U. S. 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 March 31, 1995
TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission File Number 0-3960
CAPITAL PROPERTIES, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Rhode Island 05-0386287
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Hospital Trust Plaza, Suite 920, Providence, RI 02903
(Address of principal executive offices)
Issuer's telephone number 40l-33l-0100
(Former name, former address and former fiscal year, if changed
since last report.)
Check whether the issuer (1) 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 issuer was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the lastest practicable date:
As of May 1, 1995, the registrant had 1,000,000
shares of common stock outstanding.
<PAGE>
PART I
Item 1. Financial Statements
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Properties and equipment (net of accumulated
depreciation)(Notes 3 and 6)................... $ 9,704,000
Cash and cash equivalents........................ 750,000
Note receivable, Providence and Worcester
Railroad Company............................... 6,604,000
Other receivables (Note 4)....................... 245,000
Accrued rental income of $8,098,000 less
amounts for which realization is not
assured of $7,913,000 (Note 5)................. 185,000
Prepaid and other................................ 133,000
$17,621,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Note payable, bank (Note 6).................... $ 1,982,000
Accounts payable............................... 29,000
Income tax payable............................. 13,000
Accrued expenses:
Property taxes................................ 358,000
Other......................................... 120,000
Deferred income taxes (Note 7)................. 1,513,000
4,015,000
Commitment (Note 8)
Shareholders' equity:
Common stock, $1 par; authorized, issued
and outstanding 1,000,000 shares.............. 1,000,000
Capital in excess of par....................... 10,828,000
Retained earnings.............................. 1,778,000
13,606,000
$17,621,000
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Income:
Rentals (Note 5)...................... $440,000 $376,000
Garage and surface parking revenues... 127,000 119,000
Interest:
Providence and Worcester Railroad
Company............................. 199,000 214,000
Other................................ 7,000 3,000
773,000 712,000
Expenses:
Expenses applicable to:
Rental income........................ 178,000 142,000
Garage and surface parking........... 158,000 163,000
General and administrative............ 320,000 289,000
Interest.............................. 50,000 47,000
706,000 641,000
Income before income taxes ............. 67,000 71,000
Income taxes............................ 28,000 38,000
Net income ............................. $ 39,000 $ 33,000
Income per common share ................ $.04 $.03
Dividends per common share.............. $-0- $-0-
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income........................... $ 39,000 $ 33,000
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation ...................... 93,000 96,000
Deferred income taxes ............. (22,000) (30,000)
Other, principally net changes in
other receivables, accounts
payable and accrued expenses...... (100,000) (42,000)
Net cash provided by (used in)
operating activities................ (10,000) 57,000
Cash flows from investing activities:
Purchase of properties and
equipment........................... (4,000) (28,000)
Proceeds from collection of
notes receivable.................... 78,000 75,000
Net cash provided by investing
activities.......................... 74,000 47,000
Cash flows from financing activities,
payment of notes payable, bank....... (71,000) (104,000)
Decrease in cash and cash equivalents.. (7,000) -0-
Cash and cash equivalents, beginning... 757,000 813,000
Cash and cash equivalents, ending...... $ 750,000 $ 813,000
Supplemental disclosure, cash paid for:
Interest............................. $ 33,000 $ 45,000
Income taxes......................... $ 101,000 $ 102,000
</TABLE>
See notes to consolidated financial statements.
<PAGE>
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 March 31, 1995 and the
results of operations for the three months ended March 31, 1995 and
1994, and cash flows for the three months ended March 31, 1995 and
1994.
2. Results for interim periods may not be necessarily indicative of
the results to be expected for the year.
3. Properties and equipment:
<TABLE>
<S> <C>
Properties and equipment on
lease or held for lease:
Land and land improvements....... $ 6,134,000
Buildings and structures......... 389,000
Equipment, petroleum storage
tanks........................... 4,163,000
10,686,000
Other:
Land and land improvements....... 192,000
Buildings, principally parking
garage.......................... 2,536,000
Equipment........................ 99,000
2,827,000
13,513,000
Less accumulated depreciation:
Properties and equipment on
lease or held for lease......... 3,276,000
Other............................ 533,000
3,809,000
$ 9,704,000
</TABLE>
4. Other receivables:
<TABLE>
<S> <C>
Rentals, principally tenant
property tax reimbursement...... $ 111,000
Interest, Providence and
Worcester Railroad Company...... 66,000
Petroleum terminal tenant........ 66,000
Other............................ 2,000
$ 245,000
</TABLE>
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
5. Description of leasing arrangements:
At March 31, 1995, the Company has entered into land leases for
three separate land parcels with remaining terms of up to 98
years. The Company also leases petroleum storage facilities and
various parcels of land for surface parking.
Prior to March 1995, the Company leased various parcels of land
for outdoor advertising to two tenants. During March 1995, one
tenant acquired the other tenant, and the Company extended the
term of its current lease with the remaining tenant to 2023.
For those leases with scheduled rent increases, the cumulative
excess of straight-line over contractual rentals (considering
scheduled rent increases over the initial 32 to 102 year terms of
the leases) amounted to $8,098,000 at March 31, 1995. Commencing
in 1992, management has been able to conclude that a portion of
the excess of straight-line over contractual rentals ($185,000
through March 31, 1995) is realizable when payable over the terms
of the leases.
6. Note 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 due July 1993.
The note was extended to December 1994 and was further extended to
December 1999 and provides for monthly installments of principal
and interest of approximately $27,000. In the quarter ended March
31, 1995, the Company made a prepayment of $50,000, thereby
reducing the final payment due in December 1999 to $1,231,000.
The note is secured by the Company's parking garage and the note
receivable from Providence and Worcester Railroad Company.
7. Income taxes:
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 March 31, 1995 were as follows:
<TABLE>
<S> <C>
Gross deferred tax liabilities:
Property having a financial
statement basis in excess of
its tax basis................... $1,562,000
Excess of straight line over
contractual rental income....... 74,000
1,636,000
Gross deferred tax assets,
principally professional fees..... (123,000)
$1,513,000
</TABLE>
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
8. Commitment:
Under an agreement with the State of Rhode Island entered into in
1990, the Company will owe the State $158,000 sixty days after the
completion by the State of a construction contract for certain
public improvements affecting one of the Company's parcels. The
Company anticipates that such payment will not be due until the
third 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%.
<PAGE>
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. The
Company is negotiating a lease on one of its parcels and is
engaged in discussions concerning the possible development of
other parcels but is unable to predict when leases on additional
parcels will commence; however, the Company will continue to use
the available parcels for public surface parking.
Effective October 1, 1991, the Company's petroleum storage
facilities were leased under a five-year lease under which the
tenant has the right to extend the lease term for an additional
five years. At any time during the first five years of the
lease, the tenant can exercise an option to purchase the
petroleum storage facilities. The purchase price during the
first year of the lease was $4,500,000 and is increased by an
inflation factor in each of the remaining four years ($4,961,000
at March 31, 1995). The Company has not been advised by the
tenant as to whether it will extend the term of the lease beyond
September 1996 or whether it will purchase the terminal. The
tenant must advise the Company by September 30, 1995 whether it
intends to extend the lease term for an additional five years.
The Company is presently unaware of the tenant's intentions
either to extend the lease or to acquire the terminal. In the
event the tenant neither extends the lease nor purchases the
terminal, the Company believes it will have sufficient time to
locate a successor tenant.
In August 1994, a leak was discovered in a 25,000 barrel storage
tank at the petroleum terminal facilities which allowed the
escape of a small amount of fuel oil. The tank was emptied, and
all required notices were made to the appropriate environmental
agency. No soil contamination has been detected as a result of
this leak, and monitoring wells have to date shown no
groundwater contamination. Accordingly, the Company's
engineering consultants have determined that no additional
remediation is necessary at this time. The Company is of the
opinion that the tenant of these facilities is solely
responsible for the payment of all costs to repair the tank,
including related professional fees, and for remediation of any
damage caused by such leak. These costs are presently estimated
at $66,000 and are included as a receivable from the tenant and
a liability on the accompanying consolidated balance sheet. The
tenant does not agree that it is responsible for the payment of
such costs. The lease provides for arbitration in the event the
parties cannot reach agreement on the matter.
<PAGE>
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 due
July 1993. The note was extended to December 1994 and was
further extended to December 1999 and provides for monthly
installments of principal and interest of approximately $27,000.
In the quarter ended March 31, 1995, the Company made a
prepayment of $50,000, thereby reducing the final payment due in
December 1999 to $1,231,000. The note is secured by the
Company's parking garage and the note receivable from Providence
and Worcester Railroad Company.
Results of operations:
For the three months ended March 31, 1995, total income
increased approximately 9% over the 1994 level. The increase in
rental income resulted principally from scheduled increased in
long-term land leases and the recognition of the excess of
straight-line over contractual rents associated with said
leases. Such increase was 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 months ended March 31, 1995, total expenses
increased approximately 10% over the 1994 level due principally
to the write-off of expenses previously deferred and an increase
in professional fees.
At March 31, 1994, the Company had two notes payable outstanding
with a bank, one of which was fully prepaid in September 1994.
For the three months March 31, 1995 as compared with the same
period in 1994 the increase in interest expense results from an
increase in the prime rate during the year from 7.25% at March
31, 1994 to 9% at March 31, 1995.
Future cash outlays for income taxes will be a more significant
portion of total tax expense and presently exceeds 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.
<PAGE>
PART II
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders was held on
April 26, 1995. Of the 1,000,000 shares entitled
to vote, 881,077 shares of stock were present, in
person or by proxy.
All directors of the Registrant are elected on an
annual basis and the following were so elected at
this Annual Meeting: Theodore P. Cohen, Joseph R.
DiStefano, Barbara J. Dreyer, Harold J. Harris and
Henry S. Woodbridge, Jr. Each director received
877,697 affirmative votes; 3,380 abstained.
Also presented for approval was a resolution for
the appointment of Lefkowitz, Garfinkel, Champi &
DeRienzo P. C. as independent auditors of the
accounts of the Registrant for the year 1994. The
resolution received 874,190 affirmative votes and
6,561 negative votes; 326 abstained.
Item 6. Exhibits and Reports on Form 8-K
No reports on 8-K were filed during the quarter
ended March 31, 1995.
<PAGE>
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 S/Joseph R. DiStefano
Joseph R. DiStefano, President
By S/Barbara J. Dreyer
Barbara J. Dreyer, Treasurer
and Principal Financial Officer
DATED: May 1, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27 (FDS) FILED WITH FORM 10QSB
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 750
<SECURITIES> 0
<RECEIVABLES> 6849
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 13513
<DEPRECIATION> 3809
<TOTAL-ASSETS> 17621
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1000
0
0
<OTHER-SE> 12606
<TOTAL-LIABILITY-AND-EQUITY> 17621
<SALES> 0
<TOTAL-REVENUES> 773
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<OTHER-EXPENSES> 656
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<INCOME-TAX> 28
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<NET-INCOME> 39
<EPS-PRIMARY> .04
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</TABLE>
