UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended June 30, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number 1-5570 TRANSCO REALTY TRUST (Exact name of small business issuer as specified in its charter) Massachusetts 04607-1814 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2701 S. Bayshore Drive, Coconut Grove, Florida 33133 (Address of principal executive offices) (Zip Code) 305-854-6803 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) has filed all reports required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 ___ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Check whether the registrant filed all documents and reports required to be filed by Sections, 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court. Yes ___ No ___ APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 560,508 Common shares were outstanding as of July 31, 1995 TRANSCO REALTY TRUST AND SUBSIDIARIES (A MASSACHUSETTS BUSINESS TRUST) INDEX PAGE NUMBER PART I Financial Information: Item 1. Financial Statements Condensed Consolidated Balance Sheets as of June 30, 1995 and December 31, 1994 (Unaudited) ..................1 Condensed Consolidated Statements of Operations For the Three and Six Months Ended June 30, 1995 and 1994 (Unaudited) ..............................................2 Condensed Consolidated Statements of Cash Flows For the Six Months Ended June 30, 1995 and 1994 (Unaudited) .......................................................3 Investment in Affiliates for the Three and Six Months Ended June 30, 1995 and 1994 (Unaudited) ...................4 Notes to Condensed Consolidated Financial Statements (Unaudited) ............................................5 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations .........................6 PART II Other Information: Item 6. Reports of Form 8-K ..........................................7 Transco Realty Trust and Subsidiaries Part I Financial Information (A Massachusetts Business Trust) Item I Financial Statements Condensed Consolidated Balance Sheets (Unaudited) June 30, December 31, 1995 1994 ASSETS Cash $9,256 $2,899 Land held for sale 17,676 17,676 Investments in and receivables from affiliates 2,790,403 3,019,621 Notes, mortgage loans and accrued interest receivable 172,021 177,086 Investments in partnerships, other securities and other 23,670 20,515 Deferred income taxes 229,200 201,000 ---------- ---------- TOTAL ASSETS 3,242,226 3,438,797 ========= ========= LIABILITIES & SHAREHOLDERS' EQUITY Loans and notes payable 65,000 65,000 Notes and accrued interest payable to affiliates 1,095,789 977,910 Dividends payable 240,000 200,000 Accounts payable, accrued expenses and other liabilities 11,910 27,792 ---------- ---------- TOTAL LIABILITIES 1,412,699 1,270,702 ---------- ---------- SHAREHOLDERS' EQUITY Shares of beneficial interest, no par value; unlimited number authorized; 581,508 issued 4,147,196 4,147,196 $1.00 cummulative preferred stock, no par value, non-voting - 80,000 shares authorized, issued and outstanding at redemption value of $12.50 per share 1,000,000 1,000,000 Accumulated deficit (3,092,669) (2,754,101) Treasury stock (21,000 shares at cost) (225,000) (225,000) ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 1,829,527 2,168,095 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,242,226 $3,438,797 ========== ========== 1 See notes to condensed consolidated financial statements Transco Realty Trust and Subsidiaries (A Massachusetts Business Trust) Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 1995 1994 1995 1994 INCOME Equity in earnings of affiliates ($295,905) ($531,579) ($238,860) ($165,877) Gains from partnerships and other investments 1,776 1,840 Interest, dividends and other income 5,004 4,523 9,798 9,220 --------- --------- --------- --------- (290,901) (527,056) (227,286) (154,817) --------- --------- --------- --------- EXPENSES Interest 10,049 5,974 17,704 11,575 Property and other operating expenses 19,775 18,471 27,617 27,709 Fees and salaries to trustees, officers and related parties 27,000 27,000 54,200 54,200 --------- --------- --------- --------- 56,824 51,445 99,521 93,484 --------- --------- --------- --------- Income (loss) before income taxes (347,725) (578,501) (326,807) (248,301) Provision for income taxes (40,800) (28,200) --------- --------- --------- --------- NET INCOME (LOSS) ($306,925) ($578,501) ($298,607) ($248,301) ========= ========= ========= ========= Net income (loss) per share of beneficial interest: Net income ($306,925) ($578,501) ($298,607) ($248,301) Less preferred stock dividends 20,000 20,000 40,000 --------- --------- --------- --------- Net (loss) income of beneficial interest ($306,925) ($598,501) ($318,607) ($288,301) ========= ========= ========= ========= Weighted average number of common shares of beneficial interest outstanding during the period 560,508 560,508 560,508 560,508 ======= ======= ======= ======= Net(loss) income per share of beneficial interest ($0.55) ($1.07) ($0.57) ($0.51) ====== ====== ====== ====== See notes to condensed consolidated financial statements 2 Transco Realty Trust and Subsidiaries (A Massachusetts Business Trust) Condensed Consolidated Statements of Cash Flow (Unaudited) Six Months Ended June 30, 1995 1994 Cash Flows from Operating Activities: Net income (loss) ($298,607) ($248,301) --------- --------- Adjustments to reconcile net income to net cash used in operating activities: Equity in losses (earnings) of affiliates and partnerships 238,860 164,037 Changes in assets and liabilities: Increase in deferred income taxes (28,200) Decrease (increase) in other assets (3,244) (9,151) Increase in accrued expenses and other liabilities (25,485) (10,636) --------- --------- Total Adjustments 181,931 144,250 --------- --------- Net cash used in operating activities (116,676) (104,051) --------- --------- Cash Flows from Investing Activities: Payments received on mortgages and notes receivable 5,065 7,205 Distributions from partnerships and affiliates 89 3,618 Advances from (to) affiliates 117,879 (2,494) --------- --------- Net cash provided by investing activities 123,033 8,329 --------- --------- Cash Flows from Financing Activities: Repayments of interest to affiliate (5,887) --------- --------- Net cash used in financing activities (5,887) --------- --------- Net (decrease) increase in cash 6,357 (101,609) Cash at the beginning of the period 2,899 128,475 --------- --------- Cash at the end of the period $9,256 $26,866 ====== ======= Supplemental Disclosure of Cash Flow Information: Cash paid during the period for interest $18,000 $12,000 ======= ======= See notes to condensed consolidated financial statements 3 Part I Financial Information (continued) - Investments in Affiliates - HMG/Courtland Properties, Inc. (HMG) The investment in affiliates at June 30, 1995 inclues the Trust's 40.91% interest in HMG. HMG's Condensed Consolidated Statements of Operations for the three and six months ended June 30, 1995 and 1994 are presented below: HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three months ended Six months ended June 30, June 30, 1995 1994 1995 1994 REVENUES Rentals and related revenue $402,993 $784,238 $1,222,377 $1,700,574 Hotel, club and marina revenues 1,007,898 639,357 2,139,439 1,487,406 Gain from sale of securities 51,086 Interest from invested cash, dividends and other 376,618 110,845 528,585 178,600 --------- --------- --------- --------- Total revenues 1,787,509 1,534,440 3,941,487 3,366,580 --------- --------- --------- --------- EXPENSES Operating expenses: Rental Properties and other 317,675 468,218 741,426 880,643 Hotel, club and marina expenses: Payroll and related expenses 588,911 676,027 1,204,301 1,270,159 Cost of food and beverage 156,610 116,655 343,493 246,582 Administrative and general expenses 479,753 454,863 915,715 991,787 Depreciation and amortization 314,803 209,326 773,901 451,229 --------- --------- --------- --------- Total operating expenses 1,857,752 1,952,089 3,978,836 3,840,400 Interest 239,190 228,408 488,186 443,897 Advisor's fee 218,751 218,751 437,502 437,502 General and administrative 132,278 528,552 248,334 761,557 Directors' fees and expenses 15,350 21,641 31,195 33,641 Minority partners' interests in operating gains of consolidated entities 36,515 4,930 120,940 22,301 Gains from unconsolidated entities (75,578) (30,291) (115,620) (540,752) --------- --------- --------- --------- Total expenses 2,424,258 2,897,080 5,189,373 4,998,546 --------- --------- --------- --------- Loss before gain on sales of real estate (636,749) (1,362,640) (1,247,886) (1,631,966) Gain (loss) on sales of real estate, net (28,543) 172,987 787,853 1,362,489 --------- --------- --------- --------- NET LOSS ($665,292) ($1,189,653) ($460,033) ($269,477) ========= =========== ========= ========= Earnings (Loss) Per Common Share (Based on 1,166,835 weighted average shares outstanding): ($0.57) ($1.02) ($0.39) ($0.23) ====== ====== ====== ====== 4 TRANSCO REALTY TRUST AND SUBSIDIARIES (A MASSACHUSETTS BUSINESS TRUST) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS In the opinion of the Trust, the accompanying unaudited condensed financial statements include all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the results for the periods. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the Trust's Annual Report for the year ended December 31, 1994. The results of operations for the six months ended June 30, 1995 are not necessarily indicative of the results to be expected for the full year. 5 Part I Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the three and six months ended June 30, 1995 the Trust reported net losses of $307,000 or $.55 per share and $299,000 or $.57 per share, respectively. For the three and six months ended June 30, 1994, the Trust reported net losses of $578,000 or $1.07 per share and $248,000 or $.51 per share, respectively. Total revenues for the three and six months ended June 30, 1995 were a deficit of $291,000 and $227,000, respectively. For the three and six months ended June 30, 1994 total revenues were a deficit of $527,000 and $155,000, respectively. This decrease in deficit was primarily due to equity in increased earnings of its affiliate, HMG/Courtland Properties, Inc. (HMG). For the three and six months ended June 30, 1995 HMG reported losses of $665,000 and $460,000, respectively, versus losses of $1,190,000 and $269,000 for the three and six months ended June 30, 1994, respectively. (See Part I Financial Information - Investments in Affiliates - HMG/Courtland Properties, Inc.). HMG's decrease in losses for the three months ended June 30, 1995 is primarily attributable to increased revenues from the operations of the hotel, club, and marina property acquired in September 1993. Total expenses for the three and six months ended June 30, 1995 were $57,000 and $100,000, respectively. Total expenses for the three and six months ended June 30, 1994 were $51,000 and $93,000 respectvely. These increases were not significant. LIQUIDITY AND CAPITAL RESOURCES The Trust's ability to maintain liquidity and obtain capital resources largely depends on the results of its affiliate HMG and on HMG's ability to generate sufficient operating income to allow for the payment of dividends. Until such dividends are paid or TRT can successfully sell the remaining land in North Carolina, the Trust's current obligations will be met by financing provided through traditional sources and by affiliates. 6 Part II OTHER INFORMATION Item 6. Reports on Form 8-K (a) There were no reports filed on Form 8-K during the quarter ended June 30, 1995. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRANSCO REALTY TRUST (Registrant) Lawrence I. Rothstein Vice President August 15, 1995 7