<PAGE>
UNITED STATES
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 March 31, 2000
/ / 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 000-23463
Philips International Realty Corp.
(Exact name of registrant as specified in its charter)
Maryland 13-3963667
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No)
417 Fifth Avenue, New York, NY 10016
(Address of principal executive offices - Zip Code)
(212) 545-1100
(Registrant's telephone number, including area code)
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 / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
7,340,474 shares outstanding as of April 30, 2000.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of March 31,
2000 and December 31, 1999
Condensed Consolidated Statements of Income for the
Three Months Ended March 31, 2000 and 1999
Condensed Consolidated Statements of Shareholders'
Equity for the Three Months Ended March 31, 2000 and
1999
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Item 3. Quantitative and Qualitative Disclosure of Market Risk
<PAGE>
PHILIPS INTERNATIONAL REALTY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- -------------
(Unaudited) (Note 1)
(Note 6)
<S> <C> <C>
ASSETS
Rental properties - net $ 276,106,464 $ 261,630,620
Investments in and advances to real estate joint ventures 3,744,431 25,134,060
Cash and cash equivalents 4,792,568 3,183,142
Accounts receivable 8,047,781 7,445,972
Deferred charges and prepaid expenses 6,295,400 4,934,190
Other assets 2,574,481 4,222,373
------------- -------------
Total Assets $ 301,561,125 $ 306,550,357
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgages and notes payable $ 175,664,910 $ 181,955,221
Accounts payable and accrued expenses 4,376,757 2,980,303
Dividends payable 2,771,031 2,771,031
Other liabilities 2,258,486 1,897,998
------------- -------------
Total Liabilities 185,071,184 189,604,553
------------- -------------
Minority interests in Operating Partnership 29,963,806 30,091,696
------------- -------------
Shareholders' Equity
Preferred Stock, $.01 par value; 30,000,000 shares authorized;
no shares issued and outstanding -- --
Common Stock, $.01 par value; 150,000,000 shares authorized;
7,340,474 shares issued and outstanding 73,405 73,405
Additional paid in capital 92,668,007 92,668,007
Cumulative distributions in excess of net income (5,562,151) (5,183,136)
------------- -------------
87,179,261 87,558,276
Stock purchase loans receivable (653,126) (704,168)
------------- -------------
Total Shareholders' Equity 86,526,135 86,854,108
------------- -------------
Total Liabilities and Shareholders' Equity $ 301,561,125 $ 306,550,357
============= =============
</TABLE>
See accompanying notes.
<PAGE>
PHILIPS INTERNATIONAL REALTY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenues from rental property $ 12,640,736 $ 9,211,727
------------ ------------
Expenses:
Operating expenses 1,561,945 1,157,002
Real estate taxes 1,795,229 1,418,431
Management fees to affiliates 377,665 275,974
Interest expense 3,152,466 1,807,018
Depreciation and amortization 2,028,959 1,611,345
General and administrative expenses 775,873 613,599
------------ ------------
9,692,137 6,883,369
------------ ------------
Operating income 2,948,599 2,328,358
Equity in net income of real estate joint ventures 57,873 613,631
Minority interests in income of Operating Partnership (805,439) (613,306)
Other income (expense), net 190,983 (507,267)
------------ ------------
Net income $ 2,392,016 $ 1,821,416
============ ============
Basic and diluted net income per common share $ 0.33 $ 0.25
============ ============
</TABLE>
See accompanying notes.
<PAGE>
PHILIPS INTERNATIONAL REALTY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Common Distributions
Stock Additional in Excess Stock Total
------------------------ Paid-In of Net Purchase Shareholders'
Shares Amount Capital Income Loans Equity
------ ------ ------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 7,340,474 $ 73,405 $ 92,668,007 $ (5,183,136) $ (704,168) $ 86,854,108
Net income 2,392,016 2,392,016
Dividends declared on Common Stock (2,771,031) (2,771,031)
Amortization of stock purchase loans 51,042 51,042
--------- -------- ------------ ------------ ---------- ------------
Balance, March 31, 2000 7,340,474 $ 73,405 $ 92,668,007 $ (5,562,151) $ (653,126) $ 86,526,135
========= ======== ============ ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
Cumulative
Common Distributions
Stock Additional in Excess Stock Total
------------------------ Paid-In of Net Purchase Shareholders'
Shares Amount Capital Income Loans Equity
------ ------ ------- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 7,340,474 $ 73,405 $ 92,668,007 $ (2,435,222) $ (908,334) $ 89,397,856
Net income 1,821,416 1,821,416
Dividends declared on Common Stock (2,771,031) (2,771,031)
Amortization of stock purchase loans 51,042 51,042
--------- -------- ------------ ------------ ---------- ------------
Balance, March 31, 1999 7,340,474 $ 73,405 $ 92,668,007 $ (3,384,837) $ (857,292) $ 88,499,283
========= ======== ============ ============ ========== ============
</TABLE>
See accompanying notes.
<PAGE>
PHILIPS INTERNATIONAL REALTY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flow provided by operating activities: $ 4,204,478 $ 3,731,511
------------ ------------
Cash flow from investing activities:
Acquisitions of land, buildings and improvements (2,643,097) (9,604,558)
Investments in and advances to real estate joint ventures (169,524) (21,522,654)
Return of investment in real estate joint venture 7,862,240 --
Collection (purchase) of secured mortgage note receivable 2,350,000 (1,750,000)
------------ ------------
Net cash provided by (used in) investing activities 7,399,619 (32,877,212)
------------ ------------
Cash flow from financing activities:
Repayment of mortgage notes payable (11,200,000) --
Principal amortization of mortgage notes payable (290,311) (247,441)
Proceeds from debt financing 5,200,000 24,475,000
Dividends paid on Common Stock (2,771,031) (2,477,412)
Distributions to minority interests (933,329) (834,434)
------------ ------------
Net cash provided by (used in) financing activities (9,994,671) 20,915,713
------------ ------------
Net increase (decrease) in cash and cash equivalents 1,609,426 (8,229,988)
Cash and cash equivalents, beginning of period 3,183,142 9,116,070
------------ ------------
Cash and cash equivalents, end of period $ 4,792,568 $ 886,082
============ ============
Noncash investing & financing activities:
Acquisition of real estate accounted for at the time of purchase
on the equity method $ 13,754,786 $ --
============ ============
Dividends declared and paid in succeeding period $ 2,771,031 $ 2,771,031
============ ============
</TABLE>
See accompanying notes.
<PAGE>
PHILIPS INTERNATIONAL REALTY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Interim Financial Statements
The accompanying Condensed Consolidated Financial Statements include the
accounts of the Company and its subsidiaries, all of which are wholly-owned, and
the Operating Partnership. All significant intercompany accounts and balances
have been eliminated in consolidation. The information furnished is unaudited
and reflects all adjustments which are, in the opinion of management, necessary
to reflect a fair presentation of the results for the interim periods presented,
and all such adjustments are of a normal recurring nature. These Condensed
Consolidated Financial Statements should be read in conjunction with the
financial statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.
The Condensed Consolidated Balance Sheet at December 31, 1999, has been
derived from the audited financial statements at that date but does not include
all of the information and footnote disclosure required by generally accepted
accounting principles for complete financial statements.
2. Income (Loss) per Common Share
Basic net income per share excludes the dilutive effects of any
outstanding options. Diluted net income per share includes the dilutive (but not
any anti-dilutive) effect of outstanding options calculated under the treasury
stock method.
Basic and diluted net income per common share in the accompanying
Condensed Consolidated Statements of Income are based upon weighted average
numbers of 7,340,474 shares of Common Stock outstanding for the three months
ended March 31, 2000 and 1999.
3. Dividends on Common Stock
On March 15, 2000, and March 15, 1999, the Board of Directors declared a
common stock dividend of $.3775 per share, which amounts were paid on April 17,
2000, and April 15, 1999 respectively, to common shareholders of record on March
31, 2000, and March 31, 1999.
4. Segment Information
Management considers the Company's various operating, investing and
financing activities to comprise a single business segment and evaluates real
estate performance and allocates resources based on net income.
5. Investment Activity
During July 1999, the Company acquired nine shopping center properties
(the "Properties") anchored by Kmart and comprising approximately 1.1 million
square feet of leasable space located in the states of Florida, California,
Washington, Minnesota, Illinois and Kentucky. Prior to these acquisitions, the
Company had purchased, through a series of unrelated transactions since July
1998, limited partnership interests in the Properties. The total amount invested
by the Company to acquire the Properties of approximately $49.5 million was
funded with borrowings under the Company's revolving line of credit. The
reporting of financial position and results of operations for the Company
pertaining to these Properties reflects a change from the equity to
consolidation method of accounting effective in July 1999.
At December 31, 1999, the Company had a $7.1 million joint-venture
investment in a proposed retail-residential redevelopment project. In February
2000, the joint venture sold this project and the Company's investment was
returned in full together with $.8 million representing a return on investment.
A shareholder and Unit holder of the Company was also an investor in this joint
venture.
During the first quarter 2000, the Company acquired the minority interests
in, and began reporting on a consolidated basis the results of operations for,
two shopping center properties previously accounted for under the equity method.
<PAGE>
6. Subsequent Event
On April 28, 2000, the Company announced that it had executed various
contracts pertaining to certain asset sales and a plan of liquidation authorized
by a special committee of the independent members (the "Independent Committee")
of its Board of Directors on April 17, 2000. Specifically, the contracts
executed pertain to (i) the disposition of fifteen shopping centers comprising
the Company's New York area portfolio and certain other properties to the Kimco
Income REIT, a private partnership in which Kimco Realty Corporation is a
partner, for a total consideration of approximately $206 million (the "Kimco
Transaction"), and (ii) the distribution of interests in four shopping center
properties in Hialeah, Florida, and the sale of the Company's interests in two
retail/residential redevelopment sites (having a total value of approximately
$131 million), to certain limited partners (the "Unit Holders") in Philips
International Realty, LP (the "Operating Partnership") including Mr. Philip
Pilevsky, the Company's Chairman and CEO, in redemption of their entire
interests in the Operating Partnership (the "Unit Holders' Transaction").
The Kimco Transaction contemplates the disposition of a total fifteen
shopping centers in two transactions valued at approximately $68 million and
$138 million. The $68 million transaction comprises the sale of seven properties
and is expected to close, subject to the completion of due diligence, within
forty-five days of contract date. The $138 million transaction contemplates the
purchase of the Company's interests in eight properties as part of the Company's
plan of liquidation.
The Unit Holders' Transaction contemplates, in part, the distribution of
the Company's interests in the Hialeah shopping centers to the Unit Holders in
redemption of all their limited partnership interests in the Operating
Partnership. These limited partnership interests will be valued for the purposes
of this redemption at an amount approximately equal to the $18.50 per share
expected to be distributed to the Company's public shareholders upon
liquidation. Such valuation, when considered together with the assumption of
debt encumbering the properties, will comprise fair value to the Company for the
distributed assets.
The $138 million transaction with Kimco and the Unit Holders' Transaction
comprise the plan of liquidation which will be submitted to the Company's public
shareholders for approval. The Independent Committee has instructed management
to proceed as expeditiously as possible to complete the foregoing sales
transactions, solicit shareholder approval and liquidate the Company. However,
it cautions shareholders that those shopping center properties now under
contract for sale remain subject to the completion of due diligence, and seven
other shopping center properties to be sold to third party purchasers as part of
the Company's liquidation have only recently been listed for sale.
<PAGE>
PART I
FINANCIAL INFORMATION
(Continued)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the
accompanying Condensed Consolidated Financial Statements and Notes thereto, and
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999. These unaudited financial statements include all adjustments which are, in
the opinion of management, necessary to reflect a fair presentation of the
results for the interim periods presented, and all such adjustments are of a
normal recurring nature.
On April 28, 2000, the Company announced it had executed various contracts
pertaining to certain asset sales and a plan of liquidation authorized by a
special committee of the independent members of its Board of Directors on April
17, 2000. See Note 6 to the accompanying Condensed Consolidated Financial
Statements. Discussion regarding the Company's investment and operating
strategy, liquidity and capital resources and dividends and other future plans
throughout this report should be read giving appropriate consideration to these
pending transactions.
When used in this Quarterly Report on Form 10-Q, the words "may", "will",
"expect", "anticipate", "continue", "estimate", "project", "intend" and similar
expressions are intended to identify forward-looking statements regarding
events, conditions and financial trends that may affect the Company's future
plans of operations, business strategy, results of operations and financial
position. Such forward-looking statements are not guarantees of future
performance and are subject to risks and uncertainties. Actual results may
differ materially from those included within the forward-looking statements as a
result of various factors.
Results of Operations
The following discussion compares the results of property operations of
the Company for the three months ended March 31, 2000, and March 31, 1999.
During July 1999, the Company acquired nine shopping center properties
anchored by Kmart and comprising approximately 1.1 million square feet of
leasable space located in six states. Prior to these acquisitions, the Company
had purchased, through a series of unrelated transactions since July 1998,
limited partnership interests in these properties and reported its investment on
the equity method of accounting. During the first quarter 2000, the Company
acquired the minority interests in two additional shopping center properties
previously accounted for under the equity method of accounting. The accompanying
Condensed Consolidated Statement of Income for the three months ended March 31,
2000 reports the operations of these eleven properties on a consolidated basis.
Consequently, the acquisition of these properties gives rise to significant
changes when comparing the Company's results of operations for the three months
ended March 31, 2000, to the three months ended March 31, 1999.
Comparison of Three Months Ended March 31, 2000 and 1999
Revenues from rental property increased $3,429,000 or 37.2% to $12,641,000
for the quarter ended March 31, 2000, as compared with $9,212,000 for the
quarter ended March 31, 1999. This net increase includes growth in base rental
revenues associated with higher rent levels achieved on new and renewal leases
and the acquisition of eleven shopping center properties as discussed above.
Property operating expenses increased $405,000 from $1,157,000 for the
quarter ended March 31, 1999, to $1,562,000 for the quarter ended March 31,
2000. This net increase reflects increased expenses associated with the
acquisition of eleven shopping center properties offset by management's efforts
to reduce operating expenses at existing properties. Property real estate taxes
increased by approximately $377,000 to $1,795,000 for the quarter ended March
31, 2000, as compared with $1,418,000 for the corresponding period in 1999,
reflecting the acquisition of the eleven shopping center properties, and the
effect of increased assessments associated with property expansions and
renovations.
Management fees remained constant at approximately 3% of gross revenues
for the quarters ended March 31, 2000, and 1999, as provided for in the
Management Agreement.
Interest charges increased $1,345,000 to $3,152,000 for the quarter ended
March 31, 2000, as compared with $1,807,000 for the quarter ended March 31,
1999, due to interest costs on borrowings to fund the acquisition of eleven
shopping center properties, combined with the effect of higher rates on variable
rate debt.
Depreciation and amortization expenses increased $418,000 to $2,029,000
for the quarter ended March 31, 2000, as compared with $1,611,000 for the
quarter ended March 31, 1999. This increase reflects the depreciation and
amortization of capital
<PAGE>
expenditures associated with the renovation and retenanting of properties in the
portfolio and the acquisition of eleven shopping center properties.
Equity in net income of real estate joint ventures declined between
periods as the Company now reports the operating results of eleven shopping
center properties discussed above on a consolidated basis.
Other income (expense), net for the three months ended March 31, 2000
includes approximately $600,000 representing the amount collected on a mortgage
note receivable in excess of the cost thereof, and approximately ($300,000) of
certain costs incurred in connection with the plan of liquidation.
Liquidity and Capital Resources
The Company's predecessor partnerships historically relied on fixed and
floating rate mortgage financing to fund acquisitions and refinance maturing
debt. Working capital and funds required for distributions, debt service and
capital expenditures were generally provided through net cash flows from
operations and, in certain instances, capital contributions of partners and/or
additional borrowing. The ability to refinance debt prior to maturity and to
fund acquisitions was generally dependent upon interest rates, the general
availability of both mortgage debt and private equity in the marketplace and the
cash flow and value of the asset to be financed or refinanced. Distributions
were generally made based upon 100% of excess cash over identified, near-term
requirements.
The Company believes that its public stock offering improved its financial
position, principally through enabling the Company to substantially reduce the
outstanding indebtedness on its shopping center portfolio. In connection with
this offering, the Company utilized approximately $109.3 million of the net
proceeds to repay all of its then outstanding floating-rate debt and certain
secured, fixed-rate obligations. The significant reduction in the Company's
overall debt served to reduce annual mortgage interest expense as a percentage
of total revenue and the cash from operations required to fund debt service
requirements.
Since completion of its initial public stock offering, the Company has
financed the acquisition of interests in fifteen real estate properties with
borrowings under its revolving line of credit, assumed property indebtedness and
the placement of new mortgage financing. Indebtedness outstanding at March 31,
2000, totaled $175.7 million, and was comprised of $87.5 million fixed rate
mortgage debt with a weighted average interest rate and remaining term to
maturity of 7.6% and 4.5 years, respectively, and $88.2 million in borrowings
under the Company's line of credit.
The combined aggregate principal maturities of mortgages and notes payable
outstanding as of March 31, 2000, are as follows:
Fixed Rate Obligations Variable Rate Obligations
---------------------- -------------------------
Amount Amount
Rate (000's) Rate (000's)
---- ------- ---- -------
4/2000-12/2000......... 7.65% $905 7.68% $88,200
2001................... 6.35% 2,540 -- --
2002................... 7.50% 12,912 -- --
2003................... 7.40% 25,366 -- --
2004................... 7.83% 30,590 -- --
Thereafter............. 7.88% 15,152 -- --
The Company considers (i) the availability of funds under its revolving
credit facility described below, (ii) the potential net proceeds from divesting
unencumbered shopping center properties located outside its target markets, and
(iii) its access to other sources of debt and equity capital, sufficient to
pursue its identified growth strategies. The Company intends to make regular
quarterly distributions to the holders of its Common Stock. The distribution for
the period ended March 31, 2000, was $0.3775 per share.
The Company expects to invest temporarily available cash in short-term,
investment-grade interest bearing securities, such as securities of the United
States government or its agencies, high-grade commercial paper and bank
deposits.
The Company expects to meet its short-term liquidity requirements
generally through net cash provided by operations. The Company believes that its
net cash provided by operations will be sufficient to allow the Company to make
distributions necessary to enable the Company to continue to qualify as a REIT.
The Company also believes that the foregoing sources of liquidity will be
sufficient to fund its short-term liquidity needs for the foreseeable future.
The Company expects to meet its long-term liquidity requirements, such as
property acquisition and development, scheduled debt maturities, renovations,
expansions and other non-recurring capital improvements through long-term
secured and unsecured
<PAGE>
indebtedness and the issuance of additional equity or debt securities. The
Company also expects to use funds available under its credit facility to finance
acquisition and development activities and capital improvements on an interim
basis.
Upon consummation of its public stock offering, the Company entered into a
$100 million senior revolving credit facility with a financial services
institution to finance acquisition, redevelopment and development activities and
for general corporate purposes. Borrowings under the credit facility bear
interest at rates ranging from 1.25% to 1.75% over the 30-day London Interbank
Offered Rate ("LIBOR") based on the Company's total indebtedness outstanding
relative to total assets, as defined. The availability of funds under the credit
facility will be subject to the Company's compliance with a number of customary
financial and other covenants. Borrowings under the credit facility, totaling
$88.2 million at March 31, 2000, are secured by certain shopping center
properties with recourse to the Company. The credit facility matures on
September 30, 2000.
Funds from Operations
The White Paper on Funds from Operations approved by the Board of
Governors of NAREIT in October 1999 defines Funds from Operations as net income
(computed in accordance with GAAP), excluding gains (or losses) from sales of
property, plus real estate related depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated to reflect
funds from operations on the same basis. The Company believes that Funds from
Operations is helpful to investors as a measure of the performance of an equity
REIT because, along with cash flow from operating activities, financing
activities and investing activities, it provides investors with an indication of
the ability of the Company to incur and service debt, to make capital
expenditures and to fund other cash requirements. The Company computes Funds
from Operations in accordance with standards established by NAREIT which may not
be comparable to Funds from Operations reported by other REITs that do not
define the term in accordance with the current NAREIT definition or that
interpret the current NAREIT definition differently than the Company. Funds from
Operations does not represent cash generated from operating activities in
accordance with GAAP and should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indication of the Company's
financial performance or to cash flow from operating activities (determined in
accordance with GAAP) as a measure of the Company's liquidity, nor is it
indicative of funds available to fund the Company's cash requirements, including
its ability to make cash distributions.
Funds from Operations (FFO) increased approximately 23% to $5.3 million
for the three months ended March 31, 2000, as compared to $4.3 million for the
three months ended March 31, 1999.
Calculation of Funds From Operations
(In thousands)
Three Months Ended March 31, 2000
---------------------------------
Net income $2,392
Minority interests in Operating Partnership 805
Depreciation and amortization 2,029
Adjustment for unconsolidated joint ventures (1) 30
------
Funds from Operations $5,256
======
Distributions $3,704
======
Payout ratio 70.5%
====
(1) Company share of depreciation and amortization charges in unconsolidated
real estate joint ventures.
Inflation
Substantially all of the Company's leases contain provisions designed to
mitigate the adverse impact of inflation. Such provisions include clauses
enabling the Company to receive percentage rentals based on tenants' gross
sales, which generally increase as prices rise, and/or escalation clauses, which
generally increase rental rates during the terms of the leases. Such escalation
clauses are often related to increases in the consumer price index or similar
inflation indices. In addition, many of the Company's leases are for terms of
less than 10 years, which permits the Company to seek to increase rents on
re-rental at market rates. Most of the Company's leases require the tenant to
pay its share of operating expenses, including common area maintenance, real
estate taxes and insurance,
<PAGE>
thereby reducing the Company's exposure to increases in costs and operating
expenses resulting from inflation.
Item 3. Quantitative and Qualitative Disclosure of Market Risk
See Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not presently involved in any litigation, nor to its
knowledge is any litigation threatened against the Company or its subsidiaries,
that in management's opinion, would result in any material adverse effect on the
Company's ownership, management or operation of its properties, or which is not
covered by the Company's liability insurance.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
On April 28, 2000, the Company announced that it had executed various
contracts pertaining to certain asset sales and a plan of liquidation authorized
by a special committee of the independent members (the "Independent Committee")
of its Board of Directors on April 17, 2000. See Note 6 to the accompanying
Condensed Consolidated Financial Statements.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2.1 - Plan of Liquidation and Dissolution of the Company
(filed as exhibit 2.1 to the Company's Current Report on
Form 8-K dated April 28, 2000, and incorporated herein
by reference)
3.1 - Amended and Restated Articles of Incorporation of the
Company (filed as Exhibit 3.1 to the Company's Current
Report on Form 8-K dated December 31, 1997, and
incorporated herein by reference)
3.2 - Articles Supplementary dated July 27, 1999, (filed as
Exhibit 3.1 to the Company's Current Report on Form 8-K
dated July 15, 1999, and incorporated herein by
reference).
3.3 - Third Amended and Restated By-Laws of the Company
dated July 27, 1999,(filed as Exhibit 3.2 to the
Company's Current Report on Form 8-K dated July 15,
1999, and incorporated herein by reference)
4.1 - Shareholder Rights Agreement, dated as of June 30,
1999, between the Company and BankBoston, N.A. (filed as
Exhibit 4.1 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998, and incorporated
herein by reference)
4.2 - Amendment No. 1, dated July 27, 1999, to Shareholder
Rights Agreement dated as of March 31, 1999, between the
Company and Bank Boston N.A., as Rights Agent (filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K
dated July 15, 1999, and incorporated herein by
reference)
4.3 - Articles Supplementary for Series A Junior
Participating Preferred Stock (filed as Exhibit 4.2 to
the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, and incorporated herein by
reference)
10.1 - Amended and Restated Agreement of Limited Partnership
of the Operating Partnership (filed as Exhibit 10.1 to
the Company's Registration Statement on Form S-11,
Registration No. 333- 47975, and incorporated herein by
reference)
10.2 - First Amendment to the Amended and Restated Agreement
of Limited Partnership of the Operating Partnership
(filed as Exhibit 10.2 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1998, and
incorporated herein by reference)
10.3 - Contribution and Exchange Agreement, dated August 11,
1997, among National Properties Investment Trust, the
Board of Trustees, the Company, the Operating
Partnership and certain contributing partnerships or
limited liability companies associated with a private
real estate firm controlled by Philip Pilevsky and
certain partners and members thereof (filed as Exhibit
10.6 to the Company's Registration Statement on Form
S-4, Registration No. 333-41431, and incorporated herein
by reference)
10.4 - Amended and Restated Management Agreement, dated as of
March 30, 1998, among the Company, the Operating
Partnership and Philips International Management Corp.
(Filed as Exhibit 10-8 to the Company's Form 10-K for
the year ended December 31, 1997, and incorporated
herein by reference)
10.5 - Amended and Restated Non-Competition Agreement, dated
as of March 30, 1998, among the Company, the Operating
Partnership, Philip Pilevsky and Sheila Levine (filed as
Exhibit 10.9 to the Company's Form 10-K for the year
ended December 31, 1997, and incorporated herein by
reference)
10.6 - Amendment No. 1 to Contribution and Exchange
Agreement, dated as of December 29, 1997 (filed as
Exhibit 10.13 to the Company's Form 8-K dated December
31, 1997, and incorporated herein by reference)
10.7 - Credit Agreement among the Operating Partnership and
Prudential Securities Credit Corporation (filed as
Exhibit 10.18 to the Company's Report on Form 10-Q for
the period ended March 31, 1998 and incorporated herein
by reference)
10.8 - Purchase and Sale Agreement dated as of April 28, 2000,
by and among Munsey Park Associates, LLC, a New York
limited liability company, North Shore Triangle, LLC, a
New York limited liability company, Philips Yonkers,
LLC, a New York limited liability company, Philips
Henry, LLC, a New York limited liability company,
Philips Shopping Center Fund, L.P., a Delaware limited
partnership, and Philips Lake Mary Associates, L.P., a
Delaware limited partnerhsip, and Kimco Income Operating
Partnership, L.P., a Delaware limited partnership (filed
as exhibit 10.1 to the Company's Current Report on Form
8-K dated April 28, 2000, and incorporated herein by
reference).
10.9 - Redemption Agreement dated as of April 27, 2000, by and
among the Operating Partnership and Philip Pilevsky
(filed as exhibit 10.2 to the Company's Current Report
on Form 8-K dated April 28, 2000, and incorporated
herein by reference).
10.10 - Assset Contribution, Purchase and Sale Agreement dated
as of April 28, 2000, by and among the Company, the
Operating Partnership, Certain Affiliated Parties
Signatory Thereto, KIR Acquisition, LLC, a Delaware
limited liability company and Kimco Income Operating
Partnership, L.P., a Delaware limited partnership (filed
as exhibit 10.3 to the Company's Current Report on Form
8-K dated April 28, 2000, and incorporated herein by
reference).
27.1* - Financial Data Schedule
* filed herewith
(b) Reports on Form 8-K
None
<PAGE>
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.
PHILIPS INTERNATIONAL REALTY CORP.
May 15, 2000 /s/ Philip Pilevsky
(Date) Philip Pilevsky
Chairman of the Board and Chief Executive Officer
May 15, 2000 /s/ Carl Kraus
(Date) Carl Kraus
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
2.1 Plan of Liquidation and Dissolution of the Company (filed as exhibit
2.1 to the Company's Current Report on Form 8-K dated April 28,
2000, and incorporated herein by reference)
3.1 Amended and Restated Articles of Incorporation of the Company (filed
as Exhibit 3.1 to the Company's Current Report on Form 8-K dated
December 31, 1997, and incorporated herein by reference)
3.2 Articles Supplementary dated July 27, 1999, (filed as Exhibit 3.1 to
the Company's Current Report on Form 8-K dated July 15, 1999, and
incorporated herein by reference)
3.3 Third Amended and Restated By-Laws of the Company dated July 27,
1999, (filed as Exhibit 3.2 to the Company's Current Report on Form
8-K dated July 15, 1999, and incorporated herein by reference)
4.1 Shareholder Rights Agreement, dated as of June 30, 1999, between the
Company and BankBoston, N.A. (filed as Exhibit 4.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1998, and
incorporated herein by reference)
4.2 Amendment No. 1, dated July 27, 1999, to Shareholder Rights
Agreement dated as of March 31, 1999, between the Company and Bank
Boston N.A., as Rights Agent (filed as Exhibit 4.1 to the Company's
Current Report on Form 8-K dated July 15, 1999, and incorporated
herein by reference)
4.3 Articles Supplementary for Series A Junior Participating Preferred
Stock (filed as Exhibit 4.2 to the Company's Annual Report on Form
10-K for the year ended December 31, 1998, and incorporated herein
by reference)
10.1 Amended and Restated Agreement of Limited Partnership of the
Operating Partnership (filed as Exhibit 10.1 to the Company's
Registration Statement on Form S-11, Registration No. 333- 47975,
and incorporated herein by reference)
10.2 First Amendment to the Amended and Restated Agreement of Limited
Partnership of the Operating Partnership (filed as Exhibit 10.2 to
the Company's Annual Report on Form 10-K for the year ended December
31, 1998, and incorporated herein by reference)
10.3 Contribution and Exchange Agreement, dated August 11, 1997, among
National Properties Investment Trust, the Board of Trustees, the
Company, the Operating Partnership and certain contributing
partnerships or limited liability companies associated with a
private real estate firm controlled by Philip Pilevsky and certain
partners and members thereof (filed as Exhibit 10.6 to the Company's
Registration Statement on Form S-4, Registration No. 333-41431, and
incorporated herein by reference)
10.4 Amended and Restated Management Agreement, dated as of March 30,
1998, among the Company, the Operating Partnership and Philips
International Management Corp. (Filed as Exhibit 10-8 to the
Company's Form 10-K for the year ended December 31, 1997, and
incorporated herein by reference)
10.5 Amended and Restated Non-Competition Agreement, dated as of March
30, 1998, among the Company, the Operating Partnership, Philip
Pilevsky and Sheila Levine (filed as Exhibit 10.9 to the Company's
Form 10-K for the year ended December 31, 1997, and incorporated
herein by reference)
10.6 Amendment No. 1 to Contribution and Exchange Agreement, dated as of
December 29, 1997 (filed as Exhibit 10.13 to the Company's Form 8-K
dated December 31, 1997, and incorporated herein by reference)
10.7 Credit Agreement among the Operating Partnership and Prudential
Securities Credit Corporation (filed as Exhibit 10.18 to the
Company's Report on Form 10-Q for the period ended March 31, 1998
and incorporated herein by reference)
10.8 Purchase and Sale Agreement dated as of April 28, 2000, by and
among Munsey Park Associates, LLC, a New York limited liability
company, North Shore Triangle, LLC, a New York limited liability
company, Philips Yonkers, LLc, a New York limited liability company,
Philips Henry, LLC, a New York limited liability company, Philips
Shopping Center Fund, L.P., a Delaware limited partnership, and
Philips Lake Mary Associates, L.P., a Delaware limited partnerhsip,
and Kimco Income Operating Partnership, L.P., a Delaware limited
partnership (filed as exhibit 10.1 to the Company's Current Report
on Form 8-K dated April 28, 2000, and incorporated herein by
reference).
10.9 Redemption Agreement dated as of April 27, 2000, by and among the
Operating Partnership and Philip Pilevsky (filed as exhibit 10.2 to
the Company's Current Report on Form 8-K dated April 28, 2000, and
incorporated herein by reference).
10.10 Assset Contribution, Purchase and Sale Agreement dated as of April
28, 2000, by and among the Company, the Operating Partnership,
Certain Affiliated Parties Signatory Thereto, KIR Acquisition, LLC,
a Delaware limited liability company and Kimco Income Operating
Partnership, L.P., a Delaware limited partnership (filed as exhibit
10.3 to the Company's Current Report on Form 8-K dated April 28,
2000, and incorporated herein by reference).
27.1* Financial Data Schedule
* filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTERLY PERIOD ENDED March
31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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<BONDS> 175,665
0
0
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