SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______ to ________
SANTA FE FINANCIAL CORPORATION
------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 95-2452529
------------------------------- ------------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
11315 Rancho Bernardo Road, Suite 129
San Diego, California 92127-1463
--------------------------------------- ------------------
(Address of Principal Executive Offices) (Zip Code)
(858) 673-4722
---------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
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, 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: 1,223,814 shares of issuer's
$.10 Par Value Common Stock were outstanding as of October 25, 1999.
Transitional Small Business Disclosure Format (check one): Yes ( ) No (X)
<PAGE> 2
INDEX
SANTA FE FINANCIAL CORPORATION
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheet--September 30, 1999 (Unaudited) 3
Consolidated Statement of Income and Comprehensive Income
(Unaudited)--Three Months ended September 30, 1999 and 1998 4
Consolidated Statement of Income and Comprehensive Income
(Unaudited)--Nine Months ended September 30, 1999 and 1998 5
Consolidated Statement of Cash Flows (Unaudited)--
Nine Months ended September 30, 1999 and 1998 6
Notes to Consolidated Financial Statements -September 30, 1999 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
<PAGE> 3
<TABLE>
<CAPTION>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Santa Fe Financial Corporation
Consolidated Balance Sheet
(Unaudited)
September 30,
1999
-------------
<S> <C>
Assets
Cash and cash equivalents $ 155,289
Investment in marketable securities 20,135,618
Investment in Justice Investors 7,411,613
Rental property 4,079,960
Other investments 464,082
Notes receivable 123,104
Other assets 1,178,522
----------
Total assets $ 33,548,188
==========
Liabilities and Shareholders' Equity
Liabilities
Due to securities broker $ 7,557,272
Obligations for securities sold 5,486,686
Mortgage payable 2,117,563
Accounts payable and accrued expenses 990,522
----------
Total liabilities 16,152,043
----------
Minority interest 4,698,288
----------
Commitments and contingencies
Shareholders' equity:
6% Cumulative, convertible, voting preferred stock
par value $.10 per share
Authorized shares - 1,000,000
Issued and outstanding - 63,600
Liquidation preference of $858,600 6,360
Common stock - par value $.10 per share
Authorized - 2,000,000
Issued 1,276,038 and outstanding 1,223,814 127,604
Additional paid-in capital 8,807,941
Retained earnings 4,237,233
Treasury stock, at cost, 52,224 shares (481,281)
-----------
Total shareholders' equity 12,697,857
-----------
Total liabilities & shareholders' equity $ 33,548,188
===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
<TABLE>
<CAPTION>
Santa Fe Financial Corporation
Consolidated Statement of Income and Comprehensive Income
(Unaudited)
For three months ended September 30, 1999 1998
--------- --------
<S> <C> <C>
Revenues
Equity in net income of Justice
Investors $ 1,063,272 $ 781,297
Dividend and interest income 92,300 28,419
Net gains (losses) on marketable
securities 3,703,201 (651,841)
Rental income 42,335 144,218
Gain on sale of real estate 1,176,292 -
Other income 30,707 24,722
--------- ---------
6,108,107 326,815
--------- ---------
Costs and expenses
Property operating expense 35,535 116,482
Mortgage interest expense 18,838 29,478
Depreciation expense 13,963 41,275
Margin interest and investment
related expenses 159,108 30,211
Litigation 3,705 1,285
General and administrative 237,099 181,261
--------- ---------
468,248 399,992
--------- ---------
Income (loss) before income taxes
and minority interest 5,639,859 (73,177)
Income tax (expense) benefits (2,261,010) 115,200
--------- ---------
Income before minority interest 3,378,849 42,023
Minority interest (1,093,474) (109,908)
--------- ---------
Net income (loss) $ 2,285,375 $ ( 67,885)
========= =========
Basic earnings (loss) per share $ 1.86 $ (0.05)
========= =========
Weighted average number of shares
outstanding 1,227,298 1,274,924
========= =========
Comprehensive income
Net income (loss) $ 2,285,375 $ (67,885)
Other comprehensive income:
Unrealized holding loss
on marketable securities - (1,937,734)
Reclassification adjustment for holding
loss included in net earnings - 651,841
Income tax benefit related to
other comprehensive income 1,645,472 553,638
Adjustment for the reclassification of
the accumulated unrealized holding
gains prior to July 1, 1999 to current
earnings (4,113,680) -
--------- ---------
Total comprehensive income $ (182,833) $ (800,140)
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
<TABLE>
<CAPTION>
Santa Fe Financial Corporation
Consolidated Statement of Income and Comprehensive Income
(Unaudited)
For nine months ended September 30, 1999 1998
--------- --------
<S> <C> <C>
Revenues
Equity in net income of Justice
Investors $2,588,955 $2,235,406
Dividend and interest income 382,790 371,640
Net gains (losses) on
marketable securities 1,125,581 (1,693,896)
Rental income 348,400 459,906
Other income 94,745 87,074
Gain on sale of real estate 1,176,292 -
--------- ---------
5,716,763 1,460,130
--------- ---------
Costs and expenses
Property operating expense 201,391 387,650
Mortgage interest expense 60,827 91,729
Depreciation expense 102,236 134,305
Margin interest and investment
related expenses 509,095 261,438
Litigation 18,176 43,065
General and administrative 686,696 670,506
--------- ---------
1,578,421 1,588,693
--------- ---------
Income (loss) before income taxes
and minority interest 4,138,342 (128,563)
Income tax (expense) benefit (1,655,337) 51,400
--------- ---------
Income (loss) before minority interest 2,483,005 (77,163)
Minority interest (1,420,077) (292,655)
--------- ---------
Net income (loss) $1,062,928 $ (369,818)
========= =========
Basic earnings (loss) per share $ 0.86 $ (0.29)
========= =========
Weighted average number of shares
outstanding 1,237,468 1,275,663
========= =========
Comprehensive income
Net loss $1,062,928 $ (369,818)
Other comprehensive income:
Unrealized holding loss
on marketable securities - (2,532,870)
Reclassification adjustment for holding
loss included in net earnings - 1,693,896
Income tax benefit related to
other comprehensive income 1,645,472 723,677
Adjustment for the reclassification of
the accumulated unrealized holding
gains prior to July 1, 1999 to current
earnings (4,113,680) -
--------- ---------
Total comprehensive income $(1,405,280) $ (485,115)
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
<TABLE>
<CAPTION>
Santa Fe Financial Corporation
Consolidated Statement of Cash Flows
(Unaudited)
For the nine months ended September 30, 1999 1998
----------- -----------
<S> <C> <C>
Operating activities
Net income(loss) $ 1,062,928 $ (369,818)
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Equity in net income of Justice Investors (2,588,955) (2,235,406)
Net (gain) loss on marketable securities (1,125,581) 1,693,896
Gain on sale of real estate (1,176,292) -
Minority interest 1,420,077 292,655
Depreciation expense 102,236 134,305
Changes in operating assets and liabilities
Other assets 176,202 (681,598)
Accounts receivable 11,438 -
Accounts payable and accrued expenses 590,188 46,728
Restricted cash 53,423 (68,403)
---------- ----------
Net cash used in operating activities (1,474,336) (1,187,641)
---------- ----------
Investing activities
Cash distributions from Justice Investors 1,324,680 1,254,960
Purchase of Portsmouth Square stock (129,705) (225,862)
Purchase of marketable securities (27,436,202) (22,227,357)
Proceeds from sale of marketable securities 26,468,733 31,285,812
Purchase of other investments (169,315) (300,000)
Investment in real estate (4,079,960) -
Proceeds from the sale of real estate 3,013,440 -
Purchase of property, furniture and fixtures - (121,337)
---------- ----------
Net cash (used in)provided by investing
activities (1,008,329) 9,666,216
---------- ----------
Financing activities
Decrease in due to securities broker (362,480) (5,666,507)
Increase(decrease) in obligations for
securities sold 2,298,283 (740,594)
Principal payments on mortgage payable (1,227,534) (14,143)
Borrowings from mortgage payable 2,117,563 -
Dividends paid to minority shareholders
of Portsmouth Square (126,714) (126,714)
Decrease in notes receivable - 174,297
Purchase of treasury stock (170,647) (48,898)
---------- ----------
Net cash provided by (used in) financing
activities 2,528,471 (6,422,559)
---------- ----------
Net increase in cash and cash equivalents 45,806 2,056,016
Cash and cash equivalents at beginning of period 109,483 382,021
---------- ----------
Cash and cash equivalents at end of period $ 155,289 $ 2,438,037
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 7
SANTA FE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Significant Accounting Policies
---------------------------------------------------------
The consolidated financial statements included herein have been prepared by
Santa Fe Financial Corporation (the "Company"), without audit, according to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes the disclosures that are made are adequate to make the
information presented not misleading. Further, the consolidated financial
statements reflect, in the opinion of management, all adjustments (which
included only normal recurring adjustments) necessary to state fairly the
financial position and results of operations as of and for the periods
indicated.
Certain reclassifications have been made to the financial statements as of
September 30, 1998 and for the nine months then ended to conform with the
current quarter presentation.
It is suggested that these financial statements be read in conjunction with
the audited financial statements and the notes therein included in the
Company's Form 10-KSB for the year ended December 31, 1998.
The results of operations for the three and nine months ended September 30,
1999 are not necessarily indicative of results to be expected for the full
fiscal year ending December 31, 1999.
2. Investment in Justice Investors
-------------------------------
The Company's principal source of revenue continues to be derived from the
investment of its 68.1%-owned subsidiary, Portsmouth Square, Inc.
("Portsmouth") in the Justice Investors limited partnership ("Justice
Investors"). Portsmouth has a 49.8% interest in the limited partnership, which
derives most of its income from a lease of its San Francisco, California hotel
property to Felcor Lodging Trust, Inc. ("Felcor") and from a lease with Evon
Garage Corporation ("Evon"). Portsmouth also serves as one of the two general
partners of Justice Investors. Portsmouth records its investment on the equity
basis.
<PAGE> 8
Condensed financial statements for Justice Investors are as follows:
JUSTICE INVESTORS
CONDENSED BALANCE SHEET
September 30, 1999
--------------
Assets
Total current assets $1,927,830
Property, plant and equipment, net of
accumulated depreciation of $11,280,079 5,295,603
Loan fees and deferred lease costs,
net of accumulated amortization of $140,065 170,348
---------
$7,393,781
=========
Liabilities and partners' capital
Total current liabilities $ 50,810
Partners' capital 7,342,971
Total liabilities and ---------
partners' capital $7,393,781
=========
JUSTICE INVESTORS
CONDENSED STATEMENTS OF OPERATIONS
For the nine months ended September 30, 1999 1998
---------- ----------
Revenues $5,844,395 $5,231,500
Costs and expenses 645,689 742,733
--------- ---------
Net income $5,198,706 $4,488,767
========= =========
3. Investment in Marketable Securities
-----------------------------------
Marketable securities are stated at market value as determined by the most
recently traded price of each security at the balance sheet date. In recent
months, the Company has increased the turnover of its investment portfolio and
engaged in increased trading activities designed to maximize the overall return
on investment activities in the near term. This has resulted in portions of
the Company's investments in marketable securities being classified as
"trading" as defined by generally accepted accounting principles. After
consultation with the Investment Committee of the Board of Directors,
management has determined that the classification of the entire portfolio as
trading beginning July 1, 1999 would be more consistent with Company's overall
investment objectives and activities. As a result, beginning with its third
quarter ended September 30, 1999, all unrealized gains and losses on the
Company's investment portfolio will be recorded through the income statement.
For the three and nine months ended September 30, 1999, the Company recognized
a net unrealized gain of $4,113,680 related to the reclassification of all
available-for-sale securities to trading securities.
<PAGE> 9
4. Investment in Real Estate
-------------------------
In April 1999, the Company's 55.4%-owned subsidiary, Intergroup Woodland
Village, Inc. ("Woodland") entered into a contract to sell its three-story,
100-unit apartment complex located in Cincinnati, Ohio for $3,125,000. The
sale was completed in July 1999 and Woodland realized a gain of $1,176,292.
Woodland received net proceeds of $1,736,000 after the repayment of the
underlying mortgage of $1,215,565. In July 1999, Woodland entered into a
contract to purchase a 27-unit multi-family apartment complex located in Santa
Monica, California for $4,075,000 in connection with a 1031 tax-deferred
exchange. The purchase was completed in September 1999 with Woodland executing
a 30-year fully amortized mortgage note in the amount of $1,955,000. The
interest rate on that note is fixed at 7.73% for the first 10 years, after
which it will be at a variable rate of 2.15% above the twelve-month average
yield on 10-year U.S. Treasury Securities. In September 1999, in addition to
the mortgage note, Woodland obtained two 5-year interest only loans of $201,928
and $162,563 from Santa Fe and The InterGroup Corporation, the Company's parent
("InterGroup"), respectively. Both notes have a 7.75% interest rate.
5. Related Party Transactions
--------------------------
As noted above, in September 1999, Woodland obtained two 5-year interest only
loans of $201,928 and $162,563 from Santa Fe and InterGroup, respectively.
Both notes have a 7.75% interest rate.
Certain costs and expenses, primarily salaries, rent and insurance, are
allocated among the Company and its subsidiary, Portsmouth, and the Company's
parent, InterGroup, based on management's estimate of the utilization of
resources. For the nine months ended September 30, 1999, the Company and
Portsmouth made payments to InterGroup of approximately $152,791 for
administrative costs and reimbursement of direct and indirect costs associated
with the management of the Companies and their investments, including the
partnership asset.
The Company's President and Chief Executive Officer, John V. Winfield, directs
the investment activity of the Company in public and private markets pursuant
to authority granted by the Board of Directors. Mr. Winfield also serves as
Chief Executive Officer of Portsmouth and InterGroup and directs the investment
activity of those companies. Effective April 1, 1998, an employee of
InterGroup was assigned to manage the portfolios of the Company and Portsmouth
in consultation with Mr. Winfield. The Company and Portsmouth reimburse
InterGroup for an allocated portion of the compensation and benefits of such
employee. Depending on certain market conditions and various risk factors, the
Chief Executive Officer, his family, Portsmouth and InterGroup may, at times,
invest in the same companies in which the Company invests. The Company
encourages such investments because it places personal resources of the Chief
Executive Officer and his family members, and the resources of Portsmouth and
InterGroup, at risk in connection with investment decisions made on behalf of
the Company. All of the Company's Directors serve as directors of InterGroup
and all three of the Company's Directors serve on the Board of Portsmouth.
<PAGE> 10
6. Commitments and Contingencies
-----------------------------
During 1997, the Company and the director defendants prevailed in their defense
of a shareholders' derivative suit related to the private placement of 90,000
shares of common stock and warrants for the purchase of an additional 90,000
shares to InterGroup. As prevailing parties, the Company and the director
defendants made application to the Superior Court for recovery of the
attorney's fees and costs expended in the successful defense of this
litigation. During March 1998, the trial court entered a judgment in favor of
the Company and the director defendants and granted the applications for
attorneys' fees and costs in the total amount of approximately $936,000. That
award bears interest at the statutory rate of 10% per annum and has been
appealed by the plaintiffs in that action. The parties are currently waiting
for oral argument in that appeal.
7. Earnings per Share
- ------------------
Basic earnings per share are computed by dividing net income available to
common stockholders by the weighted average number of commons shares
outstanding. The computation of diluted earnings per share is similar to the
computation of basic earnings per share except that the weighted-average number
of common shares is increased to include the number of additional common shares
that would have been outstanding if potential dilutive common shares had been
issued. The Company's only potentially dilutive common shares are the 6%
cumulative, convertible, voting preferred stock. As of September 30, 1999 and
1998, the conversion price is above the market value the Company's common,
consequently, the preferred stock are not considered dilutive. Therefore, basic
and diluted earnings per share for the three months and nine months ended
September 30, 1999 are the same.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS AND PROJECTIONS
The Company may from time to time make forward-looking statements and
projections concerning future expectations. When used in this discussion, the
words "estimate," "project," "anticipate" and similar expressions, are
intended to identify forward-looking statements. Such statements are subject
to certain risks and uncertainties, including partnership distributions,
general economic conditions of the hotel industry in the San Francisco area,
securities markets, litigation and other factors, including natural disasters
and those discussed below and in the Company's Form 10-KSB for the year ended
December 31, 1998, that could cause actual results to differ materially from
those projected. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as to the date hereof. The
Company undertakes no obligation to publicly release the results of any
revisions to those forward-looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
<PAGE> 11
RESULTS OF OPERATIONS
The Company's principal sources of revenue continue to be derived from the
investment of its 68.1% owned subsidiary, Portsmouth, in the Justice Investors
limited partnership, rental income from its multi-family real estate property
investment and income received from investment of its cash and securities
assets. The partnership derives most of its income from a lease of its hotel
property to Felcor and from a lease with Evon.
Three Months Ended September 30, 1999 Compared to Three Months
Ended September 30, 1998
Comparison of operating results for the three months ended September 30, 1999
to the three months ended September 30, 1998 shows net income of $2,285,375 as
compared to a net loss of $67,885. That result is primarily attributable to an
increase in partnership income to $1,063,272 from $781,297, an increase in net
gains on marketable securities to $3,703,201 from a net loss of $651,842, a
gain on sale of real estate of $1,176,292 as compared to none, an increase in
dividend and interest income to $92,300 from $28,419, partially offset by a
decrease in rental income to $42,335 from $144,218 and an increase in costs and
expenses to $468,248 from $399,992.
The increase in partnership income was primarily attributable to an increase in
hotel and garage rental income and a decrease in partnership operating
expenses. The decrease in partnership expenses was primarily attributable to
lower interest expenses as a result of a reduction in notes payable.
The increase in dividend income to $92,300 from $28,419 reflects management's
efforts to reposition the Company's investment portfolio. Gains and losses on
marketable securities may fluctuate significantly from period to period in the
future and could have a meaningful effect on the Company's net earnings.
However, the amount of gains or losses on marketable securities for any given
period may have no predictive value and variations in amount from period to
period may have no analytical value.
Marketable securities are stated at market value as determined by the most
recently traded price of each security at the balance sheet date. In recent
months, the Company has increased the turnover of its investment portfolio and
engaged in increased trading activities designed to maximize the overall return
on investment activities in the near term. After consultation with the
Investment Committee of the Board of Directors, management has determined that
the classification of the entire portfolio as trading beginning July 1, 1999
would be more consistent with Company's overall investment objectives and
activities. As a result, beginning with its third quarter ended September 30,
1999, all unrealized gains and losses on the Company's investment portfolio
will be recorded through the income statement. For the three and nine months
ended September 30, 1999, the Company recognized a net unrealized gain of
$4,113,680 related to the reclassification of all available-for-sale securities
to trading securities. The increase in net gains from marketable securities to
$3,703,201 compared to the net loss of $651,841 is primarily due to the
reclassification discussed above.
The decrease in rental income to $42,335 from $144,218 and the corresponding
decrease in property related expenses to $35,535 from $116,482 are due to the
sale of the real estate property by the Company's 55.4%-owned subsidiary,
Woodland, in July 1999 for a gain of $1,176,292.
<PAGE> 12
The increase in costs and expenses to $468,248 from $399,992 is primarily due
to an increase in margin interest and investment related expenses to $159,108
from $30,211 due to an increase in the size of the Company's investment
portfolio. General and administrative expenses also increased to $237,099 from
$181,161 primarily as a result of higher insurance costs and accounting fees.
Those increases were partially offset by a decrease in property related
expenses to $68,336 from $187,235 due to the sale of the property in July 1999.
Nine Months Ended September 30, 1999 Compared to Nine Months Ended
September 30, 1998
Comparison of operating results for the nine months ended September 30, 1999 to
the nine months ended September 30, 1998 shows net income of $1,062,928 as
compared to a net loss of $369,818. That result is primarily attributable to
an increase in partnership income to $2,588,955 from $2,235,406, the increase
in net gains on marketable securities to $1,125,581 from a net loss of
$1,693,896, a gain on sale of real estate of $1,176,292 as compared to none,
partially offset by a decrease in rental income to $348,400 from $459,906.
The increase in partnership income was primarily attributable to an increase in
hotel and garage rental income and a decrease in partnership operating
expenses. The decrease in partnership expenses was primarily attributable to
lower interest expenses as a result of a reduction in notes payable.
Gains and losses on marketable securities may fluctuate significantly from
period to period in the future and could have a meaningful effect on the
Company's net earnings. However, the amount of gains or losses on marketable
securities for any given period may have no predictive value and variations in
amount from period to period may have no analytical value.
Marketable securities are stated at market value as determined by the most
recently traded price of each security at the balance sheet date. In recent
months, the Company has increased the turnover of its investment portfolio and
engaged in increased trading activities designed to maximize the overall return
on investment activities in the near term. After consultation with the
Investment Committee of the Board of Directors, management has determined that
the classification of the entire portfolio as trading beginning July 1, 1999
would be more consistent with Company's overall investment objectives and
activities. As a result, beginning with its third quarter ended September 30,
1999, all unrealized gains and losses on the Company's investment portfolio
will be recorded through the income statement. For the three and nine months
ended September 30, 1999, the Company recognized a net unrealized gain of
$4,113,680 related to the reclassification of all available-for-sale securities
to trading securities. The net gains in marketable securities of $1,125,581
compared to the net loss of $1,693,896 is primarily due to the reclassification
discussed above.
The decrease in rental income to $348,400 from $459,906 and the corresponding
decrease in property related expenses to $364,454 from $613,684 is due to the
sale of the real estate property by the Company's 55.4%-owned subsidiary,
Woodland, in July 1999 for a gain of $1,176,292.
Margin interest and investment related expenses increased to $509,095 from
$261,438 due to an increase in the size of the Company's investment portfolio.
<PAGE> 13
FINANCIAL CONDITION AND LIQUIDITY
The Company's cash flows are primarily generated by its subsidiary's investment
in the Justice Investors limited partnership, which derives the majority of its
income from its lease with Felcor and a lease with Evon. In addition to the
monthly limited partnership distributions it receives from Justice Investors,
Portsmouth also receives monthly management fees as a general partner. The
Company also derives revenue from its investment in a multi-family real estate
property and the investment of its cash and securities assets.
In July 1999, the Company's subsidiary, Woodland, completed the sale of the
Woodland Village property for $3,125,000 and realized a gain on the sale of
real estate of $1,176,292. In September 1999, net proceeds from the sale of
$1,736,000 were used by Woodland to purchase a 27-unit multi-family apartment
complex located in Los Angeles, California in a 1031 tax-deferred exchange. In
addition, Woodland obtained a $1,955,000 30-year mortgage note and two 5-year
interest only loans of $201,928 and $162,563 from Santa Fe and InterGroup,
respectively. The mortgage note has a 7.73% interest rate and the interest
rates for the 5-year loans are at 7.75%
For the nine months ended September 30, 1999, Portsmouth received cash
distributions from Justice Investors of $1,324,680 compared to $1,254,960 for
the nine months ended September 30, 1998. The increase in distributions can be
characterized as special distributions and, at any time, unforeseen
circumstances could dictate a change in the amount distributed. The general
partners will continue to conduct an annual review and analysis to determine an
appropriate monthly distribution for the ensuing year. At that time, the
monthly distribution could be increased or decreased.
On August 17, 1999, the Board of Directors increased the number of shares that
the Company is authorized to repurchase under its stock buy-back program by an
additional 50,000 shares to a total of 100,000 shares. As of September 30,
1999, the Company had repurchased 52,224 shares of its Common Stock for an
aggregate consideration of $481,280.
At September 30, 1999, the Company's current assets were $21,469,429, which
consists of cash, marketable securities and other assets. The Company remains
liquid and management believes that its capital resources are currently
adequate to meet its short and long-term obligations.
YEAR 200O ISSUES
The Company is aware of the potential implications that the year 2000 ("Y2K")
issue could have on its business and as a result, is in the process of
determining what, if any, steps the Company must take to cure any potential
software or hardware problems associated with Y2K. The Company has hired
professional outside consultants to assist it in addressing its Y2K needs. The
Company's plans include upgrading existing software applications to make them
Y2K compliant, replacing some hardware required by software upgrades,
purchasing new computer hardware and upgrading its computer network and
communication systems. The Company has also contacted its suppliers of various
services and materials regarding their readiness and plans for Y2K.
Based on discussions with the Company's outside consultants, service providers
and software and hardware vendors, the Company has determined that its systems,
both information technology and non-information technology, are not reasonably
likely to be impacted by Y2K and that the costs to complete the Y2K compliance
will not have a material effect on the Company's financial position or results
of operations. Management expects to be Y2K compliant by November 15, 1999.
<PAGE> 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - the Financial Data Schedule is filed as an exhibit
to this report.
(b) Registrant filed no reports on Form 8-K
during the period covered by this report:
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.
SANTA FE FINANCIAL CORPORATION
(Registrant)
Date: November 2, 1999 by /s/ John V. Winfield
----------------------------
John V. Winfield, President,
Chairman of the Board and
Chief Executive Officer
Date: November 2, 1999 by /s/ Michael G. Zybala
----------------------------
Michael G. Zybala
Vice President and Secretary
Date: November 2, 1999 by /s/ David Nguyen
-----------------------------
David Nguyen, Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND STATEMENT OF INCOME AND COMPREHENSIVE INCOME OF
SANTA FE FINANCIAL CORPORATION AND SUBSIDIARIES SET FORTH IN ITS FORM
10-QSB REPORT FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-QSB REPORT.
</LEGEND>
<CIK> 0000086759
<NAME> SANTA FE FINANCIAL CORPORATION
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 155289
<SECURITIES> 20135618
<RECEIVABLES> 123104
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20878093
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 33548188
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<BONDS> 0
0
0
<COMMON> 127604
<OTHER-SE> 12507174
<TOTAL-LIABILITY-AND-EQUITY> 33548188
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<TOTAL-REVENUES> 5716763
<CGS> 0
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<OTHER-EXPENSES> 1578421
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<INCOME-PRETAX> 4138342
<INCOME-TAX> 1655337
<INCOME-CONTINUING> 1062928
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1062928
<EPS-BASIC> .86
<EPS-DILUTED> .86
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