x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
13-3293645
|
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
|
Incorporation or organization)
|
Identification No.)
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company x
|
Page
|
|||
PART I – FINANCIAL INFORMATION
|
|||
Item 1.
|
Financial Statements.
|
||
Condensed Consolidated Balance Sheets as of September 30, 2011 (Unaudited) and June 30, 2011
|
3
|
||
Condensed Consolidated Statements of Operations (Unaudited) for the Three Months ended September 30, 2011 and 2010
|
4
|
||
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months ended September 30, 2011 and 2010
|
5
|
||
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
14
|
|
Item 4.
|
Controls and Procedures.
|
20
|
|
PART II – OTHER INFORMATION
|
|||
Item 6.
|
Exhibits.
|
21
|
|
Signatures
|
22
|
September 30, 2011
|
||||||||
As of
|
(Unaudited)
|
June 30, 2011
|
||||||
ASSETS
|
||||||||
Investment in hotel, net
|
$ | 40,341,000 | $ | 40,143,000 | ||||
Investment in real estate, net
|
68,821,000 | 69,270,000 | ||||||
Investment in marketable securities
|
5,482,000 | 19,438,000 | ||||||
Other investments, net
|
16,273,000 | 17,285,000 | ||||||
Cash and cash equivalents
|
2,174,000 | 1,364,000 | ||||||
Restricted cash
|
1,980,000 | 2,148,000 | ||||||
Other assets, net
|
5,211,000 | 4,718,000 | ||||||
Total assets
|
$ | 140,282,000 | $ | 154,366,000 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Liabilities:
|
||||||||
Accounts payable and other liabilities
|
$ | 11,220,000 | $ | 11,347,000 | ||||
Due to securities broker
|
814,000 | 9,454,000 | ||||||
Obligations for securities sold
|
393,000 | 674,000 | ||||||
Other notes payable
|
2,532,000 | 2,786,000 | ||||||
Mortgage notes payable - hotel
|
44,969,000 | 45,179,000 | ||||||
Mortgage notes payable - real estate
|
72,079,000 | 72,437,000 | ||||||
Deferred income taxes
|
4,426,000 | 5,987,000 | ||||||
Total liabilities
|
136,433,000 | 147,864,000 | ||||||
Commitments and contingencies
|
||||||||
Shareholders' equity:
|
||||||||
Preferred stock, $.01 par value, 100,000 shares authorized; none issued
|
$ | - | $ | - | ||||
Common stock, $.01 par value, 4,000,000 shares authorized; 3,340,704 and 3,322,172 issued; 2,412,012 and 2,398,438 outstanding, respectively
|
33,000 | 33,000 | ||||||
Additional paid-in capital
|
9,497,000 | 9,371,000 | ||||||
Retained earnings
|
9,866,000 | 12,941,000 | ||||||
Treasury stock, at cost, 928,692 and 923,734 shares
|
(10,423,000 | ) | (10,299,000 | ) | ||||
Total InterGroup shareholders' equity
|
8,973,000 | 12,046,000 | ||||||
Noncontrolling interest
|
(5,124,000 | ) | (5,544,000 | ) | ||||
Total shareholders' equity
|
3,849,000 | 6,502,000 | ||||||
Total liabilities and shareholders' equity
|
$ | 140,282,000 | $ | 154,366,000 |
For the three months ended September 30,
|
2011
|
2010
|
||||||
Revenues:
|
||||||||
Hotel
|
$ | 11,109,000 | $ | 9,526,000 | ||||
Real estate
|
3,618,000 | 3,461,000 | ||||||
Total revenues
|
14,727,000 | 12,987,000 | ||||||
Costs and operating expenses:
|
||||||||
Hotel operating expenses
|
(8,145,000 | ) | (7,317,000 | ) | ||||
Real estate operating expenses
|
(1,909,000 | ) | (1,811,000 | ) | ||||
Depreciation and amortization expense
|
(1,103,000 | ) | (1,764,000 | ) | ||||
General and administrative expense
|
(488,000 | ) | (472,000 | ) | ||||
Total costs and operating expenses
|
(11,645,000 | ) | (11,364,000 | ) | ||||
Income from operations
|
3,082,000 | 1,623,000 | ||||||
Other income (expense):
|
||||||||
Interest expense
|
(1,574,000 | ) | (1,575,000 | ) | ||||
Net (loss) gain on marketable securities
|
(4,655,000 | ) | 353,000 | |||||
Net unrealized (loss) gain on other investments and derivative instruments
|
(318,000 | ) | 41,000 | |||||
Impairment loss on other investments
|
(417,000 | ) | (230,000 | ) | ||||
Dividend and interest income
|
90,000 | 139,000 | ||||||
Trading and margin interest expense
|
(424,000 | ) | (303,000 | ) | ||||
Other expense, net
|
(7,298,000 | ) | (1,575,000 | ) | ||||
Income (loss) before income taxes
|
(4,216,000 | ) | 48,000 | |||||
Income tax benefit (expense)
|
1,561,000 | (2,000 | ) | |||||
Income (loss) from continuing operations
|
(2,655,000 | ) | 46,000 | |||||
Discontinued operations:
|
||||||||
Income from discontinued operations
|
- | 50,000 | ||||||
Income tax expense
|
- | (20,000 | ) | |||||
Income from discontinued operations
|
- | 30,000 | ||||||
Net (loss) income
|
(2,655,000 | ) | 76,000 | |||||
Less: Net income attributable to the noncontrolling interest
|
(420,000 | ) | (67,000 | ) | ||||
Net (loss) income attributable to InterGroup
|
$ | (3,075,000 | ) | $ | 9,000 | |||
Net (loss) income per share from continuing operations
|
||||||||
Basic
|
$ | (1.10 | ) | $ | 0.02 | |||
Diluted
|
$ | (1.10 | ) | $ | 0.02 | |||
Net income per share from discontinued operations
|
||||||||
Basic
|
$ | - | $ | 0.01 | ||||
Diluted
|
$ | - | $ | 0.01 | ||||
Net loss per share attributable to InterGroup
|
||||||||
Basic
|
$ | (1.28 | ) | $ | 0.00 | |||
Diluted
|
$ | (1.28 | ) | $ | 0.00 | |||
Weighted average number of common shares outstanding
|
2,404,223 | 2,409,809 | ||||||
Weighted average number of diluted common shares outstanding
|
2,404,223 | 2,484,809 |
For the three months ended September 30,
|
2011
|
2010
|
||||||
Cash flows from operating activities:
|
||||||||
Net (loss) income
|
$ | (2,655,000 | ) | $ | 76,000 | |||
Adjustments to reconcile net (loss) income to net cash
|
||||||||
provided by operating activities:
|
||||||||
Depreciation and amortization
|
1,103,000 | 1,764,000 | ||||||
Net unrealized loss (gain) on marketable securities
|
2,756,000 | (466,000 | ) | |||||
Unrealized loss (gain) on other investments and derivative instruments
|
318,000 | (41,000 | ) | |||||
Impairment loss on other investments
|
417,000 | 230,000 | ||||||
Stock compensation expense
|
126,000 | 109,000 | ||||||
Changes in assets and liabilities:
|
||||||||
Investment in marketable securities
|
11,200,000 | (494,000 | ) | |||||
Other assets
|
(511,000 | ) | 401,000 | |||||
Accounts payable and other liabilities
|
(127,000 | ) | 534,000 | |||||
Due to securities broker
|
(8,640,000 | ) | 968,000 | |||||
Obligations for securities sold
|
(281,000 | ) | (285,000 | ) | ||||
Deferred taxes
|
(1,561,000 | ) | 22,000 | |||||
Net cash provided by operating activities
|
2,145,000 | 2,818,000 | ||||||
Cash flows from investing activities:
|
||||||||
Investment in hotel
|
(745,000 | ) | (434,000 | ) | ||||
Investment in real estate
|
(89,000 | ) | (574,000 | ) | ||||
Proceeds from other investments
|
277,000 | - | ||||||
Restricted cash
|
168,000 | (213,000 | ) | |||||
Net cash used in investing activities
|
(389,000 | ) | (1,221,000 | ) | ||||
Cash flows from financing activities:
|
||||||||
Principal payments on mortgage notes payable
|
(568,000 | ) | (577,000 | ) | ||||
Payments on other notes payable
|
(254,000 | ) | (291,000 | ) | ||||
Purchase of treasury stock
|
(124,000 | ) | - | |||||
Net cash used in financing activities
|
(946,000 | ) | (868,000 | ) | ||||
Net increase in cash and cash equivalents
|
810,000 | 729,000 | ||||||
Cash and cash equivalents at the beginning of the period
|
1,364,000 | 1,140,000 | ||||||
Cash and cash equivalents at the end of the period
|
$ | 2,174,000 | $ | 1,869,000 | ||||
Supplemental information:
|
||||||||
Interest paid
|
$ | 1,739,000 | $ | 1,697,000 |
Accumulated
|
Net Book
|
|||||||||||
September 30, 2011
|
Cost
|
Depreciation
|
Value
|
|||||||||
Land
|
$ | 2,738,000 | $ | - | $ | 2,738,000 | ||||||
Furniture and equipment
|
19,826,000 | (17,339,000 | ) | 2,487,000 | ||||||||
Building and improvements
|
55,868,000 | (20,752,000 | ) | 35,116,000 | ||||||||
$ | 78,432,000 | $ | (38,091,000 | ) | $ | 40,341,000 |
Accumulated
|
Net Book
|
|||||||||||
June 30, 2011
|
Cost
|
Depreciation
|
Value
|
|||||||||
Land
|
$ | 2,738,000 | $ | - | $ | 2,738,000 | ||||||
Furniture and equipment
|
19,584,000 | (17,075,000 | ) | 2,509,000 | ||||||||
Building and improvements
|
55,363,000 | (20,467,000 | ) | 34,896,000 | ||||||||
$ | 77,685,000 | $ | (37,542,000 | ) | $ | 40,143,000 |
As of
|
September 30, 2011
|
June 30, 2011
|
||||||
Land
|
$ | 26,921,000 | $ | 26,921,000 | ||||
Buildings, improvements and equipment
|
72,732,000 | 72,645,000 | ||||||
Accumulated depreciation
|
(30,832,000 | ) | (30,296,000 | ) | ||||
Investment in real estate, net
|
$ | 68,821,000 | $ | 69,270,000 |
For the three months ended September 30,
|
2010
|
|||
Revenues
|
$ | 232,000 | ||
Expenses
|
(182,000 | ) | ||
Income from discontinued operations
|
$ | 50,000 |
Investment
|
Cost
|
Gross
Unrealized Gain |
Gross
Unrealized Loss |
Net
Unrealized Gain |
Fair
Value |
|||||||||||||||
As of September 30, 2011
|
||||||||||||||||||||
Corporate
|
||||||||||||||||||||
Equities
|
$ | 4,295,000 | $ | 2,997,000 | $ | (1,810,000 | ) | $ | 1,187,000 | $ | 5,482,000 | |||||||||
As of June 30, 2011
|
||||||||||||||||||||
Corporate
|
||||||||||||||||||||
Equities
|
$ | 15,288,000 | $ | 6,147,000 | $ | (1,997,000 | ) | $ | 4,150,000 | $ | 19,438,000 |
For the three months ended September 30,
|
2011
|
2010
|
||||||
Realized loss on marketable securities
|
$ | (1,899,000 | ) | $ | (113,000 | ) | ||
Unrealized (loss) gain on marketable securities
|
(2,756,000 | ) | 466,000 | |||||
Net (loss) gain on marketable securities
|
$ | (4,655,000 | ) | $ | 353,000 |
Type
|
September 30, 2011
|
June 30, 2011
|
||||||
Preferred stock - Comstock, at cost
|
$ | 13,231,000 | $ | 13,231,000 | ||||
Private equity hedge fund, at cost
|
2,339,000 | 2,736,000 | ||||||
Corporate debt and equity instruments, at cost
|
269,000 | 569,000 | ||||||
Warrants - at fair value
|
434,000 | 749,000 | ||||||
$ | 16,273,000 | $ | 17,285,000 |
As of September 30, 2011
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents
|
$ | 3,000 | $ | - | $ | - | $ | 3,000 | ||||||||
Restricted cash
|
1,980,000 | - | - | 1,980,000 | ||||||||||||
Other investments - warrants
|
- | 434,000 | - | 434,000 | ||||||||||||
Investment in marketable securities:
|
||||||||||||||||
Basic materials
|
3,001,000 | - | - | 3,001,000 | ||||||||||||
Services
|
747,000 | - | - | 747,000 | ||||||||||||
Financial services
|
664,000 | - | - | 664,000 | ||||||||||||
REITs and real estate companies
|
556,000 | - | - | 556,000 | ||||||||||||
Other
|
514,000 | - | - | 514,000 | ||||||||||||
5,482,000 | - | - | 5,482,000 | |||||||||||||
$ | 7,465,000 | $ | 434,000 | $ | - | $ | 7,899,000 |
As of June 30, 2011
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Assets:
|
||||||||||||||||
Cash equivalents
|
$ | 3,000 | $ | - | $ | - | $ | 3,000 | ||||||||
Restricted cash
|
2,148,000 | - | - | 2,148,000 | ||||||||||||
Other investments - warrants
|
- | 749,000 | - | 749,000 | ||||||||||||
Investment in marketable securities:
|
||||||||||||||||
Basic materials
|
4,978,000 | - | - | 4,978,000 | ||||||||||||
Services
|
3,740,000 | - | - | 3,740,000 | ||||||||||||
Investment funds
|
3,358,000 | - | - | 3,358,000 | ||||||||||||
Financial services
|
2,012,000 | - | - | 2,012,000 | ||||||||||||
REITs and real estate companies
|
2,851,000 | - | - | 2,851,000 | ||||||||||||
Other
|
2,499,000 | - | - | 2,499,000 | ||||||||||||
19,438,000 | - | - | 19,438,000 | |||||||||||||
$ | 21,589,000 | $ | 749,000 | $ | - | $ | 22,338,000 |
Assets
|
Level 1
|
Level 2
|
Level 3
|
September 30, 2011
|
Net loss for the three months
ended September 30, 2011 |
|||||||||||||||
Other non-marketable investments
|
$ | - | $ | - | $ | 15,839,000 | $ | 15,839,000 | $ | (417,000 | ) |
Assets
|
Level 1
|
Level 2
|
Level 3
|
June 30, 2011
|
Net loss for the three months
ended September 30, 2010 |
|||||||||||||||
Other non-marketable investments
|
$ | - | $ | - | $ | 16,536,000 | $ | 16,536,000 | $ | (230,000 | ) |
Number of
Shares |
Weighted Average
Exercise Price |
Weighted Average
Remaining Life |
Aggregate
Intrinsic Value |
|||||||||||
Oustanding at June 30, 2010 | 192,000 | $ | 11.32 |
6.44 years
|
$ | 790,000 | ||||||||
Granted
|
- | - | ||||||||||||
Exercised
|
(3,000 | ) | 12.70 | |||||||||||
Forfeited
|
- | |||||||||||||
Exchanged
|
(27,000 | ) | 12.96 | |||||||||||
Oustanding at June 30, 2011 | 162,000 | 11.02 |
6.48 years
|
2,252,000 | ||||||||||
Granted
|
5,000 | 24.92 |
10.00 years
|
- | ||||||||||
Exercised
|
- | - | ||||||||||||
Forfeited
|
- | |||||||||||||
Exchanged
|
- | - | ||||||||||||
Oustanding at September 30, 2011 | $ | 167,000 | 11.44 |
6.34 years
|
$ | 1,939,000 | ||||||||
Exercisable at September 30, 2011 | 79,500 | $ | 11.76 |
3.95 years
|
$ | 892,000 | ||||||||
Estimated number of options
|
||||||||||||||
vested and expected to vest at September 30, 2011 | 167,000 | $ | 11.44 |
6.34 years
|
$ | 1,939,000 |
Weighted Average
|
|||||||||
Number of RSUs
|
Grant Date
Fair Value |
||||||||
RSUs outstanding as of June 30, 2010 | 32,564 | $ | 12.89 | ||||||
Granted
|
5,884 | $ | 24.92 | ||||||
Converted to common stock
|
(17,564 | ) | $ | 13.07 | |||||
RSUs outstanding as of June 30, 2011 | 20,884 | $ | 16.14 | ||||||
Granted
|
- | $ | - | ||||||
Converted to common stock
|
(15,000 | ) | $ | 12.69 | |||||
RSUs outstanding as of September 30, 2011 | 5,884 | $ | 24.92 |
As of and for the three months ended
September 30, 2011
|
Hotel
Operations |
Real Estate
Operations |
Investment
Transactions |
Other
|
Subtotal
|
Discontinued
Operations |
Total
|
|||||||||||||||||||||
Revenues
|
$ | 11,109,000 | $ | 3,618,000 | $ | - | $ | - | $ | 14,727,000 | $ | - | $ | 14,727,000 | ||||||||||||||
Operating expenses
|
(8,710,000 | ) | (2,447,000 | ) | - | (488,000 | ) | (11,645,000 | ) | - | (11,645,000 | ) | ||||||||||||||||
Income (loss) from perations
|
2,399,000 | 1,171,000 | - | (488,000 | ) | 3,082,000 | - | 3,082,000 | ||||||||||||||||||||
Interest expense
|
(688,000 | ) | (886,000 | ) | - | - | (1,574,000 | ) | - | (1,574,000 | ) | |||||||||||||||||
Loss from investments
|
- | - | (5,724,000 | ) | - | (5,724,000 | ) | - | (5,724,000 | ) | ||||||||||||||||||
Income tax benefit
|
- | - | - | 1,561,000 | 1,561,000 | - | 1,561,000 | |||||||||||||||||||||
Net income (loss)
|
$ | 1,711,000 | $ | 285,000 | $ | (5,724,000 | ) | $ | 1,073,000 | $ | (2,655,000 | ) | $ | - | $ | (2,655,000 | ) | |||||||||||
Total assets
|
$ | 40,341,000 | $ | 68,821,000 | $ | 21,755,000 | $ | 9,365,000 | $ | 140,282,000 | $ | - | $ | 140,282,000 |
As of and for the three months ended
September 30, 2010
|
Hotel
Operations |
Real Estate
Operations |
Investment
Transactions |
Other
|
Total
|
Discontinued
Operations |
Total
|
|||||||||||||||||||||
Revenues
|
$ | 9,526,000 | $ | 3,461,000 | $ | - | $ | - | $ | 12,987,000 | $ | 232,000 | $ | 13,219,000 | ||||||||||||||
Operating expenses
|
(8,605,000 | ) | (2,287,000 | ) | - | (472,000 | ) | (11,364,000 | ) | (135,000 | ) | (11,499,000 | ) | |||||||||||||||
Income (loss) from perations
|
921,000 | 1,174,000 | - | (472,000 | ) | 1,623,000 | 97,000 | 1,720,000 | ||||||||||||||||||||
Interest expense
|
(703,000 | ) | (872,000 | ) | - | - | (1,575,000 | ) | (47,000 | ) | (1,622,000 | ) | ||||||||||||||||
Income from investments
|
- | - | - | - | - | - | - | |||||||||||||||||||||
Income tax expense
|
- | - | - | (2,000 | ) | (2,000 | ) | (20,000 | ) | (22,000 | ) | |||||||||||||||||
Net income (loss)
|
$ | 218,000 | $ | 302,000 | $ | - | $ | (474,000 | ) | $ | 46,000 | $ | 30,000 | $ | 76,000 | |||||||||||||
Total assets
|
$ | 41,121,000 | $ | 66,485,000 | $ | 15,134,000 | $ | 7,820,000 | $ | 130,560,000 | $ | 1,992,000 | $ | 132,552,000 |
For the three months ended September 30,
|
2011
|
2010
|
||||||
Hotel revenues:
|
||||||||
Hotel rooms
|
$ | 8,697,000 | $ | 7,515,000 | ||||
Food and beverage
|
1,374,000 | 1,181,000 | ||||||
Garage
|
731,000 | 636,000 | ||||||
Other operating departments
|
307,000 | 194,000 | ||||||
Total hotel revenues
|
11,109,000 | 9,526,000 | ||||||
Operating expenses excluding interest, depreciation and amortization
|
(8,145,000 | ) | (7,317,000 | ) | ||||
Operating income before interest, depreciation and amortization
|
2,964,000 | 2,209,000 | ||||||
Interest
|
(688,000 | ) | (703,000 | ) | ||||
Depreciation and amortization
|
(565,000 | ) | (1,288,000 | ) | ||||
Net income from hotel operations
|
$ | 1,711,000 | $ | 218,000 |
Three Months
Ended September 30,
|
Average
Daily Rate
|
Average
Occupancy %
|
RevPar
|
|||||||||
2011
|
$ | 189 | 92 | % | $ | 174 | ||||||
2010
|
$ | 168 | 89 | % | $ | 150 |
As of September 30, 2011
|
% of Total
|
|||||||
Investment
|
||||||||
Industry Group
|
Fair Value
|
Securities
|
||||||
Basic materials
|
$ | 3,001,000 | 54.7 | % | ||||
Services
|
747,000 | 13.6 | % | |||||
Financial services
|
664,000 | 12.1 | % | |||||
REITs and real estate companies
|
556,000 | 10.1 | % | |||||
Other
|
514,000 | 9.5 | % | |||||
$ | 5,482,000 | 100.0 | % |
As of June 30, 2011
|
% of Total
|
|||||||
Investment
|
||||||||
Industry Group
|
Fair Value
|
Securities
|
||||||
Basic materials
|
$ | 4,978,000 | 25.6 | % | ||||
Services
|
3,740,000 | 19.2 | % | |||||
Investment funds
|
3,358,000 | 17.3 | % | |||||
Financial services
|
2,012,000 | 14.7 | % | |||||
REITs and real estate companies
|
2,851,000 | 10.4 | % | |||||
Other
|
2,499,000 | 12.8 | % | |||||
$ | 19,438,000 | 100.0 | % |
For the three months ended September 30,
|
2011
|
2010
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||||||
Net (loss) gain on marketable securities
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$ | (4,655,000 | ) | $ | 353,000 | |||
Net unrealized (loss) gain on other investments
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(318,000 | ) | 41,000 | |||||
Impairment loss on other investments
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(417,000 | ) | (230,000 | ) | ||||
Dividend and interest income
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90,000 | 139,000 | ||||||
Margin interest expense
|
(165,000 | ) | (75,000 | ) | ||||
Trading and management expenses
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(259,000 | ) | (228,000 | ) | ||||
$ | (5,724,000 | ) | $ | - |
Total
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Year 1
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Year 2
|
Year 3
|
Year 4
|
Year 5
|
Thereafter
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||||||||||||||||||||||
Mortgage notes payable
|
$ | 117,048,000 | $ | 1,815,000 | $ | 34,174,000 | $ | 7,072,000 | $ | 1,779,000 | $ | 42,242,000 | $ | 29,966,000 | ||||||||||||||
Other notes payable
|
2,532,000 | 401,000 | 569,000 | 1,557,000 | 5,000 | - | - | |||||||||||||||||||||
Interest
|
26,178,000 | 4,595,000 | 5,845,000 | 4,120,000 | 3,706,000 | 1,670,000 | 6,242,000 | |||||||||||||||||||||
Total
|
$ | 145,758,000 | $ | 6,811,000 | $ | 40,588,000 | $ | 12,749,000 | $ | 5,490,000 | $ | 43,912,000 | $ | 36,208,000 |
THE INTERGROUP CORPORATION
(Registrant)
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|||
Date: November 14, 2011
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by
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/s/ John V. Winfield | |
John V. Winfield, President, | |||
Chairman of the Board and | |||
Chief Executive Officer | |||
Date: November 14, 2011 | by | /s/ David T. Nguyen | |
David T. Nguyen, Treasurer
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|||
and Controller
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/s/ John V. Winfield
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|||
John V. Winfield
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|||
President and Chief Executive Officer
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|||
(Principal Executive Officer)
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/s/ David T. Nguyen
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|||
David T. Nguyen
|
|
|||
Treasurerand Controller
|
|
|||
(Principal Financial Officer)
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·
|
The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934; and
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·
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ John V. Winfield
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|||
John V. Winfield
|
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|||
President and Chief Executive Officer
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|||
(Principal Executive Officer)
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·
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The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934; and
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·
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ David T. Nguyen
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|||
David T. Nguyen
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|||
Treasurer and Controller
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|||
(Principal Financial Officer)
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CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $) | Sep. 30, 2011 | Jun. 30, 2011 |
---|---|---|
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000 | 100,000 |
Preferred stock , shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 4,000,000 | 4,000,000 |
Common stock, shares issued | 3,340,704 | 3,322,172 |
Common stock , shares outstanding | 2,412,012 | 2,398,438 |
Treasury stock, shares | 928,692 | 923,734 |
DOCUMENT AND ENTITY INFORMATION | 3 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 07, 2011 | |
Entity Registrant Name | INTERGROUP CORP | |
Entity Central Index Key | 0000069422 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | intg | |
Entity Common Stock, Shares Outstanding | 2,416,970 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2012 |
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ACCOUNTS PAYABLE AND OTHER LIABILITIES | 3 Months Ended |
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Sep. 30, 2011 | |
Disclosure Text Block Supplement [Abstract] | |
Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block] | NOTE 7 – ACCOUNTS PAYABLE AND OTHER LIABILITIES
Accounts payable and other liabilities include trade payables, advance deposits and other liabilities.
As of September 30, 2011, included in the total accounts payable and other liabilities balance of $11,220,000 is $7,638,000 of accounts payable and other liabilities related to Justice Investors and its hotel operations. As of June 30, 2011, included in the total accounts payable and other liabilities balance of $11,347,000, $7,961,000 is accounts payable related to Justice Investors and its hotel operations. |
INVESTMENT IN REAL ESTATE, NET | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||
Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Real Estate and Accumulated Depreciation Disclosure [Text Block] | NOTE 3 – INVESTMENT IN REAL ESTATE, NET
Investment in real estate consisted of the following:
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STOCK BASED COMPENSATION PLANS | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 9 – STOCK BASED COMPENSATION PLANS
The Company follows the Statement of Financial Accounting Standards 123 (Revised), "Share-Based Payments" ("SFAS No. 123R"), which was primarily codified into ASC Topic 718 “Compensation – Stock Compensation”, which addresses accounting for equity-based compensation arrangements, including employee stock options and restricted stock units.
Please refer to Note 16 – Stock Based Compensation Plans in the Company's Form 10-K for the year ended June 30, 2011 for more detail information on the Company’s stock-based compensation plans.
In July 2011, an officer of the Company was awarded 5,000 stock options with an exercise price of $24.92, with 1,000 options vesting each year for the next five years and expiring ten years from the date of grant.
During the three months ended September 30, 2011 and 2010, the Company recorded stock option compensation cost of $38,000 and $37,000, respectively, related to the issuance of stock options. As of September 30, 2011, there was a total of $290,000 of unamortized compensation related to stock options which is expected to be recognized over the weighted-average of 5 years.
The following table summarizes the stock options activity from June 30, 2010 through September 30, 2011:
The table below summarizes the restricted stock units (RSUs) granted and outstanding.
On July 1 of every year, as part of the Stock Compensation Plan for Non-employee Directors, each non-employee director received an automatic grant of a number of shares of Company’s Common Stock equal in value to $22,000 ($88,000 total recorded as stock compensation expense) based on 100% of the fair market value of the Company’s stock on the day of grant. During the three months ended September 30, 2011 and 2010, the four non-employee directors of the Company received a total grant of 3,532 and 4,716 shares of common stock.
In September 2011, the Company’s President converted his 15,000 RSUs to common stock. As part of the transaction, he surrendered 4,958 shares to Intergroup in exchange for $123,950 or $25 per share which was the closing price of the stock on that day. The Company recorded this transaction as a purchase of treasury stock. |
SEGMENT INFORMATION | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] | NOTE 10 – SEGMENT INFORMATION
The Company operates in three reportable segments, the operation of the hotel (“Hotel Operations”), the operation of its multi-family residential properties (“Real Estate Operations”) and the investment of its cash in marketable securities and other investments (“Investment Transactions”). These three operating segments, as presented in the financial statements, reflect how management internally reviews each segment’s performance. Management also makes operational and strategic decisions based on this information.
Information below represents reported segments for the three months ended September 30, 2011 and 2010. Operating income (loss) from hotel operations consist of the operation of the hotel and operation of the garage. Operating income for rental properties consist of rental income. Operating income for investment transactions consist of net investment gain (loss) and dividend and interest income.
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FAIR VALUE MEASUREMENTS | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | NOTE 8 - FAIR VALUE MEASUREMENTS
The carrying values of the Company’s non-financial instruments approximate fair value due to their short maturities (i.e., accounts receivable, other assets, accounts payable and other liabilities, due to securities broker and obligations for securities sold) or the nature and terms of the obligation (i.e., other notes payable and mortgage notes payable).
The assets measured at fair value on a recurring basis are as follows:
The fair values of investments in marketable securities are determined by the most recently traded price of each security at the balance sheet date. The fair value of the warrants was determined based upon a Black-Scholes option valuation model.
Financial assets that are measured at fair value on a non-recurring basis and are not included in the tables above include “Other investments in non-marketable securities,” that were initially measured at cost and have been written down to fair value as a result of impairment or adjusted to record the fair value of new instruments received (i.e., preferred shares) in exchange for old instruments (i.e., debt instruments). The following table shows the fair value hierarchy for these assets measured at fair value on a non-recurring basis as follows:
Other investments in non-marketable securities are carried at cost net of any impairment loss. The Company has no significant influence or control over the entities that issue these investments. These investments are reviewed on a periodic basis for other-than-temporary impairment. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time an investment is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near term prospects of the issuer and (iv) our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
---|---|
Sep. 30, 2011 | |
Basis Of Presentation and Significant Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | 1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial statements included herein have been prepared by The InterGroup Corporation (“InterGroup” or the “Company”), without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures that are made are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all adjustments (which included only normal recurring adjustments) necessary for a fair statement of the financial position, cash flows and results of operations as of and for the periods indicated. It is suggested that these financial statements be read in conjunction with the audited financial statements of InterGroup and the notes therein included in the Company's Annual Report on Form 10-K for the year ended June 30, 2011. The June 30, 2011 Condensed Consolidated Balance Sheet was obtained from the Company’s Form 10-K for the year ended June 30, 2011.
The results of operations for the three months ended September 30, 2011 are not necessarily indicative of results to be expected for the full fiscal year ending June 30, 2012.
As of September 30, 2011, the Company had the power to vote 81% of the voting shares of Santa Fe Financial Corporation (“Santa Fe”), a public company (OTCBB: SFEF). This percentage includes the power to vote an approximately 4% interest in the common stock in Santa Fe owned by the Company’s Chairman and President pursuant to a voting trust agreement entered into on June 30, 1998.
Santa Fe’s revenue is primarily generated through the management of its 68.8% owned subsidiary, Portsmouth Square, Inc. (“Portsmouth”), a public company (OTCBB: PRSI). InterGroup also directly owns approximately 11.7% of the common stock of Portsmouth. Portsmouth has a 50.0% limited partnership interest in Justice and serves as one of the two general partners. The other general partner, Evon Corporation (“Evon”), served as the managing general partner until December 1, 2008 at which time Portsmouth assumed the role of managing general partner.
Justice owns a 544-room hotel property located at 750 Kearny Street, San Francisco California, known as the Hilton San Francisco Financial District (the Hotel) and related facilities including a five level underground parking garage. The Hotel is operated by the partnership as a full service Hilton brand hotel pursuant to a Franchise License Agreement with Hilton Hotels Corporation. Justice also has a Management Agreement with Prism Hospitality L.P. (Prism) to perform the day-to-day management functions of the Hotel.
Until September 30, 2008, the Partnership also derived income from the lease of the parking garage to Evon. Effective October 1, 2008, Justice entered into an installment sale agreement with Evon to purchase the remaining term of the garage lease and related garage assets, and assumed the contract with Ace Parking for the operations of the garage. That installment sale agreement was fully paid as of November 30, 2010. Justice also agreed to assume Evon’s contract with Ace Parking Management, Inc. (“Ace Parking”) for the management of the garage and any other liabilities related to the operation of the garage commencing October 1, 2008. The management agreement with Ace Parking was extended for another 62 months, effective November 1, 2010. The Partnership also leases a day spa on the lobby level to Tru Spa. Portsmouth also receives management fees as a general partner of Justice for its services in overseeing and managing the Partnership’s assets. Those fees are eliminated in consolidation.
Due to the temporary closing of the Hotel to undergo major renovations from May 2005 until January 2006 to transition and reposition the Hotel from a Holiday Inn to a Hilton, and the substantial depreciation and amortization expenses resulting from the renovations and operating losses incurred as the Hotel ramped up operations after reopening, Justice has recorded net losses. These losses were anticipated and planned for as part of the Partnership’s renovation and repositioning plan for Hotel and management considers those net losses to be temporary. The Hotel has been generating positive cash flows from operations since June 2006 and net income is expected to improve in the future, especially since depreciation and amortization
expenses attributable to the renovation will decrease substantially. For the fiscal year ended June 30, 2011, that trend of net losses was reversed as the Company recorded net income from hotel operations of $512,000. For the three months ended September 30, 2011, that positive trend continued as the Company recorded net income from hotel operations of 1,711,000. Despite a troubled economy, management believes that the revenues expected to be generated from the Hotel, garage and the Partnership’s leases will be sufficient to meet all of the Partnership’s current and future obligations and financial requirements. Management also believes that there is significant equity in the Hotel to support additional borrowings, if necessary.
In addition to the operations of the Hotel, the Company also generates income from the ownership of real estate. Properties include apartment complexes, commercial real estate, and two single-family houses as strategic investments. The properties are located throughout the United States, but are concentrated in Texas and Southern California. The Company also has investments in unimproved real property. The Company’s residential rental properties located in California are managed by a professional third party property management company.
In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (International Financial Reporting Standard).” ASU 2011-04 attempts to improve the comparability of fair value measurements disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS. Amendments in ASU 2011-04 clarify the intent of the application of existing fair value measurement and disclosure requirements, as well as change certain measurement requirements and disclosures. ASU 2011-04 is effective for the Company beginning January 1, 2012 and will be applied on a prospective basis. We do not believe that the adoption of ASU 2011-04 will have a material effect on our consolidated financial statements.
In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income.” ASU 2011-05 changes the way other comprehensive income (“OCI”) appears within the financial statements. Companies will be required to show net income, OCI and total comprehensive income in one continuous statement or in two separate but consecutive statements. Components of OCI may no longer be presented solely in the statement of changes in shareholders’ equity. Any reclassification between OCI and net income will be presented on the face of the financial statements. ASU 2011-05 is effective for the Company beginning January 1, 2012. The adoption of ASU 2011-05 will not impact the measurement of net income or other comprehensive income.
The Company has evaluated subsequent events through the date the condensed consolidated financial statements were issued.
Properties Held for Sale – Discontinued Operations
Properties are classified as held for sale when management commits to a plan to sell the asset, the asset is available for immediate sale, an active program to locate a buyer has been initiated, the sale of the asset is probable, the sale of the asset is actively marketed and it is unlikely that significant changes to the sale plan will be made or withdrawn. As of September 30, 2011, the Company had no properties classified as held for sale. During the quarter ended September 30, 2010, the Company had one property located in Texas that was classified as held for sale. That property was sold in January 2011.
Earnings Per Share
Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding. The computation of diluted income (loss) per share is similar to the computation of basic earnings per share except that the weighted-average number of common shares is increased to include the number of additional common shares that would have been outstanding if potential dilutive common shares had been issued. The Company's only potentially dilutive common shares are stock options and restricted stock units (RSUs). For the three months ended September 30, 2011, the Company did not have potential dilutive common shares as the Company had a loss from continuing operations. For the three months ended September 30, 2010, the Company had stock options and RSUs totaling 75,000 that were considered potential dilutive common shares. |
PROPERTY HELD FOR SALE AND DISCONTINUED OPERATIONS | 3 Months Ended | ||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | NOTE 4 – PROPERTY HELD FOR SALE AND DISCONTINUED OPERATIONS
As of September 30, 2011, the Company had no properties classified as held for sale. During the three months ended September 30, 2010, the Company had one property located in San Antonio, Texas that was classified as held for sale. That property was sold in January 2011.
The revenues and expenses from the operation of the held for sale property for respective period are summarized as follows:
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INVESTMENT IN MARKETABLE SECURITIES | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | NOTE 5 – INVESTMENT IN MARKETABLE SECURITIES
The Company’s investment in marketable securities consists primarily of corporate equities. The Company has also invested in corporate bonds and income producing securities, which may include interests in real estate based companies and REITs, where financial benefit could inure to its shareholders through income and/or capital gain.
At September 30, 2011 and June 30, 2011, all of the Company’s marketable securities are classified as trading securities. The change in the unrealized gains and losses on these investments are included in earnings. Trading securities are summarized as follows:
As of September 30, 2011 and June 30, 2011, the Company had unrealized losses of $1,120,000 and $969,000, respectively, related to securities held for over one year.
Net gain (loss) on marketable securities on the statement of operations is comprised of realized and unrealized gains (losses). Below is the composition of the two components for the respective periods:
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OTHER INVESTMENTS, NET | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Investments Disclosure [Text Block] | NOTE 6 – OTHER INVESTMENTS, NET
The Company may also invest, with the approval of the Securities Investment Committee and other Company guidelines, in private investment equity funds and other unlisted securities, such as convertible notes through private placements. Those investments in non-marketable securities are carried at cost on the Company’s balance sheet as part of other investments, net of other than temporary impairment losses.
Other investments, net consist of the following:
During the three months September 30, 2011 and 2010, the Company recorded impairment losses of $417,000 and $230,000, respectively. |
INVESTMENT IN HOTEL, NET | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment Disclosure [Text Block] | NOTE 2 – INVESTMENT IN HOTEL, NET
Investment in hotel consisted of the following as of:
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RELATED PARTY TRANSACTIONS | 3 Months Ended |
---|---|
Sep. 30, 2011 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | NOTE 11 – RELATED PARTY TRANSACTIONS
Four of the Portsmouth directors serve as directors of Intergroup. Three of those directors also serve as directors of Santa Fe. The three Santa Fe directors also serve as directors of InterGroup.
During the three months ended September 30, 2011 and 2010, the Company received management fees from Justice Investors totaling $91,000 and $79,000, respectively. These amounts were eliminated in consolidation.
John V. Winfield serves as Chief Executive Officer and Chairman of the Company, Portsmouth and Santa Fe. Depending on certain market conditions and various risk factors, the Chief Executive Officer, his family, Portsmouth and Santa Fe may, at times, invest in the same companies in which the Company invests. The Company encourages such investments because it places personal resources of the Chief Executive Officer and his family members, and the resources of Portsmouth and Santa Fe, at risk in connection with investment decisions made on behalf of the Company. |
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