— | — | ||||||
| Common stock, par value $.01 per share; 12,000 shares authorized; 8,951 and 8,830 shares issued; 7,225 and 7,104 shares outstanding (excluding treasury stock), respectively |
90 | 88 | ||||||
| Additional paid-in capital |
285,207 | 282,818 | ||||||
| Notes receivable from officers re common stock purchases |
(785 | ) | (799 | ) | ||||
| Deferred compensation re restricted stock |
(3,049 | ) | (1,354 | ) | ||||
| Dividends in excess of accumulated earnings |
(158,704 | ) | (159,340 | ) | ||||
| Treasury stock, 1,726 and 1,726 shares at cost, respectively |
(26,612 | ) | (26,612 | ) | ||||
| 96,147 | 94,801 | |||||||
| Total Liabilities and Stockholders’ Equity |
$ | 252,326 | $ | 247,096 | ||||
See Notes to Condensed Consolidated Financial Statements
1
AMERICAN LAND LEASE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
| Three Months Ended 2004 |
Three Months Ended March 31, 2003 |
|||||||
| RENTAL PROPERTY OPERATIONS |
||||||||
| Rental and other property revenues |
$ | 7,033 | $ | 6,381 | ||||
| Golf course operating revenues |
403 | 338 | ||||||
| Total property operating revenues |
7,436 | 6,719 | ||||||
| Property operating expenses |
(2,549 | ) | (2,347 | ) | ||||
| Golf course operating expenses |
(308 | ) | (303 | ) | ||||
| Total property operating expenses |
(2,857 | ) | (2,650 | ) | ||||
| Depreciation |
(709 | ) | (649 | ) | ||||
| Income from rental property operations |
3,870 | 3,420 | ||||||
| SALES OPERATIONS |
||||||||
| Home sales revenue |
9,280 | 7,890 | ||||||
| Cost of home sales |
(6,204 | ) | (5,784 | ) | ||||
| Gross profit on home sales |
3,076 | 2,106 | ||||||
| Commissions earned on brokered sales |
185 | 126 | ||||||
| Commissions paid on brokered sales |
(100 | ) | (65 | ) | ||||
| Gross profit on brokered sales |
85 | 61 | ||||||
| Selling and marketing expenses |
(2,343 | ) | (1,828 | ) | ||||
| Income from sales operations |
818 | 339 | ||||||
| General and administrative expenses |
(911 | ) | (618 | ) | ||||
| Interest and other income |
272 | 296 | ||||||
| Interest expense |
(1,360 | ) | (1,284 | ) | ||||
| Equity in income of unconsolidated real estate partnerships |
— | 20 | ||||||
| Income before minority interest in Operating Partnership |
2,689 | 2,173 | ||||||
| Minority interest in Operating Partnership |
(323 | ) | (261 | ) | ||||
| Income from continuing operations |
2,366 | 1,912 | ||||||
| DISCONTINUED OPERATIONS |
||||||||
| Income (loss) from discontinued operations, net of minority interest in Operating Partnership |
8 | (71 | ) | |||||
| Net Income |
$ | 2,374 | $ | 1,841 | ||||
| Basic earnings from continuing operations |
$ | 0.34 | $ | 0.28 | ||||
| Basic (loss) earnings from discontinued operations |
(0.00 | ) | (0.01 | ) | ||||
| Basic earnings per share |
$ | 0.34 | $ | 0.27 | ||||
| Diluted earnings from continuing operations |
$ | 0.33 | $ | 0.28 | ||||
| Diluted (loss) earnings from discontinued operations |
(0.00 | ) | (0.02 | ) | ||||
| Diluted earnings per share |
$ | 0.33 | $ | 0.26 | ||||
| Weighted average common shares outstanding |
6,938 | 6,838 | ||||||
| Weighted average common shares and common share equivalents outstanding |
7,301 | 6,951 | ||||||
| Dividends paid per share |
$ | 0.25 | $ | 0.25 | ||||
See Notes to Condensed Consolidated Financial Statements
2
AMERICAN LAND LEASE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 2,374 | $ | 1,841 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
919 | 799 | ||||||
| Revenue recognized related to acquired lease obligations |
(20 | ) | — | |||||
| Amortization of deferred compensation and expense of stock options |
291 | 59 | ||||||
| Minority interest in Operating Partnership |
323 | 265 | ||||||
| Minority interest attributable to discontinued operations |
1 | (2 | ) | |||||
| Loss on sale of discontinued operations, net of minority interest |
— | 86 | ||||||
| Equity in earnings of unconsolidated real estate partnerships |
— | (20 | ) | |||||
| Recovery of common stock escrowed to secure management contracts |
— | (227 | ) | |||||
| Increase in inventory |
(927 | ) | (1,587 | ) | ||||
| Decrease (increase) in operating assets and liabilities |
1,119 | (491 | ) | |||||
| Net cash provided by operating activities |
4,080 | 723 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Proceeds from sale of real estate |
24 | 1,172 | ||||||
| Purchase of real estate |
(75 | ) | — | |||||
| Capital replacements and enhancements |
(357 | ) | (215 | ) | ||||
| Purchases of and additions to real estate, including development |
(4,415 | ) | (2,391 | ) | ||||
| Capitalized interest |
(886 | ) | (845 | ) | ||||
| Notes receivable advances |
(7 | ) | (36 | ) | ||||
| Proceeds from notes receivable |
10 | 179 | ||||||
| Distributions received from investments in unconsolidated real estate partnerships |
— | 17 | ||||||
| Principal collection and indemnifications on CMBS bonds |
— | 36 | ||||||
| Net cash used in investing activities |
(5,706 | ) | (2,083 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Proceeds (principal payments on) from secured short-term financing |
2,836 | (1,890 | ) | |||||
| Proceeds from secured long-term notes payable |
— | 7,040 | ||||||
| Principal payments on secured long-term notes payable |
(716 | ) | (653 | ) | ||||
| Payment of loan costs |
(3 | ) | (246 | ) | ||||
| Payments to escrow funds for capital improvement |
(209 | ) | (206 | ) | ||||
| Collections of escrowed funds |
37 | 163 | ||||||
| Collections of notes receivable on common stock purchases |
14 | 3 | ||||||
| Proceeds from stock options exercised |
86 | 33 | ||||||
| Proceeds from dividends reinvestment program |
198 | 94 | ||||||
| Proceeds from OP unit distribution reinvestment program |
69 | 171 | ||||||
| Payment of common stock dividends |
(1,738 | ) | (1,718 | ) | ||||
| Payment of distributions to minority interest in Operating Partnership |
(236 | ) | (232 | ) | ||||
| Net cash provided by financing activities |
338 | 2,559 | ||||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(1,288 | ) | 1,199 | |||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
2,064 | 1,223 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 776 | $ | 2,422 | ||||