American Realty Investors (ARL) 8-K Results of Operations and Financial Condition

AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
	(dollars in thousands, except share and per share amounts)
Revenues:
Rental and other property revenues (including $167 and $0 for the three months and $335 and $0 for the six months ended 2012 and 2011 respectively from affiliates and related parties)	$	31,016		$	29,306		$	60,598		$	56,480
Expenses:
Property operating expenses (including $258 and $383 for the three months and $550 and $631 for the six months ended 2012 and 2011 respectively from affiliates and related parties)		15,674			15,407			31,087			30,667
Depreciation and amortization		5,393			4,958			10,821			10,162
General and administrative (including $937 and $1,241 for the three months and $1,817 and $2,429 for the six months ended 2012 and 2011 respectively from affiliates and related parties)		935			3,692			3,507			6,915
Provision on impairment of notes receivable and real estate assets		-			444			-			5,622
Advisory fee to affiliate		2,700			3,462			5,359			6,984
Total operating expenses		24,702			27,963			50,774			60,350
Operating income (loss)		6,314			1,343			9,824			(3,870	)
Other income (expense):
Interest income (including $4,624 and $1,104 for the three months and $7,865 and $1,603 for the six months ended 2012 and 2011 respectively from affiliates and  related parties)		4,723			1,203			8,063			1,871
Other income (including $1,500 and $0 for the three months and $3,000 and $0 for the six months ended 2012 and 2011 respectively from affiliates and related parties)		2,171			551			3,800			1,765
Mortgage and loan interest (including $931 and $1,275 for the three months and $1,853 and $1,580 for the six months ended 2012 and 2011 respectively from affiliates and related parties)		(16,641	)		(15,439	)		(34,219	)		(29,897	)
Loss on sale of investments		-			-			(362	)		-
Earnings from unconsolidated subsidiaries and investees		33			22			150			(73	)
Total other expenses		(9,714	)		(13,663	)		(22,568	)		(26,334	)
Loss before gain on land sales, non-controlling interest, and taxes		(3,400	)		(12,320	)		(12,744	)		(30,204	)
Gain on land sales		4,738			14,029			3,716			19,373
Income (loss) from continuing operations before tax		1,338			1,709			(9,028	)		(10,831	)
Income tax benefit		1,537			1,942			2,548			2,351
Net income (loss) from continuing operations		2,875			3,651			(6,480	)		(8,480	)
Discontinued operations:
Loss from discontinued operations		(277	)		(2,130	)		(975	)		(5,099	)
Gain on sale of real estate from discontinued operations		4,668			7,679			8,256			11,816
Income tax expense from discontinued operations		(1,537	)		(1,942	)		(2,548	)		(2,351	)
Net income from discontinued operations		2,854			3,607			4,733			4,366
Net income (loss)		5,729			7,258			(1,747	)		(4,114	)
Net (income) loss attributable to non-controlling interest		(1,064	)		7,175			112			9,345
Net income (loss) attributable to American Realty Investors, Inc.		4,665			14,433			(1,635	)		5,231
Preferred dividend requirement		(613	)		(613	)		(1,226	)		(1,230	)
Net income (loss) applicable to common shares	$	4,052		$	13,820		$	(2,861	)	$	4,001
Earnings per share - basic
Income (loss) from continuing operations	$	0.10		$	0.89		$	(0.66	)	$	(0.03	)
Income from discontinued operations		0.25			0.31			0.41			0.38
Net income (loss) applicable to common shares	$	0.35		$	1.20		$	(0.25	)	$	0.35
Earnings per share - diluted
Income (loss) from continuing operations	$	0.05		$	0.59		$	(0.66	)	$	(0.03	)
Income from discontinued operations		0.11			0.21			0.41			0.38
Net income (loss) applicable to common shares	$	0.16		$	0.80		$	(0.25	)	$	0.35
Weighted average common share used in computing earnings per share		11,525,389			11,525,389			11,525,389			11,509,341
Weighted average common share used in computing diluted earnings per share		25,679,951			17,394,553			11,525,389			11,509,341
Amounts attributable to American Realty Investors, Inc.
Income (loss) from continuing operations	$	1,811		$	10,826		$	(6,368	)	$	865
Income from discontinued operations		2,854			3,607			4,733			4,366
Net income (loss)	$	4,665		$	14,433		$	(1,635	)	$	5,231

AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
	June 30,			December 31,
	2012			2011
	(dollars in thousands, except share and par value amounts)
Assets
Real estate, at cost	$	1,066,094		$	1,120,122
Real estate held for sale at cost, net of depreciation ($3,290 for 2012 and $1,752 for 2011)		2,329			15,015
Real estate subject to sales contracts at cost, net of depreciation ($15,042 and $9,790 in 2012 and 2011)		48,515			49,982
Less accumulated depreciation		(154,499	)		(158,489	)
Total real estate		962,439			1,026,630
Notes and interest receivable
Performing (including $114,613 and $104,969 in 2012 and 2011 from affiliates and related parties)		118,710			110,136
Non-performing  (including $0 and $0 in 2012 and 2011 from affiliates and related parties)		5,908			4,787
Less allowance for estimated losses (including $18,962 and $8,962 in 2012 and 2011 from affiliates and related parties)		(23,383	)		(13,383	)
Total notes and interest receivable		101,235			101,540
Cash and cash equivalents		18,090			20,312
Investments in unconsolidated subsidiaries and investees		7,437			10,746
Other assets (including $21 in 2012 and $11 in 2011 from affiliates and related parties)		71,044			76,243
Total assets	$	1,160,245		$	1,235,471
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable	$	800,162		$	855,619
Notes related to assets held for sale		3,868			13,830
Notes related to subject to sales contracts		55,503			44,516
Stock-secured notes payable and margin debt		26,133			26,898
Affiliate payables		13,816			10,294
Deferred gain (including $75,727 and $71,964 in 2012 and 2011 from sales to related parties)		77,572			78,750
Accounts payable and other liabilities (including $1,925 and $1,822 in 2012 and 2011 to affiliates and related parties)		91,921			110,307
		1,068,975			1,140,214
Shareholders’ equity:
Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued and outstanding 3,353,954 shares in 2012 and 2011 (liquidation preference $10 per share), including 900,000 shares in 2012 and 2011 held by subsidiaries		4,908			4,908
Common stock, $.01 par value, authorized 100,000,000 shares; issued 11,941,174 shares and outstanding 11,525,389 shares in 2012 and 2011		115			115
Treasury stock at cost; 415,785 shares in 2012 and 2011 and 229,214 and 236,587 shares held by TCI as of 2012 and 2011.		(6,395	)		(6,395	)
Paid-in capital		107,092			105,388
Retained earnings		(49,121	)		(47,486	)
Accumulated other comprehensive income		(786	)		(786	)
Total American Realty Investors, Inc. shareholders' equity		55,813			55,744
Non-controlling interest		35,457			39,513
Total equity		91,270			95,257
Total liabilities and equity	$	1,160,245		$	1,235,471