UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly period ended September 30, 1996
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission file number 1-7865
HMG/COURTLAND PROPERTIES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 59-1914299
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2701 S. Bayshore Drive, Coconut Grove, Florida 33133
(Address of principal executive offices) (Zip Code)
305-854-6803
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Sections 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 ____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required to be
filed by Sections 12, 13, or 15 (d) of the Exchange Act after the distribution
of securities under a plan confirmed by court. Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
1,166,835 Common shares were outstanding as of October 31, 1996.
<PAGE>
HMG/COURTLAND PROPERTIES, INC.
Index
PAGE
NUMBER
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
September 30, 1996 (Unaudited) and December 31, 1995 1
Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 1996 and 1995 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 (Unaudited) 3
Notes to Condensed Consolidated Financial Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Financial 5
Condition and Results of Operations
PART II. Other Information
Item 6. Reports on Form 8-K 7
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Part I Financial Information
Item I Financial Statements
<TABLE>
<CAPTION>
(UNAUDITED)
September, December 31,
1996 1995
<S> <C> <C>
ASSETS
Investment Properties, net of accumulated depreciation:
Commercial and industrial $ 1,676,701 $ 1,969,318
Hotel and club facility 8,438,884 8,971,370
Yacht Slips 1,739,283 1,689,283
Land held for development 7,586,328 8,103,304
Real estate development in progress 1,204,390 1,204,390
------------ ------------
Total investment properties, net 20,645,586 21,937,665
Investments in and receivables from unconsolidated entities 2,812,130 2,439,010
Notes and Advances Due From Related Parties 1,257,777 1,168,788
Cash and Cash Equivalents 1,539,832 1,094,999
Other Assets 2,155,869 2,241,610
------------ ------------
TOTAL ASSETS $ 28,411,194 $ 28,882,072
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses $ 2,410,723 $ 2,254,024
Mortgages and Notes payable 10,400,762 8,905,166
Other Liabilities 1,532,968 1,421,131
------------ ------------
TOTAL LIABILITIES 14,344,453 12,580,321
------------ ------------
Minority interests 237,923 613,643
------------ ------------
STOCKHOLDERS' EQUITY
Preferred Stock, no par value; 2,000,000 shares
authorized; none issued
Common Stock, $1 par value; 1,500,000 shares authorized;
1,245,635 shares issued and outstanding in 1996 and and 1995 1,245,635 1,245,635
Additional Paid-in Capital 26,283,222 26,283,222
Undistributed gains from sales of real estate, net of losses 32,400,345 31,637,177
Undistributed losses from operations (45,103,922) (42,481,464)
------------ ------------
14,825,280 16,684,570
Less: Treasury Stock, at cost (78,800 shares) in 1996 and 1995 (996,462) (996,462)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 13,828,818 15,688,108
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 28,411,194 $ 28,882,072
============ ============
</TABLE>
See notes to condensed consolidated financial statements
1
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(UNAUDITED) Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES
Rentals and related revenue $ 353,218 $ 312,308 $ 991,155 $ 1,534,685
Hotel, club and marina revenues 1,359,139 592,368 4,915,635 2,731,807
(Loss) gain from sale of marketable securities (26,548) 450,431 252,908 501,517
Interest from invested cash, dividends and other 38,576 83,510 208,953 612,095
----------- ----------- ----------- -----------
Total revenues 1,724,385 1,438,617 6,368,651 5,380,104
----------- ----------- ----------- -----------
EXPENSES
Operating expenses:
Rental Properties and other 410,046 238,193 1,014,286 979,619
Hotel, club and marina expenses:
Payroll and related expenses 746,074 500,231 2,316,259 1,704,532
Cost of food and beverage 285,681 79,090 960,178 422,583
Administrative and general expenses 684,439 673,559 2,297,352 1,589,274
Depreciation and amortization 290,063 302,247 861,289 1,076,148
----------- ----------- ----------- -----------
Total operating expenses 2,416,303 1,793,320 7,449,364 5,772,156
Interest 237,735 177,976 687,870 666,162
Advisor's fee 218,751 218,751 656,253 656,253
General and administrative 89,566 125,962 333,839 374,296
Directors' fees and expenses 19,583 20,146 48,913 51,341
Minority partners' interests in operating
(losses) gains of consolidated entities (3,345) (59,869) (88,808) 61,071
Gains from unconsolidated entities (7,303) (38,672) (96,322) (154,292)
----------- ----------- ----------- -----------
Total expenses 2,971,290 2,237,614 8,991,109 7,426,987
----------- ----------- ----------- -----------
Loss before sales of real estate (1,246,905) (798,997) (2,622,458) (2,046,883)
Gain on sales of real estate, net 813,377 1,159,670 763,168 1,947,523
----------- ----------- ----------- -----------
Net (loss) income ($ 433,528) $ 360,673 ($1,859,290) ($ 99,360)
=========== =========== =========== ===========
Earnings (Loss) Per Common Share
(Based on 1,166,835 weighted average shares outstanding) ($ 0.37) $ 0.31 ($ 1.59) ($ 0.09)
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED) Nine months ended
September 30,
1996 1995
<S> <C> <C>
Net loss ($1,859,290) ($ 99,360)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 861,289 1,076,148
Gain from unconsolidated entities (96,322) (154,292)
Gain on sales of real estate, net (763,168) (1,947,523)
Net gain from sales of marketable securities (252,908) (501,517)
Minority partners' interest in operating (losses) gains (88,808) 61,071
Changes in assets and liabilities:
Decrease (increase) in other assets 46,032 (25,559)
Increase in due from affiliates (88,989) (238,504)
Increase (decrease) in accounts payable and accrued expenses 156,699 (676,489)
Increase in other liabilities 111,837 465,105
----------- -----------
Total adjustments (114,338) (1,941,560)
----------- -----------
Net cash used in operating activities (1,973,628) (2,040,920)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Aquisitions and improvements of properties (235,441) (2,751,055)
Net proceeds from disposals of properties 1,953,110 8,871,113
Net (contributions to) distributions from unconsolidated entities (276,798) 152,173
Net proceeds from sales and redemptions of securities 344,330 664,041
Purchases of investments in securities (91,760)
----------- -----------
Net cash provided by investing activities 1,693,441 6,936,272
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgages and notes payables (338,918) 700,000
Additions to mortgages and notes payables 1,834,514 (5,855,923)
Net distributions to minority partners (770,576) (3,024,768)
----------- -----------
Net cash provided by (used in) financing activities 725,020 (8,180,691)
----------- -----------
Net increase (decrease) in cash and cash equivalents 444,833 (3,285,339)
Cash and cash equivalents at beginning of the period 1,094,999 5,382,501
----------- -----------
Cash and cash equivalents at end of the period $ 1,539,832 $ 2,097,162
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest (net of amounts capitalized) $ 688,000 $ 666,000
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
HMG/COURTLAND PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements include all adjustments (consisting only of
normal recurring accruals) which are necessary for a fair presentation of the
results for the periods presented. Certain information and footnote disclosures
normally included in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the Company's Annual Report for the year ended December 31,
1995. The results of operations for the nine months ended September 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
2. SALES OF REAL ESTATE
In January 1996, the Company sold 1.8 acres of vacant land located in
Houston, Texas for approximately $137,000. The Company recognized a gain on the
sale of approximately $11,000.
In January 1996, Courtrust Palm Bay, Ltd, sold its remaining acreage
(approximately 1.5 acres) located in Palm Bay, Florida for approximately
$359,000, and recognized a loss of approximately $61,000.
In September 1996, HMG-Fieber Associates sold its property located in
Portland, Maine for $1.2 million and recognized a gain on the sale of
approximately $1 million. The Company's portion of the gain was approximately
$589,000.
In September 1996, HMG-Fieber Associates sold its property located in West
Springfield, Massachusetts for $460,000 and recognized a gain on the sale of
approximately $376,000. The Company's portion of the gain was approximately
$220,000.
( 4 )
<PAGE>
Part I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues for the three and nine months ended September 30, 1996, as
compared with the same periods in 1995, increased by approximately $286,000
(20%) and $989,000 (18%), respectively. Total expenses for the same comparable
periods increased by approximately $734,000 (33%) and $1,564,000 (21%),
respectively.
REVENUES
Rentals and related revenue for the three and nine months ended September
30, 1996, as compared with the same periods in 1995, increased by approximately
$41,000 (13%) for the three month periods and decreased by $544,000 (35%) for
the nine month periods, respectively. The increase in the three month periods
was primarily attributable to increased rental revenue from Fashion Square
Partnership located near Jacksonville, Florida. The decrease in the nine month
periods was primarily attributable to decreased rental revenue as the result of
the sale of the office building located in Houston, Texas in April 1995, and
decreased rental revenue from the HMG-Fieber retail stores.
Hotel, Club and marina revenues consisted of hotel rooms revenue, food and
beverage revenue, club membership dues and revenues from marina operations.
For the three and nine months ended September 30, 1996, hotel, club and
marina revenues increased by approximately $767,000 (129%) and $2,184,000 (80%),
respectively, as compared to that of the same periods in 1995. This was
primarily attributable to increased hotel occupancy and increased food and
beverage sales.
Gain from sale of marketable securities for the three and nine months ended
September 30, 1996 decreased by approximately $477,000 (106%) and $249,000
(50%), as compared with the comparable periods in 1995. This was attributable to
nonrecurring sales of marketable securities during the third quarter of 1995.
Interest from invested cash, dividends and other income for the three and
nine months ended September 30, 1996 decreased by approximately $45,000 (54%)
and $403,000 (66%), respectively, as compared to that of the same periods in
1995. This was attributable primarily to decreased cash balances and invested
cash.
EXPENSES
Operating expenses of rental properties and other for the three and nine
months ended September 30, 1996, as compared with the same period in 1995,
increased by $172,000 (72%) and $35,000 (4%), respectively. This increase was
primarily attributable to increased expenses relating to The Grove Towne Center
- - Texas, Ltd. project. That project was abandoned in the fourth quarter of 1995
and real estate taxes and other operating costs are no longer being capitalized.
Hotel, club and marina payroll and related expenses for the three and nine
months ended September 30, 1996 increased by approximately $246,000 (49%) and
$612,000 (36%), respectively, as compared with that of the same periods in 1995.
Also, as compared with the same periods in 1995, cost of food and beverage
increased by $207,000 (261%) and $538,000 (127%), respectively for the three and
nine months ended September 30, 1996. These increases were primarily
attributable to increased food and beverage sales. Furthermore, administrative
and general expenses of the hotel, club and marina for the three and nine months
ended September 30, 1996 increased by approximately $11,000 (2%) and $708,000
(45%), respectively, as compared with the same periods in 1995. This increase
was primarily attributable to increased sales and marketing costs and other
costs of operating departments at the Grove Isle hotel, club and marina.
( 5 )
<PAGE>
Part I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(continued)
Depreciation and amortization expense for the three and nine months ended
September 30, 1996 decreased by approximately $12,000 (4%) and $215,000 (20%),
respectively, as compared with that of the same periods in 1995. This decrease
was primarily the result of the sale of the Houston, Texas office building in
April 1995.
Interest expense for the three and nine months ended September 30,1996
increased by approximately $60,000 (34%) and $22,000 (3%), respectively, as
compared with that of the same periods in 1995. The increase in the three month
periods was due to the non-capitalization of interest relating to abandonment of
The Grove Towne Center - Texas project in the fourth quarter of 1995.
General and administrative expense for the three and nine months ended
September 30,1996 decreased by approximately $36,000 (29%) and $40,000 (11%) as
compared with that of the comparable periods in 1995. This decrease was
primarily due to decreased professional fees.
Minority partners' interests in operating losses of consolidated entities
for the three and nine months ended September 30, 1996, as compared with the
same periods in 1995, decreased by $56,000 (94%) and increased by $150,000
(245%), respectively. The decrease in the three month periods was primarily due
to a decrease in losses from Courtland Investments, Inc. The increase in the
nine month periods was attributable to increased losses from The Grove Towne
Center partnership.
LIQUIDITY AND CAPITAL RESOURCES
The Company's material commitments for capital expenditures include the
completion of the shopping center in Jacksonville, Florida and required
contributions relating to the Grove Isle hotel and club operations. The sources
of funds for these projects are being provided from available cash and
ultimately with construction and permanent financing.
Maturities of debt obligations in 1996 are expected to be satisfied from
refinancing available cash, sales of properties and operating revenue.
OTHER:
FUTURE ACCOUNTING CHANGES.
The Company has adopted the provision of FASB No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," in
1996. The adoption of FASB No. 121 has not had a material effect on the carrying
value of the Company's long-lived assets.
The Company does not presently intend in 1996 to adopt the fair value based
method as encouraged by FASB No.123 "Accounting for Stock-Based Compensation".
Accordingly, there will be no effect to the financial statements.
MATERIAL COMPONENTS OF CASH FLOWS
For the nine months ended September 30, 1996, net cash used in operating
activities was approximately $2 million. This was primarily attributable to a
net loss for the nine month period of approximately $1.9 million less
( 6 )
<PAGE>
Part I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(continued)
depreciation and amortization of approximately $861,000 plus gain from sales of
marketable securities of approximately $253,000 and gain on sales of real estate
of $763,000.
For the nine months ended September 30, 1996, net cash provided by
investing activities was approximately $1.7 million. This consisted primarily of
net proceeds from disposal of properties of $2 million and net proceeds from
sales of securities of $344,000. These sources of cash were partially offset by
net contributions to unconsolidated entities of $277,000 and improvements of
properties of $235,000 and investments in securities of $92,000.
For the nine months ended September 30, 1996, net cash provided by
financing activities was approximately $725,000. This consisted primarily of
additions to notes payable of $1.8 million less repayment of mortgages and notes
payable of $339,000 and net distributions to minority partners of approximately
$771,000.
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) There were no reports on Form 8-K filed for the quarter ended
September 30, 1996.
( 7 )
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HMG/COURTLAND PROPERTIES, INC.
Dated: November 14, 1996 /s/ Lawrence Rothstein
------------------------------------
Lawrence Rothstein
Senior Vice President
Dated: November 14, 1996 /s/ Carlos Camarotti
------------------------------------
Carlos Camarotti
Vice President - Finance
( 8 )
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000311817
<NAME> HMG/COURTLAND PROPERTIES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,539,832
<SECURITIES> 0
<RECEIVABLES> 1,257,777
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 24,623,921
<DEPRECIATION> 3,978,335
<TOTAL-ASSETS> 28,411,194
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,245,635
<OTHER-SE> 12,583,183
<TOTAL-LIABILITY-AND-EQUITY> 28,411,194
<SALES> 6,368,651
<TOTAL-REVENUES> 6,368,651
<CGS> 960,178
<TOTAL-COSTS> 6,489,186
<OTHER-EXPENSES> 1,541,745
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 687,870
<INCOME-PRETAX> (1,859,290)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,859,290)
<EPS-PRIMARY> (1.59)
<EPS-DILUTED> 0
</TABLE>
