UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(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, 2012
OR
|
o
|
|
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
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59-1914299
|
|
(State or other jurisdiction of
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(I.R.S. Employer
|
|
incorporation or organization)
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Identification No.)
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|
|
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|
1870 S. Bayshore Drive, Coconut Grove, Florida
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33133
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|
(Address of principal executive offices)
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(Zip Code)
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|
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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)
Indicate
by check mark 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
o
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
x
No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
x
|
|
|
|
|
(Do not check if a smaller reporting company)
|
|
|
|
|
|
|
|
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the exchange Act). Yes
o
No
x
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. 1,010,426
Common shares were outstanding as of August 14, 2012.
HMG/COURTLAND
PROPERTIES, INC.
Index
Cautionary
Statement
. This Form 10-Q contains certain statements relating to future results of the Company that are considered "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially
from those expressed or implied as a result of certain risks and uncertainties, including, but not limited to, changes in political
and economic conditions; interest rate fluctuation; competitive pricing pressures within the Company’s market; equity and fixed
income market fluctuation; technological change; changes in law; changes in fiscal, monetary, regulatory and tax policies; monetary
fluctuations as well as other risks and uncertainties detailed elsewhere in this Form 10-Q or from time-to-time in the filings
of the Company with the Securities and Exchange Commission. Such forward-looking statements speak only as of the date on which
such statements are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.
|
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
|
|
|
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CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
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June 30,
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|
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December 31,
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|
|
|
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2012
|
|
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2011
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(UNAUDITED)
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|
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ASSETS
|
|
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Investment properties, net of accumulated depreciation:
|
|
|
|
|
|
|
|
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Commercial properties
|
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$
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6,979,876
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|
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$
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7,057,005
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Hotel, club and spa facility
|
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3,340,766
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|
|
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3,447,870
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Marina properties
|
|
|
1,776,345
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|
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|
1,893,452
|
|
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Land held for development
|
|
|
—
|
|
|
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27,689
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|
|
Total investment properties, net
|
|
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12,096,987
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|
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12,426,016
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|
|
|
|
|
|
|
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Cash and cash equivalents
|
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2,920,080
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|
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2,366,363
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|
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Investments in marketable securities
|
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1,948,209
|
|
|
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2,019,476
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Other investments
|
|
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3,657,328
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|
|
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3,745,327
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Investment in affiliate
|
|
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2,718,093
|
|
|
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2,686,887
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|
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Loans, notes and other receivables
|
|
|
683,998
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|
|
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683,998
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|
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Notes and advances due from related parties
|
|
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701,769
|
|
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696,909
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Deferred taxes
|
|
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649,000
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|
|
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632,000
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Goodwill
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5,628,627
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|
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5,628,627
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Other assets
|
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582,921
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|
|
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710,227
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TOTAL ASSETS
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$
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31,587,012
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$
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31,595,830
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|
|
|
|
|
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LIABILITIES
|
|
|
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|
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Mortgages and notes payable
|
|
$
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14,304,108
|
|
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$
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14,531,833
|
|
|
Accounts payable, accrued expenses and other liabilities
|
|
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582,207
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|
|
|
740,618
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|
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Interest rate swap contract payable
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2,059,000
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|
|
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1,975,000
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|
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TOTAL LIABILITIES
|
|
|
16,945,315
|
|
|
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17,247,451
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|
|
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|
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STOCKHOLDERS’ EQUITY
|
|
|
|
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Excess common stock, $1 par value; 100,000 shares authorized: no shares issued
|
|
|
—
|
|
|
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—
|
|
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Common stock, $1 par value; 1,200,000 shares authorized and 1,023,955 issued
|
|
|
1,023,955
|
|
|
|
1,023,955
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|
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Additional paid-in capital
|
|
|
24,375,069
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|
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24,366,099
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Less: Treasury stock at cost (13,529 shares as of June 30, 2012 and December 31, 2011)
|
|
|
(60,388
|
)
|
|
|
(60,388
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)
|
|
Undistributed gains from sales of properties, net of losses
|
|
|
41,572,120
|
|
|
|
41,572,120
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|
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Undistributed losses from operations
|
|
|
(54,150,237
|
)
|
|
|
(54,383,928
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(1,029,500
|
)
|
|
|
(987,500
|
)
|
|
Total stockholders’ equity
|
|
|
11,731,019
|
|
|
|
11,530,358
|
|
|
Non controlling interest
|
|
|
2,910,678
|
|
|
|
2,818,021
|
|
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TOTAL EQUITY
|
|
|
14,641,697
|
|
|
|
14,348,379
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
31,587,012
|
|
|
$
|
31,595,830
|
|
|
|
|
|
|
|
|
|
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|
|
See notes to the condensed consolidated financial statements
|
|
|
|
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HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
|
|
|
|
|
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|
For the three months ended
|
|
|
For the six months ended
|
|
|
|
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June 30,
|
|
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June 30,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Real estate rentals and related revenue
|
|
$
|
486,762
|
|
|
$
|
464,209
|
|
|
$
|
961,950
|
|
|
$
|
927,561
|
|
|
Food & beverage sales
|
|
|
1,610,845
|
|
|
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1,607,675
|
|
|
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3,356,837
|
|
|
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3,295,691
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|
|
Marina revenues
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|
|
418,921
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|
|
|
402,480
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|
|
|
831,292
|
|
|
|
815,379
|
|
|
Spa revenues
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|
|
119,240
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|
|
|
97,678
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|
|
|
240,263
|
|
|
|
209,797
|
|
|
Total revenues
|
|
|
2,635,768
|
|
|
|
2,572,042
|
|
|
|
5,390,342
|
|
|
|
5,248,428
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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EXPENSES
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|
|
|
|
|
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|
|
|
|
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|
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Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other properties
|
|
|
184,671
|
|
|
|
165,994
|
|
|
|
299,890
|
|
|
|
347,997
|
|
|
Food and beverage cost of sales
|
|
|
447,543
|
|
|
|
447,991
|
|
|
|
966,997
|
|
|
|
921,679
|
|
|
Food and beverage labor and related costs
|
|
|
359,662
|
|
|
|
340,129
|
|
|
|
725,716
|
|
|
|
685,631
|
|
|
Food and beverage other operating costs
|
|
|
556,507
|
|
|
|
526,091
|
|
|
|
1,077,685
|
|
|
|
1,063,951
|
|
|
Marina expenses
|
|
|
203,974
|
|
|
|
224,365
|
|
|
|
417,262
|
|
|
|
443,146
|
|
|
Spa expenses
|
|
|
125,537
|
|
|
|
107,078
|
|
|
|
250,067
|
|
|
|
209,898
|
|
|
Depreciation and amortization
|
|
|
222,277
|
|
|
|
236,448
|
|
|
|
445,768
|
|
|
|
617,742
|
|
|
Adviser’s base fee
|
|
|
255,000
|
|
|
|
255,000
|
|
|
|
510,000
|
|
|
|
510,000
|
|
|
General and administrative
|
|
|
99,729
|
|
|
|
78,916
|
|
|
|
190,508
|
|
|
|
172,959
|
|
|
Professional fees and expenses
|
|
|
79,896
|
|
|
|
109,204
|
|
|
|
125,568
|
|
|
|
196,330
|
|
|
Directors’ fees and expenses
|
|
|
18,750
|
|
|
|
21,306
|
|
|
|
43,500
|
|
|
|
45,306
|
|
|
Total operating expenses
|
|
|
2,553,546
|
|
|
|
2,512,522
|
|
|
|
5,052,961
|
|
|
|
5,214,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
220,282
|
|
|
|
218,461
|
|
|
|
440,783
|
|
|
|
470,650
|
|
|
Total expenses
|
|
|
2,773,828
|
|
|
|
2,730,983
|
|
|
|
5,493,744
|
|
|
|
5,685,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before other income (loss) and income taxes
|
|
|
(138,060
|
)
|
|
|
(158,941
|
)
|
|
|
(103,402
|
)
|
|
|
(436,861
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized and unrealized gains (losses) from investments in marketable securities
|
|
|
4,954
|
|
|
|
(30,978
|
)
|
|
|
97,096
|
|
|
|
31,980
|
|
|
Net income from other investments
|
|
|
268,898
|
|
|
|
35,979
|
|
|
|
316,446
|
|
|
|
45,312
|
|
|
Realized loss on interest rate swap agreement
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(198,400
|
)
|
|
Other than temporary impairment losses from other investments
|
|
|
—
|
|
|
|
(86,707
|
)
|
|
|
(27,666
|
)
|
|
|
(86,707
|
)
|
|
Interest, dividend and other income
|
|
|
34,644
|
|
|
|
30,134
|
|
|
|
68,871
|
|
|
|
126,022
|
|
|
Total other income (loss)
|
|
|
308,496
|
|
|
|
(51,572
|
)
|
|
|
454,747
|
|
|
|
(81,793
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
170,436
|
|
|
|
(210,513
|
)
|
|
|
351,345
|
|
|
|
(518,654
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit from for income taxes
|
|
|
(13,000
|
)
|
|
|
(59,000
|
)
|
|
|
(17,000
|
)
|
|
|
(50,000
|
)
|
|
Net income (loss)
|
|
|
183,436
|
|
|
|
(151,513
|
)
|
|
|
368,345
|
|
|
|
(468,654
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net (income) loss attributable to noncontrolling interest in consolidated entities
|
|
|
(18,366
|
)
|
|
|
(30,529
|
)
|
|
|
(134,654
|
)
|
|
|
80,481
|
|
|
Net income (loss) attributable to the Company
|
|
$
|
165,070
|
|
|
$
|
(182,042
|
)
|
|
$
|
233,691
|
|
|
$
|
(388,173
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (loss) gain on interest rate swap agreement
|
|
$
|
(111,000
|
)
|
|
$
|
(89,500
|
)
|
|
$
|
(42,000
|
)
|
|
$
|
41,000
|
|
|
Total other comprehensive income
|
|
|
(111,000
|
)
|
|
|
(89,500
|
)
|
|
|
(42,000
|
)
|
|
|
41,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
54,070
|
|
|
$
|
(271,542
|
)
|
|
$
|
191,691
|
|
|
$
|
(347,173
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) Per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
0.16
|
|
|
$
|
(0.18
|
)
|
|
$
|
0.23
|
|
|
$
|
(0.38
|
)
|
|
Weighted average common shares outstanding-Basic and diluted
|
|
|
1,010,426
|
|
|
|
1,010,426
|
|
|
|
1,010,426
|
|
|
|
1,010,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to the condensed consolidated financial statements
|
|
|
|
|
|
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
|
|
|
For the six months ended June 30,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to the Company
|
|
$
|
233,691
|
|
|
$
|
(388,173
|
)
|
|
Adjustments to reconcile net income (loss) attributable
to the Company to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
445,768
|
|
|
|
617,742
|
|
|
Non-employee stock compensation expense
|
|
|
8,970
|
|
|
|
—
|
|
|
Net income from other investments, excluding impairment losses
|
|
|
(316,446
|
)
|
|
|
(45,312
|
)
|
|
Other than temporary impairment losses from other investments
|
|
|
27,666
|
|
|
|
86,707
|
|
|
Net gain from investments in marketable securities
|
|
|
(97,096
|
)
|
|
|
(31,980
|
)
|
|
Realized loss on interest rate swap agreement
|
|
|
—
|
|
|
|
198,400
|
|
|
Net income (loss) attributable to non controlling interest
|
|
|
134,654
|
|
|
|
(80,481
|
)
|
|
Deferred income tax benefit
|
|
|
(17,000
|
)
|
|
|
(50,000
|
)
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Other assets and other receivables
|
|
|
137,364
|
|
|
|
52,477
|
|
|
Accounts payable, accrued expenses and other liabilities
|
|
|
(158,411
|
)
|
|
|
(43,084
|
)
|
|
Total adjustments
|
|
|
165,469
|
|
|
|
704,469
|
|
|
Net cash provided by operating activities
|
|
|
399,160
|
|
|
|
316,296
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchases and improvements of properties
|
|
|
(126,796
|
)
|
|
|
(163,057
|
)
|
|
Increase in notes and advances from related parties
|
|
|
(4,860
|
)
|
|
|
(4,759
|
)
|
|
Distributions from other investments
|
|
|
494,931
|
|
|
|
119,222
|
|
|
Contributions to other investments
|
|
|
(168,548
|
)
|
|
|
(118,963
|
)
|
|
Net proceeds from sales and redemptions of securities
|
|
|
700,216
|
|
|
|
641,788
|
|
|
Purchase of marketable securities
|
|
|
(512,661
|
)
|
|
|
(440,081
|
)
|
|
Net cash provided by investing activities
|
|
|
382,282
|
|
|
|
34,150
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Repayment of mortgages and notes payables
|
|
|
(227,725
|
)
|
|
|
(2,599,997
|
)
|
|
Partial settlement of interest rate swap contract
|
|
|
—
|
|
|
|
(198,400
|
)
|
|
Withdrawals from restricted cash
|
|
|
—
|
|
|
|
2,379,947
|
|
|
Distributions to minority partners
|
|
|
—
|
|
|
|
(101,181
|
)
|
|
Net cash used in financing activities
|
|
|
(227,725
|
)
|
|
|
(519,631
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
553,717
|
|
|
|
(169,185
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of the period
|
|
|
2,366,363
|
|
|
|
3,618,200
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
2,920,080
|
|
|
$
|
3,449,015
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest
|
|
$
|
441,000
|
|
|
$
|
471,000
|
|
|
Cash paid during the period for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to the condensed consolidated financial statements
|
|
|
|
|
|
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
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 prepared in accordance with instructions
for Form 10-Q, 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 consolidated financial
statements prepared in accordance with accounting principles generally accepted in the United States of America 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, 2011. The condensed consolidated balance sheet as of December 31, 2011 was derived from
audited consolidated financial statements as of that date. The results of operations for the three and six months ended June 30,
2012 are not necessarily indicative of the results to be expected for the full year.
The condensed
consolidated financial statements include the accounts of HMG/Courtland Properties, Inc. (the “Company”) and entities
in which the Company owns a majority voting interest or controlling financial interest. All material transactions and balances
with consolidated and unconsolidated entities have been eliminated in consolidation or as required under the equity method.
2.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company
does not believe that any recently issued, but not yet effective accounting standards, if currently adopted, will have a material
effect on the Company’s consolidated financial position, results of operations and cash flows.
3.
RESULTS OF OPERATIONS FOR MONTY’S RESTAURANT, MARINA AND OFFICE/RETAIL PROPERTY, COCONUT GROVE, FLORIDA
The Company,
through two 50%-owned entities, Bayshore Landing, LLC (“Landing”) and Bayshore Rawbar, LLC (“Rawbar”),
(collectively, “Bayshore”) owns a restaurant, office/retail and marina property located in Coconut Grove (Miami),
Florida known as Monty’s (the “Monty’s Property”).
Summarized
combined statements of income for Landing and Rawbar for the three and six months ended June 30, 2012 and 2011 are presented below
(Note: the Company’s ownership percentage in these operations is 50%):
Summarized Combined statements of income
Bayshore Landing, LLC and
Bayshore Rawbar, LLC
|
|
For the three months ended
June 30, 2012
|
|
For the three months ended
June 30, 2011
|
|
For the six
months ended
June 30, 2012
|
|
For the six
months ended
June 30, 2011
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and Beverage Sales
|
|
$
|
1,611,000
|
|
|
$
|
1,608,000
|
|
|
$
|
3,357,000
|
|
|
$
|
3,296,000
|
|
|
Marina dockage and related
|
|
|
281,000
|
|
|
|
271,000
|
|
|
|
554,000
|
|
|
|
557,000
|
|
|
Retail/mall rental and related
|
|
|
160,000
|
|
|
|
147,000
|
|
|
|
308,000
|
|
|
|
294,000
|
|
|
Total Revenues
|
|
|
2,052,000
|
|
|
|
2,026,000
|
|
|
|
4,219,000
|
|
|
|
4,147,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of food and beverage sold
|
|
|
448,000
|
|
|
|
448,000
|
|
|
|
967,000
|
|
|
|
922,000
|
|
|
Labor and related costs
|
|
|
310,000
|
|
|
|
292,000
|
|
|
|
627,000
|
|
|
|
590,000
|
|
|
Entertainers
|
|
|
50,000
|
|
|
|
48,000
|
|
|
|
99,000
|
|
|
|
96,000
|
|
|
Other food and beverage related costs
|
|
|
142,000
|
|
|
|
150,000
|
|
|
|
283,000
|
|
|
|
307,000
|
|
|
Other operating costs
|
|
|
34,000
|
|
|
|
28,000
|
|
|
|
83,000
|
|
|
|
70,000
|
|
|
Repairs and maintenance
|
|
|
113,000
|
|
|
|
108,000
|
|
|
|
190,000
|
|
|
|
214,000
|
|
|
Insurance
|
|
|
129,000
|
|
|
|
130,000
|
|
|
|
262,000
|
|
|
|
254,000
|
|
|
Management fees
|
|
|
80,000
|
|
|
|
76,000
|
|
|
|
137,000
|
|
|
|
160,000
|
|
|
Utilities
|
|
|
61,000
|
|
|
|
70,000
|
|
|
|
114,000
|
|
|
|
124,000
|
|
|
Ground rent
|
|
|
279,000
|
|
|
|
224,000
|
|
|
|
457,000
|
|
|
|
446,000
|
|
|
Interest
|
|
|
163,000
|
|
|
|
166,000
|
|
|
|
326,000
|
|
|
|
367,000
|
|
|
Depreciation and amortization
|
|
|
162,000
|
|
|
|
168,000
|
|
|
|
328,000
|
|
|
|
483,000
|
|
|
Realized loss on interest rate swap
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
198,000
|
|
|
Total Expenses
|
|
|
1,971,000
|
|
|
|
1,908,000
|
|
|
|
3,873,000
|
|
|
|
4,231,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
81,000
|
|
|
$
|
118,000
|
|
|
$
|
346,000
|
|
|
$
|
(84,000
|
)
|
4.
INVESTMENTS IN MARKETABLE SECURITIES
Investments
in marketable securities consist primarily of large capital corporate equity and debt securities in varying industries or issued
by government agencies with readily determinable fair values. These securities are stated at market value, as determined by the
most recent traded price of each security at the balance sheet date. Consistent with the Company’s overall current investment
objectives and activities its entire marketable securities portfolio is classified as trading.
Net realized
and unrealized gain (loss) from investments in marketable securities for the three and six months ended June 30, 2012 and 2011
is summarized below:
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
Description
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Net realized gain (loss) from sales of securities
|
|
$
|
18,000
|
|
|
$
|
(2,000
|
)
|
|
$
|
68,000
|
|
|
$
|
78,000
|
|
|
Unrealized net (loss) gain in trading securities
|
|
|
(13,000
|
)
|
|
|
(29,000
|
)
|
|
|
29,000
|
|
|
|
(46,000
|
)
|
|
Total net gain (loss) from investments in marketable securities
|
|
$
|
5,000
|
|
|
$
|
(31,000
|
)
|
|
$
|
97,000
|
|
|
$
|
32,000
|
|
For the
three and six months ended June 30, 2012, net unrealized (losses) gains from trading securities were ($13,000) and $29,000, respectively.
This is compared to net unrealized (losses) of ($29,000) and ($46,000) for the three and six months ended June 30, 2011, respectively.
For the
three months ended June 30, 2012, net realized gain from sales of marketable securities of approximately $18,000, and consisted
of approximately $39,000 of gross gains net of $21,000 of gross losses. For the six months ended June 30, 2012 net realized gain
from sales of marketable securities of approximately $68,000, and consisted of approximately $104,000 of gross gains net of $36,000
of gross losses.
For the
three months ended June 30, 2011, net realized loss from sales of marketable securities of approximately $2,000, and consisted
of approximately $10,000 of gross losses net of $8,000 of gross gains. For the six months ended June 30, 2011, net realized gain
from sales of marketable securities of approximately $78,000, and consisted of approximately $103,000 of gross gains net of $25,000
of gross losses.
Investment
gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant
impact on the Company’s net earnings. However, the amount of investment gains or losses on marketable securities for any given
period has no predictive value and variations in amount from period to period have no practical analytical value.
5.
OTHER INVESTMENTS
As of
June 30, 2012, the Company’s portfolio of other investments had an aggregate carrying value of approximately $3.7 million.
As of June 30, 2012, the Company has committed to fund approximately $871,000 as required by agreements with the investees. The
carrying value of these investments is equal to contributions less distributions and loss valuation adjustments. During the six
months ended June 30, 2012, the Company contributed a total of $168,000 in other investments. These contributions include one
new investment in a medical technology related company for $51,000 which was fully funded in January 2012 and follow on contributions
totaling $117,000 towards funding commitments in various other existing investments. Cash distributions received from other investments
for the six months ended June 30, 2012 totaled approximately $494,000. These distributions include approximately $274,000 from
real estate funds and $200,000 from funds investing in diversified businesses.
Net
income from other investments for the three and six months ended June 30, 2012 and 2011, is summarized below (excluding other
than temporary impairment loss):
|
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
|
Description
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Partnerships owning real estate and related
|
|
$
|
255,000
|
|
|
$
|
25,000
|
|
|
$
|
255,000
|
|
|
$
|
—
|
|
|
Partnerships owning diversified businesses
|
|
|
—
|
|
|
|
—
|
|
|
|
30,000
|
|
|
|
25,000
|
|
|
Income from investment in 49% owned affiliate (T.G.I.F. Texas, Inc.)
|
|
|
14,000
|
|
|
|
11,000
|
|
|
|
31,000
|
|
|
|
20,000
|
|
|
Total net income from other investments (excluding other than temporary impairment losses)
|
|
$
|
269,000
|
|
|
$
|
36,000
|
|
|
$
|
316,000
|
|
|
$
|
45,000
|
|
The following
tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of June
30, 2012 and December 31, 2011, aggregated by investment category and the length of time that investments have been in a
continuous loss position:
|
|
|
As of June 30, 2012
|
|
|
|
|
Less than 12 Months
|
|
|
Greater than 12 Months
|
|
|
Total
|
|
|
Investment Description
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Partnerships owning investments in technology related industries
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
372,000
|
|
|
$
|
(67,000
|
)
|
|
$
|
372,000
|
|
|
$
|
(67,000
|
)
|
|
Partnerships owning diversified businesses
|
|
|
—
|
|
|
|
—
|
|
|
|
298,000
|
|
|
|
(58,000
|
)
|
|
|
298,000
|
|
|
|
(58,000
|
)
|
|
Partnerships owning real estate and related investments
|
|
|
—
|
|
|
|
—
|
|
|
|
240,000
|
|
|
|
(51,000
|
)
|
|
|
240,000
|
|
|
|
(51,000
|
)
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
910,000
|
|
|
$
|
(176,000
|
)
|
|
$
|
910,000
|
|
|
$
|
(176,000
|
)
|
|
|
|
As of December 31, 2011
|
|
|
|
|
Less than 12 Months
|
|
|
Greater than 12 Months
|
|
|
Total
|
|
|
Investment Description
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Partnerships owning investments in technology related industries
|
|
$
|
327,000
|
|
|
$
|
(20,000
|
)
|
|
$
|
47,000
|
|
|
$
|
(39,000
|
)
|
|
$
|
374,000
|
|
|
$
|
(59,000
|
)
|
|
Partnerships owning diversified businesses
|
|
|
—
|
|
|
|
—
|
|
|
|
228,000
|
|
|
|
(61,000
|
)
|
|
|
228,000
|
|
|
|
(61,000
|
)
|
|
Partnerships owning real estate and related investments
|
|
|
—
|
|
|
|
—
|
|
|
|
256,000
|
|
|
|
(56,000
|
)
|
|
|
256,000
|
|
|
|
(56,000
|
)
|
|
Total
|
|
$
|
327,000
|
|
|
$
|
(20,000
|
)
|
|
$
|
531,000
|
|
|
$
|
(156,000
|
)
|
|
$
|
858,000
|
|
|
$
|
(176,000
|
)
|
When
evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent
to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s
intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s
amortized cost basis.
In accordance
with ASC Topic 320-10-65, Recognition and Presentation of Other-Than-Temporary Impairments as of March 31, 2012 the Company recorded
a loss of approximately $28,000 from an investment in a partnership which operates and leases executive suites in Miami, Florida.
The Company has funded $120,000 to date in this investment and the losses incurred were associated with the initial start up of
the venture in 2010. In June 2011 the Company recognized an impairment loss of approximately $84,000 from this same investment.
There were no OTTI impairment valuation adjustments for the three months ended June 30, 2012 and for the three months ended March
31, 2011.
6.
INTEREST RATE SWAP CONTRACT
The Company is exposed to interest rate risk through its borrowing
activities. In order to minimize the effect of changes in interest rates, the Company has entered into an interest rate swap contract
under which the Company agrees to pay an amount equal to a specified rate of 7.57% times a notional principal approximating the
outstanding loan balance, and to receive in return an amount equal to 2.45% plus the one-month LIBOR Rate times the same notional
amount. The Company designated this interest rate swap contract as a cash flow hedge.
As of
June 30, 2012 the fair value of this hedge was an unrealized loss of approximately $2,059,000, as compared with an unrealized
loss of $1,975,000 as of December 31, 2011 which resulted in an unrealized loss of $84,000 (or $42,000, net of noncontrolling
interest) for the six months ended June 30, 2012. This amount has been recorded as other comprehensive income and will be reclassified
to interest expense over the life of the contract.
The following tables present the required disclosures in accordance
with ASC Topic 815-10:
Fair Values of Derivative Instruments:
|
|
|
Liability Derivative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Balance
Sheet
Location
|
|
|
Fair
Value
|
|
|
Balance
Sheet
Location
|
|
|
Fair
Value
|
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap contract
|
|
|
Liabilities
|
|
|
$
|
2,059,000
|
|
|
|
Liabilities
|
|
|
$
|
1,975,000
|
|
|
Total derivatives designated as hedging instruments under ASC Topic 815
|
|
|
|
|
|
$
|
2,059,000
|
|
|
|
|
|
|
$
|
1,975,000
|
|
The Effect of Derivative Instruments on the Statements of Comprehensive
Income
for the Three and Six Months Ended June 30, 2012 and 2011:
The
Effect of Derivative Instruments on the Statements of Comprehensive Income
|
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three Months ended
|
|
|
For the three Months ended
|
|
|
For the six Months ended
|
|
|
For the six Months ended
|
|
|
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap contracts
|
|
$
|
(111,000
|
)
|
|
$
|
(89,500
|
)
|
|
$
|
(42,000
|
)
|
|
$
|
41,000
|
|
|
Total
|
|
$
|
(111,000
|
)
|
|
$
|
(89,500
|
)
|
|
$
|
(42,000
|
)
|
|
$
|
41,000
|
|
7.
FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance
with ASC Topic 820, the Company measures cash equivalents, marketable securities, other investments and interest rate swap contract
at fair value. Our cash equivalents, marketable securities and interest rate swap contract are classified within Level 1 or Level
2. This is because our cash equivalents, marketable securities and interest rate swap are valued using quoted market prices or
alternative pricing sources and models utilizing observable market inputs. Our other investments are classified within Level 3
because they are valued using valuation models which use some inputs that are unobservable and supported by little or no market
activity and are significant.
Assets
and liabilities measured at fair value on a recurring basis are summarized below:
|
|
|
Fair value measurement at reporting date using
|
|
|
|
|
|
Total June 30,
|
|
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
|
|
Significant Other Observable Inputs
|
|
|
|
Significant Unobservable Inputs
|
|
|
Description
|
|
|
2012
|
|
|
|
(Level 1)
|
|
|
|
(Level 2)
|
|
|
|
(Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits
|
|
$
|
54,353
|
|
|
|
—
|
|
|
$
|
54,353
|
|
|
|
—
|
|
|
Money market mutual funds
|
|
|
1,561,821
|
|
|
$
|
1,561,821
|
|
|
|
—
|
|
|
|
—
|
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities
|
|
|
942,914
|
|
|
|
—
|
|
|
|
942,914
|
|
|
|
—
|
|
|
Marketable equity securities
|
|
|
1,005,295
|
|
|
|
1,005,295
|
|
|
|
—
|
|
|
|
—
|
|
|
Total assets
|
|
$
|
3,564,383
|
|
|
$
|
2,567,116
|
|
|
$
|
997,267
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap contract
|
|
|
2,059,000
|
|
|
|
—
|
|
|
|
2,059,000
|
|
|
|
—
|
|
|
Total liabilities
|
|
$
|
2,059,000
|
|
|
|
—
|
|
|
$
|
2,059,000
|
|
|
|
—
|
|
|
|
|
Fair value measurement at reporting date using
|
|
|
|
|
|
Total December 31,
|
|
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
|
|
Significant Other Observable Inputs
|
|
|
|
Significant Unobservable Inputs
|
|
|
Description
|
|
|
2011
|
|
|
|
(Level 1)
|
|
|
|
(Level 2)
|
|
|
|
(Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits
|
|
$
|
54,104
|
|
|
|
—
|
|
|
$
|
54,104
|
|
|
|
—
|
|
|
Money market mutual funds
|
|
|
1,536,787
|
|
|
$
|
1,536,787
|
|
|
|
—
|
|
|
|
—
|
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities
|
|
|
885,252
|
|
|
|
—
|
|
|
|
885,252
|
|
|
|
—
|
|
|
Marketable equity securities
|
|
|
1,134,224
|
|
|
|
1,134,224
|
|
|
|
—
|
|
|
|
—
|
|
|
Total assets
|
|
$
|
3,610,367
|
|
|
$
|
2,671,011
|
|
|
$
|
939,356
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap contract
|
|
|
1,975,000
|
|
|
|
—
|
|
|
|
1,975,000
|
|
|
|
—
|
|
|
Total liabilities
|
|
$
|
1,975,000
|
|
|
|
—
|
|
|
$
|
1,975,000
|
|
|
|
—
|
|
Assets measured at fair value on a nonrecurring
basis are summarized below:
|
|
|
Fair value measurement at reporting date using
|
|
|
|
|
|
|
Total June 30,
|
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
|
Significant Other Observable Inputs
|
|
|
Significant Unobservable Inputs
|
|
|
Total losses for the three and six months ended
|
|
|
Description
|
|
2012
|
|
|
(Level 1)
|
|
|
(Level 2) (a)
|
|
|
(Level 3) (b)
|
|
|
6/30/2012
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments by investment focus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology & Communication
|
|
$
|
512,562
|
|
|
$
|
—
|
|
|
$
|
512,562
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Diversified businesses
|
|
|
1,388,989
|
|
|
|
—
|
|
|
|
1,388,989
|
|
|
|
—
|
|
|
|
—
|
|
|
Real estate and related
|
|
|
1,455,777
|
|
|
|
—
|
|
|
|
502,760
|
|
|
|
953,017
|
|
|
|
(27,666
|
)
|
|
Other
|
|
|
300,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
—
|
|
|
|
|
$
|
3,657,328
|
|
|
$
|
—
|
|
|
$
|
2,404,311
|
|
|
$
|
1,253,017
|
|
|
$
|
(27,666
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill (Bayshore)
|
|
|
5,628,627
|
|
|
|
|
|
|
|
|
|
|
|
5,628,627
|
|
|
|
|
|
|
Total assets
|
|
$
|
9,285,955
|
|
|
$
|
—
|
|
|
$
|
2,404,311
|
|
|
$
|
6,881,644
|
|
|
$
|
(27,666
|
)
|
|
|
|
Fair value measurement at reporting date using
|
|
|
|
|
|
|
|
Total December 31,
|
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
|
Significant Other Observable Inputs
|
|
|
Significant Unobservable Inputs
|
|
|
Total losses for year ended
|
|
|
Description
|
|
2011
|
|
|
(Level 1)
|
|
|
(Level 2) (a)
|
|
|
(Level 3) (b)
|
|
|
12/31/2011
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments by investment focus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology & Communication
|
|
$
|
477,646
|
|
|
$
|
—
|
|
|
$
|
477,646
|
|
|
$
|
—
|
|
|
$
|
(2,437
|
)
|
|
Diversified businesses
|
|
|
1,444,521
|
|
|
|
—
|
|
|
|
1,444,521
|
|
|
|
—
|
|
|
|
—
|
|
|
Real estate and related
|
|
|
1,523,160
|
|
|
|
—
|
|
|
|
542,479
|
|
|
|
980,681
|
|
|
|
(84,270
|
)
|
|
Other
|
|
|
300,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
—
|
|
|
|
|
$
|
3,745,327
|
|
|
$
|
—
|
|
|
$
|
2,464,646
|
|
|
$
|
1,280,681
|
|
|
$
|
(86,707
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill (Bayshore)
|
|
|
5,628,627
|
|
|
|
|
|
|
|
|
|
|
|
5,628,627
|
|
|
|
—
|
|
|
Total assets
|
|
$
|
9,373,954
|
|
|
$
|
—
|
|
|
$
|
2,464,646
|
|
|
$
|
6,909,308
|
|
|
$
|
(86,707
|
)
|
|
(a)
|
|
Other investments measured at fair value on a non-recurring
basis include investments in certain entities that calculate net asset value per share (or its equivalent such as member units
or an ownership interest in partners’ capital to which a proportionate share of net assets is attributed, “NAV”).
This class primarily consists of private equity funds that have varying investment focus. These investments can never be redeemed
with the funds. Instead, the nature of the investments in this class is that distributions are received through the liquidation
of the underlying assets of the fund. If these investments were held it is estimated that the underlying assets of the fund would
be liquidated over 5 to 10 years. As of June 30, 2012, it is probable that all of the investments in this class will be sold at
an amount different from the NAV of the Company’s ownership interest in partners’ capital. Therefore, the fair values
of the investments in this class have been estimated using recent observable information such as audited financial statements
and/or statements of partners’ capital obtained directly from investees on a quarterly or other regular basis. During the
six months ended June 30, 2012, the Company made contributions totaling $168,000 in this type of other investments. These contributions
include one new investment a medical technology related company for $51,000 which was fully funded in January 2012 and follow
on contributions totaling $117,000 towards funding commitments in various other existing investments. As of June 30, 2012, the
amount of the Company’s unfunded commitments related to the aforementioned investments is approximately $871,000.
|
|
(b)
|
|
Other investments above which are measured on a nonrecurring
basis using Level 3 unobservable inputs consist of investments primarily in commercial real estate in Florida through private
partnerships and two investments in the stock of private banks in Florida and Texas. The Company does not know when it will have
the ability to redeem the investments and has categorized them as a Level 3 fair value measurement. The Level 3 real estate and
related investments of approximately $1 million primarily consist of one investment in a commercial building located near the
Company’s offices purchased in 2005. This investment is measured using primarily inputs provided by the managing member
of the partnerships with whom the Company has done similar transactions in the past and is well known to management. The fair
values of these real estate investments have been estimated using the net asset value of the Company’s ownership interest
in partners’ capital. The investments in private bank stocks include a private bank and trust located in Coral Gables, Florida
in the amount of $250,000 made in 2009, and a $50,000 investment in a bank located in El Campo, Texas made in 2010. The fair values
of these bank stock investments have been estimated using the cost method less distributions received and other than temporary
impairments. This investment is valued using inputs provided by the management of the banks.
|
The
following table includes a roll-forward of the investments classified within level 3 of the fair value hierarchy for the six months
ended June 30, 2012:
|
|
|
Level 3 Investments:
|
|
|
Balance at January 1, 2012
|
|
$
|
1,300,000
|
|
|
Additional investment in limited partnership
|
|
|
—
|
|
|
Other than temporary impairment loss
|
|
|
(28,000
|
)
|
|
Transfers from Level 2
|
|
|
—
|
|
|
Balance at June 30, 2012
|
|
$
|
1,272,000
|
|
8.
SEGMENT INFORMATION
The Company has
three reportable segments: Real estate rentals; Food and Beverage sales; and Other investments and related income. The Real estate
and rentals segment primarily includes the leasing of its Grove Isle property, marina dock rentals at both Monty’s and Grove Isle
marinas, and the leasing of office and retail space at its Monty’s property. The Food and Beverage sales segment consists of the
Monty’s restaurant operation. Lastly, the other investment and related income segment includes all of the Company’s other investments,
marketable securities, loans, notes and other receivables and the Grove Isle spa operations which individually do not meet the
criteria as a reportable segment.
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Net Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate and marina rentals
|
|
$
|
906,000
|
|
|
$
|
867,000
|
|
|
$
|
1,793,000
|
|
|
$
|
1,743,000
|
|
|
Food and beverage sales
|
|
|
1,611,000
|
|
|
|
1,607,000
|
|
|
|
3,357,000
|
|
|
|
3,295,000
|
|
|
Spa revenues
|
|
|
119,000
|
|
|
|
98,000
|
|
|
|
240,000
|
|
|
|
210,000
|
|
|
Total net revenues
|
|
$
|
2,636,000
|
|
|
$
|
2,572,000
|
|
|
$
|
5,390,000
|
|
|
$
|
5,248,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate and marina rentals
|
|
$
|
285,000
|
|
|
$
|
239,000
|
|
|
$
|
562,000
|
|
|
$
|
495,000
|
|
|
Food and beverage sales
|
|
|
38,000
|
|
|
|
56,000
|
|
|
|
124,000
|
|
|
|
114,000
|
|
|
Other investments and related income
|
|
|
(171,000
|
)
|
|
|
(536,000
|
)
|
|
|
(469,000
|
)
|
|
|
(1,047,000
|
)
|
|
Total net income (loss) attributable to the Company before income taxes
|
|
$
|
152,000
|
|
|
$
|
(241,000
|
)
|
|
$
|
217,000
|
|
|
$
|
(438,000
|
)
|
9.
INCOME TAXES
We
adopted the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” on January 1, 2007.
This topic clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in
accordance with ASC Topic 740, “Accounting for Income Taxes”, and prescribes a recognition threshold and measurement
process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Topic
740-10 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure
and transition.
Based
on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our consolidated
financial statements. Our evaluation was performed for the tax years ended December 31, 2008, 2009, 2010 and 2011, the tax
years which remain subject to examination by major tax jurisdictions as of June 30, 2012.
We
may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically
have been minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties,
it has been classified in the consolidated financial statements as general and administrative expense.
Item
2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
RESULTS
OF OPERATIONS
For
the three and six months ended June 30, 2012, the Company reported net income of approximately $165,000 ($.16 per share) and $234,000
($.23 per share), respectively. For the three and six months ended June 30, 2011, the Company reported a net loss of approximately
$182,000 ($.18 per share) and $388,000 ($.38 per share), respectively.
Total
revenues for the six months ended June 30, 2012 as compared with the same period in 2011, increased by approximately $142,000
or 3%. Total revenues for the three months ended June 30, 2012 as compared with the same period in 2011, increased by approximately
$64,000 or 2%.
Total
expenses for the six months ended June 30, 2012, as compared with the same periods in 2011, decreased by approximately $191,000
or 3%. Total expenses for the three months ended June 30, 2012, as compared with the same periods in 2011, increased by approximately
$43,000 or 2%.
REVENUES
Rentals
and related revenues for the three and six months ended June 30, 2012 as compared with the same period in 2011 increased by $23,000
(or 5%) and $34,000 (or 4%), respectively. This was primarily as a result of an inflation adjustment in rent due from the tenant
at Grove Isle.
Restaurant
operations:
Summarized
statements of income for the Company’s Monty’s restaurant for the three and six months ended June 30, 2012 and 2011
is presented below:
|
|
|
For the three months
|
|
|
For the six months
|
|
|
|
|
ended June 30,
|
|
|
ended June 30,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and Beverage Sales
|
|
$
|
1,611,000
|
|
|
$
|
1,608,000
|
|
|
$
|
3,357,000
|
|
|
$
|
3,296,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of food and beverage sold
|
|
|
448,000
|
|
|
|
448,000
|
|
|
|
967,000
|
|
|
|
922,000
|
|
|
Labor and related costs
|
|
|
310,000
|
|
|
|
292,000
|
|
|
|
627,000
|
|
|
|
590,000
|
|
|
Entertainers
|
|
|
50,000
|
|
|
|
48,000
|
|
|
|
99,000
|
|
|
|
96,000
|
|
|
Other food and beverage direct costs
|
|
|
77,000
|
|
|
|
64,000
|
|
|
|
155,000
|
|
|
|
131,000
|
|
|
Other operating costs
|
|
|
65,000
|
|
|
|
86,000
|
|
|
|
128,000
|
|
|
|
176,000
|
|
|
Repairs and maintenance
|
|
|
72,000
|
|
|
|
35,000
|
|
|
|
119,000
|
|
|
|
80,000
|
|
|
Insurance
|
|
|
79,000
|
|
|
|
81,000
|
|
|
|
159,000
|
|
|
|
157,000
|
|
|
Management and accounting fees
|
|
|
35,000
|
|
|
|
26,000
|
|
|
|
70,000
|
|
|
|
64,000
|
|
|
Utilities
|
|
|
58,000
|
|
|
|
65,000
|
|
|
|
113,000
|
|
|
|
128,000
|
|
|
Rent (as allocated)
|
|
|
170,000
|
|
|
|
170,000
|
|
|
|
334,000
|
|
|
|
328,000
|
|
|
Total Expenses
|
|
|
1,364,000
|
|
|
|
1,315,000
|
|
|
|
2,771,000
|
|
|
|
2,672,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before depreciation and non controlling interest
|
|
$
|
247,000
|
|
|
$
|
293,000
|
|
|
$
|
586,000
|
|
|
$
|
624,000
|
|
Amounts above are presented as a percentage
of sales below:
|
|
|
For the three months
|
|
|
For the six months
|
|
|
|
|
ended June 30,
|
|
|
ended June 30,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and Beverage Sales
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of food and beverage sold
|
|
|
28
|
%
|
|
|
28
|
%
|
|
|
29
|
%
|
|
|
28
|
%
|
|
Labor and related costs
|
|
|
19
|
%
|
|
|
18
|
%
|
|
|
19
|
%
|
|
|
18
|
%
|
|
Entertainers
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
|
Other food and beverage direct costs
|
|
|
5
|
%
|
|
|
4
|
%
|
|
|
5
|
%
|
|
|
4
|
%
|
|
Other operating costs
|
|
|
4
|
%
|
|
|
5
|
%
|
|
|
4
|
%
|
|
|
5
|
%
|
|
Repairs and maintenance
|
|
|
4
|
%
|
|
|
2
|
%
|
|
|
3
|
%
|
|
|
2
|
%
|
|
Insurance
|
|
|
5
|
%
|
|
|
5
|
%
|
|
|
5
|
%
|
|
|
5
|
%
|
|
Management fees
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
2
|
%
|
|
Utilities
|
|
|
4
|
%
|
|
|
4
|
%
|
|
|
3
|
%
|
|
|
4
|
%
|
|
Rent (as allocated)
|
|
|
11
|
%
|
|
|
11
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
|
Total Expenses
|
|
|
85
|
%
|
|
|
82
|
%
|
|
|
83
|
%
|
|
|
81
|
%
|
|
Income before depreciation and non-controlling interest
|
|
|
15
|
%
|
|
|
18
|
%
|
|
|
17
|
%
|
|
|
19
|
%
|
For
the six months ended June 30, 2012 as compared with the same period in 2011, restaurant sales increased by approximately $61,000
(2%), with food sales increasing by $57,000 (or 3%) and beverage sales increasing $4,000 (or less than 1%).
For
the three months ended June 30, 2012 as compared with the same period in 2011, restaurant sales increased by $3,000 (less than
1%), with food sales increasing by $14,000 (1%) and beverage sales decreasing $11,000 (2%).
For
the three and six months ended June 30, 2012 as compared with the same periods in 2011, total restaurant expenses increased by
$49,000 (4%) and $99,000 (4%), respectively. This was primarily due to higher food costs and increased labor costs.
Marina
operations:
Summarized and combined statements of income for marina operations
for the three and six months ended June 30, 2012 and 2011: (The Company owns 50% of the Monty’s marina and 95% of the Grove
Isle marina)
|
|
|
For the three months
|
|
|
For the six months
|
|
|
|
|
ended June 30,
|
|
|
ended June 30,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Marina Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monty’s dockage fees and related income
|
|
$
|
293,000
|
|
|
$
|
290,000
|
|
|
$
|
579,000
|
|
|
$
|
591,000
|
|
|
Grove Isle marina slip owners dues and dockage fees
|
|
|
126,000
|
|
|
|
113,000
|
|
|
|
252,000
|
|
|
|
224,000
|
|
|
Total marina revenues
|
|
|
419,000
|
|
|
|
403,000
|
|
|
|
831,000
|
|
|
|
815,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marina Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labor and related costs
|
|
|
66,000
|
|
|
|
60,000
|
|
|
|
130,000
|
|
|
|
131,000
|
|
|
Insurance
|
|
|
21,000
|
|
|
|
21,000
|
|
|
|
47,000
|
|
|
|
43,000
|
|
|
Management fees
|
|
|
18,000
|
|
|
|
18,000
|
|
|
|
36,000
|
|
|
|
36,000
|
|
|
Utilities, net of tenant reimbursement
|
|
|
(11,000
|
)
|
|
|
(2,000
|
)
|
|
|
(21,000
|
)
|
|
|
(18,000
|
)
|
|
Rent and bay bottom lease expense
|
|
|
56,000
|
|
|
|
54,000
|
|
|
|
110,000
|
|
|
|
110,000
|
|
|
Repairs and maintenance
|
|
|
24,000
|
|
|
|
54,000
|
|
|
|
57,000
|
|
|
|
95,000
|
|
|
Other
|
|
|
30,000
|
|
|
|
19,000
|
|
|
|
58,000
|
|
|
|
46,000
|
|
|
Total marina expenses
|
|
|
204,000
|
|
|
|
224,000
|
|
|
|
417,000
|
|
|
|
443,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before depreciation and non controlling interest
|
|
$
|
215,000
|
|
|
$
|
179,000
|
|
|
$
|
414,000
|
|
|
$
|
372,000
|
|
Total
marina revenues for the three and six months ended June 30, 2012 as compared to the same periods in 2011 increased by $16,000
(or 4%) and $16,000 (or 2%). This was primarily due to a rate increased in the Grove Isle Marina slip owner’s dues.
Total
marina expenses for the three and six months ended June 30, 2012 as compared to the same periods in 2011 decreased by $20,000
(or 9%) and $26,000 (or 6%). This was primarily due to decreased repairs and maintenance expense at the Monty’s marina.
Spa
operations:
Below
are summarized statements of income for Grove Spa operations for the three and six months ended June 30, 2012 and 2011. The Company
owns 50% of the Grove Isle Spa with the other 50% owned by an affiliate of Grand Heritage, the tenant of the Grove Isle Resort:
|
Summarized statements of income of spa operations
|
|
Three months ended June 30, 2012
|
|
|
Three months ended June 30, 2011
|
|
|
Six months ended June 30, 2012
|
|
|
Six months ended June 30, 2011
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services provided
|
|
$
|
97,000
|
|
|
$
|
78,000
|
|
|
$
|
201,000
|
|
|
$
|
172,000
|
|
|
Membership and other
|
|
|
22,000
|
|
|
|
20,000
|
|
|
|
39,000
|
|
|
|
38,000
|
|
|
Total spa revenues
|
|
|
119,000
|
|
|
|
98,000
|
|
|
|
240,000
|
|
|
|
210,000
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (commissions and other)
|
|
|
23,000
|
|
|
|
16,000
|
|
|
|
44,000
|
|
|
|
34,000
|
|
|
Salaries, wages and related
|
|
|
39,000
|
|
|
|
33,000
|
|
|
|
77,000
|
|
|
|
65,000
|
|
|
Other operating expenses
|
|
|
54,000
|
|
|
|
47,000
|
|
|
|
112,000
|
|
|
|
91,000
|
|
|
Management and administrative fees
|
|
|
3,000
|
|
|
|
5,000
|
|
|
|
8,000
|
|
|
|
11,000
|
|
|
Other non-operating expenses
|
|
|
6,000
|
|
|
|
6,000
|
|
|
|
9,000
|
|
|
|
9,000
|
|
|
Total Expenses
|
|
|
125,000
|
|
|
|
107,000
|
|
|
|
250,000
|
|
|
|
210,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before interest, depreciation and non-controlling interest
|
|
$
|
(6,000
|
)
|
|
$
|
(9,000
|
)
|
|
$
|
(10,000
|
)
|
|
$
|
-0-
|
|
Spa
revenues for the three and six months ended June 30, 2012 as compared with the same period in 2011 increased by $21,000 (or 22%)
and $30,000 (or 14%), respectively. This came at the expense of higher promotional costs which was the main reason Spa expenses
for the three and six months ended June 30, 2012 as compared with the same period in 2011 increased by $18,000 (or 17%) and $40,000
(or 19%).
Net
realized and unrealized gain (loss) from investments in marketable securities:
Net realized and unrealized gain from investments in marketable
securities for the three and six months ended June 30, 2012 was approximately $5,000 and $97,000, respectively. This is as compared
to net realized and unrealized (loss) gain from investments in marketable securities for the three and six months ended June 30,
2011 of approximately ($30,000) and $32,000, respectively. For further details refer to Note 4 to Condensed Consolidated Financial
Statements (unaudited).
Net
income from other investments:
Net income from other investments for the three and six months ended
June 30, 2012 was approximately $269,000 and $316,000, respectively. This is as compared to net income from other investments for
the three and six months ended June 30, 2011 of $36,000 and $45,000, respectively. For further details refer to Note 5 to Condensed
Consolidated Financial Statements (unaudited).
Realized
loss from interest rate swap contract:
In
conjunction with amendment of the Bayshore bank loan in March 2011 the interest rate swap contract liability was paid down by
$198,400 (in the same proportion as the amount of the loan principal paid down). As a result, the Company reclassified a previously
unrealized loss of $198,400 from accumulated other comprehensive income to realized loss on interest rate swap contract within
the condensed consolidated statements of comprehensive income for the three months ended March 31, 2011. There was no realized
loss from the interest rate swap contract for the three and six months ended June 30, 2012.
Interest,
dividend and other income:
Interest,
dividend and other income for the six months ended June 30, 2012 was approximately $69,000, as compared to income of approximately
$126,000 for the six months ended June 30, 2011. This decrease of $57,000 (or 45%) was primarily due to a decrease of service
related income from Courtland Houston of $50,000.
EXPENSES
Expenses
for rental and other properties for the three and six months ended June 30, 2012 were $185,000 and $300,000, respectively. This
is as compared to the same expenses of approximately $166,000 and $348,000 for the three and six months ended June 30, 2011. The
increase in the three month comparable periods of $19,000 (or 11%) was due to increased rent expense from adjustments to Monty’s
rent due to the City of Miami which the Company is contesting. The decrease in the six month comparable periods of $48,000 (or
14%) was primarily due to decreased repairs and maintenance expenses.
For
comparisons of all food and beverage related expenses refer to Restaurant Operations (above) summarized statement of income for
Monty’s restaurant.
For
comparisons of all marina related expenses refer to Marina Operations (above) for summarized and combined statements of income
for marina operations.
For
comparisons of all spa related expenses refer to Spa Operations (above) for summarized statements of income for spa operations.
Depreciation
and amortization expense for the three and six months ended June 30, 2012 compared to the same periods in 2011 decreased by $14,000
(or 6%) and $172,000 (or 28%), respectively. The decrease in the six month comparable periods was primarily due to the non-recurring
amortization of loan costs associated with the Monty’s loan modification completed in March 2011.
General
and administrative expense for the three and six months ended June 30, 2012 compared to the same periods in 2011 increased by
approximately $21,000 (or 26%) and $17,000 (or 10%), respectively. This was primarily due to the abandonment and write off of
land held for development with a cost basis of $28,000.
Professional
fees and expenses for the three and six months ended June 30, 2012 compared to the same periods in 2011 decreased by $29,000 (or
27%) and $70,000 (or 36%), respectively. These changes were primarily due to lower legal costs relating to ongoing Grove Isle
litigation.
EFFECT
OF INFLATION:
Inflation
affects the costs of operating and maintaining the Company’s investments. In addition, rentals under certain leases are based
in part on the lessee’s sales and tend to increase with inflation, and certain leases provide for periodic adjustments according
to changes in predetermined price indices.
LIQUIDITY, CAPITAL EXPENDITURE REQUIREMENTS AND CAPITAL RESOURCES
The Company’s material commitments primarily consist of maturities
of debt obligations of approximately $3.4 million in 2012 and contributions committed to other investments of approximately $871,000
due upon demand. The funds necessary to meet these obligations are expected to come from the proceeds from the sales of properties
or investments, bank loans, refinancing of existing bank loans, distributions from investments and available cash.
In June 2012 the Company renewed and modified the existing bank
mortgage note payable on the Grove Isle property with the same lender. The renewal and modification extends the maturity date to
June 30, 2016 and calls for the same monthly principal payments of $10,000 plus interest calculated at the one-month LIBOR rate
plus 3% with an interest rate floor 4.5%.
Included in the maturing debt obligations for 2012 is a note payable
to the Company’s 49% owned affiliate, T.G.I.F. Texas, Inc. (“TGIF”) of approximately $3.2 million due on demand.
The obligation due to TGIF will be paid with funds available from distributions from its investment in TGIF and from available
cash.
MATERIAL
COMPONENTS OF CASH FLOWS
For
the six months ended June 30, 2012, net cash provided by operating activities was approximately $399,000. This was primarily from
the cash flow provided by the Company’s rental operations.
For
the six months ended June 30, 2012, net cash provided by investing activities was approximately $382,000. This consisted primarily
of approximately $700,000 in net proceeds from sales of marketable securities and distributions from other investment of $495,000.
These sources of funds were partially offset by purchases of marketable securities of $513,000, contributions to other investments
of $169,000 and additions to fixed assets of $127,000.
For
the six months ended June 30, 2012, net cash used in financing activities was approximately $228,000 consisting solely of loan
principal repayments.
Item
3. Quantitative and Qualitative Disclosures about Market Risk
Not
applicable
Item 4.
Controls and Procedures
|
(a)
|
|
Evaluation of Disclosure Controls and Procedures.
|
Our
Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures
(as defined in the Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly
Report on Form 10-Q have concluded that, based on such evaluation, our disclosure controls and procedures were effective and designed
to ensure that material information relating to us and our consolidated subsidiaries, which we are required to disclose in the
reports we file or submit under the Securities Exchange Act of 1934, was made known to them by others within those entities and
reported within the time periods specified in the SEC’s rules and forms.
|
(b)
|
|
Changes in Internal Control Over Financial Reporting.
|
There
were no changes in the Company’s internal controls over financial reporting identified in connection with the evaluation of such
internal control over financial reporting that occurred during our last fiscal quarter which have materially affected, or reasonably
likely to materially affect, our internal control over financial reporting
.
PART II. OTHER INFORMATION
Item
1.
Legal Proceedings
The
Company was a co-defendant in two lawsuits in the circuit court in Miami Dade County Florida. These cases arose from claims by
a condominium association and resident seeking a declaratory judgment regarding certain provisions of the declaration of condominium
relating to the Grove Isle Club and the developer. The claim by the association has been dismissed as to all counts related to
the Company; however the association has filed an appeal. The Company believes that the claims are without merit and intends
to vigorously defend its position. The ultimate outcome of this litigation cannot presently be determined. However, in management’s
opinion the likelihood of a material adverse outcome is remote. Accordingly, adjustments, if any that might result from the resolution
of this matter have not been reflected in the consolidated financial statements.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds:
None
Item
3.
Defaults Upon Senior Securities:
None.
Item
4.
Mine Safety Disclosures:
Not applicable
Item
5.
Other Information:
None
Item
6.
Exhibits:
|
(a)
|
|
Certifications pursuant to 18 USC Section 1350-Sarbanes-Oxley Act of 2002. Filed herewith.
|
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, 2012
|
/s/ Larry Rothstein
|
|
|
|
President, Treasurer and Secretary
|
|
|
|
Principal Financial Officer
|
|
|
|
|
|
|
Dated: August 14, 2012
|
/s/Carlos Camarotti
|
|
|
|
Vice President- Finance and Controller
|
|
|
|
Principal Accounting Officer
|
|
|
|
|
|
17
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