HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
ASSETS
|
|
(UNAUDITED)
|
|
|
|
|
Investment properties, net of accumulated depreciation:
|
|
|
|
|
|
|
Commercial properties
|
|
$
|
6,976,674
|
|
|
$
|
7,057,005
|
|
Hotel, club and spa facility
|
|
|
3,287,216
|
|
|
|
3,447,870
|
|
Marina properties
|
|
|
1,719,571
|
|
|
|
1,893,452
|
|
Land held for development
|
|
|
-
|
|
|
|
27,689
|
|
Total investment properties, net
|
|
|
11,983,461
|
|
|
|
12,426,016
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
2,637,520
|
|
|
|
2,366,363
|
|
Investments in marketable securities
|
|
|
1,903,681
|
|
|
|
2,019,476
|
|
Other investments
|
|
|
3,691,087
|
|
|
|
3,745,327
|
|
Investment in affiliate
|
|
|
2,730,735
|
|
|
|
2,686,887
|
|
Loans, notes and other receivables
|
|
|
735,304
|
|
|
|
683,998
|
|
Notes and advances due from related parties
|
|
|
705,614
|
|
|
|
696,909
|
|
Deferred taxes
|
|
|
629,000
|
|
|
|
632,000
|
|
Goodwill
|
|
|
5,628,627
|
|
|
|
5,628,627
|
|
Other assets
|
|
|
604,109
|
|
|
|
710,227
|
|
TOTAL ASSETS
|
|
$
|
31,249,138
|
|
|
$
|
31,595,830
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Mortgages and notes payable
|
|
$
|
14,114,747
|
|
|
$
|
14,531,833
|
|
Accounts payable, accrued expenses and other liabilities
|
|
|
665,675
|
|
|
|
740,618
|
|
Interest rate swap contract payable
|
|
|
2,066,000
|
|
|
|
1,975,000
|
|
TOTAL LIABILITIES
|
|
|
16,846,422
|
|
|
|
17,247,451
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Excess common stock, $1 par value; 100,000 shares authorized: no shares issued
|
|
|
-
|
|
|
|
-
|
|
Common stock, $1 par value; 1,200,000 shares authorized and 992,326 issued
|
|
|
992,326
|
|
|
|
1,023,955
|
|
Additional paid-in capital
|
|
|
24,238,575
|
|
|
|
24,366,099
|
|
Less: Treasury stock at cost (13,529 as of December 31, 2011)
|
|
|
-
|
|
|
|
(60,388
|
)
|
Undistributed gains from sales of properties, net of losses
|
|
|
41,572,120
|
|
|
|
41,572,120
|
|
Undistributed losses from operations
|
|
|
(54,244,646
|
)
|
|
|
(54,383,928
|
)
|
Accumulated other comprehensive loss
|
|
|
(1,033,000
|
)
|
|
|
(987,500
|
)
|
Total stockholders' equity
|
|
|
11,525,375
|
|
|
|
11,530,358
|
|
Non controlling interest
|
|
|
2,877,341
|
|
|
|
2,818,021
|
|
TOTAL EQUITY
|
|
|
14,402,716
|
|
|
|
14,348,379
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
31,249,138
|
|
|
$
|
31,595,830
|
|
See notes to the condensed consolidated financial statements
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
|
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
REVENUES
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Real estate rentals and related revenue
|
|
$
|
500,760
|
|
|
$
|
475,230
|
|
|
$
|
1,462,710
|
|
|
$
|
1,402,791
|
|
Food & beverage sales
|
|
|
1,271,635
|
|
|
|
1,218,886
|
|
|
|
4,628,472
|
|
|
|
4,514,577
|
|
Marina revenues
|
|
|
407,686
|
|
|
|
384,640
|
|
|
|
1,238,978
|
|
|
|
1,200,019
|
|
Spa revenues
|
|
|
110,324
|
|
|
|
211,226
|
|
|
|
350,587
|
|
|
|
421,023
|
|
Total revenues
|
|
|
2,290,405
|
|
|
|
2,289,982
|
|
|
|
7,680,747
|
|
|
|
7,538,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental and other properties
|
|
|
178,861
|
|
|
|
211,684
|
|
|
|
478,751
|
|
|
|
559,681
|
|
Food and beverage cost of sales
|
|
|
357,382
|
|
|
|
344,710
|
|
|
|
1,324,379
|
|
|
|
1,266,389
|
|
Food and beverage labor and related costs
|
|
|
334,066
|
|
|
|
304,758
|
|
|
|
1,059,782
|
|
|
|
990,389
|
|
Food and beverage other operating costs
|
|
|
463,826
|
|
|
|
474,202
|
|
|
|
1,541,511
|
|
|
|
1,538,153
|
|
Marina expenses
|
|
|
223,310
|
|
|
|
212,670
|
|
|
|
640,572
|
|
|
|
655,816
|
|
Spa expenses
|
|
|
95,877
|
|
|
|
204,238
|
|
|
|
345,944
|
|
|
|
414,136
|
|
Depreciation and amortization
|
|
|
222,843
|
|
|
|
237,079
|
|
|
|
668,611
|
|
|
|
854,821
|
|
Adviser's base fee
|
|
|
255,000
|
|
|
|
255,000
|
|
|
|
765,000
|
|
|
|
765,000
|
|
General and administrative
|
|
|
83,747
|
|
|
|
117,293
|
|
|
|
274,255
|
|
|
|
290,252
|
|
Professional fees and expenses
|
|
|
46,721
|
|
|
|
108,871
|
|
|
|
172,289
|
|
|
|
305,201
|
|
Direc
tors' fees and expenses
|
|
|
25,649
|
|
|
|
25,285
|
|
|
|
69,149
|
|
|
|
70,591
|
|
Total operating expenses
|
|
|
2,287,282
|
|
|
|
2,495,790
|
|
|
|
7,340,243
|
|
|
|
7,710,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
215,843
|
|
|
|
216,837
|
|
|
|
656,626
|
|
|
|
687,487
|
|
Total expenses
|
|
|
2,503,125
|
|
|
|
2,712,627
|
|
|
|
7,996,869
|
|
|
|
8,397,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before other income (loss) and income taxes
|
|
|
(212,720
|
)
|
|
|
(422,645
|
)
|
|
|
(316,122
|
)
|
|
|
(859,506
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized and unrealized gains (losses) from investments in marketable securities
|
|
|
44,826
|
|
|
|
(173,206
|
)
|
|
|
141,922
|
|
|
|
(141,226
|
)
|
Net income from other investments
|
|
|
20,247
|
|
|
|
10,189
|
|
|
|
336,693
|
|
|
|
55,502
|
|
Realized loss on interest rate swap agreement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(198,400
|
)
|
Other than temporary impairment losses from other investments
|
|
|
-
|
|
|
|
-
|
|
|
|
(27,666
|
)
|
|
|
(86,707
|
)
|
Interest, dividend and other income
|
|
|
43,404
|
|
|
|
34,346
|
|
|
|
112,275
|
|
|
|
160,368
|
|
Total other income (loss)
|
|
|
108,477
|
|
|
|
(128,671
|
)
|
|
|
563,224
|
|
|
|
(210,463
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
|
(104,243
|
)
|
|
|
(551,316
|
)
|
|
|
247,102
|
|
|
|
(1,069,969
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (benefit from) income taxes
|
|
|
20,000
|
|
|
|
(230,000
|
)
|
|
|
3,000
|
|
|
|
(280,000
|
)
|
Net (loss) income
|
|
|
(124,243
|
)
|
|
|
(321,316
|
)
|
|
|
244,102
|
|
|
|
(789,969
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss (income) attributable to noncontrolling interest in consolidated entities
|
|
|
29,834
|
|
|
|
91,283
|
|
|
|
(104,820
|
)
|
|
|
171,764
|
|
Net (loss) income attributable to the Company
|
|
$
|
(94,409
|
)
|
|
$
|
(230,033
|
)
|
|
$
|
139,282
|
|
|
$
|
(618,205
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on interest rate swap agreement
|
|
$
|
(3,500
|
)
|
|
$
|
(298,000
|
)
|
|
$
|
(45,500
|
)
|
|
$
|
(257,000
|
)
|
Total other comprehensive loss
|
|
|
(3,500
|
)
|
|
|
(298,000
|
)
|
|
|
(45,500
|
)
|
|
|
(257,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income
|
|
$
|
(97,909
|
)
|
|
$
|
(528,033
|
)
|
|
$
|
93,782
|
|
|
$
|
(875,205
|
)
|
Net (loss) income Per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.09
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.61
|
)
|
Weighted average common shares outstanding-Basic and diluted
|
|
|
1,010,108
|
|
|
|
1,010,426
|
|
|
|
1,008,492
|
|
|
|
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 nine months ended September 30,
|
|
|
|
2012
|
|
|
2011
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income (loss) attributable to the Company
|
|
$
|
139,282
|
|
|
$
|
(618,205
|
)
|
Adjustments to reconcile net income (loss) attributable to the Company to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
668,611
|
|
|
|
854,821
|
|
Non-employee stock compensation expense
|
|
|
13,455
|
|
|
|
48,646
|
|
Net income from other investments, excluding impairment losses
|
|
|
(336,693
|
)
|
|
|
(55,502
|
)
|
Other than temporary impairment losses from other investments
|
|
|
27,666
|
|
|
|
86,707
|
|
Net (gain) loss from investments in marketable securities
|
|
|
(141,922
|
)
|
|
|
141,226
|
|
Realized loss on interest rate swap agreement
|
|
|
-
|
|
|
|
198,400
|
|
Net income (loss) attributable to non controlling interest
|
|
|
104,820
|
|
|
|
(171,764
|
)
|
Deferred income tax expense (benefit)
|
|
|
3,000
|
|
|
|
(280,000
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Other assets and other receivables
|
|
|
56,646
|
|
|
|
(52,758
|
)
|
Accounts payable, accrued expenses and other liabilities
|
|
|
(74,947
|
)
|
|
|
(104,467
|
)
|
Total adjustments
|
|
|
320,636
|
|
|
|
665,309
|
|
Net cash provided by operating activities
|
|
|
459,918
|
|
|
|
47,104
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchases and improvements of properties
|
|
|
(227,889
|
)
|
|
|
(170,196
|
)
|
Increase in notes and advances from related parties
|
|
|
(8,705
|
)
|
|
|
(7,246
|
)
|
Distributions from other investments
|
|
|
527,557
|
|
|
|
168,794
|
|
Contributions to other investments
|
|
|
(227,327
|
)
|
|
|
(174,713
|
)
|
Net proceeds from sales and redemptions of securities
|
|
|
971,374
|
|
|
|
1,165,181
|
|
Purchase of marketable securities
|
|
|
(694,465
|
)
|
|
|
(1,099,976
|
)
|
Net cash provided by (used in) investing activities
|
|
|
340,545
|
|
|
|
(118,156
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Repayment of mortgages and notes payables
|
|
|
(417,086
|
)
|
|
|
(2,710,884
|
)
|
Partial settlement of interest rate swap contract
|
|
|
-
|
|
|
|
(198,400
|
)
|
Withdrawals from restricted cash
|
|
|
-
|
|
|
|
2,379,947
|
|
Distributions to minority partners
|
|
|
-
|
|
|
|
(101,181
|
)
|
Purchase treasury stock
|
|
|
(112,220
|
)
|
|
|
-
|
|
Net cash used in financing activities
|
|
|
(529,306
|
)
|
|
|
(630,518
|
)
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
271,157
|
|
|
|
(701,570
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of the period
|
|
|
2,366,363
|
|
|
|
3,618,200
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of the period
|
|
$
|
2,637,520
|
|
|
$
|
2,916,630
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest
|
|
$
|
657,000
|
|
|
$
|
687,000
|
|
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 on Form 10-K 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 nine months ended September 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
Refer to the consolidated financial statements and footnotes thereto included in the HMG/Courtland Properties, Inc. Annual Report on Form 10-K for the year ended December 31, 2011 for 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 nine months ended September 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
September 30, 2012
|
|
|
For the three months ended
September 30, 2011
|
|
|
For the nine
months ended
September 30, 2012
|
|
|
For the nine
months ended
September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and Beverage Sales
|
|
$
|
1,272,000
|
|
|
$
|
1,219,000
|
|
|
$
|
4,628,000
|
|
|
$
|
4,515,000
|
|
Marina dockage and related
|
|
|
268,000
|
|
|
|
243,000
|
|
|
|
822,000
|
|
|
|
800,000
|
|
Retail/mall rental and related
|
|
|
174,000
|
|
|
|
158,000
|
|
|
|
483,000
|
|
|
|
452,000
|
|
Total Revenues
|
|
|
1,714,000
|
|
|
|
1,620,000
|
|
|
|
5,933,000
|
|
|
|
5,767,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of food and beverage sold
|
|
|
357,000
|
|
|
|
344,000
|
|
|
|
1,324,000
|
|
|
|
1,266,000
|
|
Labor and related costs
|
|
|
284,000
|
|
|
|
255,000
|
|
|
|
911,000
|
|
|
|
845,000
|
|
Entertainers
|
|
|
50,000
|
|
|
|
49,000
|
|
|
|
149,000
|
|
|
|
145,000
|
|
Other food and beverage related costs
|
|
|
117,000
|
|
|
|
113,000
|
|
|
|
400,000
|
|
|
|
420,000
|
|
Other operating costs
|
|
|
40,000
|
|
|
|
71,000
|
|
|
|
123,000
|
|
|
|
141,000
|
|
Repairs and maintenance
|
|
|
106,000
|
|
|
|
76,000
|
|
|
|
296,000
|
|
|
|
290,000
|
|
Insurance
|
|
|
115,000
|
|
|
|
150,000
|
|
|
|
377,000
|
|
|
|
404,000
|
|
Management fees
|
|
|
64,000
|
|
|
|
93,000
|
|
|
|
201,000
|
|
|
|
253,000
|
|
Utilities
|
|
|
71,000
|
|
|
|
71,000
|
|
|
|
185,000
|
|
|
|
195,000
|
|
Ground rent
|
|
|
219,000
|
|
|
|
220,000
|
|
|
|
676,000
|
|
|
|
666,000
|
|
Interest
|
|
|
161,000
|
|
|
|
166,000
|
|
|
|
487,000
|
|
|
|
533,000
|
|
Depreciation and amortization
|
|
|
164,000
|
|
|
|
167,000
|
|
|
|
492,000
|
|
|
|
650,000
|
|
Realized loss on interest rate swap
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
198,000
|
|
Total Expenses
|
|
|
1,748,000
|
|
|
|
1,775,000
|
|
|
|
5,621,000
|
|
|
|
6,006,000
|
|
Net (loss) income
|
|
$
|
(34,000
|
)
|
|
$
|
(155,000
|
)
|
|
$
|
312,000
|
|
|
$
|
(239,000
|
)
|
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 nine months ended September 30, 2012 and 2011 is summarized below:
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
Description
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Net realized (loss) gain from sales of securities
|
|
$
|
(12,000
|
)
|
|
$
|
36,000
|
|
|
$
|
55,000
|
|
|
$
|
115,000
|
|
Unrealized net gain (loss) in trading securities
|
|
|
57,000
|
|
|
|
(209,000
|
)
|
|
|
87,000
|
|
|
|
(256,000
|
)
|
Total net gain (loss) from investments in marketable securities
|
|
$
|
45,000
|
|
|
$
|
(173,000
|
)
|
|
$
|
142,000
|
|
|
$
|
(141,000
|
)
|
For the three and nine months ended September 30, 2012, net unrealized gains from trading securities were $57,000 and $87,000, respectively. This is compared to net unrealized losses of $209,000 and $256,000 for the three and nine months ended September 30, 2011, respectively.
For the three months ended September 30, 2012, net realized loss from sales of marketable securities of approximately $12,000 consisted of $35,000 of gross losses net of $23,000 of gross gains. For the nine months ended September 30, 2012 net realized gain from sales of marketable securities of approximately $55,000 consisted of $126,000 of gross gains net of $71,000 of gross losses.
For the three months ended September 30, 2011 net realized gain from sales of marketable securities of approximately $36,000 consisted of $65,000 of gross gains net of $29,000 of gross losses. For the nine months ended September 30, 2011 net realized gain from sales of marketable securities of approximately $115,000 consisted of $169,000 of gross gains net of $54,000 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 September 30, 2012, the Company’s portfolio of other investments had an aggregate carrying value of approximately $3.7 million. As of September 30, 2012, the Company has committed to fund approximately $812,000 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 nine months ended September 30, 2012, the Company contributed a total of $227,000 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 $176,000 towards funding commitments in various other existing investments. Cash distributions received from other investments for the nine months ended September 30, 2012 totaled approximately $528,000, including $274,000 from real estate funds, $234,000 from funds investing in diversified businesses and $20,000 from investments in technology related partnerships.
Net income from other investments for the three and nine months ended September 30, 2012 and 2011, is summarized below (excluding other than temporary impairment loss):
|
|
Three months ended September 30,
|
|
|
Nine months ended September 30,
|
|
Description
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Partnerships owning diversified businesses
|
|
$
|
7,000
|
|
|
$
|
-
|
|
|
$
|
38,000
|
|
|
$
|
25,000
|
|
Partnerships owning real estate and related investments
|
|
|
-
|
|
|
|
-
|
|
|
|
255,000
|
|
|
|
-
|
|
Partnerships owning technology related businesses
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
1,000
|
|
Income from investment in 49% owned affiliate (T.G.I.F. Texas, Inc.)
|
|
|
13,000
|
|
|
|
9,000
|
|
|
|
44,000
|
|
|
|
30,000
|
|
Total net income from other investments (excluding other than temporary impairment losses)
|
|
$
|
20,000
|
|
|
$
|
10,000
|
|
|
$
|
337,000
|
|
|
$
|
56,000
|
|
The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of September 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 September 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
|
|
$
|
11,000
|
|
|
$
|
(13,000
|
)
|
|
$
|
371,000
|
|
|
$
|
(67,000
|
)
|
|
$
|
382,000
|
|
|
$
|
(80,000
|
)
|
Partnerships owning diversified businesses
|
|
|
-
|
|
|
|
-
|
|
|
|
213,000
|
|
|
|
(37,000
|
)
|
|
|
213,000
|
|
|
|
(37,000
|
)
|
Partnerships owning real estate and related investments
|
|
|
-
|
|
|
|
-
|
|
|
|
241,000
|
|
|
|
(51,000
|
)
|
|
|
241,000
|
|
|
|
(51,000
|
)
|
Total
|
|
$
|
11,000
|
|
|
$
|
(13,000
|
)
|
|
$
|
825,000
|
|
|
$
|
(155,000
|
)
|
|
$
|
836,000
|
|
|
$
|
(168,000
|
)
|
|
|
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, the Company recorded a loss of approximately $28,000 from an investment in a partnership which operates and leases executive suites in Miami, Florida during the three and six months ended June 30, 2012. 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 September 30, 2012.
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 amount 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 September 30, 2012 the fair value of this hedge was an unrealized loss of approximately $2,066,000, as compared to an unrealized loss of $1,975,000 as of December 31, 2011 which resulted in an unrealized loss of $91,000 (or $45,500, net of non-controlling interest) for the nine months ended September 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
|
|
|
|
September 30, 2012
|
|
|
|
|
|
Balance
Sheet
Location
|
|
Fair
Value
|
|
Balance
Sheet
Location
|
|
Fair
Value
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Interest rate swap contract
|
|
Liabilities
|
|
$
|
2,066,000
|
|
Liabilities
|
|
$
|
1,975,000
|
|
Total derivatives designated as hedging instruments under ASC Topic 815
|
|
|
|
$
|
2,066,000
|
|
|
|
$
|
1,975,000
|
|
The Effect of Derivative Instruments on the Statements of Comprehensive Income
for the Three and Nine Months Ended September 30, 2012 and 2011:
The Effect of Derivative Instruments on the Statements of Comprehensive Income
|
Recognized in OCI on Derivative
|
|
|
|
|
|
|
|
|
|
|
|
|
(Effective Portion)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
|
|
|
For the three Months
|
|
|
For the nine Months
|
|
|
For the nine Months
|
|
|
|
Months ended
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
Interest rate swap contracts
|
|
$
|
(3,500
|
)
|
|
$
|
(298,000
|
)
|
|
$
|
(45,500
|
)
|
|
$
|
(257,000
|
)
|
Total
|
|
$
|
(3,500
|
)
|
|
$
|
(298,000
|
)
|
|
$
|
(45,500
|
)
|
|
$
|
(257,000
|
)
|
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
|
|
|
Quoted Prices in Active
|
|
|
Significant Other
|
|
|
Significant
|
|
|
|
September 30,
|
|
|
Markets for Identical Assets
|
|
|
Observable Inputs
|
|
|
Unobservable Inputs
|
|
Description
|
|
2012
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits
|
|
$
|
54,000
|
|
|
|
-
|
|
|
$
|
54,000
|
|
|
|
-
|
|
Money market mutual funds
|
|
|
1,512,000
|
|
|
$
|
1,512,000
|
|
|
|
-
|
|
|
|
-
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities
|
|
|
758,000
|
|
|
|
-
|
|
|
|
758,000
|
|
|
|
-
|
|
Marketable equity securities
|
|
|
1,146,000
|
|
|
|
1,146,000
|
|
|
|
-
|
|
|
|
-
|
|
Total assets
|
|
$
|
3,470,000
|
|
|
$
|
2,658,000
|
|
|
$
|
812,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap contract
|
|
|
2,066,000
|
|
|
|
-
|
|
|
|
2,066,000
|
|
|
|
-
|
|
Total liabilities
|
|
$
|
2,066,000
|
|
|
|
-
|
|
|
$
|
2,066,000
|
|
|
|
-
|
|
|
|
Fair value measurement at reporting date using
|
|
|
|
Total
|
|
|
Quoted Prices in Active
|
|
|
Significant Other
|
|
|
Significant
|
|
|
|
December 31,
|
|
|
Markets for Identical Assets
|
|
|
Observable Inputs
|
|
|
Unobservable Inputs
|
|
Description
|
|
2011
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits
|
|
$
|
54,000
|
|
|
|
-
|
|
|
$
|
54,000
|
|
|
|
-
|
|
Money market mutual funds
|
|
|
1,537,000
|
|
|
$
|
1,537,000
|
|
|
|
-
|
|
|
|
-
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities
|
|
|
885,000
|
|
|
|
-
|
|
|
|
885,000
|
|
|
|
-
|
|
Marketable equity securities
|
|
|
1,134,000
|
|
|
|
1,134,000
|
|
|
|
-
|
|
|
|
-
|
|
Total assets
|
|
$
|
3,610,000
|
|
|
$
|
2,671,000
|
|
|
$
|
939,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 losses
|
|
|
|
Total
|
|
|
Quoted Prices in Active
|
|
|
Significant Other
|
|
|
Significant
|
|
|
for the three and nine
|
|
|
|
September 30,
|
|
|
Markets for Identical Assets
|
|
|
Observable Inputs
|
|
|
Unobservable Inputs
|
|
|
months ended
|
|
Description
|
|
2012
|
|
|
(Level 1)
|
|
|
(Level 2) (a)
|
|
|
(Level 3) (b)
|
|
|
9/30/2012
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments by investment focus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology & Communication
|
|
$
|
518,000
|
|
|
$
|
-
|
|
|
$
|
518,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Diversified businesses
|
|
|
1,409,000
|
|
|
|
-
|
|
|
|
1,409,000
|
|
|
|
-
|
|
|
|
-
|
|
Real estate and related
|
|
|
1,464,000
|
|
|
|
-
|
|
|
|
511,000
|
|
|
|
953,000
|
|
|
|
(28,000
|
)
|
Other
|
|
|
300,000
|
|
|
|
-
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
-
|
|
|
|
$
|
3,691,000
|
|
|
$
|
-
|
|
|
$
|
2,438,000
|
|
|
$
|
1,253,000
|
|
|
$
|
(28,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill (Bayshore)
|
|
|
5,629,000
|
|
|
|
|
|
|
|
|
|
|
|
5,629,000
|
|
|
|
|
|
Total assets
|
|
$
|
9,320,000
|
|
|
$
|
-
|
|
|
$
|
2,438,000
|
|
|
$
|
6,882,000
|
|
|
$
|
(28,000
|
)
|
|
|
Fair value measurement at reporting date using
|
|
|
Total
|
|
|
|
Total
|
|
|
Quoted Prices in Active
|
|
|
Significant Other
|
|
|
Significant
|
|
|
losses for
|
|
|
|
December 31,
|
|
|
Markets for Identical Assets
|
|
|
Observable Inputs
|
|
|
Unobservable Inputs
|
|
|
year ended
|
|
Description
|
|
2011
|
|
|
(Level 1)
|
|
|
(Level 2) (a)
|
|
|
(Level 3) (b)
|
|
|
12/31/2011
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments by investment focus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology & Communication
|
|
$
|
478,000
|
|
|
$
|
-
|
|
|
$
|
478,000
|
|
|
$
|
-
|
|
|
$
|
(2,000
|
)
|
Diversified businesses
|
|
|
1,445,000
|
|
|
|
-
|
|
|
|
1,445,000
|
|
|
|
-
|
|
|
|
-
|
|
Real estate and related
|
|
|
1,523,000
|
|
|
|
-
|
|
|
|
542,000
|
|
|
|
981,000
|
|
|
|
(84,000
|
)
|
Other
|
|
|
300,000
|
|
|
|
-
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
-
|
|
|
|
$
|
3,746,000
|
|
|
$
|
-
|
|
|
$
|
2,465,000
|
|
|
$
|
1,281,000
|
|
|
$
|
(86,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill (Bayshore)
|
|
|
5,629,000
|
|
|
|
|
|
|
|
-
|
|
|
|
5,629,000
|
|
|
|
|
|
Total assets
|
|
$
|
9,375,000
|
|
|
$
|
-
|
|
|
$
|
2,465,000
|
|
|
$
|
6,910,000
|
|
|
$
|
(86,000
|
)
|
(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 September 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 nine months ended September 30, 2012, the Company made contributions totaling $227,000 in this type of investment. 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 $176,000 towards funding commitments in various other existing investments.
As of September 30, 2012, the amount of the Company’s unfunded commitments related to the aforementioned investments is approximately $812,000.
|
(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 $953,000 include one investment in a commercial building located near the Company’s offices purchased in 2005 with a carrying value as of September 30, 2012 of $724,000. These investments are 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 nine months ended September 30, 2012:
|
|
Level 3 Investments:
|
|
Balance at January 1, 2012
|
|
$
|
1,281,000
|
|
Additional investment in limited partnership
|
|
|
-
|
|
Other than temporary impairment loss
|
|
|
(28,000
|
)
|
Transfers from Level 2
|
|
|
-
|
|
Balance at September 30, 2012
|
|
$
|
1,253,000
|
|
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 related 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 each individually do not meet the criteria as a reportable segment.
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Net Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate and marina rentals
|
|
$
|
908,000
|
|
|
$
|
860,000
|
|
|
$
|
2,702,000
|
|
|
$
|
2,603,000
|
|
Food and beverage sales
|
|
|
1,272,000
|
|
|
|
1,219,000
|
|
|
|
4,628,000
|
|
|
|
4,515,000
|
|
Spa revenues
|
|
|
110,000
|
|
|
|
211,000
|
|
|
|
350,000
|
|
|
|
421,000
|
|
Total net revenues
|
|
$
|
2,290,000
|
|
|
$
|
2,290,000
|
|
|
$
|
7,680,000
|
|
|
$
|
7,539,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate and marina rentals
|
|
$
|
267,000
|
|
|
$
|
235,000
|
|
|
$
|
829,000
|
|
|
$
|
729,000
|
|
Food and beverage sales
|
|
|
(26,000
|
)
|
|
|
(42,000
|
)
|
|
|
98,000
|
|
|
|
72,000
|
|
Other investments and related income
|
|
|
(315,000
|
)
|
|
|
(653,000
|
)
|
|
|
(785,000
|
)
|
|
|
(1,699,000
|
)
|
Total net (loss) income attributable to the Company before income taxes
|
|
$
|
(74,000
|
)
|
|
$
|
(460,000
|
)
|
|
$
|
142,000
|
|
|
$
|
(898,000
|
)
|
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 September 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.
10.
COMMON STOCK
During September 2012, we repurchased 18,100 shares of our common stock under a stock repurchase program approved by our Board of Directors in November 2008. The cost of the shares was $112,200. These shares plus 13,529 previously-acquired shares - representing the entire balance of unretired treasury shares - were retired during the three months ended September 30, 2012. The par value of the retired shares was charged to common stock, with the excess of the purchase price over par value charged to additional paid-in capital.
Item 2.
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
For the three months ended September 30, 2012 and 2011, the Company reported net losses of approximately $94,000 ($.09 per share) and $230,000 ($.23 per share), respectively. For the nine months ended September 30, 2012 and 2011, the Company reported net income of approximately $139,000 ($.14 per share) and a net loss of $618,000 ($.61 per share), respectively.
Total revenues for the nine months ended September 30, 2012 as compared with the same period in 2011, increased by approximately $142,000 or 2%. Total revenues for the three months ended September 30, 2012 as compared with the same period in 2011 remained essentially unchanged.
Total expenses for the nine months ended September 30, 2012, as compared with the same period in 2011, decreased by approximately $401,000 or 5%. Total expenses for the three months ended September 30, 2012, as compared with the same period in 2011, decreased by approximately $210,000 or 8%.
REVENUES
Rentals and related revenues for the three and nine months ended September 30, 2012 as compared with the same period in 2011 increased by $26,000 (5%) and $60,000 (4%), respectively. This was primarily as a result of increased rental income from tenants at the Monty’s Property and also due to annual 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 nine months ended September 30, 2012 and 2011 are presented below:
|
|
For the three months
|
|
|
For the nine months
|
|
|
|
ended September 30,
|
|
|
ended September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and Beverage Sales
|
|
$
|
1,272,000
|
|
|
$
|
1,219,000
|
|
|
$
|
4,628,000
|
|
|
$
|
4,515,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of food and beverage sold
|
|
|
357,000
|
|
|
|
344,000
|
|
|
|
1,324,000
|
|
|
|
1,266,000
|
|
Labor and related costs
|
|
|
284,000
|
|
|
|
255,000
|
|
|
|
911,000
|
|
|
|
845,000
|
|
Entertainers
|
|
|
50,000
|
|
|
|
49,000
|
|
|
|
149,000
|
|
|
|
145,000
|
|
Other food and beverage direct costs
|
|
|
59,000
|
|
|
|
57,000
|
|
|
|
214,000
|
|
|
|
188,000
|
|
Other operating costs
|
|
|
58,000
|
|
|
|
56,000
|
|
|
|
186,000
|
|
|
|
232,000
|
|
Repairs and maintenance
|
|
|
48,000
|
|
|
|
42,000
|
|
|
|
167,000
|
|
|
|
122,000
|
|
Insurance
|
|
|
72,000
|
|
|
|
83,000
|
|
|
|
231,000
|
|
|
|
240,000
|
|
Management and accounting fees
|
|
|
35,000
|
|
|
|
48,000
|
|
|
|
105,000
|
|
|
|
112,000
|
|
Utilities
|
|
|
57,000
|
|
|
|
60,000
|
|
|
|
170,000
|
|
|
|
188,000
|
|
Rent (as allocated)
|
|
|
134,000
|
|
|
|
129,000
|
|
|
|
468,000
|
|
|
|
457,000
|
|
Total Expenses
|
|
|
1,154,000
|
|
|
|
1,123,000
|
|
|
|
3,925,000
|
|
|
|
3,795,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before depreciation and non controlling interest
|
|
$
|
118,000
|
|
|
$
|
96,000
|
|
|
$
|
703,000
|
|
|
$
|
720,000
|
|
Amounts above are presented as a percentage of sales below:
|
|
For the three months
|
|
|
For the nine months
|
|
|
|
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
|
|
|
22
|
%
|
|
|
21
|
%
|
|
|
20
|
%
|
|
|
19
|
%
|
Entertainers
|
|
|
4
|
%
|
|
|
4
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
Other food and beverage direct costs
|
|
|
5
|
%
|
|
|
5
|
%
|
|
|
4
|
%
|
|
|
4
|
%
|
Other operating costs
|
|
|
5
|
%
|
|
|
5
|
%
|
|
|
4
|
%
|
|
|
5
|
%
|
Repairs and maintenance
|
|
|
4
|
%
|
|
|
3
|
%
|
|
|
4
|
%
|
|
|
3
|
%
|
Insurance
|
|
|
6
|
%
|
|
|
7
|
%
|
|
|
5
|
%
|
|
|
5
|
%
|
Management and accounting fees
|
|
|
3
|
%
|
|
|
4
|
%
|
|
|
2
|
%
|
|
|
3
|
%
|
Utilities
|
|
|
4
|
%
|
|
|
4
|
%
|
|
|
4
|
%
|
|
|
4
|
%
|
Rent (as allocated)
|
|
|
10
|
%
|
|
|
11
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
Total Expenses
|
|
|
91
|
%
|
|
|
92
|
%
|
|
|
85
|
%
|
|
|
84
|
%
|
Income before depreciation and non-controlling interest
|
|
|
9
|
%
|
|
|
8
|
%
|
|
|
15
|
%
|
|
|
16
|
%
|
For the nine months ended September 30, 2012 as compared with the same period in 2011, restaurant sales increased by approximately $113,000 (2%), with food sales increasing by $95,000 (3%) and beverage sales increasing $18,000 (1%).
For the three months ended September 30, 2012 as compared with the same period in 2011, restaurant sales increased by $53,000 (4%), with food sales increasing by $39,000 (6%) and beverage sales increasing $14,000 (2%).
For the three and nine months ended September 30, 2012 as compared with the same periods in 2011, total restaurant expenses increased by $31,000 (3%) and $130,000 (3%), 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 nine months ended September 30, 2012 and 2011 (The Company owns 50% of the Monty’s marina and 95% of the Grove Isle marina) are presented below:
|
|
For the three months
|
|
|
For the nine months
|
|
|
|
ended September 30,
|
|
|
ended September 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Marina Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Monty's dockage fees and related income
|
|
$
|
282,000
|
|
|
$
|
259,000
|
|
|
$
|
861,000
|
|
|
$
|
850,000
|
|
Grove Isle marina slip owners dues and dockage fees
|
|
|
126,000
|
|
|
|
126,000
|
|
|
|
378,000
|
|
|
|
350,000
|
|
Total marina revenues
|
|
|
408,000
|
|
|
|
385,000
|
|
|
|
1,239,000
|
|
|
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marina Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Labor and related costs
|
|
|
61,000
|
|
|
|
70,000
|
|
|
|
191,000
|
|
|
|
201,000
|
|
Insurance
|
|
|
22,000
|
|
|
|
24,000
|
|
|
|
69,000
|
|
|
|
67,000
|
|
Management fees
|
|
|
18,000
|
|
|
|
17,000
|
|
|
|
54,000
|
|
|
|
54,000
|
|
Utilities, net of tenant reimbursement
|
|
|
12,000
|
|
|
|
4,000
|
|
|
|
(9,000
|
)
|
|
|
(14,000
|
)
|
Rent and bay bottom lease expense
|
|
|
63,000
|
|
|
|
49,000
|
|
|
|
173,000
|
|
|
|
159,000
|
|
Repairs and maintenance
|
|
|
29,000
|
|
|
|
26,000
|
|
|
|
86,000
|
|
|
|
121,000
|
|
Other
|
|
|
19,000
|
|
|
|
21,000
|
|
|
|
77,000
|
|
|
|
68,000
|
|
Total marina expenses
|
|
|
224,000
|
|
|
|
211,000
|
|
|
|
641,000
|
|
|
|
656,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before depreciation and non controlling interest
|
|
$
|
184,000
|
|
|
$
|
174,000
|
|
|
$
|
598,000
|
|
|
$
|
544,000
|
|
Total marina revenues for the three and nine months ended September 30, 2012 as compared to the same periods in 2011 increased by $23,000 (6%) and $39,000 (3%). This was primarily due to a rate increased in the Grove Isle Marina slip owner’s dues.
Total marina expenses for the three months ended September 30, 2012 as compared to the same period in 2011 increased by $13,000 (6%), primarily due to increased rent expense. Total marina expenses for the nine months ended September 30, 2012 as compared to the same period in 2011 decreased by $15,000 (2%), primarily due to lower repairs and maintenance expense.
Spa operations:
Below are summarized statements of income for Grove Spa operations for the three and nine months ended September 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 September 30, 2012
|
|
|
Three months ended September 30, 2011
|
|
|
Nine months ended September 30, 2012
|
|
|
Nine months ended September 30, 2011
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Services provided
|
|
$
|
96,000
|
|
|
$
|
196,000
|
|
|
$
|
296,000
|
|
|
$
|
367,000
|
|
Membership and other
|
|
|
15,000
|
|
|
|
16,000
|
|
|
|
54,000
|
|
|
|
54,000
|
|
Total spa revenues
|
|
|
111,000
|
|
|
|
212,000
|
|
|
|
350,000
|
|
|
|
421,000
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (commissions and other)
|
|
|
19,000
|
|
|
|
33,000
|
|
|
|
63,000
|
|
|
|
67,000
|
|
Salaries, wages and related
|
|
|
38,000
|
|
|
|
40,000
|
|
|
|
115,000
|
|
|
|
105,000
|
|
Other operating expenses
|
|
|
32,000
|
|
|
|
119,000
|
|
|
|
144,000
|
|
|
|
209,000
|
|
Management and administrative fees
|
|
|
6,000
|
|
|
|
11,000
|
|
|
|
14,000
|
|
|
|
23,000
|
|
Other non-operating expenses
|
|
|
1,000
|
|
|
|
2,000
|
|
|
|
10,000
|
|
|
|
11,000
|
|
Total Expenses
|
|
|
96,000
|
|
|
|
205,000
|
|
|
|
346,000
|
|
|
|
415,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before interest, depreciation and non-controlling interest
|
|
$
|
15,000
|
|
|
$
|
7,000
|
|
|
$
|
4,000
|
|
|
$
|
6,000
|
|
Spa revenues for the three and nine months ended September 30, 2012 as compared with the same periods in 2011 decreased by $101,000 (48%) and $70,000 (17%), respectively. Spa expenses for the three and nine months ended September 30, 2012 as compared with the same periods in 2011 decreased by $109,000 (53%) and $68,000 (16%), respectively. These decreases in were primarily due to the termination of a high discount sales promotional program which had been in place for almost a year.
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 nine months ended September 30, 2012 was approximately $45,000 and $142,000, respectively. This is as compared to net realized and unrealized loss from investments in marketable securities for the three and nine months ended September 30, 2011 of approximately $173,000 and $141,000, 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 nine months ended September 30, 2012 was approximately $20,000 and $337,000, respectively. This is as compared to net income from other investments for the three and nine months ended September 30, 2011 of $10,000 and $56,000, 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 nine months ended September 30, 2012.
Interest, dividend and other income:
Interest, dividend and other income for the three and nine months ended September 30, 2012 was approximately $43,000 and $112,000, respectively. This is as compared to income of approximately $34,000 and $160,000 for the three and nine months ended September 30, 2011. This decrease of $48,000 (30%) for the nine months ended September 30, 2012 was primarily due to a decrease in service related income from the Company’s subsidiary Courtland Houston.
EXPENSES
Expenses for rental and other properties for the three and nine months ended September 30, 2012 were $179,000 and $479,000, respectively. This is as compared to the same expenses of approximately $212,000 and $560,000 for the three and nine months ended September 30, 2011. The decreases in the three and nine month comparable periods of $33,000 (15%) and $81,000 (14%), respectively was due to decreased expenses of the Company’s Monty’s real estate operations, including decreased repairs, maintenance and insurance expense.
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 nine months ended September 30, 2012 compared to the same periods in 2011 decreased by $14,000 (6%) and $186,000 (22%), respectively. The decrease in the nine month comparable periods was primarily due to the non-recurring amortization expense of loan costs associated with the Monty’s loan modification completed in March 2011.
General and administrative expense for the three and nine months ended September 30, 2012 compared to the same periods in 2011 decreased by approximately $33,000 (29%) and $16,000 (6%), respectively. This was primarily due to a decrease in non-employee stock compensation expense.
Professional fees and expenses for the three and nine months ended September 30, 2012 compared to the same periods in 2011 decreased by $62,000 (57%) and $133,000 (44%), 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 $3.2 million in 2012 and contributions committed to other investments of approximately $812,000 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 $3.1 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 nine months ended September 30, 2012, net cash provided by operating activities was approximately $460,000. This was primarily from the cash flow provided by the Company’s rental operations.
For the nine months ended September 30, 2012, net cash provided by investing activities was approximately $341,000. This consisted primarily of approximately $971,000 in net proceeds from sales of marketable securities and distributions from other investment of $528,000. These sources of funds were partially offset by purchases of marketable securities of $694,000, contributions to other investments of $227,000 and additions to fixed assets of $228,000.
For the nine months ended September 30, 2012, net cash used in financing activities was approximately $529,000 consisting of loan principal repayments of $417,000 and purchase of treasury stock of $112,000.