CAPITAL PROPERTIES INC RI

Previous wording

At June 30, 2024, the Company had cash and cash equivalents of $847,000. In addition to these funds, the Company has $1,265,000 invested in U.S. Treasury securities that yield 5.08% and mature in September 2024. The Company and its subsidiary each maintain checking accounts and a money market account in one bank, all of which are insured by the Federal Deposit Insurance Corporation to a maximum of $250,000. The Company periodically evaluates the financial stability of the financial institutions at which the Company’s funds are held.

Current wording

At September 30, 2024, the Company had cash and cash equivalents of $973,000. In addition to these funds, the Company has $1,294,000 invested in U.S. Treasury securities that yield 4.86% and mature in March 2025. The Company and its subsidiary each maintain checking accounts and a money market account in one bank, all of which are insured by the Federal Deposit Insurance Corporation to a maximum of $250,000. The Company periodically evaluates the financial stability of the financial institutions at which the Company’s funds are held.

Previous wording

The Terminal Sale Agreement and related documentation provides that the Company is required to secure an approved remediation plan and to remediate contamination caused by a leak in 1994 from a storage tank at the Terminal. At June 30, 2024, the Company’s accrual for the remaining cost of remediation was $387,000 of which $36,000 is expected to be incurred during the balance of 2024. Any subsequent increases or decreases to the expected cost of remediation will be recorded in gain (loss) on sale of discontinued operations, net of taxes.

Current wording

The Terminal Sale Agreement and related documentation provides that the Company is required to secure an approved remediation plan and to remediate contamination caused by a leak in 1994 from a storage tank at the Terminal. At September 30, 2024, the Company’s accrual for the remaining cost of remediation was $365,000 of which $22,000 is expected to be incurred during the balance of 2024. Any subsequent increases or decreases to the expected cost of remediation will be recorded in gain (loss) on sale of discontinued operations, net of taxes.

Previous wording

The Terminal Sale Agreement also contained a cost sharing provision for a breasting dolphin whereby any construction costs in excess of the contract cost of construction would be borne equally by Sprague and the Company subject to certain limitations, including, in the Company’s opinion, a 20% cap on the increase from the initial estimate subject to the sharing arrangement. In November 2019, Sprague asserted that it was owed $427,000 and the Company asserted that its obligation under the Agreement could not exceed $104,000. Mediation efforts were unsuccessful and in July 2021, Sprague commenced an action against the Company in the Rhode Island Superior Court (Superior Court) seeking monetary damages of $427,000, plus interest and attorney’s fees. In December 2022, the Superior Court denied Sprague’s Motion for Summary Judgment filed in September 2022 and granted in part and denied in part the Company’s Cross Motion for Summary Judgment also filed in September 2022. The matter went to trial before a Superior Court judge in May 2024. Post-trial briefs have been filed and the Company anticipates that a decision will be rendered before the end of 2024.

Current wording

The Terminal Sale Agreement also contained a cost sharing provision for a breasting dolphin whereby any construction costs in excess of the contract cost of construction would be borne equally by Sprague and the Company subject to certain limitations, including, in the Company’s opinion, a 20% cap on the increase from the initial estimate subject to the sharing arrangement. In November 2019, Sprague asserted that it was owed $427,000 and the Company asserted that its obligation under the Agreement could not exceed $104,000. Mediation efforts were unsuccessful and in July 2021, Sprague commenced an action against the Company in the Rhode Island Superior Court (Superior Court) seeking monetary damages of $427,000, plus interest and attorney’s fees. In December 2022, the Superior Court denied Sprague’s Motion for Summary Judgment filed in September 2022 and granted in part and denied in part the Company’s Cross Motion for Summary Judgment also filed in September 2022. The matter went to trial before a Superior Court judge in May 2024. Post-trial briefs were filed on July 25, 2024. On October 28, 2024, the Superior Court rendered its decision and found that the Company’s obligation with respect to the increased cost of constructing the breasting dolphin is $104,000. In accordance with Rhode Island law, the Court also awarded Sprague prejudgment interest of 12% per annum from the date the claim accrued which the Company anticipates that at the time judgment is entered by the Court will total approximately $45,000. The Company and Sprague each have thirty (30) days from the date of entry of the judgment by the Court to file a notice of appeal. The Company is still evaluating whether to appeal. At September 30, 2024 and December 31, 2023, Liabilities, other includes $149,000 and $104,000, respectively, related to this matter.

Previous wording

Loss on sale of discontinued operations on the condensed consolidated statements of income and shareholders’equity includes legal and professional fees related to the Sprague Litigation of $281,000 and $351,000 for the three and six months ended June 30, 2024, respectively and $25,000 in each of the same periods for 2023 related to the Sprague litigation.

Current wording

Loss on sale of discontinued operations on the condensed consolidated statements of income and shareholders’equity includes legal and professional fees related to the Sprague Litigation of $10,000 and $386,000 for the three and nine months ended September 30, 2024, respectively and $4,000 and $29,000 in each of the same periods for 2023 related to the Sprague litigation. For the three and nine months ended September 30, 2024, the loss also includes prejudgment interest of $45,000 related to the Sprague Litigation.

Previous wording

Revenue increased $2,000 from 2023 and consists of increased revenue from Metropark ($20,000), scheduled rent increases ($8,000) and other sources of revenue ($11,000) offset by a net decline in rent from Lamar caused by decreased contingent rent ($37,000).

Current wording

Revenue increased $59,000 from 2023 and consists of increased revenue from Metropark ($24,000), scheduled rent increases ($31,000) and a net increase in other sources of revenue ($4,000),

Previous wording

Operating expenses increased $20,000 due principally to repair and maintenance costs, professional fees related to the Company's billboard operations and increased insurance costs.

Current wording

Operating expenses increased $32,000 due principally to professional fees related to the Company's billboard operations.

Previous wording

General and administrative expense increased $2,000 due principally to an increase in payroll and payroll related costs.

Current wording

General and administrative expense increased $25,000 due principally to an increase in payroll and payroll related costs.

Previous wording

Six months ended June 30, 2024 compared to six months ended June 30, 2023:

Current wording

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023:

Previous wording

Leasing revenue increased $93,000 from 2023, due principally to Metropark ($59,000), scheduled rent increases and contingent rent associated with our land leases ($37,000) along with an increase in other revenue ($29,000) offset by a decline in contingent rent from Lamar ($32,000).

Current wording

Leasing revenue increased $152,000 from 2023, due principally to Metropark ($83,000), scheduled rent increases and contingent rent associated with our land leases ($66,000) along with an increase in other revenue ($26,000) offset by a net decline in rent from Lamar ($23,000) due to the decline in contingent rent.

Previous wording

Operating expenses increased $54,000 due to professional fees associated with billboard operations ($34,000), increased insurance costs ($10,000) and repairs and maintenance ($12,000) offset by a decline in other operating expenses ($2,000).

Current wording

Operating expenses increased $86,000 due to professional fees associated with billboard operations ($62,000), increased insurance costs ($16,000) and repairs and maintenance ($8,000).

Previous wording

General and administrative expense increased $18,000 due principally to increased payroll and payroll related costs.

Current wording

General and administrative expense increased $43,000 due principally to increased payroll and payroll related costs.

Previous wording

For the six months ended June 30, 2024 and 2023, the Company’s effective income tax rate is approximately 27% of income before income taxes.

Current wording

For the nine months ended September 30, 2024 and 2023, the Company’s effective income tax rate is approximately 27% of income before income taxes.