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 June 30, 1997
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 401-331-0100
Issuer's Fax number 40l-331-2965
(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 latest practicable date:
As of August 1, 1997, the registrant had 3,000,000 shares
of common stock outstanding.
Transitional small business disclosure format (check one).
YES_____ NO X .
<PAGE>
PART I
Item 1. Financial Statements
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(Unaudited)
ASSETS
<TABLE>
<S> <C>
Properties and equipment (net of accumulated
depreciation) . . . . . . . . . . . . . . . . . $ 8,846,000
Cash and cash equivalents . . . . . . . . . . . . 798,000
Note receivable, Providence and Worcester
Railroad Company. . . . . . . . . . . . . . . . 4,105,000
Other receivables . . . . . . . . . . . . . . . . 341,000
Accrued rental income . . . . . . . . . . . . . . 413,000
Prepaid and other . . . . . . . . . . . . . . . . 469,000
$14,972,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses:
Property taxes. . . . . . . . . . . . . . . . . $ 559,000
Other . . . . . . . . . . . . . . . . . . . . . . 145,000
Deferred income taxes . . . . . . . . . . . . . . 1,333,000
2,037,000
Commitments and contingencies (Note 7)
Shareholders' equity:
Common stock, $1 par; authorized, issued and
outstanding 3,000,000 shares (Note 8). . . . . 3,000,000
Capital in excess of par (Note 8) . . . . . . . 8,828,000
Retained earnings . . . . . . . . . . . . . . . 1,107,000
12,935,000
$14,972,000
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
Income:
Rentals. . . . . . . $402,000 $451,000 $ 789,000 $1,881,000
Garage and surface
parking revenues. . 142,000 131,000 262,000 271,000
Petroleum storage
facilities, prin-
cipally sales of
petroleum products. 271,000 295,000
Interest:
Providence and Worcester
Railroad Company. 103,000 110,000 207,000 224,000
Other. . . . . . . 9,000 9,000 18,000 19,000
927,000 701,000 1,571,000 1,395,000
Expenses:
Expenses applicable to:
Rental income. . . 105,000 192,000 200,000 366,000
Garage and surface
parking . . . . . 186,000 202,000 376,000 406,000
Petroleum storage
facilities. . . . 406,000 561,000
General and
administrative . . 300,000 160,000 474,000 318,000
997,000 554,000 1,611,000 1,090,000
Income (loss) before
income taxes. . . . (70,000) 147,000 (40,000) 305,000
Income tax expense
(benefit) . . . . . (12,000) 58,000 2,000 124,000
Net income (loss). . $ (58,000) $ 89,000 $ (42,000) $ 181,000
Income(loss)per
common share re-
stated to reflect
3-for-1 stock
split in June 1997
(Note 8). . . . . . $(.02) $.03 $(.01) $.06
Dividends per common
share restated to
reflect 3-for-1
stock split in June
1997 (Note 8) . . . $ .05 $.05 $ .05 $.05
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
<TABLE>
<S> <C> <C>
1997 1996
Cash flows from operating activities:
Net income (loss). . . . . . . . . . $ (42,000) $ 181,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation . . . . . . . . . . . 181,000 181,000
Deferred income taxes. . . . . . . (27,000) (55,000)
Other, principally net changes in
other receivables, accounts pay-
able and accrued expenses . . . . (422,000) 96,000
Net cash provided by (used in)
operating activities. . . . . . . . (310,000) 403,000
Cash flows from investing activities:
Proceeds from:
Collection of note receivable,
Providence and Worcester
Railroad Company . . . . . . . . . 107,000 301,000
Maturity of temporary cash
investments. . . . . . . . . . . . 203,000
Cash provided by investing
activities. . . . . . . . . . . . . 310,000 301,000
Cash used in financing activities,
payment of dividends . . . . . . . . (150,000) (150,000)
Increase (decrease) in cash and
cash equivalents . . . . . . . . . . (150,000) 554,000
Cash and cash equivalents,
beginning. . . . . . . . . . . . . . 948,000 767,000
Cash and cash equivalents, ending . . $798,000 $ 1,321,000
Supplemental disclosure, cash
paid for Income taxes. . . . . . . . $175,000 $ 57,000
</TABLE>
See notes to consolidated financial statements.
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
1. The accompanying consolidated financial statements have been
prepared by the Company. Certain information and note
disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles
have been condensed or omitted. In the opinion of management,
the accompanying consolidated financial statements contain all
adjustments necessary to present fairly the financial position
as of June 30, 1997 and the results of operations for the
three and six months ended June 30, 1997 and 1996 and the cash
flows for the six months ended June 30, 1997 and 1996.
The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the
full year.
2. 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 date of the financial
statements. Estimates also affect the reported amounts of
revenue and expenses during the reporting period. Actual
results could differ from those estimates.
3. Properties and equipment:
<TABLE>
<S> <C>
Properties on lease or held for lease, land
and land improvements . . . . . . . . . . $ 4,014,000
Petroleum storage facilities:
Land. . . . . . . . . . . . . . . . . . . 1,825,000
Buildings and structures. . . . . . . . . 325,000
Tanks and equipment . . . . . . . . . . . 4,163,000
6,313,000
Other:
Land and land improvements. . . . . . . . 492,000
Buildings, principally parking garage . . 2,537,000
Equipment . . . . . . . . . . . . . . . . 96,000
3,125,000
13,452,000
Less accumulated depreciation:
Petroleum storage facilities. . . . . . . 3,921,000
Other . . . . . . . . . . . . . . . . . . 685,000
4,606,000
</TABLE>
$ 8,846,000
4. Other receivables:
<TABLE>
<S> <C>
Rentals, principally tenant property
tax reimbursements. . . . . . . . . . . . $ 159,000
Property tax abatement. . . . . . . . . . . 93,000
Former tenant of petroleum
storage facilities. . . . . . . . . . . . 55,000
Interest, Providence and Worcester
Railroad Company. . . . . . . . . . . . . 34,000
$ 341,000
</TABLE>
<PAGE>
5. Description of leasing arrangements:
At June 30, 1997, the Company had entered into land leases
for three separate land parcels. One lease was amended in May
1997, extending the term thereof from 2092 to 2142. There was
no change in the rents due under the original term of the
lease, and rents for the extended period will be calculated in
accordance with the formulas set forth for the original term.
The Company also leases various parcels of land principally
for outdoor advertising and surface parking for remaining
terms of up to 27 years. For those leases with scheduled rent
increases, the cumulative excess of straight-line over
contractual rentals (considering scheduled rent increases over
the initial 30 to 149-year terms of the leases) amounted to
$10,266,000 through June 30, 1997. Management has been able
to conclude that a portion of the excess of straight-line over
contractual rentals ($413,000 at June 30, 1997) is realizable
when payable over the terms of the leases.
6. Income taxes:
Deferred income taxes are recorded based upon differences
between financial statement and tax bases of assets and
liabilities. The tax effects of temporary differences which
give rise to deferred tax assets and liabilities at June 30,
1997 were as follows:
<TABLE>
<S> <C>
Gross deferred tax liabilities:
Property having a financial statement
basis in excess of its tax basis. . . . . $1,341,000
Excess of straight-line over
contractual rental income . . . . . . . . 171,000
1,512,000
Gross deferred tax assets, principally
professional fees. . . . . . . . . . . . . (179,000)
$1,333,000
</TABLE>
7.Petroleum storage facilities:
Since October 1, 1991, the Company's petroleum storage
facilities (the Facilities) had been leased under a 5-year
agreement under which the tenant paid an annual rental of
$183,000 plus reimbursement of property taxes (approximately
$90,000 annually), which lease terminated September 30, 1996.
In 1994, a leak was discovered in a 25,000 barrel storage
tank at the 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 (the
agency). To date, monitoring wells have shown no ground
water contamination, and the leak has been contained in the
soil under the tank. The Company's engineering consultants
(the consultants) are working with the agency to determine the
extent of remediation. The consultants have proposed several
acceptable options and have determined a range of estimated
costs (including professional fees) to be $27,000 (for the
capping of the contaminated area) to $383,000 (for the
complete removal of the contaminated soil and its off-site
disposal). The agency has advised the Company that it will
accept the capping of the contaminated area as an
appropriate remediation measure, subject to the placement of a
notice on the Company's deed describing the location of the
contaminated area.
During 1995, the former tenant informed the Company of the
erosion of a slope and damage to a retaining wall which caused
the washing away of several tons of soil. The consultants
<PAGE>
have proposed several options and have determined a range of
estimated costs (including professional fees) to be $15,000
(to repair the eroded channel) to $136,000 (to include the
replacement of the retaining wall).
In 1995, the Company provided for the estimated costs to
remediate the contaminated soil and repair the erosion
situation by reporting a liability and a corresponding
receivable from the former tenant for $42,000. In 1996, the
Company paid $15,000 to repair a portion of the erosion
situation, which amount reduced the reported liability to
$27,000. At June 30, 1997, the Company is reporting on the
accompanying consolidated balance sheet the aforementioned
liability of $27,000 in accrued expenses, other, and a $42,000
receivable from the former tenant which is included in other
receivables.
Management is of the opinion that the terms of the lease not
only make the former tenant solely responsible for the payment
of all costs to remediate the contaminated soil and to repair
the erosion of the slope and retaining wall, but also required
the former tenant to return the Facilities at the termination
of the lease in a condition substantially the same as when the
former tenant took possession. After the former tenant
vacated the Facilities and emptied the tanks, the Company
inspected the Facilities and determined that one of the tanks
had a structural failure. During 1996, the Company repaired
the tank at a cost of $65,000.
Since 1985, the Company has been a party to an agreement
covering the operation and maintenance of the Pier, which Pier
is owned by Providence and Worcester Railroad Company
(Railroad). In 1991, the agreement was amended by the parties
then subject to the agreement who were the Company, Railroad
and two major oil companies. The agreement provides that the
parties will share the cost of operating and maintaining the
Pier, which costs are allocated annually among the parties
based on their relative usage of the Pier as measured by
vessel berthing hours. Since 1991, Railroad has notified the
parties of the need for several significant repair and
maintenance projects to the Pier and has attempted to obtain
agreement among the parties to proceed with such repairs. In
1996, Railroad notified the parties that the estimated cost of
the repair and maintenance projects totaled approximately
$1,100,000 and requested the parties to consent to its
undertaking such projects. All of the parties except one have
consented. All of the Company's responsibilities and
obligations under this agreement were assumed by the former
tenant in accordance with the terms of its lease. Although
the former tenant has paid for certain on-going operating
costs, it does not agree that it is responsible for any
portion of the costs of the repair and maintenance projects.
The Company is unable to determine what its share of the costs
will be as well as when reimbursement will be due Railroad.
Because the former tenant does not agree that it is
responsible for any of the aforementioned costs, the Company
initiated arbitration proceedings before the American
Arbitration Association in accordance with the lease
provisions. In connection with the arbitration proceedings,
the former tenant again denied responsibility and set forth
counterclaims asserting that it is entitled to recover $96,000
plus interest from the Company for operating expenses. The
Company denies any liability in connection with the
counterclaims. The arbitration proceedings will decide the
responsibilities of the parties, which decision is final. The
arbitration hearing was completed in June 1997, and the
<PAGE>
Company expects that a decision will be rendered in the third
quarter of 1997. The arbitration could find that the Company
is financially responsible for some or all of the disputed
costs.
8. Stock split:
In May 1997, the Board of Directors declared a three-for-one
split of the Company's common stock (effected in the form of a
200% stock dividend) which was paid on June 16, 1997. To
permit the split, the Company's articles of incorporation were
restated to increase the number of authorized common shares,
$1 par, from 1,000,000 to 3,000,000 shares. To account for
the split, the Company transferred $2,000,000 from capital in
excess of par to common stock on the accompanying consolidated
balance sheet. On June 16, 1997, the Company's common stock
was listed on the American Stock Exchange.
9. Property tax abatement:
During 1995, the Company received notice of an increase in the
assessed valuation of several of its parcels in Providence,
Rhode Island. The increase in the assessment was not the
result of a city-wide revaluation, pertained to 1995 and
subsequent years and resulted in an annual increase in
property taxes of $265,000. The Company has filed appeals
for 1995 and 1996 but was required to make property tax
payments as due pending the outcome of the appeals. During
the fourth quarter of 1996, the City reduced the assessed
valuation on one of the parcels, resulting in an abatement of
property taxes of $107,000 for 1995 and a reduction in the tax
of $115,000 for 1996 and subsequent years. The Company is
unable to determine if the remaining appeals will result in an
abatement of the property taxes for 1995 and 1996 and the
lowering of property taxes for 1997 and thereafter.
10. Transactions with related parties:
A trust for the benefit of the controlling shareholder is the
holder of rights with respect to the use of the Pier and two
petroleum pipelines located in East Providence, Rhode Island.
Since February 1983, the Company and the tenant of its
Facilities have had the right to utilize the pipelines for the
transportation of petroleum products, in consideration for
which the Company and its tenant are obligated to pay the
trust a fee based upon the number of barrels of product
transported through the pipelines. The fee is subject to
adjustment as of October 1 of each year to reflect changes in
the Consumer Price Index.
<PAGE>
The Company has the option to purchase the rights of the trust
at any time during the twelve-month period following September
30, 1997, at a price equal to twice the payments due for the
twelve-month period ending September 30, 1997, but not less
than $50,000. Based upon estimated usage for the twelve-
month period ending September 30, 1997, the price would be
$50,000. The Company can assign its rights to purchase to a
third party. Should the Company not purchase or assign the
rights of the trust, the Company's responsibility will
continue indefinitely under the present arrangement.
11. Pending litigation and subsequent event:
In connection with the River Relocation Project, in 1987 the
State of Rhode Island condemned a portion of the Company's
property and paid an award of $2,600,000. As part of an
agreement to purchase another parcel of land from the State,
the Company was required to return to the State a portion of
the condemnation award ($1,600,000).
In April 1988, the Company filed a petition in the Rhode
Island Superior Court for an increased condemnation award
alleging that the award paid in 1987 was inadequate. In
January 1992, the Superior Court awarded the Company an
additional condemnation award of $401,000 plus interest from
the date of the condemnation. The Company had asserted in the
Superior Court that it was entitled to an additional
condemnation award in excess of $6,000,000 plus interest, and
accordingly, in February 1992, the Company appealed the
decision of the Superior Court to the Rhode Island Supreme
Court. In January 1994, the Supreme Court overturned the
Superior Court decision and returned the matter to the
Superior Court for a retrial of the case. The case was
retried in 1995, and on March 5, 1997,
the Superior Court issued a decision awarding the Company an
additional $6,100,000 plus interest. On May 6, 1997, the Court
entered final judgment awarding condemnation proceeds of
$6,101,000 in favor of the Company and interest on the
judgment through that date of $4,552,000. The State has filed
an appeal to the Rhode Island Supreme Court. Interest is
accruing on the judgment. The Company is unable to predict
when the matter will be heard. Under the aforementioned
agreement, the Company may be required to return to the State
a portion of this award.
<PAGE>
CAPITAL PROPERTIES, INC. AND SUBSIDIARIES
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 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.
In May 1997, one of the Company's land leases was amended,
extending the term thereof from 2092 to 2142. There was no
change in the rents due under the original term of the lease; and
rents for the extended period will be calculated in accordance
with the formulas set forth for the original term.
Since October 1, 1991, the Company's petroleum storage facilities
(the Facilities) had been leased under a 5-year agreement under
which the tenant paid an annual rental of $183,000 plus
reimbursement of property taxes (approximately $90,000 annually),
which lease terminated September 30, 1996.
In 1994, a leak was discovered in a 25,000 barrel storage tank
at the 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 (the agency). To
date, monitoring wells have shown no ground water contamination,
and the leak has been contained in the soil under the tank. The
Company's engineering consultants (the consultants) are working
with the agency to determine the extent of remediation. The
consultants have proposed several acceptable options and have
determined a range of estimated costs (including professional
fees) to be $27,000 (for the capping of the contaminated area) to
$383,000 (for the complete removal of the contaminated soil and
its off-site disposal). The agency has advised the Company that
it will accept the capping of the contaminated area as an
appropriate remediation measure, subject to the placement of a
notice on the Companys deed describing the location of the
contaminated area.
During 1995, the former tenant informed the Company of the
erosion of a slope and damage to a retaining wall which caused
the washing away of several tons of soil. The consultants have
proposed several options and have determined a range of estimated
costs (including professional fees) to be $15,000 (to repair the
eroded channel) to $136,000 (to include the replacement of the
retaining wall).
In 1995, the Company provided for the estimated costs to
remediate the contaminated soil and repair the erosion situation
by reporting a liability and a corresponding receivable from the
former tenant for $42,000. In 1996, the Company paid $15,000 to
repair a portion of the erosion situation, which amount reduced
the reported liability to $27,000. At June 30, 1997, the Company
is reporting on the accompanying consolidated balance sheet the
aforementioned liability of $27,000 in accrued expenses, other,
and a $42,000 receivable from the former tenant which is included
in other receivables.
Management is of the opinion that the terms of the lease not only
make the former tenant solely responsible for the payment of all
costs to remediate the contaminated soil and to repair the
erosion of the slope and retaining wall, but also required the
former tenant to return the Facilities at the termination of the
lease in a condition substantially the same as when the former
tenant took possession. After the former tenant vacated the
Facilities and emptied the tanks, the Company inspected the
Facilities and determined that one of the tanks had a structural
failure. During 1996, the Company repaired the tank at a cost of
$65,000.
<PAGE>
Since 1985, the Company has been a party to an agreement covering
the operation and maintenance of the Pier, which Pier is owned by
Providence and Worcester Railroad Company (Railroad). In 1991,
the agreement was amended by the parties then subject to the
agreement who were the Company, Railroad and two major oil
companies. The agreement provides that the parties will share the
cost of operating and maintaining the Pier, which costs are
allocated annually among the parties based on their relative
usage of the Pier as measured by vessel berthing hours. Since
1991, Railroad has notified the parties of the need for several
significant repair and maintenance projects to the Pier and has
attempted to obtain agreement among the parties to proceed with
such repairs. In 1996, Railroad notified the parties that the
estimated cost of the repair and maintenance projects totalled
approximately $1,100,000 and requested the parties to consent to
its undertaking such projects. All of the parties except one
have consented. All of the Company's responsibilities and
obligations under this agreement were assumed by the former
tenant in accordance with the terms of its lease. Although the
former tenant has paid for certain on-going operating costs, it
does not agree that it is responsible for any portion of the
costs of the repair and maintenance projects. The Company is
unable to determine what its share of the costs will be as well
as when reimbursement will be due Railroad.
Because the former tenant does not agree that it is responsible
for any of the aforementioned costs, the Company has initiated
arbitration proceedings before the American Arbitration
Association in accordance with the lease provisions. In
connection with the arbitration proceedings, the former tenant
has again denied responsibility and has set forth counterclaims
asserting that it is entitled to recover $96,000 plus interest
from the Company for operating expenses. The Company denies any
liability in connection with the counterclaims. The arbitration
proceedings will decide the responsibilities of the parties,
which decision is final. The arbitration hearing was completed
in June 1997, and the Company expects that a decision will be
rendered in the third quarter of 1997. The arbitration could find
that the Company is financially responsible for some or all of
the disputed costs.
On October 1, 1996, the Company took possession of the Facilities
and is currently in negotiations with several oil companies to
enter into thru-put arrangements under which the Company would
receive, store and disburse product (thru-put) for such
companies. However, there is no assurance when and if such
arrangements can be completed. In the absence of such
arrangements, the annual cash outlay to maintain the Facilities
is approximately $240,000. Pending the completion of thru-put
arrangements, the Company began purchasing petroleum products
which it stores at the Facilities and resells.
In connection with the River Relocation Project, in 1987 the
State of Rhode Island condemned a portion of the Company's
property and paid an award of $2,600,000. As part of an
agreement to purchase another parcel of land from the State, the
Company was required to return to the State a portion of the
condemnation award ($1,600,000).
<PAGE>
In April 1988, the Company filed a petition in the Rhode Island
Superior Court for an increased condemnation award alleging that
the award paid in 1987 was inadequate. In January 1992, the
Superior Court awarded the Company an additional condemnation
award of $401,000 plus interest from the date of the
condemnation. The Company had asserted in the Superior Court that
it was entitled to an additional condemnation award in excess of
$6,000,000 plus interest, and accordingly, in February 1992, the
Company appealed the decision of the Superior Court to the Rhode
Island Supreme Court. In January 1994, the Supreme Court
overturned the Superior Court decision and returned the matter to
the Superior Court for a retrial of the case. The case was
retried in 1995, and on March 5, 1997, the Superior Court issued
a decision awarding the Company an additional $6,100,000 plus
interest. On May 6, 1997, the Court entered final judgment
awarding condemnation proceeds of $6,101,000 in favor of the
Company and interest on the judgment through that date of
$4,552,000. The State filed an appeal to the Rhode Island
Supreme Court. Interest is accruing on the judgment. The
Company is unable to predict when the matter will be heard.
Under the aforementioned agreement, the Company may be required
to return to the State a portion of this award.
Certain portions of this statement, and particularly the
Management's Discussion and Analysis of Financial Condition and
Results of Operations and the Notes to Consolidated Financial
Statements, contain forward-looking statements which represent
the Company's expectations or beliefs concerning future events.
The Company cautions that these statements are further qualified
by important factors that could cause actual results to differ
materially from those in the forward-looking statements.
Results of operations:
For the three and six months ended June 30, 1997, total income
increased approximately 32% and 13%, respectively, from the 1996
level.
The increase in petroleum storage facilities income was offset in
part by a decrease in rental income resulting from the
termination of the lease of those facilities on September 30,
1996. Expenses applicable to petroleum storage facilities
include certain expenses which were included in expenses
applicable to rental income prior to the termination of the
lease.
Expenses applicable to garage and surface parking decreased due
to the lowering in property taxes resulting from the Company's
appeal.
The decrease in interest income on the note receivable from
Railroad results from a prepayment of $200,000 in May 1996.
General and administrative expenses increased approximately 88%
and 49%, respectively, over the 1996 level due principally to
professional fees in connection with the arbitration proceedings,
the condemnation case and the listing of the Company's common
stock on the American Stock Exchange.
During 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (Earnings per
Share). The opinion is effective for interim and annual periods
ended after December 15, 1997. Earlier application is not
permitted. The adoption of FAS 128 will not have any effect on
the reporting of earnings per share.
<PAGE>
PART II
Item 4.Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders was held on April 29,
1997. Of the 1,000,000 shares entitled to vote, 889,694
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: James H. Dodge, Barbara J. Dreyer, Robert H. Eder,
Harold J. Harris and Henry S. Woodbridge, Jr. Each director
received 834,544 affirmative votes; 55,150 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 1997. The resolution received 829,293
affirmative votes and 60,231 negative votes; and 170
abstained.
Item 6.Exhibits and Reports on Form 8-K
(a) Exhibits
(3) (a) Restated articles of incorporation incorporated
by reference to Exhibit 4.1 to the Issuer's report
on Form 8-A dated June 6, 1997).
(b) By-laws, as amended (incorporated by reference
to Exhibit 3(b) to the Issuer's quarterly report
on Form 10-QSB for the quarter ended June 30,
1995).
(10) (a) Note from Providence and Worcester Railroad
Company to Issuer dated January 1, 1988
(incorporated by reference to Exhibit 10(a) to
the Issuer's annual report on Form 10-KSB for the
year ended December 31, 1992) as modified by
Agreement dated August 16, 1995 (incorporated by
reference to Exhibit 10(a) to the Issuer's annual
report on Form 10-KSB for the year ended December
31, 1995).
(b) Leases between Metropark, Ltd. and Issuer:
(i) Dated November 30, 1995 (incorporated by
reference to Exhibit 10(c)(i) to the Issuer's
annual report on Form 10-KSB for the year
ended December 31, 1995).
(ii) Dated November 10, 1994 (incorporated by
reference to Exhibit 10(c)(ii) to the Issuer's
annual report on Form 10-KSB for the year
ended December 31, 1994.
(iii) Dated November 6, 1996 (incorporated by
reference to Exhibit 10(c)(i) to the Issuer's
annual report on Form 10-KSB for the year ended
December 31, 1996).
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended June 30, 1997.
<PAGE>
SIGNATURE
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/Barbara J. Dreyer
Barbara J. Dreyer
President, Treasurer and
Principal Financial Officer
DATED: August 4, 1997
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