Attached files
file | filename |
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EX-32 - EXHIBIT 32 - HMG COURTLAND PROPERTIES INC | ex32.htm |
EX-31.A - EXHIBIT 31A - HMG COURTLAND PROPERTIES INC | ex31a.htm |
EX-31.B - EXHIBIT 31B - HMG COURTLAND PROPERTIES INC | ex31b.htm |
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 September
30, 2009
OR
[
]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES
|
EXCHANGE
ACT OF 1934
|
For the
transition period from to
Commission
file number 1-7865
HMG/COURTLAND PROPERTIES,
INC.
|
|||
(Exact
name of small business issuer as specified in its
charter)
|
|||
Delaware
|
59-1914299 | ||
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
||
|
|||
1870 S. Bayshore Drive, Coconut Grove, Florida | 33133 | ||
(Address
of principal executive offices)
|
(Zip Code) | ||
305-854-6803
|
|||
|
(Registrant's
telephone number, including area code)
|
||
Not Applicable | |||
(Former
name, former address and former fiscal year, if changed since last
report)
|
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
[ ]
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 o No o
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: 1,021,383 Common shares were
outstanding as of October 31, 2009.
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 [
] Accelerated filer [
] Non-accelerated
filer [
]
Smaller reporting company [ X ]
(Do not check if a smaller reporting company)
HMG/COURTLAND
PROPERTIES, INC.
Index
|
PAGE | ||
NUMBER
|
|||
PART I. |
Financial
Information
|
|
|
Item
1. Financial Statements
|
|||
Condensed
Consolidated Balance Sheets as of
|
|||
September
30, 2009 (Unaudited) and December 31, 2008
|
|||
Condensed
Consolidated Statements of Comprehensive Income for the
|
|||
Three
and Nine Months Ended September 30, 2009 and 2008
(Unaudited)
|
|||
|
|||
Condensed
Consolidated Statements of Cash Flows for the
|
|||
Nine
Months Ended September 30, 2009 and 2008 (Unaudited)
|
|||
Notes
to Condensed Consolidated Financial Statements (Unaudited)
|
|||
Item
2. Management's Discussion and Analysis of
Financial
|
|||
Condition
and Results of Operations
|
|||
Item 3. Quantitative and Qualitative Disclosures About Market Risks | |||
Item 4. Controls and Procedures | |||
PART II. |
Other
Information
|
||
Item
1. Legal Proceedings
|
|||
Item
2. Unregistered Sales of Equity Securities and Use
of Proceeds
|
20 | ||
Item
3. Defaults Upon Senior Securities
|
|||
Item
4. Submission of Matters to a Vote of Security
Holders
|
|||
Item
5. Other Information
|
|||
Item
6. Exhibits
|
|||
Signatures
|
21 |
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 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.
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
September
30,
|
December
31,
|
||||||
2009
|
2008
|
|||||||
ASSETS
|
(UNAUDITED)
|
|||||||
Investment
properties, net of accumulated depreciation:
|
||||||||
Commercial
properties
|
$ | 7,654,146 | $ | 7,961,765 | ||||
Hotel,
club and spa facility
|
3,971,692 | 4,338,826 | ||||||
Marina
properties
|
2,387,836 | 2,566,063 | ||||||
Land
held for development
|
27,689 | 27,689 | ||||||
Total
investment properties, net
|
14,041,363 | 14,894,343 | ||||||
Cash
and cash equivalents
|
2,286,863 | 3,369,577 | ||||||
Cash
and cash equivalents-restricted
|
2,398,432 | 2,390,430 | ||||||
Investments
in marketable securities
|
4,540,111 | 3,295,391 | ||||||
Other
investments
|
3,584,678 | 3,733,101 | ||||||
Investment
in affiliate
|
2,996,285 | 2,947,758 | ||||||
Loans,
notes and other receivables
|
874,151 | 621,630 | ||||||
Notes
and advances due from related parties
|
578,569 | 587,683 | ||||||
Deferred
taxes
|
325,000 | 366,000 | ||||||
Goodwill
|
7,728,627 | 7,728,627 | ||||||
Other
assets
|
868,348 | 888,535 | ||||||
TOTAL
ASSETS
|
$ | 40,222,427 | $ | 40,823,075 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Mortgages
and notes payable
|
$ | 18,758,444 | $ | 19,297,560 | ||||
Accounts
payable and accrued expenses
|
1,575,116 | 1,577,115 | ||||||
Interest
rate swap contract payable
|
1,453,000 | 2,156,000 | ||||||
Total
Liabilities
|
21,786,560 | 23,030,675 | ||||||
Preferred
stock, $1 par value; 2,000,000 shares
|
||||||||
authorized;
none issued
|
- | - | ||||||
Excess
common stock, $1 par value; 500,000 shares authorized;
|
||||||||
none
issued
|
- | - | ||||||
Common
stock, $1 par value; 1,500,000 shares authorized;
|
||||||||
1,317,535
shares issued as of September 30, 2009 and
|
||||||||
December
31, 2008
|
1,317,535 | 1,317,535 | ||||||
Additional
paid-in capital
|
26,585,595 | 26,585,595 | ||||||
Less: Treasury
stock, at cost (296,152 and 294,952 shares as of
|
||||||||
September
30, 2009 and December 31, 2008, respectively)
|
(2,574,715 | ) | (2,570,635 | ) | ||||
Undistributed
gains from sales of properties, net of losses
|
41,572,120 | 41,572,120 | ||||||
Undistributed
losses from operations
|
(52,033,629 | ) | (52,023,776 | ) | ||||
Accumulated
other comprehensive loss
|
(726,500 | ) | (1,078,000 | ) | ||||
Total
stockholders’ equity
|
14,140,406 | 13,802,839 | ||||||
Non
controlling interests
|
4,295,461 | 3,989,561 | ||||||
Total
Equity
|
18,435,867 | 17,792,400 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 40,222,427 | $ | 40,823,075 | ||||
See
notes to the condensed consolidated financial statements
|
(1)
CONDENSED
CONSOLIDATED STATEMENTS
OF
COMPREHENSIVE INCOME (UNAUDITED)
|
||||||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
REVENUES
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Real
estate rentals and related revenue
|
$ | 449,477 | $ | 436,401 | $ | 1,341,221 | $ | 1,242,281 | ||||||||
Food
& beverage sales
|
1,238,438 | 1,350,509 | 4,862,365 | 5,206,324 | ||||||||||||
Marina
revenues
|
403,794 | 447,032 | 1,253,988 | 1,327,045 | ||||||||||||
Spa
revenues
|
153,934 | 227,991 | 394,117 | 652,063 | ||||||||||||
Total
revenues
|
2,245,643 | 2,461,933 | 7,851,691 | 8,427,713 | ||||||||||||
EXPENSES
|
||||||||||||||||
Operating
expenses:
|
||||||||||||||||
Rental
and other properties
|
275,061 | 209,237 | 659,222 | 478,813 | ||||||||||||
Food
and beverage cost of sales
|
329,156 | 370,329 | 1,236,349 | 1,390,691 | ||||||||||||
Food
and beverage labor and related costs
|
351,184 | 377,900 | 1,141,722 | 1,184,991 | ||||||||||||
Food
and beverage other operating costs
|
477,759 | 524,415 | 1,630,949 | 1,654,115 | ||||||||||||
Marina
expenses
|
245,257 | 243,845 | 738,240 | 733,529 | ||||||||||||
Spa
expenses
|
148,514 | 236,928 | 425,831 | 604,891 | ||||||||||||
Depreciation
and amortization
|
338,671 | 345,779 | 1,020,855 | 1,019,927 | ||||||||||||
Adviser's
base fee
|
255,000 | 255,000 | 765,000 | 765,000 | ||||||||||||
General
and administrative
|
79,336 | 85,760 | 211,376 | 246,987 | ||||||||||||
Professional
fees and expenses
|
95,912 | 102,331 | 215,296 | 231,476 | ||||||||||||
Directors'
fees and expenses
|
34,782 | 30,959 | 84,037 | 83,988 | ||||||||||||
Total
operating expenses
|
2,630,632 | 2,782,483 | 8,128,877 | 8,394,408 | ||||||||||||
Interest
expense
|
278,407 | 329,299 | 840,364 | 1,018,403 | ||||||||||||
Total
expenses
|
2,909,039 | 3,111,782 | 8,969,241 | 9,412,811 | ||||||||||||
Loss
before other income and income taxes
|
(663,396 | ) | (649,849 | ) | (1,117,550 | ) | (985,098 | ) | ||||||||
Net
realized and unrealized gain (losses)from investments in marketable
securities
|
539,792 | (689,073 | ) | 959,092 | (903,723 | ) | ||||||||||
Net
(loss) income from other investments
|
(248,638 | ) | 6,969 | (200,496 | ) | 165,000 | ||||||||||
Interest,
dividend and other income
|
147,024 | 72,639 | 327,563 | 409,231 | ||||||||||||
Total
other income (loss)
|
438,178 | (609,465 | ) | 1,086,159 | (329,492 | ) | ||||||||||
(Loss)
income before income taxes
|
(225,218 | ) | (1,259,314 | ) | (31,391 | ) | (1,314,590 | ) | ||||||||
(Benefit
from) provision for income taxes
|
(77,000 | ) | (322,000 | ) | 41,000 | (280,000 | ) | |||||||||
Net
loss
|
(148,218 | ) | (937,314 | ) | (72,391 | ) | (1,034,590 | ) | ||||||||
Less:
Net (loss) income attributable to non controlling
interests
|
(144,342 | ) | 174,946 | 62,538 | 4,904 | |||||||||||
Net
loss attributable to the Company
|
(3,876 | ) | (762,368 | ) | (9,853 | ) | (1,029,686 | ) | ||||||||
Other comprehensive income
(loss):
|
||||||||||||||||
Unrealized
(loss) gain on interest rate swap agreement
|
$ | (85,000 | ) | $ | (61,000 | ) | $ | 351,500 | $ | (76,000 | ) | |||||
Total
other comprehensive income (loss)
|
(85,000 | ) | (61,000 | ) | 351,500 | (76,000 | ) | |||||||||
Comprehensive
income (loss)
|
$ | (88,876 | ) | $ | (823,368 | ) | $ | 341,647 | $ | (1,105,686 | ) | |||||
Net Income (loss) Per Common
Share:
|
||||||||||||||||
Basic
and diluted
|
$ | (.01 | ) | $ | (.74 | ) | $ | (.01 | ) | $ | (1.01 | ) | ||||
Weighted
average common shares outstanding-basic and diluted
|
1,021,408 | 1,023,955 | 1,021,408 | 1,023,955 |
See
notes to the condensed consolidated financial
statements
|
(2)
HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
Nine
months ended September 30,
|
||||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
loss attributable to the Company
|
$ | (9,853 | ) | $ | (1,029,686 | ) | ||
Adjustments
to reconcile net loss attributable to the Company to net cash provided
by
operating activities:
|
||||||||
Depreciation
and amortization
|
1,020,855 | 1,019,927 | ||||||
Net
loss (income) from other investments
|
200,496 | (165,000 | ) | |||||
Net
(gain) loss from investments in marketable securities
|
(959,092 | ) | 903,723 | |||||
Net
income attributable to non controlling interests
|
(62,538 | ) | (4,904 | ) | ||||
Deferred
income tax benefit (provision)
|
41,000 | (280,000 | ) | |||||
Changes
in assets and liabilities:
|
||||||||
(Increase)
decrease in other assets and other receivables
|
(115,454 | ) | 6,820 | |||||
(Decrease)
increase in accounts payable, accrued expenses and other
liabilities
|
(1,999 | ) | 386,380 | |||||
Total
adjustments
|
123,268 | 1,866,946 | ||||||
Net
cash provided by operating activities
|
113,415 | 837,260 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases
and improvements of properties
|
(143,756 | ) | (553,851 | ) | ||||
Decrease
in notes and advances from related parties
|
9,114 | 39,142 | ||||||
Increase
in mortgage loans and notes receivables
|
(150,000 | ) | (100,000 | ) | ||||
Collections
of mortgage loans and notes receivables
|
9,000 | 509,025 | ||||||
Distributions
from other investments
|
330,085 | 252,235 | ||||||
Contributions
to other investments
|
(430,686 | ) | (495,298 | ) | ||||
Net
proceeds from sales and redemptions of securities
|
1,487,868 | 3,092,459 | ||||||
Increase
in investments in marketable securities
|
(1,773,496 | ) | (2,265,429 | ) | ||||
Net
cash (used in) provided by investing activities
|
(661,871 | ) | 478,283 | |||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repayment
of mortgages and notes payables
|
(539,116 | ) | (507,780 | ) | ||||
Deposits
to restricted cash
|
(8,002 | ) | (2,011,113 | ) | ||||
Contributions
from non controlling interests
|
16,940 | 1,050,000 | ||||||
Purchase
of treasury stock
|
(4,080 | ) | - | |||||
Net
cash used in financing activities
|
(534,258 | ) | (1,468,893 | ) | ||||
Net
decrease in cash and cash equivalents
|
(1,082,714 | ) | (153,350 | ) | ||||
Cash
and cash equivalents at beginning of the period
|
3,369,577 | 2,599,734 | ||||||
Cash
and cash equivalents at end of the period
|
$ | 2,286,863 | $ | 2,446,384 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid during the period for interest
|
$ | 840,000 | $ | 1,018,000 | ||||
Cash
paid during the period for income taxes
|
$ | 0 | $ | 0 | ||||
See
notes to the condensed consolidated financial statements
|
(3)
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 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, 2008. The balance sheet
as of December 31, 2008 was derived from audited financial statements as of that
date. The results of operations for the three and nine months ended September
30, 2009 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 PRONOUNCEMENT
In
September 2009, Accounting Standards Codification (“ASC”) became the source
of authoritative U.S. GAAP recognized by the Financial Accounting Standards
Board (“FASB”) for nongovernmental entities, except for certain FASB Statements
not yet incorporated into ASC. Rules and interpretive releases of the SEC under
federal securities laws are also sources of authoritative U.S. GAAP for
registrants. The discussion below includes the applicable ASC
reference.
The
Company adopted ASC Topic 810-10 Consolidation (formerly SFAS No. 160, Non
controlling Interests in Consolidated Financial Statements – an amendment of ARB
No. 51) effective January 2, 2009. Topic 810-10 changes the
manner of presentation and related disclosures for the non controlling interest
in a subsidiary (formerly referred to as a minority interest) and for the
deconsolidation of a subsidiary. The presentation changes are reflected
retrospectively in the Company’s unaudited condensed consolidated financial
statements.
ASC Topic
815-10 Derivatives and Hedging (formerly SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities) was adopted by the Company
effective January 2, 2009. The guidance under Topic 815-10 changes the
manner of presentation and related disclosures of the fair values of derivative
instruments and their gains and losses.
The
Company adopted ASC Topic 825-10 Financial Instruments (formerly, FASB Staff
Position No. SFAS 107-1 and APB No. 28-1, Disclosures about the Fair
Value of Financial Instruments), which requires quarterly disclosure of
information about the fair value of financial instruments within the scope of
Topic 825-10. The Company adopted this pronouncement effective April 1,
2009. This disclosure is in included in Note 7 to the condensed consolidated
financial statements.
In April
2009, the Company adopted ASC Topic 820-10-65 Fair Value Measurements and
Disclosures (formerly, FASB Staff Position No. SFAS 157-4, Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly). The
standard provides additional guidance for estimating fair value in accordance
with Topic 820-10-65 when the volume and level of activity for the asset or
liability have significantly decreased and includes guidance on identifying
circumstances that indicate if a transaction is not orderly. The Company adopted
this pronouncement effective April 1, 2009 with no impact on its
consolidated financial statements.
The
Company adopted, ASC Topic 855-10 Subsequent Events (formerly SFAS 165,
Subsequent Events) effective April 1, 2009. This pronouncement changes the
general standards of accounting and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.
(4)
HMG/COURTLAND
PROPERTIES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
In June
2009, the FASB finalized SFAS No. 167, Amending FASB interpretation
No. 46(R), which was included in ASC Topic 810. The provisions of ASC 810
amend the definition of the primary beneficiary of a variable interest entity
and will require the Company to make an assessment each reporting period of its
variable interests. The provisions of this pronouncement are effective
January 1, 2010. The Company is evaluating the impact of the statement on
its consolidated financial statements.
In July
2009, the FASB issued SFAS No. 168, The Hierarchy of Generally Accepted
Accounting Principles. SFAS 168 codified all previously issued accounting
pronouncements, eliminating the prior hierarchy of accounting literature, in a
single source for authoritative U.S. GAAP recognized by the FASB to be applied
by nongovernmental entities. SFAS 168, now ASC Topic 105-10 Generally Accepted
Accounting Principles, is effective for financial statements issued for interim
and annual periods ending after September 15, 2009. The adoption of this
pronouncement did not have an effect on the consolidated financial
statements.
In August
2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05,
Measuring Liabilities at Fair Value, which clarifies, among other things, that
when a quoted price in an active market for the identical liability is not
available, an entity must measure fair value using one or more specified
techniques. The Company adopted the pronouncement effective July 1, 2009
with no impact on its consolidated financial statements.
In
October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue
Arrangements, which revises the existing multiple-element revenue arrangements
guidance and changes the determination of when the individual deliverables
included in a multiple-element revenue arrangement may be treated as separate
units of accounting, modifies the manner in which the transaction consideration
is allocated across the separately identified deliverables and expands the
disclosures required for multiple-element revenue arrangements. The
pronouncement is effective for financial statements issued after
December 31, 2010. The Company does not expect the pronouncement to have a
material effect on its consolidated financial statements.
The
Company evaluated subsequent events through November 10, 2009, the date the
financial statements were issued, and there was no subsequent event which
impacted the Company’s financial position or results of operations as of
September 30, 2009 or which required disclosure.
(5)
HMG/COURTLAND
PROPERTIES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
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 statement of income for Landing and Rawbar for the three and nine
months ended September 30, 2009 and 2008 is 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, 2009
|
For
the three
months ended
September
30, 2008
|
For
the nine
months ended
September
30, 2009
|
For
the nine
months ended
September
30, 2008
|
||||||||||||
Revenues:
|
||||||||||||||||
Food
and Beverage Sales
|
$ | 1,238,000 | $ | 1,350,000 | $ | 4,862,000 | $ | 5,206,000 | ||||||||
Marina
dockage and related
|
278,000 | 310,000 | 873,000 | 949,000 | ||||||||||||
Retail/mall
rental and related
|
138,000 | 135,000 | 408,000 | 341,000 | ||||||||||||
Total
Revenues
|
1,654,000 | 1,795,000 | 6,143,000 | 6,496,000 | ||||||||||||
Expenses:
|
||||||||||||||||
Cost
of food and beverage sold
|
329,000 | 371,000 | 1,236,000 | 1,391,000 | ||||||||||||
Labor
and related costs
|
303,000 | 324,000 | 988,000 | 1,020,000 | ||||||||||||
Entertainers
|
49,000 | 53,000 | 154,000 | 164,000 | ||||||||||||
Other
food and beverage related costs
|
104,000 | 130,000 | 443,000 | 435,000 | ||||||||||||
Other
operating costs
|
86,000 | 72,000 | 219,000 | 200,000 | ||||||||||||
Repairs
and maintenance
|
96,000 | 115,000 | 317,000 | 317,000 | ||||||||||||
Insurance
|
142,000 | 159,000 | 442,000 | 465,000 | ||||||||||||
Management
fees
|
76,000 | 79,000 | 199,000 | 216,000 | ||||||||||||
Utilities
|
87,000 | 86,000 | 224,000 | 234,000 | ||||||||||||
Ground
rent
|
234,000 | 207,000 | 676,000 | 617,000 | ||||||||||||
Interest
|
221,000 | 234,000 | 668,000 | 706,000 | ||||||||||||
Depreciation
|
194,000 | 198,000 | 581,000 | 578,000 | ||||||||||||
Total
Expenses
|
1,921,000 | 2,028,000 | 6,147,000 | 6,343,000 | ||||||||||||
Net
Income before non controlling interest
|
$ | (267,000 | ) | $ | (233,000 | ) | $ | (4,000 | ) | $ | 153,000 |
(6)
HMG/COURTLAND
PROPERTIES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
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, 2009 and 2008 is summarized
below:
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
|||||||||||||||
Description
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Net
realized (loss) gain from sales of securities
|
$ | (56,000 | ) | $ | 48,000 | $ | (59,000 | ) | $ | (46,000 | ) | |||||
Unrealized
net gain (loss) in trading securities
|
596,000 | (737,000 | ) | 1,018,000 | (858,000 | ) | ||||||||||
Total
net (loss) gain from investments in marketable securities
|
$ | 540,000 | $ | (689,000 | ) | $ | 959,000 | $ | (904,000 | ) |
For the
three and nine months ended September 30, 2009 net unrealized gain from in
trading securities was $596,000 and $1,018,000, respectively. This is compared
to a net unrealized loss of $737,000 and $858,000 for the three and nine months
ended September 30, 2009, respectively. The large increase in
unrealized gains in 2009 is in line with the overall recovery in the US stock
markets since lows were reached in March 2009, and also a result of the
Company’s increased investments in corporate bonds which have performed well
during the second and third quarters of 2009.
For the
three months ended September 30, 2009 net realized loss from sales of marketable
securities of approximately $56,000 consisted of approximately $153,000 of gross
losses net of $97,000 of gross gains. For the nine months ended September 30,
2009 net realized loss from sales of marketable securities of approximately
$59,000 consisted of approximately $257,000 of gross losses net of $198,000 of
gross gains.
For the
three and nine months ended September 30, 2008 net realized gain (loss) from
sales of marketable securities of approximately $48,000 and ($46,000),
respectively, consisted of approximately $126,000 of gross gains net of $78,000
of gross losses for the three month period and $340,000 of gross losses net of
$294,000 of gross gains for the nine month period.
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, 2009, the Company’s portfolio of other investments had an
aggregate carrying value of approximately $3.6 million. As of
September 30, 2009 the Company has committed to fund an additional $941,000 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,
2009 the Company contributed approximately $431,000 toward these commitments and
received cash distributions from these investments of $330,000 primarily from
the redemption of one stock fund. Included in the contributions is a new
investment of $250,000 in a private bank in September 2009.
(7)
HMG/COURTLAND
PROPERTIES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
Net gain
from other investments for the three and nine months ended September 30, 2009
and 2008 is summarized below:
Three
months ended September
30,
|
Nine
months ended September
30,
|
|||||||||||||||
Description
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Technology-related
venture fund
|
$ | (150,000 | ) | $ | -- | $ | (137,000 | ) | $ | 22,000 | ||||||
Partnership
owning diversified businesses & distressed debt
|
(130,000 | ) | -- | (127,000 | ) | 7,000 | ||||||||||
Income
from investment in 49% owned affiliate (T.G.I.F. Texas,
Inc.)
|
16,000 | 7,000 | 49,000 | 42,000 | ||||||||||||
Others,
net
|
15,000 | -- | 15,000 | 94,000 | ||||||||||||
Total
net gain from other investments
|
$ | (249,000 | ) | $ | 7,000 | $ | (200,000 | ) | $ | 165,000 |
During
the nine months ended September 30, 2009 cash distributions of $287,000 were
received from the redemption of a stock fund. This distribution was
recorded as a reduction in the carrying value of the investment.
During
the nine months ended September 30, 2008, the Company received approximately
$149,000 of cash proceeds from the redemption of a private equity fund resulting
in a gain to the Company of $94,000.
In
accordance with ASC Topic 320-10-65 (formerly FASB Staff Position (FSP) FAS
115-2 and FAS 124-2), Recognition and Presentation of Other-Than-Temporary
Impairments, which amends the recognition guidance for other-than-temporary
impairments (OTTI) of debt securities and expands the financial statement
disclosure for OTTI on debt and equity securities (this FSP only applies to the
Company’s other investments, not its investment in marketable equity and debt
securities for which mark to market adjustments are already recorded in the
Company’s income statement ).
The
following tables present gross unrealized losses and fair values for those
investments that were in an unrealized loss position as of December 31,
2008 and September 30, 2009, aggregated by investment category and the length of
time that investments have been in a continuous loss position:
|
As
of December 31, 2008
|
|||||||||||||||||||
|
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
|
|
$
|
109,000
|
|
$
|
(51,000
|
)
|
$
|
275,000
|
|
$
|
(86,000
|
)
|
$
|
384,000
|
$
|
(137,000)
|
|||
Partnerships
owning diversified businesses
|
|
112,000
|
|
(4,000
|
)
|
366,000
|
|
(147,000
|
)
|
478,000
|
(151,000)
|
|||||||||
|
|
|
||||||||||||||||||
Total
|
|
$
|
221,000
|
|
$
|
(55,000
|
)
|
$
|
641,000
|
|
$
|
(233,000
|
)
|
$
|
862,000
|
$
|
(288,000)
|
|||
|
|
|
||||||||||||||||||
|
As
of September 30, 2009
(unaudited)
|
|||||||||||||||||||
|
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
|
|
$
|
92,000
|
|
$
|
(12,000
|
)
|
$
|
403,000
|
|
$
|
(18,000
|
)
|
$
|
496,000
|
$
|
(30,000)
|
|||
Partnerships
owning diversified businesses
|
|
442,000
|
|
(208,000
|
)
|
357,000
|
|
(6,000
|
)
|
799,000
|
(214,000)
|
|||||||||
Partnerships
owning real estate and related investments
|
|
320,000
|
|
(119,000
|
)
|
0
|
|
0
|
320,000
|
(119,000)
|
||||||||||
|
|
|
||||||||||||||||||
Total
|
|
$
|
854,000
|
|
$
|
(339,000
|
)
|
$
|
760,000
|
|
$
|
(24,000
|
)
|
$
|
1,615,000
|
$
|
(363,000)
|
|||
|
|
|
(8)
HMG/COURTLAND
PROPERTIES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
As of
September 30, 2009 the Company’s other investments consists of 25 individual
investments primarily in limited partnerships with varying investment objectives
and focus. Management has categorized these investments by investment focus
(technology & communications, diversified businesses/distressed debt, real
estate and related and other).
Unrealized
losses on the Company’s other investments generally occur as a result of
valuation adjustments recorded by the managing partners of these partnerships
and are based on estimated changes to the value of the underlying portfolio
companies. Weaker financial performance, coupled with the impact of new fair
value accounting rules have resulted in declines in the carry values of many
portfolio companies. These new accounting rules established a framework for
measuring the fair value of illiquid investments, such as private equity
investments. In order to determine the fair value of their portfolio
investments, private equity managers review a number of factors, including a
portfolio company’s most recent financial results, relevant valuation metrics
and financial performance of comparable public and private companies; and other
company and market specific characteristics. As a result, certain portfolio
company valuations, which are based in large part on the valuation metrics of
comparable public companies, have been negatively impacted. Nevertheless, fair
value markdowns for unrealized portfolio companies do not necessarily represent
a permanent loss of value, just as mark ups do not always lead to realized
gains.
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.
During
the three and nine months ended September 30, 2009, the Company recognized
$280,000 for material impairment charges on its other investments. As of
September 30, 2009, the Company does not consider any of its investments to
be other-than-temporarily impaired.
(9)
HMG/COURTLAND
PROPERTIES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
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 September 30, 2009 and December
31, 2008 the fair value (net of 50% minority interest) of the cash flow hedge
was a loss of approximately $726,000 and $1,078,000, respectively, which has
been recorded as other comprehensive income (loss) and will be reclassified into
earnings in the same period or periods during which the hedged transaction
affects earnings.
The
following tables present the required disclosures in accordance with ASC Topic
815-10 (formerly, SFAS 161):
Fair Values of Derivative
Instruments:
|
Liability Derivative
|
|||
September 30, 2009 | December 31, 2008 | |||
|
Balance
Sheet
Location
|
Fair
Value
|
Balance
Sheet
Location
|
Fair
Value
|
Derivatives
designated as hedging instruments under
Statement
133:
|
|
|
|
|
Interest
rate swap contract
|
Liabilities
|
$1,453,000
|
Liabilities
|
$2,156,000
|
Total
derivatives designated as hedging instruments under
ASC
Topic 815 (formerly SFAS 133)
|
|
$1,453,000
|
|
$2,156,000
|
The Effect of Derivative
Instruments on the Statements of Comprehensive Income
for the Three and Nine
Months Ended September 30, 2009 and 2008:
Derivatives in ASC Topic 815 Cash Flow Hedging
Relationships
|
Amount
of Gain or (Loss)
Recognized
in OCI on
Derivative
(Effective
Portion)
|
|
For
the three
Months
ended
September 30,
2009
|
For
the three
Months
ended
September 30,
2008
|
For
the nine
Months
ended
September 30,
2009
|
For
the nine
Months
ended
September 30,
2008
|
||||||||
Interest
rate swap contracts
|
($85,000)
|
($61,000)
|
$351,500
|
($76,000)
|
||||||||
Total
|
($85,000)
|
($61,000)
|
$351,500
|
($76,000)
|
(10)
HMG/COURTLAND
PROPERTIES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
7. FAIR VALUE
INSTRUMENTS
In
accordance with ASC Topic 820-10 (formerly, SFAS 157), 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 market
observable 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
|
||||||||||||||||
Description
|
September 30,
2009
|
Quoted Prices in Active
Markets for Identical Assets
(Level
1)
|
Significant Other
Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
||||||||||||
Assets
|
||||||||||||||||
Cash
equivalents:
|
||||||||||||||||
Time
deposits
|
$ | 52,000 | — | $ | 52,000 | — | ||||||||||
Money
market mutual
funds
|
979,000 | 979,000 | — | — | ||||||||||||
Cash
equivalents – restricted
|
||||||||||||||||
Money
market mutual
funds
|
2,398,000 | 2,398,000 | — | — | ||||||||||||
Marketable
securities:
|
||||||||||||||||
Corporate
debt
securities
|
2,125,000 | — | 2,125,000 | — | ||||||||||||
Marketable
equity
securities
|
2,416,000 | 2,416,000 | — | — | ||||||||||||
Total
assets
|
$ | 7,970,000 | $ | 5,793,000 | $ | 2,177,000 | $ | — | ||||||||
Liabilities
|
||||||||||||||||
Interest
rate swap contract
|
$ | 1,453,000 | $ | — | $ | 1,453,000 | $ | — | ||||||||
Total
liabilities
|
$ | 1,453,000 | $ | — | $ | 1,453,000 | $ | — | ||||||||
Assets measured at fair value on a
nonrecurring basis are summarized below:
Description
|
September 30,
2009
|
Quoted Prices in Active
Markets for Identical Assets
(Level
1)
|
Significant Other
Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
||||||||||||
Technology-related
venture
fund
|
$ | 526,000 | $ | — | $ | — | $ | 526,000 | ||||||||
Partnership
owning
diversified
businesses
&
distressed
debt
|
$ | 493,000 | $ | — | $ | — | $ | 493,000 |
A total
of $280,000 of other than temporary impairments were recognized for the three
and nine months ended September 30, 2009.
(11)
HMG/COURTLAND
PROPERTIES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
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
|
Nine
months ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
Revenues:
|
||||||||||||||||
Real
estate and marina rentals
|
$ | 854,000 | $ | 883,000 | $ | 2,595,000 | $ | 2,569,000 | ||||||||
Food
and beverage sales
|
1,238,000 | 1,351,000 | 4,862,000 | 5,207,000 | ||||||||||||
Spa
revenues
|
154,000 | 228,000 | 394,000 | 652,000 | ||||||||||||
Total
Net Revenues
|
$ | 2,246,000 | $ | 2,462,000 | $ | 7,851,000 | $ | 8,428,000 | ||||||||
Income
(loss) before income taxes:
|
||||||||||||||||
Real
estate and marina rentals
|
$ | 105,000 | $ | 118,000 | $ | 282,000 | $ | 365,000 | ||||||||
Food
and beverage sales
|
(110,000 | ) | (97,000 | ) | 40,000 | 85,000 | ||||||||||
Other
investments and related income
|
(76,000 | ) | (1,105,000 | ) | (291,000 | ) | (1,760,000 | ) | ||||||||
Total
net income (loss) before income taxes attributable to the
Company
|
$ | (81,000 | ) | $ | (1,084,000 | ) | $ | 31,000 | $ | (1,310,000 | ) |
(12)
HMG/COURTLAND
PROPERTIES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(Unaudited)
9. INCOME
TAXES
We
adopted the provisions of ASC Topic 740-10 (formerly FASB Interpretation No.
48), “Accounting for Uncertainty in Income Taxes-an interpretation of ASC Topic
740-10, on January 1, 2007. This clarifies the accounting for uncertainty
in income taxes recognized in an enterprise’s financial statements in accordance
with FASB Statement 109, “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. It 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, 2005, 2006,
2007 and 2008, the tax years which remain subject to examination by major tax
jurisdictions as of September 30, 2009.
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 selling, general and administrative expense.
(13)
Item
2. Management's Discussion and Analysis
of
Financial
Condition and
Results of Operations
RESULTS OF
OPERATIONS
For the
three and nine months ended September 30, 2009 the Company reported net loss
attributable to the Company of approximately $4,000 (less than $.01 per share)
and $10,000 ($.01 per share), respectively. This is as compared with a net loss
of approximately $762,000 ($.74 per share) and $1,030,000 ($1.01 per share) for
the three and nine months ended September 30, 2008, respectively.
As
discussed further below, total revenues for the three and nine months ended
September 30, 2009 as compared with the same periods in 2008, decreased by
approximately $216,000 (9%) and $576,000 (7%), respectively. Total
expenses for the three and nine months ended September 30, 2009, as compared
with the same periods in 2008, decreased by approximately $203,000 (7%) and
$443,000 (5%), respectively.
REVENUES
Real estate and
related:
Rentals
and related revenues for the three and nine months ended September 30, 2009 as
compared with the same periods in 2008 increased by $13,000 (3%) and $99,000
(8%), respectively. This increase was primarily due to increased rental revenue
from the Monty’s retail space and increased rent from Grove Isle as a result of
inflation adjustments to base rent.
(14)
Condition
and Results of Operations (continued)
Restaurant
operations:
Summarized
statements of income for the Company’s Monty’s restaurant for the three and nine
months ended September 30, 2009 and 2008 is presented below:
For
the three months
|
For
the nine months
|
|||||||||||||||
ended
September 30,
|
ended
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenues:
|
||||||||||||||||
Food
and Beverage Sales
|
$ | 1,238,000 | $ | 1,350,000 | $ | 4,862,000 | $ | 5,206,000 | ||||||||
Expenses:
|
||||||||||||||||
Cost
of food and beverage sold
|
329,000 | 371,000 | 1,236,000 | 1,391,000 | ||||||||||||
Labor
and related costs
|
303,000 | 324,000 | 988,000 | 1,020,000 | ||||||||||||
Entertainers
|
49,000 | 54,000 | 154,000 | 165,000 | ||||||||||||
Other
food and beverage direct costs
|
54,000 | 64,000 | 209,000 | 213,000 | ||||||||||||
Other
operating costs
|
60,000 | 66,000 | 244,000 | 222,000 | ||||||||||||
Repairs
and maintenance
|
49,000 | 60,000 | 174,000 | 158,000 | ||||||||||||
Insurance
|
71,000 | 77,000 | 224,000 | 232,000 | ||||||||||||
Management
and accounting fees
|
47,000 | 47,000 | 104,000 | 104,000 | ||||||||||||
Utilities
|
65,000 | 66,000 | 182,000 | 194,000 | ||||||||||||
Rent
(as allocated)
|
131,000 | 143,000 | 494,000 | 530,000 | ||||||||||||
Total
Expenses
|
1,158,000 | 1,272,000 | 4,009,000 | 4,229,000 | ||||||||||||
Income
before depreciation and non controlling interest
|
$ | 80,000 | $ | 78,000 | $ | 853,000 | $ | 977,000 | ||||||||
All
amounts above presented as a percentage of sales
|
For
the three months
|
For
the nine months
|
||||||||||||||
ended
September 30,
|
ended
September 30,
|
|||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Revenues:
|
||||||||||||||||
Food
and Beverage Sales
|
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Expenses:
|
||||||||||||||||
Cost
of food and beverage sold
|
27 | % | 27 | % | 25 | % | 27 | % | ||||||||
Labor
and related costs
|
24 | % | 24 | % | 20 | % | 20 | % | ||||||||
Entertainers
|
4 | % | 4 | % | 3 | % | 3 | % | ||||||||
Other
food and beverage direct costs
|
4 | % | 5 | % | 4 | % | 4 | % | ||||||||
Other
operating costs
|
5 | % | 5 | % | 5 | % | 4 | % | ||||||||
Repairs
and maintenance
|
4 | % | 4 | % | 4 | % | 3 | % | ||||||||
Insurance
|
6 | % | 6 | % | 5 | % | 4 | % | ||||||||
Management
fees
|
4 | % | 3 | % | 2 | % | 2 | % | ||||||||
Utilities
|
5 | % | 5 | % | 4 | % | 4 | % | ||||||||
Rent
(as allocated)
|
11 | % | 11 | % | 10 | % | 10 | % | ||||||||
Total
Expenses
|
94 | % | 94 | % | 82 | % | 81 | % | ||||||||
Income
before depreciation and non controlling interest
|
6 | % | 6 | % | 18 | % | 19 | % |
For the
three and nine months ended September 30, 2009 as compared with the same
comparable periods in 2008 food sales decreased by $59,000 (or 8%) and
$260,000 (or 9%), respectively, and beverage and other sales for the
same comparable periods decreased by $53,000 (or 9%) and $84,000 (or 4%),
respectively.
(15)
Management's
Discussion and Analysis of Financial
Condition
and Results of Operations (continued)
Marina
operations:
Summarized
and combined statements of income for marina operations:
(The
Company owns 50% of the Monty’s marina and 95% of the Grove Isle
marina)
For
the three months
|
For
the nine months
|
|||||||||||||||
ended
September 30,
|
ended
September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenues:
|
||||||||||||||||
Monty's
dockage fees and related income
|
$ | 278,000 | $ | 310,000 | $ | 873,000 | $ | 949,000 | ||||||||
Grove
Isle marina slip owners dues and dockage fees
|
126,000 | 137,000 | 381,000 | 378,000 | ||||||||||||
Total
marina revenues
|
404,000 | 447,000 | 1,254,000 | 1,327,000 | ||||||||||||
Expenses:
|
||||||||||||||||
Labor
and related costs
|
61,000 | 57,000 | 188,000 | 177,000 | ||||||||||||
Insurance
|
47,000 | 51,000 | 139,000 | 148,000 | ||||||||||||
Management
fees
|
18,000 | 19,000 | 56,000 | 58,000 | ||||||||||||
Utilities,
net of tenant reimbursement
|
16,000 | 9,000 | 21,000 | 3,000 | ||||||||||||
Rent
and bay bottom lease expense
|
54,000 | 59,000 | 169,000 | 181,000 | ||||||||||||
Repairs
and maintenance
|
26,000 | 24,000 | 90,000 | 94,000 | ||||||||||||
Other
|
23,000 | 25,000 | 75,000 | 73,000 | ||||||||||||
Total
marina expenses
|
245,000 | 244,000 | 738,000 | 734,000 | ||||||||||||
Income
before depreciation and non controlling interest
|
$ | 159,000 | $ | 203,000 | $ | 516,000 | $ | 593,000 |
Monty’s
dockage and related revenue for the three and nine months ended September 30,
2009 as compared to the same periods in 2008 decreased by approximately $32,000
(10%) and $76,000 (8%) as the result of the general decline in marina and
related activity experienced industry wide.
Monty’s
marina related expenses for the three and nine months ended September 30, 2009
as compared to the same periods in 2008 decreased by $9,000 (or 7%) and $25,000
(or 7%), respectively, primarily due to decreased insurance and rent
expense.
Grove
Isle marina related expenses for the three months ended September 30, 2009 as
compared to the same periods in 2008 increased by $11,000 (or 9%) and $30,000
(or 8%), respectively primarily due to increased labor and utility
costs.
(16)
Management's
Discussion and Analysis of Financial
Condition
and Results of Operations (continued)
Spa
operations:
Below are
summarized statements of income for Grove Isle spa operations for the three and
nine months ended September 30, 2009 and 2008. 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:
Three
months
ended
September
30,
2009
|
Three
months
ended
September 30,
2008
|
Nine
months
ended
September
30,
2009
|
Nine
months
ended
September
30,
2008
|
|||||||||||||
Revenues:
|
||||||||||||||||
Services
provided
|
$ | 138,000 | $ | 215,000 | $ | 340,000 | $ | 612,000 | ||||||||
Membership
and other
|
16,000 | 13,000 | 54,000 | 40,000 | ||||||||||||
Total
spa revenues
|
154,000 | 228,000 | 394,000 | 652,000 | ||||||||||||
Expenses:
|
||||||||||||||||
Cost
of sales (commissions and other)
|
26,000 | 86,000 | 92,000 | 201,000 | ||||||||||||
Salaries,
wages and related
|
46,000 | 64,000 | 140,000 | 185,000 | ||||||||||||
Other
operating expenses
|
73,000 | 91,000 | 161,000 | 179,000 | ||||||||||||
Management
and administrative fees
|
8,000 | 11,000 | 24,000 | 31,000 | ||||||||||||
Other
non-operating expenses
|
(5,000 | ) | (15,000 | ) | 9,000 | 9,000 | ||||||||||
Total
spa expenses
|
148,000 | 237,000 | 426,000 | 605,000 | ||||||||||||
Income
(loss) before interest, depreciation and non
controlling
interest
|
$ | 6,000 | $ | (9,000 | ) | $ | (32,000 | ) | $ | 47,000 |
Spa
revenues for the three and nine months ended September 30, 2009 as compared with
the same periods in 2008 decreased by $74,000 (32%) and $258,000 (40%),
respectively due to a general decline in hotel guests and demand for spa and
other leisure services.
Investment and related
activities:
Net realized and unrealized
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, 2009 was approximately $540,000 and
$959,000, respectively. This is as compared with net realized and
unrealized loss from investments in marketable securities for the three and nine
months ended September 30, 2008 of approximately $689,000 and $904,000,
respectively. For further details refer to Note 4 to Condensed
Consolidated Financial Statements (unaudited).
Net income from other
investments:
Net loss
from other investments for the three and nine months ended September 30, 2009
was approximately $249,000 and $200,000, respectively. Net income
from other investments for the three and nine months ended September 30, 2008
was approximately $7,000 and $165,000, respectively. For further details refer
to Note 5 to Condensed Consolidated Financial Statements
(unaudited).
Interest, dividend and other
income
Interest,
dividend and other income for the three and nine months ended September 30, 2009
was approximately $147,000 and $328,000, respectively. This is as
compared with interest, dividend and other income for the three and nine months
ended September 30, 2008 of approximately $73,000 and $409,000, respectively.
The increase in the three months comparable periods was primarily due to
consulting revenue earned by Courtland Houston Inc. in September
2009. The decrease in the nine month comparable periods was primarily
due to the receipt of a $168,000 nonrecurring real estate leasing commission
received by Courtland Houston Inc. in June 2008, partially offset by increased
interest income from investment in bonds.
(17)
Management's
Discussion and Analysis of Financial
Condition
and Results of Operations (continued)
EXPENSES
For the
three and nine months ended September 30, 2009, as compared with the same
comparable periods in 2008, expenses for rental and other properties increased
by $66,000 and $180,000, respectively. These increased in 2009 are
primarily due to increased rent expense allocated to the real estate rental
operations at the Monty’s property.
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.
For the
three and nine months ended September 30, 2009, as compared with the same
comparable periods in 2008, interest expense decreased by $51,000 and $178,000,
respectively. These decreases are primarily due to lower interest
rates.
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 during the next twelve month period primarily
consist of maturities of debt obligations of approximately $7.8 million and
commitments to fund private capital investments of approximately $941,000 due
upon demand. The funds necessary to meet these obligations are
expected to be available from the proceeds of sales of properties or
investments, refinancing, distributions from investments and available cash. The
maturing debt obligations remaining 2009, and those due in 2010 consists of the
Grove Isle mortgage note payable of approximately $3.7 million which matures in
September 2010. The Company expects to renew this loan in 2010. The
loan due to the Company’s 49% owned affiliate, T.G.I.F. Texas, Inc. (“TGIF”) of
approximately $3.7 million which is due on demand. The obligation due
to TGIF will be paid with funds available from distributions from the Company’s
investment in TGIF and from available cash.
(18)
Condition
and Results of Operations (continued)
MATERIAL COMPONENTS OF CASH
FLOWS
For the
nine months ended September 30, 2009, net cash provided by operating activities
was approximately $113,000. This was primarily from the Company’s rental
operations cash flow.
For the
nine months ended September 30, 2009, net cash used in investing activities was
approximately $662,000. This consisted primarily of purchases of marketable
securities of $1.8 million, additions to loans receivable of $150,000,
contributions to other investments of $431,000 and improvements of properties
and purchases of fixed assets of $144,000. These uses were partially
offset by $1.5 million in net proceeds from sales of marketable securities and
distributions from other investment of $330,000.
For the
nine months ended September 30, 2009, net cash used in financing activities was
approximately $534,000 primarily consisting of repayments of mortgage notes
payable.
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.
(19)
Item
1.
Legal
Proceedings: None.
Item
2. Unregistered Sales of Equity Securities and Use
of Proceeds:
(c)
|
The
following table presents information regarding the shares of our common
stock we purchased during each of the nine calendar months ended September
30, 2009.
|
Period
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid per
Share
|
Total
Number of
Shares
Purchased
as
Part of
Publicly
Announced
Plan
(1)
|
Maximum
Dollar
Value
of Shares
That
May Yet Be
Purchased
Under
the Plan (1)
|
||||||||||||
January
1 – 31 2009
|
1,200
|
$
|
3.40
|
4,080
|
$
|
291,115
|
||||||||||
Feb.
1 – 28 2009
|
-
|
$
|
-
|
-
|
$
|
291,115
|
||||||||||
March
1 – 31 2009
|
-
|
$
|
-
|
-
|
$
|
291,115
|
||||||||||
April
1 – 30 2009
|
-
|
$
|
-
|
-
|
$
|
291,115
|
||||||||||
May
1 – 31 2009
|
-
|
$
|
-
|
-
|
$
|
291,115
|
||||||||||
June
1 – 30 2009
|
-
|
$
|
-
|
-
|
$
|
291,115
|
||||||||||
July
1 – 31 2009
|
-
|
$
|
-
|
-
|
$
|
291,115
|
||||||||||
August
1 – 31 2009
|
-
|
$
|
-
|
-
|
$
|
291,115
|
||||||||||
Sept. 1 - 30 2009 | $ | - | - | $ |
291,115
|
1.
|
We
have one program, which was announced in November 2008 after approval by
our Board of Directors, to purchase up to $300,000 of outstanding shares
of our common stock from time to time in the open market at prevailing
market prices or in privately negotiated transactions. All of
the shares we purchased during these periods were purchased on the open
market pursuant to this program. The repurchased shares of
common stock will be held in treasury and used for general corporate
purposes. This program has no expiration
date.
|
Item
3. Defaults
Upon Senior Securities: None.
Item
4. Submission
of Matters to a Vote of Security Holders: None
Item
5. Other
Information: None
Item
6. Exhibits:
(a) Certifications
pursuant to 18 USC Section 1350-Sarbanes-Oxley Act of 2002. Filed
herewith.
(20)
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: November
10, 2009
|
/s/
Lawrence Rothstein
|
|
|
President,
Treasurer and Secretary
|
|
|
Principal
Financial Officer
|
|
|
||
Dated: November
10, 2009
|
/s/Carlos
Camarotti
|
|
|
Vice
President- Finance and Controller
|
|
|
Principal
Accounting Officer
|
(21)