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 1-5570
TRANSCO REALTY TRUST
(Exact name of small business issuer as specified in its charter)
Massachusetts 04607-1814
(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.
560,508 Common shares were outstanding as of October 31, 1996
<PAGE>
TRANSCO REALTY TRUST AND SUBSIDIARIES
(A MASSACHUSETTS BUSINESS TRUST)
INDEX
PAGE
NUMBER
PART I Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 1996 and December 31, 1995 (Unaudited) 1
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 1996
and 1995 (Unaudited) 2
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1996 and 1995 (Unaudited) 3
Investment in Affiliates for the Three and Nine Months Ended
September 30, 1996 and 1995 (Unaudited) 4
Notes to Condensed Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 6
PART II Other Information:
Item 6. Reports of Form 8-K 7
<PAGE>
Transco Realty Trust and Subsidiaries Part I Financial Information
(A Massachusetts Business Trust) Item I Financial Statements
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
ASSETS
<S> <C> <C>
Cash $ 3,501 $ 23,639
Land held for sale 14,080 17,676
Investments in and receivables from affiliates 577,423 1,440,705
Notes, mortgage loans and accrued interest receivable 86,436 87,189
Investments in partnerships, other securities and other 17,017 17,567
Deferred income taxes 533,000 419,000
----------- -----------
TOTAL ASSETS 1,231,457 2,005,776
=========== ===========
LIABILITIES & SHAREHOLDERS' EQUITY
Loans and notes payable $ 65,000 $ 65,000
Notes and accrued interest payable to affiliates 1,193,518 1,091,231
Dividends payable 340,000 280,000
Accounts payable, accrued expenses and other liabilities 45,662 25,238
----------- -----------
TOTAL LIABILITIES 1,644,180 1,461,469
----------- -----------
SHAREHOLDERS' EQUITY
Shares of beneficial interest, no par value;
unlimited number authorized; 581,508 issued 4,147,196 4,147,196
$1.00 cummulative preferred stock, no par value,
non-voting - 80,000 shares authorized, issued and
outstanding at redemption value of $12.50 per share 1,000,000 1,000,000
Accumulated deficit (5,334,919) (4,377,889)
Treasury stock (21,000 shares at cost) (225,000) (225,000)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY (412,723) 544,307
----------- -----------
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,231,457 $ 2,005,776
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements
1
<PAGE>
Transco Realty Trust and Subsidiaries
(A Massachusetts Business Trust)
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
INCOME
<S> <C> <C> <C> <C>
Equity in (losses) earnings of affiliates ($ 229,257) $ 107,046 ($ 871,107) ($ 131,814)
(Loss) gain from partnerships and other investments (4,217) 16,454 (4,494) 18,230
Interest, dividends and other income 6,516 4,978 15,935 14,776
----------- ----------- ----------- -----------
(226,958) 128,478 (859,666) (98,808)
----------- ----------- ----------- -----------
EXPENSES
Interest 12,714 10,491 35,948 28,195
Property and other operating expenses 6,614 14,774 34,216 42,391
Fees and salaries to trustees, officers and related parties 27,000 27,000 81,200 81,200
----------- ----------- ----------- -----------
46,328 52,265 151,364 151,786
----------- ----------- ----------- -----------
(Loss) income before income taxes (273,286) 76,213 (1,011,030) (250,594)
(Benefit from) provision for income taxes (27,000) 22,200 (114,000) (6,000)
----------- ----------- ----------- -----------
NET (LOSS) INCOME ($ 246,286) $ 54,013 ($ 897,030) ($ 244,594)
=========== =========== =========== ===========
Net (loss) income per share of beneficial interest:
Net (loss) income ($ 246,286) $ 54,013 ($ 897,030) ($ 244,594)
Less preferred stock dividends 20,000 20,000 60,000 60,000
----------- ----------- ----------- -----------
Net (loss) income of beneficial interest ($ 266,286) $ 34,013 ($ 957,030) ($ 304,594)
=========== =========== =========== ===========
Weighted average number of common shares of
beneficial interest outstanding during the period 560,508 560,508 560,508 560,508
=========== =========== =========== ===========
Net (loss) income per share of beneficial interest ($ 0.48) $ 0.06 ($ 1.71) ($ 0.54)
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE>
Transco Realty Trust and Subsidiaries
(A Massachusetts Business Trust)
Condensed Consolidated Statements of Cash Flow
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1996 1995
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss ($897,030) ($244,594)
--------- ---------
Adjustments to reconcile net loss to net cash used in
operating activities:
Equity in losses of affiliates and partnerships 877,413 131,814
Changes in assets and liabilities:
Increase in deferred income taxes (114,000) (6,000)
Decrease (increase) in other assets 217 (8)
Increase (decrease) in accrued expenses and other liabilities 6,293 (26,291)
--------- ---------
Total Adjustments 769,923 99,515
--------- ---------
Net cash used in operating activities (127,107) (145,079)
--------- ---------
Cash Flows from Investing Activities:
Distributions from (contributions to) partnerships and affiliates 333 (680)
Payments received on mortgages and notes receivable 753 82,028
Proceeds from sale of property 3,596
Advances from affiliates 102,287 109,663
--------- ---------
Net cash provided by investing activities 106,969 191,011
--------- ---------
Net (decrease) increase in cash (20,138) 45,932
Cash at the beginning of the period 23,639 2,899
--------- ---------
Cash at the end of the period $ 3,501 $ 48,831
========= =========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
Part I Financial Information (continued) - Investments in Affiliates -
HMG/Courtland Properties, Inc. (HMG)
The investment in affiliates at September 30, 1996 includes the Trust's 40.91%
interest in HMG. HMG's Condensed Consolidated Statements of Operations for the
three and nine months ended September 30, 1996 and 1995 are presented below:
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>
4
<PAGE>
TRANSCO REALTY TRUST AND SUBSIDIARIES
(A MASSACHUSETTS BUSINESS TRUST)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of the Trust, the accompanying unaudited condensed financial
statements include all adjustments (consisting only of normal recurring
accruals) which are necessary for a fair presentation of the results for the
periods. 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
financial statements be read in conjunction with the Trust'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.
( 5 )
<PAGE>
Part I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For the three and nine months ended September 30, 1996 the Trust reported
net losses of approximately $246,000 or $.48 per share of beneficial interest
and $897,000 or $1.71 per share of beneficial interest, respectively. For the
three and nine months ended September 30, 1995, the Trust reported net income of
approximately $54,000 or $.06 per share of beneficial interest and for the nine
months ended September 30, 1995 the Trust reported a net loss of $245,000 or
$.54 per share of beneficial interest.
Total revenues for the three and nine months ended September 30, 1996 were
a deficit of approximately $227,000 and $860,000, respectively. For the three
and nine months ended September 30, 1995 total revenues were approximately
$128,000 and a deficit of $99,000, respectively. This increase in deficit was
primarily due to equity in increased losses of its affiliate, HMG/Courtland
Properties, Inc. (HMG).
For the three and nine months ended September 30, 1996 HMG reported losses
of approximately $433,000 and $1,859,000, respectively, versus income of
approximately $361,000 and losses $99,000 for the three and nine months ended
September 30, 1995, respectively. (See Part I Financial Information -
Investments in Affiliates - HMG/Courtland Properties, Inc.). HMG's increase in
losses for the nine months ended September 30, 1996 is primarily attributable to
decreased rental and related revenues and decreased gain from sales of real
estate.
Total expenses for the three and nine months ended September 30, 1996 were
approximately $46,000 and $152,000, respectively. Total expenses for the three
and nine months ended September 30, 1995 were approximately $52,000 and $151,000
respectively. These changes were not significant.
LIQUIDITY AND CAPITAL RESOURCES
The Trust's ability to maintain liquidity and obtain capital resources
largely depends on the results of its affiliate HMG and on HMG's ability to
generate sufficient operating income to allow for the payment of dividends.
Until such dividends are paid, the Trust's current obligations will be met by
financing provided through traditional sources and by affiliates.
( 6 )
<PAGE>
Part II OTHER INFORMATION
Item 5. Other Information
(a) The shares of beneficial interest, no par value of Transco Realty
Trust were removed from listing and registration on the Boston Stock Exchange,
effective July 2, 1996.
Item 6. Reports on Form 8-K
(a) There were no reports filed on Form 8-K during the quarter ended
September 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANSCO REALTY TRUST
---------------------------
(Registrant)
/s/ Lawrence I. Rothstein
---------------------------
Lawrence I. Rothstein
Vice President
November 14, 1996
( 7 )
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000099235
<NAME> TRANSCO REALTY TRUST
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,501
<SECURITIES> 0
<RECEIVABLES> 86,436
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,231,457
<CURRENT-LIABILITIES> 1,644,180
<BONDS> 0
1,000,000
0
<COMMON> 4,147,196
<OTHER-SE> (5,559,919)
<TOTAL-LIABILITY-AND-EQUITY> 1,231,457
<SALES> (859,666)
<TOTAL-REVENUES> (859,666)
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 115,416
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,948
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (897,030)
<EPS-PRIMARY> (1.71)
<EPS-DILUTED> 0
</TABLE>
