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

AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
	June 30,						June 30,
	2013			2012			2013			2012
	(dollars in thousands, except share and per share amounts)
Revenues:
Rental and other property revenues (including $166 and $167 for the three months and $331 and $335 for the six months ended 2013 and 2012 respectively from related parties)	$	27,182		$	27,284		$	53,973		$	53,912
Expenses:
Property operating expenses (including $194 and $244 for the three months and $424 and $509 for the six months ended 2013 and 2012 respectively from related parties)		12,544			13,253			25,577			26,116
Depreciation and amortization		5,445			4,941			10,304			9,918
General and administrative (including $1,044 and $1,017 for the three months and $1,986 and $1,936 for the six months ended 2013 and 2012 respectively from related parties)		2,043			919			4,257			3,777
Provision on impairment of notes receivable and real estate assets		800			-			800			-
Advisory fee to related party		2,487			2,700			5,042			5,359
Total operating expenses		23,319			21,813			45,980			45,170
Operating income		3,863			5,471			7,993			8,742
Other income (expense):
Interest income (including $3,420 and $4,624 for the three months and $6,493 and $7,865 for the six months ended 2013 and 2012 respectively from related parties)		3,512			4,723			7,053			8,063
Other income (including $0 and $1,500 for the three months and $0 and $3,000 for the six months ended 2013 and 2012 respectively from related parties)		149			2,235			2,685			3,981
Mortgage and loan interest (including $581 and $931 for the three months and $865 and $1,853 for the six months ended 2013 and 2012 respectively from related parties)		(11,065	)		(12,061	)		(22,169	)		(24,488	)
Deferred borrowing costs amortization		(960	)		(1,975	)		(3,436	)		(2,887	)
Loan charges and prepayment penalties		(3,380	)		(3,769	)		(7,362	)		(6,161	)
Loss on sale of investments		-			-			-			(362	)
Earnings from unconsolidated investees		(25	)		33			188			150
Total other expenses		(11,769	)		(10,814	)		(23,041	)		(21,704	)
Loss before gain on land sales, non-controlling interest, and taxes		(7,906	)		(5,343	)		(15,048	)		(12,962	)
Gain (loss) on land sales		-			4,738			(35	)		3,716
Loss from continuing operations before tax		(7,906	)		(605	)		(15,083	)		(9,246	)
Income tax benefit		6,423			2,217			8,931			2,625
Net income (loss) from continuing operations		(1,483	)		1,612			(6,152	)		(6,621	)
Discontinued operations:
Income (loss) from discontinued operations		276			1,666			216			(757	)
Gain on sale of real estate from discontinued operations		18,074			4,668			25,301			8,256
Income tax expense from discontinued operations		(6,423	)		(2,217	)		(8,931	)		(2,625	)
Net income from discontinued operations		11,927			4,117			16,586			4,874
Net income (loss)		10,444			5,729			10,434			(1,747	)
Net (income) loss attributable to non-controlling interest		(2,090	)		(1,064	)		(1,706	)		112
Net income (loss) attributable to American Realty Investors, Inc.		8,354			4,665			8,728			(1,635	)
Preferred dividend requirement		(613	)		(613	)		(1,226	)		(1,226	)
Net income (loss) applicable to common shares	$	7,741		$	4,052		$	7,502		$	(2,861	)
Earnings per share - basic
Loss from continuing operations	$	(0.36	)	$	(0.01	)	$	(0.79	)	$	(0.67	)
Income from discontinued operations		1.03			0.36			1.44			0.42
Net income (loss) applicable to common shares	$	0.67		$	0.35		$	0.65		$	(0.25	)
Earnings per share - diluted
Loss from continuing operations	$	(0.36	)	$	(0.01	)	$	(0.79	)	$	(0.67	)
Income from discontinued operations		1.03			0.36			1.44			0.42
Net income (loss) applicable to common shares	$	0.67		$	0.35		$	0.65		$	(0.25	)
Weighted average common share used in computing earnings per share		11,525,389			11,525,389			11,525,389			11,525,389
Weighted average common share used in computing diluted earnings per share		11,525,389			11,525,389			11,525,389			11,525,389
Amounts attributable to American Realty Investors, Inc.
Income (loss) from continuing operations	$	(3,573	)	$	548		$	(7,858	)	$	(6,509	)
Income from discontinued operations		11,927			4,117			16,586			4,874
Net income (loss) applicable to American Realty Investors, Inc.	$	8,354		$	4,665		$	8,728		$	(1,635	)

AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
	June 30,			December 31,
	2013			2012
	(dollars in thousands, except share and par value amounts)
Assets
Real estate, at cost	$	1,004,999		$	1,031,632
Real estate held for sale at cost, net of depreciation ($0 for 2013 and $4,393 for 2012)		-			17,040
Real estate subject to sales contracts at cost, net of depreciation ($1,773 and $15,948 in 2013 and 2012)		27,682			42,286
Less accumulated depreciation		(159,574	)		(160,525	)
Total real estate		873,107			930,433
Notes and interest receivable
Performing (including $111,898 and $114,275 in 2013 and 2012 from related parties)		118,968			120,998
Non-performing		4,226			4,175
Less allowance for estimated losses (including $15,962 and $18,962 in 2013 and 2012 from related parties)		(19,504	)		(21,704	)
Total notes and interest receivable		103,690			103,469
Cash and cash equivalents		9,333			17,141
Investments in unconsolidated investees		10,415			8,168
Related party receivable		871			-
Other assets		61,197			76,134
Total assets	$	1,058,613		$	1,135,345
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable	$	757,144		$	769,201
Notes related to assets held for sale		-			18,915
Notes related to subject to sales contracts		21,035			55,976
Stock-secured notes payable and margin debt		24,818			25,765
Related party payables		-			10,922
Deferred gain (including $74,303 and $71,303 in 2013 and 2012 from sales to related parties)		76,148			73,148
Accounts payable and other liabilities (including $10,536 and $15,746 in 2013 and 2012 to related parties)		85,278			96,314
		964,423			1,050,241
Shareholders’ equity:
Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued and outstanding 3,353,954 shares in 2013 and 2012 (liquidation preference $10 per share), including 900,000 shares in 2013 and 2012 held by subsidiaries		4,908			4,908
Preferred stock, Series K: $2.00 par value, authorized, issued and outstanding 135,000 and 0 shares in 2013 and 2012, respectively (liquidation preference $10 per share), held by TCI (consolidated)		-			-
Common stock, $.01 par value, authorized 100,000,000 shares; issued 11,941,174 shares and outstanding 11,525,389 shares in 2013 and 2012		115			115
Treasury stock (Common Stock) at cost; 415,785 shares in 2013 and 2012 and 229,214 shares held by TCI (consolidated) as of 2013 and 2012		(6,395	)		(6,395	)
Paid-in capital		104,367			105,700
Retained earnings		(44,343	)		(53,071	)
Accumulated other comprehensive loss		(786	)		(786	)
Total American Realty Investors, Inc. shareholders' equity		57,866			50,471
Non-controlling interest		36,324			34,633
Total equity		94,190			85,104
Total liabilities and equity	$	1,058,613		$	1,135,345