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| HMG > SEC Filings for HMG > Form 10-Q on 13-Aug-2009 | All Recent SEC Filings |
13-Aug-2009
Quarterly Report
RESULTS OF OPERATIONS
The Company reported net income attributable to the Company of approximately
$240,000 ($.24 per share) for the three months ended June 30, 2009 and a net
loss of approximately $6,000 (less than $.01 per share) for the six months ended
June 30, 2009. This is as compared with a net loss of approximately $13,000
($.01 per share) and $267,000 ($.26 per share) for the three and six months
ended June 30, 2008, respectively.
As discussed further below, total revenues for the three and six months ended June 30, 2009 as compared with the same periods in 2008, decreased by approximately $278,000 (9%) and $360,000 (6%), respectively. Total expenses for the three and six months ended June 30, 2009, as compared with the same periods in 2008, decreased by approximately $179,000 (6%) and $241,000 (4%), respectively.
REVENUES
Rentals and related revenues for the three and six months ended June 30, 2009 as
compared with the same periods in 2008 increased by $40,000 (10%) and $86,000
(11%), respectively. This was due to increased rental revenue from the Monty's
retail space and increase rent from Grove Isle as a result of inflation
adjustments to base rent.
Restaurant operations:
Summarized statements of income for the Company's Monty's restaurant for the
three and six months ended June 30, 2009 and 2008 is presented below:
For the three months For the six months
ended June 30, ended June 30,
2009 2008 2009 2008
Revenues:
Food and Beverage Sales $1,740,000 $1,941,000 $3,624,000 $3,856,000
Expenses:
Cost of food and beverage sold 432,000 506,000 907,000 1,020,000
Labor and related costs 330,000 341,000 685,000 696,000
Entertainers 52,000 56,000 105,000 111,000
Other food and beverage direct
costs 77,000 79,000 155,000 149,000
Other operating costs 108,000 93,000 184,000 156,000
Repairs and maintenance 59,000 56,000 125,000 98,000
Insurance 75,000 76,000 153,000 155,000
Management and accounting fees 22,000 22,000 57,000 57,000
Utilities 60,000 62,000 117,000 128,000
Rent (as allocated) 185,000 205,000 363,000 387,000
Total Expenses 1,400,000 1,496,000 2,851,000 2,957,000
Income before depreciation and
noncontrolling interest $340,000 $445,000 $773,000 $899,000
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Management's Discussion and
Analysis of Financial
Condition and Results of
Operations (continued)
The following table
summarizes the amounts the
table above as a percentage
of sales:
All amounts as a percentage For the three months For the six months
of sales
ended June 30, ended June 30,
2009 2008 2009 2008
Revenues:
Food and Beverage Sales 100% 100% 100% 100%
Expenses:
Cost of food and beverage
sold 25% 26% 25% 27%
Labor and related costs 19% 18% 19% 18%
Entertainers 3% 3% 3% 3%
Other food and beverage
direct costs 4% 4% 4% 4%
Other operating costs 6% 5% 5% 4%
Repairs and maintenance 3% 3% 4% 3%
Insurance 4% 4% 4% 4%
Management fees 1% 1% 2% 1%
Utilities 4% 3% 3% 3%
Rent (as allocated) 11% 10% 10% 10%
Total Expenses 80% 77% 79% 77%
Income before depreciation
and noncontrolling interest 20% 23% 21% 23%
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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 six months
ended June 30, ended June 30,
2009 2008 2009 2008
Marina Revenues:
Monty's dockage fees and related income $ 285,000 $ 307,000 $ 595,000 $ 639,000
Grove Isle marina slip owners dues and
dockage fees 125,000 120,000 255,000 241,000
Total marina revenues 410,000 427,000 850,000 880,000
Marina Expenses:
Labor and related costs 67,000 64,000 128,000 120,000
Insurance 47,000 49,000 92,000 97,000
Management fees 19,000 19,000 38,000 39,000
Utilities, net of tenant reimbursement 5,000 2,000 5,000 (6,000 )
Rent and bay bottom lease expense 55,000 59,000 115,000 122,000
Repairs and maintenance 20,000 33,000 64,000 71,000
Other 29,000 27,000 51,000 47,000
Total marina expenses 242,000 253,000 493,000 490,000
Income before depreciation and
noncontrolling interest $ 168,000 $ 174,000 $ 357,000 $ 390,000
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Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Monty's dockage and related revenue for the three and six months ended June 30, 2009 as compared to the same periods in 2008 decreased by approximately $22,000 (7%) and $44,000 (7%) as the result of the general decline in marina and related activity experienced industry wide. Marina expenses for the three and six months ended June 30, 2009 as compared to the same periods in 2008 remained substantially unchanged
Spa operations:
Below are summarized statements of income for Grove Isle spa operations for the
three and six months ended June 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 Three months Six months Six months
Summarized statements of income of spa ended June ended June ended June ended June
operations 30, 2009 30, 2008 30, 2009 30, 2008
Revenues:
Services provided $ 77,000 $ 188,000 $ 202,000 $ 397,000
Membership and other 24,000 13,000 38,000 27,000
Total spa revenues 101,000 201,000 240,000 424,000
Expenses:
Cost of sales (commissions and other) 34,000 54,000 66,000 116,000
Salaries, wages and related 46,000 59,000 94,000 121,000
Other operating expenses 50,000 54,000 88,000 88,000
Management and administrative fees 7,000 13,000 15,000 23,000
Other non-operating expenses 7,000 12,000 14,000 24,000
Total Expenses 144,000 192,000 277,000 372,000
Income (loss) before interest,
depreciation and noncontrolling interest $ (43,000 ) $ 9,000 $ (37,000 ) $ 52,000
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Spa revenues for the three and six months ended June 30, 2009 as compared with the same periods in 2008 decreased by $100,000 (50%) and $184,000 (43%), respectively due to a general decline in hotel guests and demand for spa and other leisure services.
Net realized and unrealized loss from investments in marketable securities:
Net realized and unrealized gain (loss) from investments in marketable
securities for the three and six months ended June 30, 2009 was approximately
$580,000 and $419,000, respectively. Net realized and unrealized gain (loss)
from investments in marketable securities for the three and six months ended
June 30, 2008 was approximately ($27,000) and ($215,000), respectively. For
further details refer to Note 4 to Condensed Consolidated Financial Statements
(unaudited).
Net income from other investments:
Net income from other investments for the three and six months ended June 30,
2009 was approximately $29,000 and $48,000, respectively. Net income from other
investments for the three and six months ended June 30, 2008 was approximately
$126,000 and $158,000, respectively. For further details refer to Note 5 to
Condensed Consolidated Financial Statements (unaudited).
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Interest, dividend and other income
Interest, dividend and other income for the three and six months ended June 30,
2009 was approximately $95,000 and $181,000, respectively. Interest, dividend
and other income for the three and six months ended June 30, 2008 was
approximately $248,000 and $337,000, respectively. The decreases in 2009 were
primarily due to the receipt of a $168,000 nonrecurring real estate leasing
commission received in June 2008.
EXPENSES
Expenses for rental and other properties for the three and six months ended June
30, 2009 were $186,000 and $384,000, respectively. Expenses for rental and other
properties for the three and six months ended June 30, 2008 were $136,000 and
$269,000, respectively. The increase in 2009 is primarily due to increased
repairs and maintenance at Grove Isle in connection with the change of tenants
which occurred in November 2008, and increased rent expense 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.
Interest expense for the three and six months ended June 30, 2009 was $282,000 and $562,000, respectively. Interest expense for the three and six months ended June 30, 2008 was $334,000 and $689,000, respectively. The decrease in 2009 is 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 in 2009 primarily consist of maturities of debt obligations of approximately $4.2 million and commitments to fund private capital investments of approximately $1 million 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 for 2009 primarily consists of the note payable 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.
Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
MATERIAL COMPONENTS OF CASH FLOWS
For the six months ended June 30, 2009, net cash provided by operating
activities was approximately $323,000. This was primarily from the Company's
rental operations cash flow.
For the six months ended June 30, 2009, net cash used in investing activities was approximately $404,000. This consisted primarily of purchases of marketable securities of $1.3 million, additions to loans receivable of $150,000, contributions to other investments of $116,000 and improvements of properties and purchases of fixed assets of $89,000. These uses were partially offset by $936,000 in net proceeds from sales of marketable securities and distributions from other investment of $315,000.
For the six months ended June 30, 2009, net cash used in financing activities was approximately $369,000 consisting of repayments of mortgage notes payable.
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