SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2001 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number 0-11083 ONE LIBERTY PROPERTIES, INC. ---------------------------- (Exact name of Registrant as specified in its charter) MARYLAND 13-3147497 -------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 60 Cutter Mill Road, Great Neck, New York 11021 ------------------------------------------------------------------------- (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (516) 466-3100 --------------- Indicate the number of shares outstanding of each of the issuer's classes of stock, as of the latest practicable date. As of November 7, 2001, the Registrant had 3,025,317 shares of Common Stock and 648,058 shares of Redeemable Convertible Preferred Stock outstanding. Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 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 --- ----
Part I - FINANCIAL INFORMATION Item 1. Financial Statements <TABLE> <CAPTION> ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in Thousands, Except Per Share Data) September 30, December 31, 2001 2000 ---- ---- (Unaudited) <S> <C> <C> Assets Real estate investments, at cost Land $ 25,939 $ 26,279 Buildings 101,153 101,585 -------- --------- 127,092 127,864 Less accumulated depreciation 8,018 6,244 -------- --------- 119,074 121,620 Cash and cash equivalents 8,149 2,069 Unbilled rent receivable 2,239 1,615 Rent, interest, deposits and other receivables 960 976 Note receivable - officer 167 240 Investment in BRT Realty Trust-(related party) 303 240 Deferred financing costs 1,328 1,154 Other (including available-for-sale securities of $216 and $228) 377 305 -------- -------- Total assets $132,597 $128,219 ======== ======== Liabilities and Stockholders' Equity Liabilities: Mortgages payable $ 76,891 $ 64,123 Line of credit - 10,000 Accrued expenses and other liabilities 763 720 Dividends payable 1,165 - -------- -------- Total liabilities 78,819 74,843 -------- -------- Commitments and contingencies - - Stockholders' equity: Redeemable convertible preferred stock, $1 par value; $1.60 cumulative annual dividend; 2,300 shares authorized; 648 shares issued; liquidation and redemption values of $16.50 10,693 10,693 Common stock, $1 par value; 25,000 shares authorized; 3,021 and 3,010 shares issued and outstanding 3,021 3,010 Paid-in capital 31,764 31,650 Accumulated other comprehensive income - net unrealized gain on available-for-sale securities 193 76 Accumulated undistributed net income 8,107 7,947 -------- -------- Total stockholders' equity 53,778 53,376 --------- -------- Total liabilities and stockholders' equity $132,597 $128,219 ======== ======== See accompanying notes to consolidated financial statements. </TABLE>
<TABLE> <CAPTION> ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands, Except Per Share Data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2001 2000 2001 2000 ---- ---- ---- ---- <S> <C> <C> <C> <C> Revenues: Rental income $3,732 $3,321 $11,322 $9,025 Interest and other income 66 35 143 185 ------- ------- ------ ------ 3,798 3,356 11,465 9,210 ------ ------- ------- ------ Expenses: Depreciation and amortization 727 642 2,173 1,710 Interest - mortgages payable 1,533 1,166 4,283 3,076 Interest - line of credit 10 105 241 157 Leasehold rent 72 72 217 217 General and administrative 284 266 881 816 Real estate expenses 41 27 130 47 ------ ------ ------- ------ 2,667 2,278 7,925 6,023 ------ ------ ------- ------ Income before gain (loss) on sale 1,131 1,078 3,540 3,187 ------ ------ ------- ------ Gain on sale of real estate 172 - 126 199 (Loss) gain on sale of available-for-sale securities - 3 (14) (10) ------- ------- ------- ------ 172 3 112 189 ------- ------- ------- ------ Net income $1,303 $1,081 $ 3,652 $3,376 ====== ====== ======= ====== Calculation of net income applicable to common stockholders: Net income $1,303 $1,081 $ 3,652 $3,376 Less: dividends on preferred stock 259 261 778 784 ------- ------- ------- ------ Net income applicable to common stockholders $1,044 $ 820 $ 2,874 $2,592 ====== ======= ======= ====== Weighted average number of common shares outstanding: Basic 3,020 2,998 3,016 2,989 ===== ===== ===== ===== Diluted 3,045 2,999 3,028 2,990 ===== ===== ===== ===== Net income per common share: Basic $ .35 $ .27 $ .95 $ .87 ====== ======= ====== ====== Diluted $ .34 $ .27 $ .95 $ .87 ====== ======= ====== ====== Cash distributions per share: Common Stock $ .30 $ .30 $ .90 $ .90 ====== ======= ====== ====== Preferred Stock $ .40 $ .40 $ 1.20 $ 1.20 ====== ======= ====== ====== See accompanying notes to consolidated financial statements. </TABLE>
<TABLE> <CAPTION> ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the nine month period ended September 30, 2001 (unaudited) and the year ended December 31, 2000 (Amounts in Thousands) Accumulated Other Accumulated Preferred Common Paid-in Comprehensive Undistributed Stock Stock Capital Income Net Income Total ------- ------ ------- ------ ---------- ------ <S> <C> <C> <C> <C> <C> <C> Balances, January 1, 2000 $10,802 $2,980 $31,338 $33 $4,649 $49,802 Distributions - common stock - - - - (3,590) (3,590) Distributions - preferred stock - - - - (1,044) (1,044) Preferred stock (109) - 18 - - (91) Shares issued through dividend reinvestment plan - 30 294 - - 324 Net income - - - - 7,932 7,932 Other comprehensive income- net unrealized gain on available-for-sale securities - - - 43 - 43 ------ Comprehensive income - - - - - 7,975 ------ ----- ------- ------ ------ ------ Balances, December 31, 2000 10,693 3,010 31,650 76 7,947 53,376 Distributions - common stock - - - - (2,714) (2,714) Distributions - preferred stock - - - - (778) (778) Shares issued through dividend reinvestment plan - 11 114 - - 125 Net income - - - - 3,652 3,652 Other comprehensive income- net unrealized gain on available-for-sale securities - - - 117 - 117 ------ Comprehensive income - - - - - 3,769 ------- ----- ------- ------ ------ ------ Balances, September 30, 2001 $10,693 $3,021 $31,764 $ 193 $ 8,107 $53,778 ======= ====== ======= ====== ======= ======= See accompanying notes to consolidated financial statements. </TABLE>
<TABLE> <CAPTION> ONE LIBERTY PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) (Unaudited) Nine Months Ended September 30, 2001 2000 ---- ---- <S> <C> <C> Cash flows from operating activities: Net income $ 3,652 $ 3,376 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of real estate (126) (199) Loss on sale of available-for-sale securities 14 10 Increase in rental income from straight-lining of rent (624) (516) Depreciation and amortization 2,173 1,710 Changes in assets and liabilities: Increase in rent, interest, deposits and other receivables (67) (319) Increase in accrued expenses and other liabilities 59 234 ------- ------- Net cash provided by operating activities 5,081 4,296 ------- ------- Cash flows from investing activities: Additions to real estate (17) (33,101) Net proceeds from sale of real estate 749 837 Net proceeds from sale of available-for-sale securities 185 150 Purchase of available-for-sale securities (132) - Payments to minority interest by subsidiary (16) (21) ------- ------- Net cash provided by (used in) investing activities 769 (32,135) ------- ------- Cash flows from financing activities: Proceeds from mortgages payable 13,600 15,000 Repayment of mortgages payable (832) (569) Payment of financing costs (408) (531) Line of credit - (paydowns) borrowings (10,000) 8,000 Cash distributions - common stock (1,808) (1,793) Cash distributions - preferred stock (519) (523) Issuance of shares through dividend reinvestment plan 124 195 Note receivable - officer 73 (160) Repurchase of preferred stock, which was cancelled - (42) -------- -------- Net cash provided by financing activities 230 19,577 -------- -------- Net increase (decrease) in cash and cash equivalents 6,080 (8,262) Cash and cash equivalents at beginning of period 2,069 11,247 -------- ------- Cash and cash equivalents at end of period $ 8,149 $ 2,985 ======== ======= Supplemental disclosures of cash flow information: Cash paid during the period for interest expense $ 4,551 $ 3,080 Supplemental schedule of non cash investing and financing activities: Assumption of mortgage payable in connection with purchase of real estate $ - $ 9,015 See accompanying notes to consolidated financial statements. </TABLE>
One Liberty Properties, Inc. and Subsidiaries Notes to Consolidated Financial Statements Note 1 - Basis of Preparation -------------------- The accompanying interim unaudited consolidated financial statements as of September 30, 2001 and for the nine and three months ended September 20, 2001 and 2000 reflect all normal, recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the results for such interim periods. The results of operations for the nine and three months ended September 30, 2001 are not necessarily indicative of the results for the full year. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements include the accounts of One Liberty Properties, Inc., its wholly-owned subsidiaries and a majority-owned limited liability company. Material intercompany balances and transactions have been eliminated. One Liberty Properties, Inc., its subsidiaries and the limited liability company are hereinafter referred to as the "Company". Certain amounts reported in previous consolidated financial statements have been reclassified in the accompanying consolidated financial statements to conform to the current year's presentation. These statements should be read in conjunction with the consolidated financial statements and related notes which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Note 2 - Earnings Per Common Share ------------------------- For the nine and three months ended September 30, 2001 and 2000 basic earnings per share was determined by dividing net income applicable to common stockholders for the period by the weighted average number of shares of Common Stock outstanding during each period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance of Common Stock that then shared in the earnings of the Company. For the nine and three month periods ended September 30, 2001 and 2000 diluted earnings per share was determined by dividing net income applicable to common stockholders for the period by the total of the weighted average number of shares of Common Stock outstanding plus the dilutive effect of the Company's outstanding options (12,627 and 24,656 for the nine and three months ended September 30, 2001 and 660 and 775 for the nine and three months ended September 30, 2000, respectively) using the
One Liberty Properties, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Note 2 - Earnings Per Common Share (Continued) ------------------------------------- treasury stock method. The Preferred Stock was not considered for the purpose of computing diluted earnings per share because their assumed conversion is antidilutive. Options to purchase 40,000 shares of Common Stock at $14.50 per share (which were granted during March 1998) were not included in the computation of diluted earnings per share because the exercise price of these options is greater than the average market price of the common shares as of September 30, 2001 and therefore the effect would be antidilutive. Note 3 - Preferred and Common Stock Dividend Distributions ------------------------------------------------- On September 5, 2001 the Board of Directors declared quarterly cash distributions of $.30 and $.40 per share on the Company's common and preferred stock, respectively, which was paid on October 1, 2001 to stockholders of record on September 17, 2001. Note 4 - Comprehensive Income -------------------- Statement No. 130 establishes standards for reporting comprehensive income and its components in a full set of general-purpose financial statements and requires that all components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. During the nine months ended September 30, 2001, accumulated other comprehensive income, which is solely composed of the net unrealized gain on available-for-sale securities, increased $117,000 to $193,000. During the nine months ended September 30, 2000 comprehensive income increased $57,000 to $90,000. Note 5 - Derivative Instruments and Hedging Activities --------------------------------------------- In June 1999, The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 137, amending Statement of Financial Accounting Standards No. 133. "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), which extended the required date of adoption to fiscal years beginning after September 15, 2000. SFAS 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded on the balance sheet as either an asset or liability measured at its fair value. SFAS 133 requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Company adopted SFAS 133 on January 1, 2001 and the impact is immaterial due to the Company's limited derivative activity.
Item 2. Management's Discussion And Analysis Of Financial Condition ----------------------------------------------------------- And Results Of Operations ------------------------- Liquidity and Capital Resources - ------------------------------- The Company's primary sources of liquidity are cash and cash equivalents ($8,149,000 at September 30, 2001), a $15,000,000 revolving credit facility, all of which is available, and cash generated from operating activities. On March 24, 2000 the Company entered into an agreement with Citibank ("Citi"), formerly European American Bank, to provide a $15,000,000 revolving credit facility ("Facility"). The Facility is used primarily to finance the acquisition of commercial real estate. The Facility matures on March 24, 2002 with an option to extend through March 24, 2003. Borrowings under the Facility bear interest at Citi's prime rate and there is an unused facility fee of one-quarter of 1%. Net proceeds received from the sale or refinance of properties are required to be used to repay amounts outstanding under the Facility if proceeds from the Facility were used to purchase the property. The Facility is guaranteed by all Company subsidiaries which own unencumbered properties. At September 30, 2001, there was no outstanding balance under the Facility. The Company is currently in discussions concerning the acquisition of additional net leased properties. Cash provided from operations and the Company's cash position will provide funds for cash distributions to shareholders and operating expenses. In addition, these sources of funds, as well as funds available from the Facility, will provide funds for future property acquisitions. It will continue to be the Company's policy to make sufficient cash distributions to shareholders in order for the Company to maintain its real estate investment trust status under the Internal Revenue Code. On July 6, 2000, the Company announced that its Board of Directors had authorized the purchase of its outstanding preferred stock from time-to-time in the open market and in private transactions. The Board of Directors of the Company allocated $1,000,000 to this repurchase program. In the year 2000, 6,600 shares of preferred stock had been repurchased at a total cost of $91,000. There have been no purchases during the nine month period ended September 30, 2001.
Results of Operations - --------------------- Nine and Three Months Ended September 30, 2001 and 2000 - ------------------------------------------------------- Rental income increased by $2,297,000 to $11,322,000 for the nine months ended September 30, 2001, as compared to the nine months ended September 30, 2000, primarily due to the acquisition of eight properties during 2000. This increase was partially offset by a decrease in revenues resulting from the sale of thirteen Total Petroleum properties during October 2000. The $411,000 increase in rental income to $3,732,000 for the three months ended September 30, 2001 as compared to the three months ended September 30, 2000 results primarily from the acquisition of four properties during the second half of 2000, offset in part by a decrease in revenues due to the sale of the Total Petroleum properties. Interest and other income decreased by $42,000 for the nine months ended September 30, 2001 to $143,000 due to a reduction in interest earned on cash and cash equivalents available for investment, as cash and cash equivalents were used to fund property acquisitions. An increase of $31,000 to $66,000 in interest and other income for the three months ended September 30, 2001 is due to the completion of a $9,900,000 mortgage financing in April 2001, of which $5,700,000 was used to pay off the outstanding credit line balance and $4,200,000 was invested in U.S. Treasury securities. Increases in depreciation and amortization expense of $463,000 and $85,000 for the nine and three months ended September 30, 2001 to $2,173,000 and $727,000, respectively, primarily results from depreciation on the eight properties acquired during the year ended December 31, 2000. The increases were partially offset by the decrease in depreciation resulting from the sale of the thirteen Total Petroleum properties. The increase in interest-mortgages payable of $1,207,000 to $4,283,000 for the nine months ended September 30, 2001 from $3,076,000 for the nine months ended September 30, 2000 is due to mortgages placed on seven of the properties acquired during 2000. The $367,000 increase in interest-mortgages payable to $1,533,000 from $1,166,000 for the three months ended September 30, 2001 is primarily due to mortgages placed on four properties in December 2000, March 2001 and April 2001. Interest - line of credit amounted to $241,000 and $10,000 for the nine and three months ended September 30, 2001 and reflect a $84,000 increase and a $95,000 decrease over the comparable periods in the preceding year. Borrowings were made to facilitate the purchase of several properties during 2000 and were paid off in full during 2001 with the proceeds from the mortgage financings completed in 2001 on two properties purchased in December 2000. Real estate expenses were $130,000 and $41,000 for the nine and three months ended September 30, 2001 and $47,000 and $27,000 for the nine and three months ended September 30, 2000. These increases are primarily due to the write off of a leasing commission, non-recurring landlord repairs and certain real estate taxes not rebilled to tenants. The nine months ended September 30, 2000 is net of a refund of real estate taxes received by the Company during that period.
Gain on sale of real estate during the three months ended September 30, 2001 results from a gain on the sale of a property located in Utah. The gain in the nine months ended September 30, 2001 is net of a loss on the sale of a property located in Tennessee during the three months ended June 30, 2001. The gain in the nine months ended September 30, 2000 includes the gain on the sale of properties located in South Carolina and Kansas. Item 3. - Quantitative and Qualitative Disclosures About Market Risks ----------------------------------------------------------- All of the Company's long-term debt bears interest at fixed rates, and therefore the fair value of these instruments is affected by changes in the market interest rates. The following table presents principal cash flows based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the fixed rate debt. Principal Year Ending Cash Flows Average September 30, (In Thousands) Interest Rate ------------- ------------- ------------- 2002 $ 1,844 7.86% 2003 10,649 7.87 2004 4,085 7.94 2005 9,393 7.96 2006 8,769 7.97 Thereafter 42,151 7.92 --------- Total $ 76,891 7.92 ========= Fair Value $ 78,538 7.50% ========= Part II - Other Information Item 6. - Exhibits and Reports on Form 8-K -------------------------------- No Form 8-K's were filed during the quarter ended September 30, 2001.
ONE LIBERTY PROPERTIES, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. One Liberty Properties, Inc. ---------------------------- (Registrant) November 9, 2001 /s/ Jeffrey Fishman - ----------------- ------------------- Date Jeffrey Fishman President November 9, 2001 /s/ David W. Kalish - ----------------- ------------------- Date David W. Kalish Vice President and Chief Financial Officer