<TABLE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited) Three Months Ended Nine Months Ended
September 30 September 30
1994 1993 1994 1993
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Income:
Rentals (Note 5)............................ $ 375,000 $352,000 $1,135,000 $1,011,000
Garage and surface parking revenues......... 97,000 96,000 319,000 295,000
Interest:
Providence and Worcester Railroad Company.. 209,000 220,000 634,000 697,000
Other...................................... 3,000 4,000 11,000 7,000
684,000 672,000 2,099,000 2,010,000
Expenses:
Expenses applicable to:
Rental income.............................. 167,000 139,000 456,000 403,000
Garage and surface parking................. 157,000 150,000 474,000 451,000
General and administrative.................. 269,000 269,000 814,000 781,000
Interest.................................... 51,000 52,000 148,000 176,000
644,000 610,000 1,892,000 1,811,000
Income before income taxes and cumulative
effect of change in accounting principle.... 40,000 62,000 207,000 199,000
Income tax expense (benefit) ................. (5,000) (17,000) 83,000 52,000
Income before cumulative effect
of change in accounting principle........... 45,000 79,000 124,000 147,000
Cumulative effect of change in
accounting principle (Note 3)............... 866,000
Net income (loss)............................. $ 45,000 $ 79,000 $ 124,000 $ (719,000)
Earnings (loss) per common share (Note 9):
Income (loss) before cumulative effect
of change in accounting principle.......... $ .05 $ .08 $ .12 $ .15
Cumulative effect of change in accounting
principle.................................. .08 (.86)
Net income (loss) per common share.......... $ .05 $ .08 $ .12 $(.71)
Dividends per common share.................... $ -0- $ -0- $ .10 $ .10
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See notes to consolidated financial statements.
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CAPITAL PROPERTIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Unaudited)
1994 1993
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Cash flows from operating activities:
Net income (loss).................... $ 124,000 $(719,000)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Cumulative effect of change in
accounting principle.............. 866,000
Depreciation ...................... 286,000 285,000
Deferred income taxes ............. (93,000) (128,000)
Other, principally net changes in
other receivables, accounts
payable and accrued expenses...... (65,000) 16,000
Net cash provided by operating
activities.......................... 252,000 320,000
Cash flows from investing activities:
Dividends............................ (100,000) (101,000)
Purchase of properties and
equipment........................... (22,000) (97,000)
Proceeds from collection of
notes receivable.................... 383,000 859,000
Repurchase and retirement of
common stock........................ (76,000)
Net cash provided by investing
activities.......................... 261,000 585,000
Cash flows from financing activities,
payment of notes payable, bank....... (543,000) (696,000)
Increase (decrease) in cash and
cash equivalents..................... (30,000) 209,000
Cash and cash equivalents, beginning... 813,000 663,000
Cash and cash equivalents, ending...... $ 783,000 $ 872,000
Supplemental disclosure, cash paid for:
Interest............................. $ 144,000 $ 174,000
Income taxes......................... $ 234,000 $ 184,000
</TABLE>
See notes to consolidated financial statements.
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CAPITAL PROPERTIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying interim consoli-
dated financial statements contain all adjustments necessary to
present fairly the financial position as of September 30, 1994 and
the results of operations for the three and nine months ended
September 30, 1994 and 1993, and cash flows for the nine months
ended September 30, 1994 and 1993.
2. Results for interim periods may not be necessarily indicative of
the results to be expected for the year.
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3. Properties and equipment:
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Properties and equipment on
lease or held for lease:
Land and land improvements....... $ 6,128,000
Buildings and structures......... 389,000
Equipment, petroleum storage
tanks........................... 4,163,000
10,680,000
Other:
Land and land improvements....... 192,000
Buildings, principally parking
garage.......................... 2,536,000
Equipment........................ 131,000
2,859,000
13,539,000
Less accumulated depreciation:
Properties and equipment on
lease or held for lease......... 3,127,000
Other............................ 525,000
3,652,000
$ 9,887,000
4. Other receivables:
Rentals, principally tenant
property tax reimbursement...... $ 110,000
Interest:
Providence and Worcester
Railroad Company.............. 69,000
Other.......................... 2,000
$ 181,000
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CAPITAL PROPERTIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
5. Description of leasing arrangements:
At September 30, 1994, the Company has entered into land leases
for four separate land parcels with remaining terms of up to 100
years, three of which leases have commenced. The Company also
leases petroleum storage facilities and various parcels of land
(leased principally for outdoor advertising and surface parking)
for remaining terms of up to 20 years.
For those leases with scheduled rent increases, the cumulative
excess of straight-line over contractual rentals (considering
scheduled rent increases over the initial 20 to 102 year terms of
the leases) amounted to $7,572,000 at September 30, 1994.
Management had been able to conclude that the excess of straight-
line over contractual rentals ($158,000 through September 30,
1994) is realizable when payable over the terms of the leases.
6. Notes payable, bank:
In 1990, the Company refinanced a note due of $2,500,000 by making
a principal payment of $50,000 and by issuing a new note in the
amount of $2,450,000 with interest at 1% over prime payable in
monthly installments of principal and interest of $23,000 due July
1993. This note was then extended to December 1994, at which time
a final payment of $2,054,000 is due. The note is secured by the
Company's parking garage which collateralized the original note.
The balance at September 30, 1994 is $2,084,000.
In connection with the purchase of a parcel of land in 1990, the
Company increased the principal amount of a note previously given
to the bank from $800,000 to $1,425,000, with interest at 1% over
prime payable monthly until October 1990, and thereafter with
monthly payments of principal in the amount of $8,000 plus inter-
est. The note was further extended to December 1994. During 1993
the Company made prepayments on its note to the bank totalling
$650,000 and in 1994 prepaid the remaining balance.
7. Income taxes:
Effective January 1, 1993, the Company adopted Financial Account-
ing Standards Board Statement No. 109 (FAS 109) which changed the
Company's method of accounting for income taxes from the deferred
method (Accounting Principles Board Opinion No. 11) to an asset
and liability method. The cumulative effect of this change is
reported as a charge to income of $866,000 or $.86 per common
share for the nine months ended September 30, 1993.
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CAPITAL PROPERTIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
7. Income taxes (continued):
Deferred taxes are recorded based upon differences between the
financial statement and tax basis of assets and liabilities and
available tax credit carryforwards. The tax effect of temporary
differences and carryforwards which give rise to deferred tax
assets and liabilities at September 30, 1994 were as follows:
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Gross deferred tax liabilities:
Property having a financial
statement basis in excess of
its tax basis................... $1,614,000
Excess of straight line over
contractual rental income....... 63,000
1,677,000
Gross deferred tax assets,
principally professional fees..... (112,000)
$1,565,000
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8. Commitment:
Under an agreement with the State of Rhode Island entered into in
1990, the Company will owe the State $158,000 upon the earlier to
occur of (a) 30 days after the completion of a building on one of
the Company's parcels, or (b) 60 days after completion by the
State of a construction contract for certain public improvements
affecting the aforementioned parcel. The Company anticipates that
such payment will not be due until the first quarter of 1995 at
the earliest and will be reimbursable by the developer of such
parcel. Accordingly, the Company has not provided for such
obligation on the accompanying consolidated financial statements.
The agreement is secured by a mortgage on one of the Company's
parcels. The agreement further provides that, should the amount
not be paid when it is due, interest will accrue from the due date
at the rate of prime plus 1%.
9. Earnings (loss) per common share:
The earnings per common share for the three and nine months ended
September 30, 1994 was calculated by dividing the net income by
the number of shares outstanding (1,000,000 shares). The earnings
per common share for the three and nine months ended September 30,
1993 was calculated by dividing the net income by the weighted
average of shares outstanding (1,000,000 and 1,005,278 shares,
respectively).
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CAPITAL PROPERTIES, INC. AND SUBSIDIARY
Item 2. Management's Discussion and Analysis or Plan of Operation
Financial condition:
A significant portion of the Company's land consists of
approximately 20.5 acres, including 1.9 acres of air rights, in
downtown Providence, Rhode Island, held for development. In
connection with the development of the Company's parcels, the
construction of a hotel on one of the parcels continues to be
delayed by the ongoing economic conditions in New England. At
this time, management is unable to predict when leases on
additional parcels will commence; however, the Company will
continue to use these parcels for surface parking.
In 1990, the Company refinanced a note due of $2,500,000 by
making a principal payment of $50,000 and by issuing a new note
in the amount of $2,450,000 with interest at 1% over prime
(which prime rate has increased 1.25% since January 1, 1994)
payable in monthy installments of principal and interest of
$23,000 until July 1993. The note was then extended to December
1994, at which time a final payment of $2,054,000 is due. The
note is secured by the Company's parking garage which
collateralized the original note. The Company does not expect
to have sufficient available cash to make the final payment of
$2,054,000 when due in December 1994. However, management
believes that, in accordance with past practice, it can
negotiate the extension of the repayment of this note.
In connection with the purchase of a parcel of land in
1990, the Company increased the principal amount of a note
previously given to the bank from $800,000 to $1,425,000, with
<PAGE>
interest at 1% over prime payable monthly until October 1990,
and thereafter with monthly payments of principal in the amount
of $8,000 plus interest. The note was further extended to
December 1994. During 1993 the Company made prepayments on its
note to the bank totalling $650,000 and in 1994 prepaid the
remaining balance.
Effective January 1, 1993, the Company adopted Financial
Accounting Standards Board Statement No. 109 (FAS 109) which
changed the Company's method of accounting for income taxes from
the deferred method (Accounting Principles Board Opinion No. 11)
to the asset and liability method. The cumulative effect of
this change is reported as a charge to income of $866,000 or
$.86 per common share for the nine months ended September 30,
1993.
Results of operations:
For the three and nine months ended September 30, 1994,
total income increased approximately 2% and 4%, respectively,
over the 1993 level due principally to an increase in rental
income resulting from scheduled increases in long-term land
leases offset in part by a decrease in interest income on the
note receivable from Providence and Worcester Railroad Company
resulting from voluntary prepayments.
For the three and nine months ended September 30, 1994,
total expenses increased approximately 6% and 4%, respectively,
over the 1993 level.
For the three and nine months ended September 30, 1994 as
compared with the same period in 1993, the decrease in interest
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expense results from the prepayments made by the Company on the
notes payable as discussed above, offset in part by increases in
the prime rate.
Future cash outlays for income taxes may be a more
significant portion of total tax expense and may exceed tax
expense for financial reporting purposes. This results
principally from the recognition of rental income on a
contractual basis for tax reporting purposes and to additional
depreciation claimed for financial reporting purposes.
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PART II
Item 6. Exhibits and Reports on Form 8-K
No reports on 8-K were filed during the quarter
ended September 30, 1994.
SIGNATURES
In accordance with the requirements of the Exchange
Act, the issuer caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CAPITAL PROPERTIES, INC.
By Joseph R. DiStefano
Joseph R. DiStefano, President
By Barbara J. Dreyer
Barbara J. Dreyer, Treasurer
and Principal Financial Officer
DATED: October 24, 1994
