-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LBUJ6qcN4+cSKkojX04DnTJz/FR4ypsDUVvGir/t9baJIeTeDjjFce+qj/XKrUUC 4HaIv+NCIjcl9d51WcJAOQ== 0000069422-96-000007.txt : 19960517 0000069422-96-000007.hdr.sgml : 19960517 ACCESSION NUMBER: 0000069422-96-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERGROUP CORP CENTRAL INDEX KEY: 0000069422 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 133293645 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-10324 FILM NUMBER: 96566391 BUSINESS ADDRESS: STREET 1: 2121 AVE OF THE STARS STREET 2: STE 2020 CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 3105561999 MAIL ADDRESS: STREET 1: 2121 AVE OF THE STARS SUITE 2020 CITY: LOS ANGELES STATE: CA ZIP: 90067 FORMER COMPANY: FORMER CONFORMED NAME: MUTUAL REAL ESTATE INVESTMENT TRUST DATE OF NAME CHANGE: 19860408 10QSB 1 U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-QSB ( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from ______ to ______ Commission file number 1-10324 THE INTERGROUP CORPORATION - ------------------------------------------------------- (Name of small business issuer as specified in its charter) DELAWARE - ------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) 13-3293645 - ------------------------------------------- (I.R.S. Employer Identification No.) 2121 Avenue of the Stars, Suite 2020 Los Angeles, California 90067 - ------------------------------------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number: (310) 556-1999 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 __ The number of shares outstanding of the issuer's Common Stock, $.01 par value, as of April 30, 1996 was 834,349 shares. Transitional Small Business Disclosure Format (check one): YES __ NO X THE INTERGROUP CORPORATION INDEX TO FORM 10-QSB PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements: Page Consolidated Balance Sheet March 31, 1996 3 Consolidated Statements of Operations Nine Months Ended March 31, 1996 and 1995 4 Consolidated Statements of Cash Flows Nine Months Ended March 31, 1996 and 1995 5 Consolidated Statements of Operations Three Months Ended March 31, 1996 and 1995 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. OTHER INFORMATION 13 Page 2 THE INTERGROUP CORPORATION CONSOLIDATED BALANCE SHEET (Unaudited) March 31, 1996 ------------- ASSETS Investment in real estate, at cost: Land $4,585,808 Buildings, improvements and equipment 30,653,425 Property held for sale or development 1,601,528 ------------- 36,840,761 Less: accumulated depreciation (11,755,157) ------------- 25,085,604 Marketable equity securities, at market value 7,932,050 Investment in Santa Fe Financial Corporation 5,529,543 Other investments 2,768,155 Cash and cash equivalents 514,513 Restricted cash 1,799,803 Rent and other receivables 183,754 Prepaid expenses 1,120,892 Other assets 183,088 ------------- Total Assets $45,117,402 ============= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $30,709,613 Due to securities broker 3,333,197 Accounts payable and other liabilities 3,503,243 Deferred income taxes 813,218 ------------- Total Liabilities 38,359,271 ------------- Commitments and Contingencies Shareholders' Equity: Preferred stock, $.10 par - 100,000 shares authorized; none issued Common stock, $.01 par - 1,500,000 shares authorized; 1,494,824 shares issued; 834,349 shares outstanding 14,948 Paid-in capital 12,754,454 Accumulated deficit (425,816) Unrealized gain on marketable securities, net of deferred taxes 2,254,918 Treasury stock, at cost, 660,475 shares (7,840,373) ------------- Total Shareholders' Equity 6,758,131 ------------- Total Liabilities and Shareholders' Equity $45,117,402 ============= The accompanying notes are an integral part of the consolidated financial statements. Page 3 THE INTERGROUP CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Nine Months Ended March 31, 1996 1995 -------------------------- Real estate operations: Rental income $8,309,988 $8,017,749 Rental expenses: Mortgage interest expense 2,107,741 2,031,327 Property operating expenses 3,925,771 4,175,619 Real estate taxes 676,349 598,798 Depreciation 1,183,981 1,098,179 -------------------------- Income from real estate operations 416,146 113,826 -------------------------- Investment transactions: Investment gains 4,738,384 4,371,243 Investment losses (1,883,359) (3,220,166) Dividend and interest income 132,341 119,597 Margin interest and trading expenses (1,273,101) (550,639) -------------------------- Income from investment transactions 1,714,265 720,035 -------------------------- Other income (expense): General and administrative expenses (814,345) (1,121,699) Miscellaneous expense (1,260,579) (97,824) -------------------------- Other expense (2,074,924) (1,219,523) -------------------------- Income (Loss) before provision for income taxes and extraordinary item 55,487 (385,662) Provision for income tax taxes (benefit) 11,954 (179,371) -------------------------- Income (Loss) before extraordinary item 43,533 (206,291) Extraordinary item - Extinguishment of Debt 0 1,030,436 -------------------------- Net Income $43,533 $824,145 ========================== Net Income (Loss) per share: Income (Loss) before extraordinary item $0.05 ($0.23) Extraordinary item - Extinguishment of Debt 0.00 1.17 -------------------------- Net Income per share $0.05 $0.94 ========================== Weighted average number of shares outstanding 909,455 878,256 ========================== The accompanying notes are an integral part of the consolidated financial statements. Page 4 THE INTERGROUP CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Nine Months Ended March 31, 1996 1995 -------------------------- Cash flows from operating activities: Net Income $43,533 $824,145 Adjustments to reconcile net income to cash provided by (used for) operating activities: Extraordinary item - Extinguishment of Debt 0 (1,030,436) Depreciation of real estate 1,183,981 1,291,586 Amortization of other assets 120,641 1,058,898 Decrease in receivables, net 870,117 323,416 Increase in prepaid expenses (185,043) (374,394) Decrease (increase) in other assets (32,038) 996,249 Increase (decrease) in accounts payable and other liabilities 940,471 (116,766) Decrease in income taxes (158,450) (299,871) -------------------------- Net cash provided by operating activities 2,783,212 2,672,827 -------------------------- Cash flows from investing activities: Additions to buildings, improvements and equipment (883,037) (931,865) Investment in real estate (596,841) (4,212,485) Investment in Santa Fe Financial Corporation (2,669,399) (2,523,805) Reduction in marketable securities 5,040,977 373,210 Investment in other investments (1,417,065) (415,279) -------------------------- Net cash used for investing activities (525,365) (7,710,224) -------------------------- Cash flows from financing activities: Principal payments on mortgage notes payable (270,227) (242,828) Proceeds from real estate financing 462,405 1,622,045 Increase in mortgage notes payable due to real estate acquisition 595,000 3,000,000 Decrease (increase) in restricted cash (239,995) 537,423 Increase (decrease) in due to securities broker (3,471,889) 2,579,187 Increase (decrease) in accounts payable related to other investments and short positions 650,794 (2,903,129) Sale of 16,500 shares of common stock 907,500 0 Purchase of treasury stock (440,213) (60,643) -------------------------- Net cash provided by (used for) financing activities (1,806,625) 4,532,055 -------------------------- Net increase (decrease) in cash and cash equivalents 451,222 (505,342) Cash and cash equivalents at beginning of period 63,291 617,314 -------------------------- Cash and cash equivalents at end of period $514,513 $111,972 ========================== The accompanying notes are an integral part of the consolidated financial statements. Page 5 THE INTERGROUP CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended March 31, 1996 1995 -------------------------- Real estate operations: Rental income $2,764,804 $2,795,166 Rental expenses: Mortgage interest expense 694,688 695,887 Property operating expenses 1,296,114 1,450,678 Real estate taxes 251,934 210,900 Depreciation 399,907 385,449 -------------------------- Income from real estate operations 122,161 52,252 -------------------------- Investment transactions: Investment gains 2,893,529 2,198,549 Investment losses (1,302,672) (2,167,897) Dividend and interest income 48,986 87,723 Margin interest and trading expenses (382,316) (238,895) -------------------------- Income (Loss) from investment transactions 1,257,527 (120,520) -------------------------- Other income (expense): General and administrative expenses (223,314) (288,804) Miscellaneous expense (83,493) (50,567) -------------------------- Other expense (306,807) (339,371) -------------------------- Income (Loss) before provision for income taxes and extraordinary item 1,072,881 (407,639) Provision for income tax taxes (benefit) 418,991 (245,059) -------------------------- Income (Loss) before extraordinary item 653,890 (162,580) Extraordinary item - Extinguishment of Debt 0 1,030,436 -------------------------- Net Income $653,890 $867,856 ========================== Net Income (Loss) per share: Income (Loss) before extraordinary item $0.71 ($0.19) Extraordinary item - Extinguishment of Debt 0.00 1.18 -------------------------- Net Income per share $0.71 $0.99 ========================== Weighted average number of shares outstanding 916,349 878,256 ========================== The accompanying notes are an integral part of the consolidated financial statements. Page 6 THE INTERGROUP CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) For the Nine Months Ended March 31, 1996 1. General: The interim financial information is unaudited; however, in the opinion of The Intergroup Corporation (the "Company"), the interim financial information contains all adjustments, including normal recurring adjustments, necessary to present fairly the results for the interim period. These consolidated financial statements should be read in conjunction with the Company's June 30, 1995 audited consolidated financial statements and notes thereto. Certain reclassifications have been made to conform the fiscal 1995 presentation to the fiscal 1996 presentation. 2. Investment in Santa Fe Financial Corporation: In March 1996, the Company increased its interest in Santa Fe Financial Corporation and subsidiary ("Santa Fe") through the exercise of warrants to purchase additional shares of common stock of Santa Fe and the subsequent nomination and election of a second of the Company's officers to the three member Board of Santa Fe. In April 1996, the Company's Chairman and CEO became Chairman and CEO of Santa Fe. The Company owns 33.1% and the Company's Chairman and CEO owns an additional 3.9% of the outstanding common stock of Santa Fe. The Company records its investment in Santa Fe on the equity basis. Condensed financial statements for Santa Fe follow: Condensed Balance Sheet as of March 31, 1996 Cash $9,504,364 Investment in Justice Investors 4,501,336 Receivables and other assets 212,128 ------------- Total Assets $14,217,828 ============= Other liabilities $172,935 Minority interest 3,001,720 Shareholders' equity 11,043,173 ------------- Total Liabilities and Shareholders' Equity $14,217,828 ============= Condensed Results of Operations for the Nine months ended March 31, 1996 1995 Revenue $1,678,298 $1,612,675 Net Income 380,493 585,583 Three months ended March 31, 1996 1995 Revenue $460,961 $529,023 Net Income 96,154 207,629 Santa Fe's revenue is primarily generated through its 64.1% interest in Portsmouth Square, Inc. ("PSI") from PSI's 49.8% interest in Justice Investors ("Justice"), a limited partnership. Justice owns the land, improvements and Page 7 leaseholds known as the Financial District Holiday Inn, a 566 room hotel in San Francisco. PSI is both a limited and general partner in Justice and records its investment on the equity basis. If the Proposed Statement of Financial Accounting Standards "Consolidated Financial Statements: Policy and Procedures" is adopted unmodified, the Company would ultimately be required to consolidate Santa Fe. If Santa Fe were consolidated as of March 31, 1996, the Company's consolidated assets would increase $15,696,101 to $60,813,503 and consolidated liabilities would increase $172,953 to $38,532,224. Pro forma results of operations if consolidation had occurred at the beginning of the respective periods follows: Nine months ended March 31, 1996 1995 Income (Loss) before extraordinary item $66,268 ($90,116) Net Income $66,268 $940,320 Net Income per share $0.07 $1.07 Three months ended March 31, 1996 1995 Income (Loss) before extraordinary item $655,363 ($121,388) Net Income $655,363 $909,048 Net Income per share $0.72 $1.04 3. Marketable Equity Securities: Marketable securities are recorded in accordance with Statement of Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain Investments in Debt and Equity Securities." All securities are equity securities classified as available-for-sale except short positions, which represent obligations of the Company and are classified as trading activity. At March 31, 1996, the aggregate market value of marketable equity securities exceeded the aggregate cost by $3,701,161. The net unrealized gain is comprised of gross unrealized gains of $5,039,265 reduced by gross unrealized losses of $1,338,104. The net unrealized gain, net of deferred taxes of $1,446,243, is included as a separate item in shareholders' equity. During the nine months ended March 31, 1996, proceeds from sales of securities were $25,748,462 and gross realized gains and losses, determined using FIFO costs, were $4,738,384 and $1,883,359, respectively. Any unrealized gains or losses relating to short positions are recognized in earnings in the current period. There were no naked short positions at March 31, 1996. Dividends on short positions are recorded on the ex-dividend date. 4. Commitments and Contingencies: The Company subscribed to purchase shares of The Renaissance Fund and has made investments of $850,259. The balance of the subscription price of $149,741 may be called from time to time by the Fund Manager at any time through April 14, 2001. In April 1993, a claim, seeking in excess of $800,000, was filed in the State Superior Court for the County of Los Angeles by Dennis Hawk, Lucas Devenn and Golden West Entertainment ("GWE") against Intergroup, John V. Winfield and GWE. Such action charged Intergroup and/or John V. Winfield with breach of Page 8 contract, fraud, conspiracy to defraud, negligent misrepresentation, assault, battery, economic duress, and breach of fiduciary duty. Plaintiffs subsequently broadened their damage claims to include lost profits from 22 motion picture and television projects claimed to be in development. Intergroup and Mr. John Winfield denied Plaintiffs' claims and charged Devenn and Hawk with fraud, breach of contract, breach of fiduciary duty, malpractice as to Hawk, who is an attorney, and intentional infliction of mental distress. The high cost of litigation caused the Company to settle the litigation. The costs of litigation and settlement aggregated approximately $1,200,000 for the nine months ended March 31, 1996 and are reflected in Miscellaneous Expense. The Company, together in some instances, with certain of its officers, is a defendant or co-defendant in various legal proceedings (including an arbitration proceeding with Aura Systems Inc.) involving breach of contract and various other claims incident to the conduct of its businesses. Management does not expect the Company to suffer any material liability by reason of such actions. 5. Income Taxes: The components of the deferred tax liability as of March 31, 1996 are as follows: Securities basis differences $1,340,535 Depreciation and fixed asset basis differences 693,655 Valuation allowance 145,977 ------------- Total deferred tax credits 2,180,167 ------------- NOL and AMT credit carryovers (1,192,098) State income taxes (123,658) Miscellaneous (51,193) ------------- Total deferred tax debits (1,366,949) ------------- Net deferred taxes $813,218 ============= There was no change in the valuation allowance during the period. The provision for income taxes is comprised of the following: Current tax benefit ($618,124) Change in deferred taxes 630,078 ------------- Total income tax expense $11,954 ============= Income tax expense differs from the amount computed by multiplying the statutory federal income tax rate times income (loss) before taxes as follows: Federal statutory tax $18,866 State income taxes, net of federal benefit 2,816 Other (9,728) ------------- Total income tax expense $11,954 ============= Page 9 THE INTERGROUP CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the Nine Months Ended March 31, 1996 vs. 1995 Income from real estate operations for the nine months ended March 31, 1996 as compared to the nine months ended March 31, 1995, was impacted primarily by increased revenues and reduced costs achieved through the economies of scale and added on-site management attention brought about by the change to an unaffiliated national property management company on April 1, 1995, partially offset by the costs of closing of the Company's property management division. Income from real estate operations was also impacted by two offsetting factors: (i) the transfer by the Company of its Indio, California properties to the mortgage lender in March 1995 which eliminated the continuing negative cash flow and depreciation of the Indio properties and (ii) the purchase of a 224-unit property in Irving, Texas in September 1994 which together resulted in a net increase in revenues and costs. Rental income from real estate operations increased by 4% to $8,309,988 from $8,017,749. The increase was primarily due to the addition of the new Texas property in September 1994 and an increase in average market rental rates which together more than offset an increase in vacancy rates, some of which was planned to upgrade tenant profiles. Mortgage interest expense increased 4% to $2,107,741 from $2,031,327 primarily due to the mortgage interest expense associated with the new Texas property. Property operating expenses decreased 6% to $3,925,771 from $4,175,619 primarily due to cessation of expenses related to the Indio properties, lower insurance costs and the closing of the Company's property management division, partially offset by expenditures associated with the new Texas property and by over $90,000 in higher utility and snow removal expenses due to this year's severe winter. Real estate taxes increased 13% to $676,349 from $598,798 primarily due to real estate taxes on the new Texas property, increased taxes on the other three Texas properties due to reassessments after the Company's acquisitions and a refund of taxes on the Harrisburg property received in the prior year partially offset by reduced taxes on one of the St. Louis properties. Depreciation increased 8% to $1,183,981 from $1,098,179 due to depreciation of the new Texas property and improvements to the other properties. Investment gains increased 8% to $4,738,384 from $4,371,243 and investment losses decreased 42% to $1,883,359 from $3,220,166 including in the prior year, the recognition of an unrealized loss of $621,121 related to short sales and the $750,000 write-off of a portion of the Company's investment in Aura Systems, Inc. which is the subject of an arbitration proceeding in which recovery is sought. Realized investment gains and losses may fluctuate significantly from period to period, with a meaningful effect on the Company's Page 10 net earnings. However, the amount of realized investment gain or loss for any given period has no predictive value, and variations in amount from period to period have no practical analytical value, particularly in view of the net unrealized gain in the Company's overall investment portfolio. Margin interest and trading expenses increased 131% to $1,273,101 from $550,639 primarily due to higher margin loan balances, trading related expenses and additional personnel. During the nine months ended March 31, 1996, the marketable equity securities portfolio decreased approximately 46% to $7,932,050 from $14,751,444 primarily due to sales of securities to fund other investments and pay down margin debt. Net unrealized gains decreased 32% to $3,701,161 from $5,479,578 due to realizing gains and market fluctuations. As of March 31, 1996, the Company had no naked short positions. The overall investment portfolio, which includes marketable securities and other investments, had a positive return of 2.3% for the nine months ended March 31, 1996 and a negative return of 21.1% for the nine months ended March 31, 1995, based on the net realized and unrealized gains and losses over the monthly average investment balance of the investment portfolio. The overall investment portfolio achieved a positive average annual compounded return of 13.5% and 16.0% for the five years ended March 31, 1996 and 1995, respectively. General and administrative expenses decreased 27% to $814,345 from $1,121,699 due to lower aggregate office and travel expenses and fewer personnel. Miscellaneous expense increased to $1,260,579 from $97,824 due to the accrued costs of litigation and settlement expenses related to the matter discussed in Note 4 to the consolidated financial statements. In Fiscal 1995, the Company recorded an extraordinary gain of $1,030,436 on the extinguishment of $10,356,404 of debt related to the Indio properties, net of taxes of $678,794 and the properties depreciated cost of $8,647,174. During the nine months ended March 31, 1996, the Company improved properties in the aggregate amount of $883,037. Management believes the improvements to the properties should enhance market values, maintain the competitiveness of the Company's properties and potentially enable the Company to obtain a higher yield through higher rents. For the Three Months Ended March 31, 1996 vs. 1995 Income from real estate operations for the three months ended March 31, 1996 as compared to the three months ended March 31, 1995, was positively impacted primarily by reduced costs from economies of scale and added on-site management attention brought by the change to an unaffiliated national property management company on April 1, 1995. Rental income from real estate operations decreased by 1% to $2,764,804 from $2,795,166. The decrease was primarily due to an increase in vacancy rates, a small portion of which was planned to upgrade tenant profiles, offset by increased average rental rates at all properties. Page 11 Mortgage interest expense decreased 0.2% to $694,688 from $695,887 primarily due to a lower interest rate from the refinancing of one of the Company's properties partially offst by higher loan cost amortization. Property operating expenses decreased 11% to $1,296,114 from $1,450,678 primarily due to lower insurance and administrative expenses partially offset by over $40,000 in higher utility and snow removal expenses due to the severe winter. Real estate taxes increased 19% to $251,934 from $210,900 primarily due to increases in taxes at the four Texas properties due to reassessments after the Company's acquisitions partially offset by a reduction in taxes at one of the St. Louis properties. Depreciation increased 4% to $399,907 from $385,449 due to depreciation of improvements to the properties. Investment gains increased 32% to $2,893,529 from $2,198,549 and investment losses decreased 40% to $1,302,672 from $2,167,897. The prior year included the recognition of an unrealized loss of $439,457 related to short positions and a $750,000 write-off of a portion of the Company's investment in Aura Systems, Inc. which is the subject of an arbitration proceeding in which recovery is sought. Margin interest and trading expenses increased 60% to $382,316 from $238,895primarily due to higher margin loan balances, trading related expenses and additional personnel. The overall investment portfolio, which includes marketable securities and other investments, had a positive return of 1.9% for the three months ended March 31, 1996 and a negative return of 6.3% for the three months ended March 31, 1995, based on the net realized and unrealized gains and losses over the monthly average investment balance of the investment portfolio. General and administrative expenses decreased 23% to $223,314 from $288,804 due to lower aggregate office and travel expenses and fewer personnel. Miscellaneous expense increased to $83,493 from $50,567 due to accrued costs of litigation related to the matter discussed in Note 4 to the consolidated financial statements. In Fiscal 1995, the Company recorded an extraordinary gain of $1,030,436 on the extinguishment of $10,356,404 of debt related to the Indio properties, net of taxes of $678,794 and the properties depreciated cost of $8,647,174. During the three months ended March 31, 1996, the Company improved properties in the aggregate amount of $259,009. Management believes the improvements to the properties should enhance market values, maintain the competitiveness of the Company's properties and potentially enable the Company to obtain a higher yield through higher rents. Page 12 FINANCIAL CONDITION AND LIQUIDITY The Company's principal cash flows are generated from its real estate operations and securities transactions. The Company generated net cash flow of $2,783,212 from operating activities, used net cash flow of $525,365 for investing activities and used net cash flow of $1,806,625 for financing activities during the nine months ended March 31, 1996. The Company's total outstanding indebtedness is comprised of mortgages on real estate which amounted to $30,709,613 as of March 31, 1996. During the nine months ended March 31, 1996, the Company refinanced its Parsippany, NJ property for $5,325,000 and borrowed $595,000 for the acquisition of the St. Louis land. Management will pursue additional refinancing activities as considered necessary or when deemed favorable to the Company. The Company intends to sell all or a portion of certain of its unimproved land. Should the Company consummate a sale, all or a portion of the proceeds may be utilized to provide additional funds for improvements and to take advantage of other investment opportunities. The Company subscribed to purchase shares of a Fund and made investments of $850,259. The balance of the subscription price of $149,741 may be called by the Fund Manager at any time through April 14, 2001. For fiscal 1996, management anticipates that its cash balances and net cash flow from real estate operations, securities transactions and real estate financing activities will be sufficient to fund the Company's anticipated acquisitions, property improvements, debt service requirements and operating expenses. Management also anticipates that the net cash flow generated from future operating activities will be sufficient to meet its long-term debt service requirements. PART II. OTHER INFORMATION Item 1 - Legal Proceedings: Material developments in connection with legal proceedings are incorporated herein by reference to Part I, Note 3 to the Consolidated Financial Statements, of this Form 10-QSB. Item 6 - Exhibits and Reports on Form 8-K: Form 8-K dated March 27, 1996 disclosed, in Item 2, the Company's additional investment in Santa Fe Financial Corporation and the nomination and election of a second of the Company's officers to the three member Board of Santa Fe. Page 13 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereto duly authorized. THE INTERGROUP CORPORATION (Registrant) Date: May 10, 1996 By /s/ John V. Winfield - ------------------------------------------------------------------- John V. Winfield, Chairman; President and Chief Executive Officer Date: May 10, 1996 By /s/ Howard A. Jaffe - ------------------------------------------------------------------- Howard A. Jaffe Chief Operating Officer and Secretary Date: May 10, 1996 By /s/ Gregory C. McPherson - ------------------------------------------------------------------- Gregory C. McPherson Executive Vice President, Assistant Secretary and Assistant Treasurer Date: May 10, 1996 By /s/ Keith R. Schrupp - ------------------------------------------------------------------- Keith R. Schrupp Vice President of Finance Date: May 10, 1996 By /s/ David C. Gonzalez - ------------------------------------------------------------------- David C. Gonzalez Controller Page 14 EX-27 2 ART 5 FDS FOR 3RD QUARTER 10-QSB
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS JUN-30-1996 MAR-31-1996 514,513 7,932,050 183,754 0 0 20,031,798 36,840,761 11,755,157 45,117,402 7,649,658 30,709,613 14,948 0 0 6,743,183 45,117,402 0 11,297,354 0 7,059,202 2,074,924 0 2,107,741 55,487 11,954 43,533 0 0 0 43,533 0.05 0.05
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