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, 1998
---------------------------------------
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.
1,100,235 Common shares were outstanding as of July 31, 1998.
<PAGE>
HMG/COURTLAND PROPERTIES, INC.
Index
PAGE
NUMBER
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1998 (Unaudited) and December 31, 1997 1
Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 1998 and 1997 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 1998 and 1997 (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 8
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES Part I Financial Information
Item I Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
June 30, December 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS
Investment Properties, net of accumulated depreciation:
Commercial and Industrial $ 3,154,200 $ 3,046,597
Hotel and Club Facility 6,858,765 7,254,692
Yacht Slips 1,587,675 1,557,675
Land Held for Development 3,013,272 5,073,976
------------ ------------
Total investment properties, net 14,613,912 16,932,940
Investments In and Receivables From Unconsolidated Entities 4,185,965 4,138,935
Notes and Advances Due From Related Parties 686,368 655,912
Loans, Notes and Other Receivables 861,058 894,935
Cash and Cash Equivalents 2,631,740 2,492,059
Investments in marketable securities 1,132,629 102,378
Other Assets 508,012 792,464
------------ ------------
TOTAL ASSETS $ 24,619,684 $ 26,009,623
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses 930,925 888,346
Mortgages and Notes payable 9,068,834 10,216,407
Other Liabilities 178,993 390,864
------------ ------------
TOTAL LIABILITIES 10,178,752 11,495,617
Minority interests 200,143 396,694
------------ ------------
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 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 36,670,311 35,151,554
Undistributed Losses From Operations (48,637,242) (47,566,637)
------------ ------------
15,561,926 15,113,774
Less: Treasury Stock, at cost (145,400 shares) (1,321,137) (996,462)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 14,240,789 14,117,312
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 24,619,684 $ 26,009,623
============ ============
See notes to condensed consolidated financial statements
(1)
</TABLE>
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(UNAUDITED)
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Rentals and related revenue $ 427,284 $ 432,047 $ 854,569 $ 904,975
Marina revenues 130,414 137,583 264,840 292,873
Gain from sale of marketable securities 38,441 8,870 202,739 8,870
Gain from unconsolidated investments 30,650 636,440 65,085 603,763
Interest from invested cash, dividends and other 59,101 136,223 109,131 307,801
---------------------------- ----------------------------
Total revenues 685,890 1,351,163 1,496,364 2,118,282
---------------------------- ----------------------------
EXPENSES
Operating expenses:
Rental Properties and other 173,868 202,580 339,963 408,512
Marina 120,505 127,825 258,099 272,749
Advisor's fee 165,000 218,751 330,000 437,502
General and administrative 408,804 209,771 692,119 480,536
Directors' fees and expenses 8,750 26,197 15,000 36,947
Depreciation and amortization 250,443 271,648 501,373 547,440
---------------------------- ----------------------------
Total operating expenses 1,127,370 1,056,772 2,136,554 2,183,686
Interest expense 219,539 226,582 439,452 454,964
Minority partners' interests in operating
losses of consolidated entities (6,140) (48,347) (9,037) (107,185)
---------------------------- ----------------------------
Total expenses 1,340,769 1,235,007 2,566,969 2,531,465
---------------------------- ----------------------------
(Loss) income before sales of real estate (654,879) 116,156 (1,070,605) (413,183)
Gain on sales of real estate, net 621,192 683 1,518,757 302,524
---------------------------- ----------------------------
Net (Loss) income ($ 33,687) $ 116,839 $ 448,152 ($ 110,659)
============================ ============================
Net (Loss) Income Per Common Share, Basic and Diluted
(Based on weighted average shares outstanding
of 1,156,554, and 1,161,684 for the three and
six months June 30, 1998, respectively, and
1,166,835 for 1997) ($ 0.03) $ 0.10 $ 0.39 ($ 0.09)
=========== =========== =========== ===========
See notes to condensed consolidated financial statements
(2)
</TABLE>
<PAGE>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
Six months ended
June 30,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 448,152 ($ 110,659)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 501,373 547,440
Gain from unconsolidated investments (65,085) (603,763)
Gain on sales of real estate, net (1,518,757) (302,524)
Gain from sales of marketable securities, net (202,739) (8,870)
Minority partners' interest in operating losses (9,037) (107,185)
Changes in assets and liabilities:
Decrease (increase) in other assets 259,359 (302,894)
Increase in due from affiliates (30,456) (106,380)
Increase (decrease) in accounts payable and accrued expenses 42,579 (377,093)
(Decrease) increase in other liabilities (211,874) 968,037
----------- -----------
Total adjustments (1,234,637) (293,232)
----------- -----------
Net cash used in operating activities (786,485) (403,891)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Aquisitions and improvements of properties (217,956) (37,350)
Net proceeds from disposals of properties 3,388,498 1,857,372
Increase in mortgage loans, notes and other loans receivable (30,358) (1,145,262)
Decrease in mortgage loans, notes and other loans receivable 64,235 79,845
Net distributions from (contributions to) unconsolidated entities 18,056 (476,877)
Net proceeds from sales and redemptions of securities 607,593 22,226
Increase in investments in securities (1,435,105) (13,419)
----------- -----------
Net cash provided by investing activities 2,394,963 286,535
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgages and notes payables (1,279,115) (1,077,310)
Additions to mortgages and notes payables 131,542 456,785
Purchase of treasury stock (324,675)
Net contributions from (distributions to) minority partners 3,451 (173,375)
----------- -----------
Net cash used in financing activities (1,468,797) (793,900)
----------- -----------
Net increase (decrease) in cash and cash equivalents 139,681 (911,256)
Cash and cash equivalents at beginning of the period 2,492,059 1,389,546
----------- -----------
Cash and cash equivalents at end of the period $ 2,631,740 $ 478,290
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 439,000 $ 455,000
=========== ===========
See notes to condensed consolidated financial statements
(3)
</TABLE>
<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,
1997. The results of operations for the three and six months ended June 30, 1998
are not necessarily indicative of the results to be expected for the full year.
2. GAIN ON SALES OF REAL ESTATE
In January 1998, The Grove Towne Center-Texas, Ltd. sold approximately 13.5
acres of vacant land located in Houston, Texas for approximately $2.6 million.
The Company recognized a net gain of approximately $725,000.
In February 1998, Courtland Investments, Inc. sold approximately 100 acres
located in Westerly, Rhode Island for approximately $117,000. The Company
recognized a net gain of approximately $86,000.
In March 1998, the Company was awarded an additional $144,000 from the
State of Texas in consideration for the condemnation of certain property in
Houston, Texas, as previously reported. The Company recognized a net gain of
approximately $86,000.
In June 1998, the Company sold approximately 8 acres of vacant land located
in Houston, Texas for approximately $1.1 million and recognized a net gain of
approximately $621,000.
3. PURCHASE OF TREASURY STOCK
In June 1998, the Company purchased 66,600 shares of treasury stock at a
cost of $324,675, or $4.88 per share which was the market value at the date of
purchase.
( 4 )
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company reported a net loss of approximately $34,000 (or $.03 per
share) and net income of $448,000 (or $.39 per share) for the three and six
months ended June 30, 1998, respectively. This is as compared with net income of
$117,000 (or $.10 per share) and a net loss of $111,000 (or $.09 per share) for
the three and six months ended June 30, 1997, respectively. Total revenues for
the three and six months ended June 30, 1998, as compared with the same periods
in 1997, decreased by approximately $665,000 (or 49%) and $622,000 (or 29%),
respectively. Total expenses for the same comparable periods increased by
approximately $106,000 (or 9%) and $36,000 (or 1%), respectively. Gain on sales
of real estate for the three and six months ended June 30, 1998 were
approximately $621,000 and $1.5 million, respectively, as compared with
approximately $1,000 and $302,000 for the three and six months ended June 30,
1997, respectively.
REVENUES
For the three and six months ended June 30, 1998 rentals and related
revenues were approximately $427,000 and $855,000, respectively. This is as
compared with approximately $432,000 and $905,000, for the same periods in 1997,
respectively. These decreases of $5,000 (or 1%) and $50,000 (or 5%) for the
three and six month comparable periods, respectively, were primarily
attributable to decreased rental income from the HMG-Fieber as the result of
sales of properties.
For the three and six months ended June 30, 1998 marina revenues were
approximately $130,000 and $265,000, respectively. This is as compared with
approximately $137,000 and $293,000, for the same periods in 1997, respectively.
These decreases of $7,000 (or 5%) and $28,000 (10%) for the three and six month
comparable periods, respectively, were primarily attributable to decreased
marina slip rental revenue and decreased marina store sales.
For the three and six months ended June 30, 1998 the Company recognized
approximately $38,000 and $203,000, respectively, in gains from the sales of
marketable securities. For the three and six months ended June 30, 1997 gains
from sales of marketable securities were approximately $9,000. The increase in
these gains is the result of higher balances of invested cash.
For the three and six months ended June 30, 1998 gains from unconsolidated
investments were approximately $31,000 and $65,000, respectively. This is as
compared with approximately $636,000 and $604,000 for the same periods in 1997,
respectively. These decreases of approximately $605,000 (95%) and $539,000 (or
89%) for the three and six month comparable periods, respectively, were
primarily attributable to non-recurring gains from CII's investment in TGIF
Texas, Inc. during the second quarter of 1997.
For the three and six months ended June 30, 1998 interest from invested
cash, dividends and other was approximately $59,000 and $109,000, respectively.
This is as compared with approximately $136,000 and $308,000 for the same
comparable periods in 1997, respectively. These decreases of approximately
$77,000 (or 57%) and $199,000 (or 65%) for the three and six month comparable
periods, respectively, were primarily attributable to the gain on the sale of a
boat slip of approximately $107,000 in February 1997.
( 5 )
<PAGE>
EXPENSES
Operating expenses of rental properties and other for the three and six
months ended June 30, 1998 were approximately $174,000 and $340,000,
respectively. This is as compared with approximately $202,000 and $408,000 for
the same periods in 1997, respectively. These decreases of approximately $28,000
(or 14%) and $68,000 (or 17%) for the three and six month comparable periods,
respectively, were primarily attributable to decreased operating costs of
HMG-Fieber Associates and The Grove Towne Center-Texas, Ltd. as the result of
sales of properties.
Marina related expenses for the three and six months ended June 30, 1998
were approximately $120,000 and $258,000, respectively. This is as compared with
approximately $128,000 and $273,000 for the same periods in 1997. These
decreases of approximately $8,000 (or 6%) and $15,000 (or 5%) for the three and
six month comparable periods, respectively, were primarily attributable to lower
operating costs due to decreased revenues from marina operations.
Advisor's fee expense for the three and six months ended June 30, 1998 was
approximately $165,000 and $330,000, respectively. This is as compared with
approximately $219,000 and $438,000 for the same periods in 1997, respectively.
These decreases of approximately $54,000 (or 25%) and $108,000 (or 25%) for the
three and six month comparable periods, respectively, were the result of a
change in the advisory agreement effective January 1, 1998, as previously
reported.
General and administrative expenses for the three and six months ended June
30, 1998 were approximately $409,000 and $692,000, respectively. This is as
compared with approximately $210,000 and $481,000 for the same periods in 1997,
respectively. These increases of approximately $199,000 (or 95%) and $211,000
(or 44%) for the three and six month comparable periods, respectively, were
primarily attributable to increased legal fees relating to ongoing litigation.
Depreciation and amortization for the three and six months ended June 30,
1998 was approximately $250,000 and $501,000, respectively. This is as compared
with approximately $272,000 and $547,000 for the same periods in 1997. These
decreases of approximately $22,000 (or 8%) and $46,000 (or 8%) for the three and
six month comparable periods were primarily due to lower depreciation expense
from Grove Isle Club, Inc.
Interest expense for the three and six months ended June 30, 1998 was
approximately $219,000 and $439,000, respectively. This is as compared with
approximately $227,000 and $455,000 for the same periods in 1997, respectively.
These decreases of approximately $8,000 (or 3%) and $16,000 (or 3%) for the
three and six month comparable periods, respectively, were primarily due to
decreased interest expense from The Grove Towne Center-Texas, Ltd. due to a
decrease in the average balance of outstanding debt. This decrease was partially
offset by an increase in interest expense from Courtland Investments, Inc. due
to an increase in the average balance of its outstanding debt
All other expenses for the three and six months ended June 30, 1998 as
compared with the same periods in 1997 remained consistent or were immaterial.
( 6 )
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(continued)
LIQUIDITY AND CAPITAL RESOURCES
The Company's material commitments primarily consist of maturities of debt
obligations. The funds necessary to meet these obligations are expected from the
proceeds of sales of properties, refinancing, distributions from investments and
available cash. In addition, the Company intends to continue to seek
opportunities for investment in income producing properties.
MATERIAL COMPONENTS OF CASH FLOWS
For the six months ended June 30, 1998, net cash provided by investing
activities was approximately $2.4 million. This consisted primarily of net
proceeds from disposal of properties of approximately $3.4 million and net
proceeds from the sales and redemptions of securities of approximately $608,000.
These increases were partially offset by increased investments in marketable
securities of approximately $1.4 million and acquisitions and improvements of
properties of approximately $218,000.
For the six months ended June 30, 1998, net cash used in financing
activities was approximately $1.5 million. This consisted primarily of repayment
of mortgages payable of $1.3 million and purchase of treasury stock of $325,000.
This was partially offset by additions to mortgages and notes payable of
approximately $132,000.
( 7 )
<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,
1998.
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 14, 1998 --------------------------------
Lawrence Rothstein
Director, Senior Vice President,
Treasurer & Secretary
Dated: August 14, 1998 --------------------------------
Carlos Camarotti
Vice President - Finance and
Controller
( 8 )
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000311817
<NAME> HMG/COURTLAND PROPERTIES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,631,740
<SECURITIES> 0
<RECEIVABLES> 1,547,426
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 19,645,188
<DEPRECIATION> 4,720,978
<TOTAL-ASSETS> 24,619,684
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1,245,635
0
0
<OTHER-SE> 12,995,154
<TOTAL-LIABILITY-AND-EQUITY> 24,619,684
<SALES> 1,496,364
<TOTAL-REVENUES> 1,496,364
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,127,517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 439,452
<INCOME-PRETAX> 448,152
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 448,152
<EPS-PRIMARY> 0.39
<EPS-DILUTED> 0
</TABLE>
