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 June 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 July 30, 1996.
<PAGE>
HMG/COURTLAND PROPERTIES, INC.
Index
PAGE
NUMBER
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1996 (Unaudited) and December 31, 1995 1
Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 1996 and 1995 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995 (Unaudited) 3
Notes to Condensed Consolidated Financial Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II. Other Information
Item 6. Reports on Form 8-K 7
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
Part I Financial Information
Item I Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
ASSETS
Investment Properties, net of accumulated depreciation:
Commercial and industrial $ 1,889,496 $ 1,969,318
Hotel and club facility 8,645,086 8,971,370
Yacht Slips 1,739,283 1,689,283
Land held for development 7,586,327 8,103,304
Real estate development in progress 1,204,390 1,204,390
------------ ------------
Total investment properties, net 21,064,582 21,937,665
Investments in and receivables from unconsolidated entities 2,719,739 2,439,010
Notes and Advances Due From Related Parties 1,268,904 1,168,788
Cash and Cash Equivalents 818,863 1,094,999
Other Assets 2,152,671 2,241,610
------------ ------------
TOTAL ASSETS $ 28,024,759 $ 28,882,072
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses $ 2,067,265 $ 2,254,024
Mortgages and Notes payable 9,643,370 8,905,166
Other Liabilities 1,683,408 1,421,131
------------ ------------
TOTAL LIABILITIES 13,394,043 12,580,321
------------ ------------
Minority interests 368,370 613,643
------------ ------------
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 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 31,586,968 31,637,177
Undistributed losses from operations (43,857,017) (42,481,464)
------------ ------------
15,258,808 16,684,570
Less: Treasury Stock, at cost (78,800 shares) in 1996 and 1995 (996,462) (996,462)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 14,262,346 15,688,108
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 28,024,759 $ 28,882,072
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES
Rentals and related revenue $ 316,399 $ 402,993 $ 637,937 $ 1,222,377
Hotel, club and marina revenues 1,519,921 1,007,898 3,556,496 2,139,439
Gain from sale of marketable securities 192,243 279,456 51,086
Interest from invested cash, dividends and other 78,462 376,618 170,377 528,585
----------- ----------- ----------- -----------
Total revenues 2,107,025 1,787,509 4,644,266 3,941,487
----------- ----------- ----------- -----------
EXPENSES
Operating expenses:
Rental Properties and other 220,813 317,675 604,240 741,426
Hotel, club and marina expenses:
Payroll and related expenses 771,192 588,911 1,570,185 1,204,301
Cost of food and beverage 315,913 156,610 674,497 343,493
Administrative and general expenses 699,226 479,753 1,612,913 915,715
Depreciation and amortization 291,780 314,803 571,226 773,901
----------- ----------- ----------- -----------
Total operating expenses 2,298,924 1,857,752 5,033,061 3,978,836
Interest 228,309 239,190 450,135 488,186
Advisor's fee 218,751 218,751 437,502 437,502
General and administrative 153,399 132,278 244,273 248,334
Directors' fees and expenses 19,830 15,350 29,330 31,195
Minority partners' interests in operating
(losses) gains of consolidated entities (20,125) 36,515 (85,463) 120,940
Gains from unconsolidated entities (46,900) (75,578) (89,019) (115,620)
----------- ----------- ----------- -----------
Total expenses 2,852,188 2,424,258 6,019,819 5,189,373
----------- ----------- ----------- -----------
Loss before sales of real estate (745,163) (636,749) (1,375,553) (1,247,886)
(Loss) gain on sales of real estate, net (643) (28,543) (50,209) 787,853
----------- ----------- ----------- -----------
Net Loss ($ 745,806) ($ 665,292) ($1,425,762) ($ 460,033)
=========== =========== =========== ===========
Earnings (Loss) Per Common Share
(Based on 1,166,835 weighted average
shares outstanding)
($0.64) ($0.57) ($1.22) ($0.39)
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
June 30,
1996 1995
<S> <C> <C>
Net loss ($1,425,762) ($ 460,033)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 571,226 773,901
Gain from unconsolidated entities (89,019) (115,620)
Loss (gain) on sales of real estate, net 50,209 (787,853)
Net gain from sales of marketable securities (279,456) (51,086)
Minority partners' interest in operating (losses) gains (85,463) 120,940
Changes in assets and liabilities:
Decrease in other assets 64,105 70,443
Increase in due from affiliates (100,116) (206,212)
Decrease in accounts payable and accrued expenses (186,759) (827,478)
Increase in other liabilities 262,277 618,280
----------- -----------
Total adjustments 207,004 (404,685)
----------- -----------
Net cash used in operating activities (1,218,758) (864,718)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Aquisitions and improvements of properties (201,565) (2,108,976)
Net proceeds from disposals of properties 477,333 6,741,293
Net contributions to unconsolidated entities (191,710) 118,086
Net proceeds from sales and redemptions of securities 370,972 77,955
Purchases of investments in securities (91,760)
----------- -----------
Net cash provided by investing activities 363,270 4,828,358
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgages and notes payables (312,310) (1,222,577)
Additions to mortgages and notes payables 1,050,514 700,000
Net distributions to minority partners (158,852) (425,939)
----------- -----------
Net cash provided by (used in) financing activities 579,352 (948,516)
----------- -----------
Net (decrease) increase in cash and cash equivalents (276,136) 3,015,124
Cash and cash equivalents at beginning of the period 1,094,999 5,382,501
----------- -----------
Cash and cash equivalents at end of the period $ 818,863 $ 8,397,625
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest (net of
amounts capitalized) $ 450,000 $ 488,000
=========== ===========
</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 six months ended June 30, 1996 are not
necessarily indicative of the results to be expected for the full year.
2. (LOSS) GAIN ON 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.
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues for the three and six months ended June 30, 1996, as
compared with the same periods in 1995, increased by approximately $320,000
(18%) and $703,000 (18%), respectively. Total expenses for the same comparable
periods increased by approximately $428,000 (18%) and $830,000 (16%),
respectively.
REVENUES
Rentals and related revenue for the three and six months ended June 30,
1996, as compared with the same periods in 1995, decreased by approximately
$87,000 (21%) and $584,000 (48%), respectively. This decrease 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 six months ended June 30, 1996, hotel, club and marina
revenues increased by approximately $512,000 (51%) and $1,417,000 (66%),
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 six months ended
June 30, 1996 increased by approximately $192,000 and $228,000, as compared with
the comparable periods in 1995.
Interest from invested cash, dividends and other income for the three and
six months ended June 30, 1996 decreased by approximately $298,000 (79%) and
$358,000 (68%), 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 six
months ended June 30, 1996, as compared with the same period in 1995, decreased
by $97,000 (30%) and $137,000 (19%), respectively. This decrease was primarily
attributable to the sale of the office building located in Houston, Texas in
April 1995.
Hotel, club and marina payroll and related expenses for the three and
six months ended June 30, 1996 increased by approximately $182,000 (31%) and
$366,000 (30%), respectively, as compared with that of the same periods in 1995.
Also, as compared with the comparable periods in 1995, cost of food and beverage
increased by $159,000 (102%) and $331,000 (96%), respectively for the three and
six months ended June 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 six months ended June
30, 1996 increased by approximately $219,000 (46%) and $697,000 (76%),
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.
Depreciation and amortization expense for the three and six months ended
June 30, 1996 decreased by approximately $23,000 (7%) and $203,000 (26%),
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 six months ended June 30,1996 decreased
by approximately $11,000 (5%) and $38,000 (8%), respectively, as compared with
that of the same periods in 1995. This decrease was due to the Company's
decreased level of debt from that of the prior year.
5
<PAGE>
General and administrative expense for the three months ended June 30,1996
increased by approximately $21,000 (16%) as compared with that of the comparable
period in 1995. This increase was primarily due to increased professional fees.
The change in general and administrative expense for the six months ended June
30, 1996 versus that of 1995 was not significant.
Minority partners' interests in operating losses of consolidated entities
for the three and six months ended June 30, 1996, as compared with the same
periods in 1995, increased by approximately $57,000 (155%) and $206,000 (171%),
respectively. This was primarily attributable to decreased operating income of
HMG-Fieber Associates and increased operating losses of The Grove Towne
Center-Texas, Ltd.
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
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 six months ended June 30, 1996, net cash used in operating
activities was approximately $1.2 million. This was primarily attributable to a
net loss for the six month period of approximately $1.4 million less
depreciation and amortization of approximately $571,000 plus gain from sales of
marketable securities of approximately $279,000.
For the six months ended June 30, 1996, net cash provided by investing
activities was approximately $363,000. This consisted primarily of net proceeds
from disposals of properties of $477,000 and net proceeds from sales of
securities of $371,000. These sources of cash were partially offset by net
contributions to unconsolidated entities of $192,000 and improvements of
properties of $202,000.
For the six months ended June 30, 1996, net cash provided by financing
activities was approximately $579,000. This consisted primarily of additions to
notes payable of $1.1 million less repayment of mortgages and notes payable of
$312,000 and net distributions to minority partners of approximately $159,000.
6
<PAGE>
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
June 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: August 11, 1996 /s/ Lawrence Rothstein
------------------------------------
Lawrence Rothstein
Senior Vice President
Dated: August 11, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 818,863
<SECURITIES> 0
<RECEIVABLES> 1,268,904
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 24,949,483
<DEPRECIATION> 3,884,899
<TOTAL-ASSETS> 28,024,759
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,245,635
<OTHER-SE> 13,016,711
<TOTAL-LIABILITY-AND-EQUITY> 28,024,759
<SALES> 2,107,025
<TOTAL-REVENUES> 4,644,266
<CGS> 674,497
<TOTAL-COSTS> 4,358,564
<OTHER-EXPENSES> 986,758
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 450,135
<INCOME-PRETAX> (1,425,762)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,425,762)
<EPS-PRIMARY> (1.22)
<EPS-DILUTED> 0
</TABLE>
