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 March 31, 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.
1,166,835 Common shares were outstanding as of April 30, 1998.
<PAGE>
HMG/COURTLAND PROPERTIES, INC.
Index
PAGE
NUMBER
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1998 (Unaudited) and December 31, 1997 1
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 1998 and 1997 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 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 7
<PAGE>
<TABLE>
<CAPTION>
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES Part I Financial Information
Item I Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
1998 1997
ASSETS
Investment Properties, net of accumulated depreciation:
<S> <C> <C>
Commercial and Industrial $3,082,593 $3,046,597
Hotel and Club Facility 7,061,402 7,254,692
Yacht Slips 1,587,675 1,557,675
Land Held for Development 3,323,570 5,073,976
--------------------- ---------------------
Total investment properties, net 15,055,240 16,932,940
Investments In and Receivables From Unconsolidated Entities 4,083,879 4,138,935
Notes and Advances Due From Related Parties 675,016 655,912
Loans, Notes and Other Receivables 859,338 894,935
Cash and Cash Equivalents 2,906,189 2,492,059
Investments in marketable securities 888,513 102,378
Other Assets 502,604 792,464
===================== =====================
TOTAL ASSETS $24,970,779 $26,009,623
===================== =====================
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Expenses 837,003 888,346
Mortgages and Notes payable 9,167,409 10,216,407
Other Liabilities 160,008 390,864
--------------------- ---------------------
TOTAL LIABILITIES 10,164,420 11,495,617
Minority interests 207,208 396,694
--------------------- ---------------------
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 36,049,119 35,151,554
Undistributed Losses From Operations (47,982,363) (47,566,637)
--------------------- ---------------------
15,595,613 15,113,774
Less: Treasury Stock, at cost (78,800 shares) (996,462) (996,462)
--------------------- ---------------------
TOTAL STOCKHOLDERS' EQUITY 14,599,151 14,117,312
--------------------- ---------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $24,970,779 $26,009,623
===================== =====================
</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
March 31,
1998 1997
REVENUES
<S> <C> <C>
Rentals and related revenue 427,285 472,928
Marina revenues 134,426 155,290
Gain from sale of marketable securities 164,298
Interest from invested cash, dividends and other 84,465 138,902
------------------------------------------
Total revenues 810,474 767,120
------------------------------------------
EXPENSES
Operating expenses:
Rental Properties and other 166,095 205,932
Marina 137,594 144,924
Advisor's fee 165,000 218,751
General and administrative 283,315 270,765
Directors' fees and expenses 6,250 10,750
Depreciation and amortization 250,930 275,792
------------------------------------------
Total operating expenses 1,009,184 1,126,914
Interest expense 219,913 228,382
Minority partners' interests in operating
losses of consolidated entities (2,897) (58,838)
------------------------------------------
Total expenses 1,226,200 1,296,458
------------------------------------------
Loss before sales of real estate (415,726) (529,338)
Gain on sales of real estate, net 897,565 301,841
------------------------------------------
Net Income (loss) $481,839 ($227,497)
==========================================
Net Income (loss) Per Common Share, Basic and Diluted
(Based on 1,166,835 weighted average shares outstanding) $0.41 ($0.19)
==========================================
</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) Three months ended
March 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $481,839 ($227,497)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 250,930 275,792
Gain from unconsolidated entities (34,435) 32,677
Gain on sales of real estate, net (897,565) (301,841)
Gain from sales of marketable securities, net (164,298)
Minority partners' interest in operating losses (2,897) (58,838)
Changes in assets and liabilities:
Decrease in other assets 277,184 (76,104)
Increase in due from affiliates (19,104) (102,163)
Decrease in accounts payable and accrued expenses (51,345) (537,434)
(Decrease) increase in other liabilities (230,856) 767,021
--------------------- ---------------------
Total adjustments (872,386) (890)
--------------------- ---------------------
Net cash used in operating activities (390,547) (228,387)
--------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Aquisitions and improvements of properties (110,960) (30,704)
Net proceeds from disposals of properties 2,457,008 1,856,281
Increase in mortgage loans, notes and other loans receivable (16,698) (895,082)
Decrease in mortgage loans, notes and other loans receivable 52,295 72,539
Net distributions from (contributions to) unconsolidated entities 89,491 (151,650)
Net proceeds from sales and redemptions of securities 180,412
Increase in investments in securities (802,249) (5,363)
--------------------- ---------------------
Net cash provided by investing activities 1,849,299 846,021
--------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of mortgages and notes payables (1,114,406) (1,040,553)
Additions to mortgages and notes payables 65,408 367,031
Net distributions to minority partners 4,376 (144,427)
--------------------- ---------------------
Net cash used in financing activities (1,044,622) (817,949)
--------------------- ---------------------
Net increase in cash and cash equivalents 414,130 (200,315)
Cash and cash equivalents at beginning of the period 2,492,059 1,389,546
--------------------- ---------------------
Cash and cash equivalents at end of the period $2,906,189 $1,189,231
===================== =====================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $220,000 $228,000
===================== =====================
</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,
1997. The results of operations for the three months ended March 31, 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 $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 consideration for the condemnation of certain property in
Houston, Texas, as previously reported. The Company recognized a net gain of
approximately $86,000.
( 4 )
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company reported net income of approximately $482,000 (or $.41 per
share) for the three months ended March 31, 1998, as compared to a net loss of
$227,000 (or $.19 per share) for the three months ended March 31, 1997. Total
revenues for the three months ended March 31, 1998, as compared with the same
period in 1997, increased by approximately $43,000 (or 6%). Total expenses for
the same comparable period decreased by approximately $70,000 (or 5%). Gain on
sales of real estate for the three months ended March 31, 1998 was approximately
$897,000, as compared to approximately $302,000 for the three months ended March
31, 1997.
REVENUES
Rentals and related revenues for the three months ended March 31, 1998
as compared with the same period in 1997, decreased by approximately $46,000 (or
10%). This decrease was primarily attributable to decreased rental income from
the HMG-Fieber properties primarily as the result of sales of properties.
For the three months ended March 31, 1998, marina revenues decreased
by approximately $21,000 (or 13%) as compared to that of the same period in
1997. This was primarily attributable to decreased marina slip rental revenue.
For the three months ended March 31, 1998 the Company recognized
approximately $164,000 in gains from the sale of marketable securities. There
were no such gains for the period ended March 31, 1997.
For the three months ended March 31, 1998 interest from invested cash,
dividends and other decreased by approximately $54,000 (or 39%) as compared to
that of the same period in 1997. This decrease was attributable to the non-
recurring gain on the sale of a boat slip of approximately $117,000 in February
1997. This amount was partially offset by increased gains from unconsolidated
entities of approximately $67,000.
EXPENSES
Operating expenses of rental properties and other for the three months
ended March 31, 1998, as compared with the same period in 1997, decreased by
approximately $40,000 (or 19%). This decrease was 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 months ended March 31, 1998
decreased by approximately $7,000 (or 5%) as compared with that of the same
period in 1997. This decrease was primarily attributable to lower operating
costs due to decreased revenues from marina operations.
Advisor's fee expense for the three months ended March 31, 1998
decreased by approximately $54,000 (or 25%) as compared with that of the same
period in 1997. This decrease was the result of a change in the advisory
agreement effective January 1, 1998, as previously reported.
( 5 )
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(continued)
General and administrative expenses for the three months ended March
31, 1998 increased by approximately $12,000 (or 5%) as compared with that of the
same period in 1997. This increase was primarily attributable to increased legal
fees relating to ongoing litigation of approximately $88,000, increased other
taxes of Courtland Investments, Inc. of approximately $59,000 and an increase in
various other expenses of approximately $33,000. These increases were partially
offset by decreased general and administrative expenses relating to
non-recurring expenses of Grove Isle Club, Inc. in 1997 of approximately
$164,000 and other decreased expenses of approximately $4,000.
Depreciation and amortization for the three months ended March 31,
1998 decreased by approximately $25,000 (or 9%) as compared with that of the
same period in 1997. This decrease was primarily due to lower depreciation
expense from Grove Isle Club, Inc.
Interest expense for the three months ended March 31, 1998 decreased
by approximately $8,000 (or 4%) as compared with that of the same period in
1997. This decrease was primarily due to decreased interest expense from The
Grove Towne Center-Texas, Ltd. of approximately $31,000 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. of approximately
$23,000 due to an increase in the average balance of its outstanding debt
Minority partners' interest in losses of consolidated entities
decreased by approximately $56,000 (or 95%) as compared to that of the same
period in 1997. This decrease was primarily due to decreased operating losses of
The Grove Towne Center-Texas, Ltd.
All other expenses for the three months ended March 31, 1998 as
compared to the same period in 1997 remained consistent.
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 three months ended March 31, 1998, net cash provided by
investing activities was approximately $1.8 million. This consisted primarily of
net proceeds from disposal of properties of approximately $2.4 million and net
proceeds from the sales and redemptions of securities of approximately $180,000.
These increases were partially offset by increased investments in marketable
securities of approximately $802,000.
For the three months ended March 31, 1998, net cash used in financing
activities was approximately $1 million. This consisted primarily of repayment
of mortgages payable of $1.1 million, partially offset by additions to mortgages
and notes payable of approximately $65,000.
( 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
March 31, 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: May 12, 1998 /s/ Lawrence Rothstein
Lawrence Rothstein
Director, Senior Vice President, Treasurer &
Secretary
Dated: May 12, 1998 /s/ Carlos Camarotti
Carlos Camarotti
Vice President - Finance and Controller
( 7 )
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000311817
<NAME> HMG/Courtland Properties, Inc.
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1998
<CASH> 2,906,189
<SECURITIES> 0
<RECEIVABLES> 1,534,354
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 19,848,490
<DEPRECIATION> 4,793,250
<TOTAL-ASSETS> 24,970,779
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1,245,635
0
0
<OTHER-SE> 13,353,516
<TOTAL-LIABILITY-AND-EQUITY> 24,970,779
<SALES> 810,474
<TOTAL-REVENUES> 810,474
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,006,287
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 219,913
<INCOME-PRETAX> 481,839
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 481,839
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0
</TABLE>
