SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Oct. 31, 1998 Commission File No. 0-8862
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First Hartford Corporation
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(Exact name of registrant as
specified in its charter)
Maine 01-0185800
- ------------------------ -------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
149 Colonial Road, Manchester, Connecticut 06040
- ------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
(860) 646-6555
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(Registrant's telephone number, including area code)
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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, and (2) has been subject to such filing
requirements for the past 90 days.
YES |_| NO |X|
As of November 8, 1997, 3,089,985 shares of common stock of the Registrant
were outstanding.
<PAGE>
FIRST HARTFORD CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets -
Oct. 31, 1998 and April 30, 1998 1 & 2
Consolidated Statements of Income (Loss)
Six Months Ended Oct. 31, 1998 and
Six Months Ended Oct. 31, 1997 3
Consolidated Statements of Cash Flows
Six Months Ended Oct. 31, 1998 and
Six Months Ended Oct. 31, 1997 4 & 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 6
PART II. OTHER INFORMATION
Signatures 7
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
Assets Oct. 31, April 30,
1998 1998
----------- ----------
Real Estate and equipment:
Developed properties $ 6,034,972 $5,269,443
(Net of $99,950 and $499,802 write down
to Estimated Market Values)
Equipment and leasehold improvements 158,469 168,726
----------- ----------
$ 6,193,441 $5,438,169
Less accumulated depreciation and
amortization 914,592 938,132
----------- ----------
$ 5,278,849 $4,500,037
Properties under construction and
investment in undeveloped properties $ 6,575,550 $2,148,678
----------- ----------
$11,854,399 $6,648,715
Cash 35,046 4,118
Accounts receivable, less allowance
for doubtful accounts 137,618 144,115
Deposits, escrows, and prepaid and
deferred expenses 850,334 757,939
Due from related parties and affiliates, and
investment in affiliated partnership 1,147,422 622,476
----------- ----------
$14,024,819 $8,177,363
=========== ==========
1
<PAGE>
PART I - FINANCIAL INFORMATION
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
Oct. 31, April 30,
1998 1998
------------ ------------
Liabilities:
Mortgages, notes payable
and capital lease obligations:
Construction loan payable $ 7,909,992 $ 1,575,925
Mortgages payable $ 4,330,008 $ 4,717,963
Notes Payable:
Other 3,618,658 3,853,842
------------ ------------
$15,858,658 $10,147,730
Accounts payable 2,609,623 2,281,671
Accrued Liabilities 796,780 870,832
Due to Related Parties and affiliated
partnerships 1,201,172 1,045,502
------------ ------------
$20,466,233 $14,345,735
Shareholders' equity (deficiency):
Common stock, $1 par; authorized
6,000,000 shares; issued 3,322,213
shares 3,322,213 3,322,213
Capital in excess of par 4,857,645 4,857,645
Deficit (12,553,148) (12,280,106)
------------ ------------
($ 4,373,290) ($ 4,100,248)
Less 232,228 shares of common stock
held in treasury, at cost 2,068,124 2,068,124
------------ ------------
($ 6,441,414) ($ 6,168,372)
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$14,024,819 $ 8,177,363
============ ============
2
<PAGE>
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
---------------- ------------------
October 31, 1998 October 31, 1997 October 31, 1998 October 31, 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
REVENUES, INCLUDING RELATED
PARTY RESPECTIVELY:
Sale of Real Estate $ 376,500 $1,509,700 $ 190,000 $ --
Construction 107,622 120,741 43,674 68,734
Rental 515,209 1,291,860 266,232 589,488
Other 462,678 237,109 401,989 221,963
Non-Recurring Gain
Other -- 430,000 -- --
----------- ---------- ---------- -----------
$ 1,462,009 $3,589,410 $ 901,895 $ 880,185
COSTS AND EXPENSES:
Cost of Sale of Real Estate $ 373,595 $1,571,804 $ 187,513 $ 83,791
Construction 83,148 72,867 37,559 37,923
Operating, selling general
and administrative 833,629 754,421 435,386 367,107
Interest 284,373 736,989 140,185 361,449
Depreciation and amortization 97,234 282,036 52,270 141,827
Real Estate Taxes 63,073 154,873 23,993 76,386
----------- ---------- ---------- -----------
$ 1,735,052 $3,572,990 $ 876,906 $ 1,068,483
NET INCOME (LOSS) BEFORE INC. TAX ($ 273,043) $ 16,420 $ 24,989 ($ 188,298)
Federal Income Tax -- -- -- --
----------- ---------- ---------- -----------
NET INCOME (LOSS) AFTER INC. TAX ($ 273,043) $ 16,420 $ 24,989 ($ 188,298)
=========== ========== ========== ===========
INCOME (LOSS) PER SHARE ($ 0.09) $ 0.01 $ 0.01 ($ 0.06)
Weighted Average Number of
Common Shares Outstanding 3,089,985 3,089,985 3,089,985 3,089,985
=========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
3
<PAGE>
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
OCTOBER 31, 1998
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Cash flows from operating 6 months ended 3 months ended
activities: 10/31/98 10/31/97 10/31/98 10/31/97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Profit (Loss) $ (273,043) $ 16,420 $ 24,988 $(188,298)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation 93,852 279,800 50,006 140,709
Amortization 3,382 2,236 2,264 1,118
Changes in assets and liabilities:
Increase (Decrease) in:
Accounts & Notes Receivable 6,497 32,162 70,775 74,121
Deposits, escrows, prepaid and
deferred expenses (95,777) 22,760 (72,996) 77,476
Accrued liabilities (74,052) 76,780 (25,059) 115,755
Decrease in:
Acct's payable & cash overdrafts 327,952 (569,226) 525,230 (37,803)
----------- ----------- ----------- ---------
Net cash used in oper. activities $ (11,189) $ (139,068) $ 575,208 $ 183,078
----------- ----------- ----------- ---------
Cash flow from investing activities:
Proceed from Sale of Real Estate 339,515 1,415,852 168,546 --
Purchase of equip & leasehold imp (13,012) (35,651) (323) (19,342)
Payments for:
Additions to properties
under construction (5,626,039) (314,683) (2,658,363) (3,329)
----------- ----------- ----------- ---------
Net Cash used in investing
activities: (5,299,536) 1,065,518 (2,490,140) (22,671)
----------- ----------- ----------- ---------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
4
<PAGE>
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS, CONTINUED
OCTOBER 31, 1998
INCREASE (DECREASE) IN CASH EQUIVALENTS
<TABLE>
<CAPTION>
Cash flows from operating 6 months ended 3 months ended
activities: 10/31/98 10/31/97 10/31/98 10/31/97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Proceeds from:
Construction Loan 7,984,067 -- 2,613,428 --
Mortgage Payable -- -- -- 129,046
Notes Payable -- 129,046 -- --
Principal payments on:
Construction Loan (1,650,000) -- -- --
Mortgage Payable (387,955) (66,515) (194,480) (22,251)
Notes Payable (235,184) (765,067) (85,184) (22,500)
Adv. from Related Parties and
affiliated Parties (369,275) 202,551 (418,600) 23,805
----------- --------- ----------- ---------
Net Cash Provided by Financing
Activities 5,341,653 (499,985) 1,915,164 108,100
----------- --------- ----------- ---------
Net Increase (Decrease) in cash
& Cash Equivalents 30,928 426,465 232 268,507
Cash & Cash Equivalents
Beginning of Year 4,118 216,148 34,814 374,106
----------- --------- ----------- ---------
Cash & Cash Equivalents
End of Year $ 35,046 $ 642,613 $ 35,046 $ 642,613
=========== ========= =========== =========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
5
<PAGE>
Item 2. FIRST HARTFORD CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Result of Operations
The quarter ended October 31, 1998 produced a nominal profit of
approximately $25,000 or .01 per share compared to a loss of $298,000 (.10 per
share) in the quarter ended July 31, 1998. This was due to a $300,000 management
fee received from an affiliated company which became collectable in this
quarter. It is not representative of normal reoccurring management fees and is
not to be counted on in the future, although some additional fees will be
collected in the next quarter.
Note the differences between the period ended October 31, 1998 and the
period ended October 31, 1997. Rental income, interest, depreciation and real
estate taxes all have been reduced significantly due to sale of properties in
the quarter ended January 31, 1998. Profit (loss) and cash flow from these
properties were immaterial for the period ended October 31, 1997.
In the fiscal year April 30, 1999, management does not foresee any
opportunities to sell any additional properties. With rental and management
income greatly reduced from previous year levels, the Registrant believes
operating losses will occur for the forseeable future.
Capital Resources and Liquidity
The Registrant has used the following discussion in its 10K for the year
ended April 30, 1998. We believe the outlook to be the same.
In the past four (4) years, the Registrant has pursued an aggressive path
to end litigation and pay down its debt. Management believes both of those
objectives were met, as there is no material litigation currently on the horizon
and debt has been reduced by more than $35,000,000.00. To achieve this result,
virtually all of our partnership interests and most of our developed properties
had been sold. We are currently on a path to attempt to rebuild our asset base.
Shopping centers are under construction in Putnam, Connecticut and Mount Olive,
New Jersey. Other properties are held under option which hopefully will result
in additional developments.
Capital resource and liquidity have always been a major impediment of
the Registrant. Reputation, industry contacts and capital resources are the key
elements of the real estate development business. Management has continued to
explore new lenders and believes we will continue to find capital resources at
reasonable rates. Liquidity is worked on a daily basis through tight cash
management and the Registrant believes that will be adequate through the end of
the year.
6
<PAGE>
PART II - OTHER INFORMATION
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.
FIRST HARTFORD CORPORATION
/s/ Stuart Greenwald
--------------------------------------
Stuart Greenwald
Treasurer
Chief Financial Officer
(Duly Authorized Officer,
Principal Financial and
Accounting Officer)
Date: Dec. 15, 1998
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7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 35,046
<SECURITIES> 0
<RECEIVABLES> 189,818
<ALLOWANCES> 52,200
<INVENTORY> 6,575,550
<CURRENT-ASSETS> 172,664
<PP&E> 6,193,441
<DEPRECIATION> 914,592
<TOTAL-ASSETS> 14,024,819
<CURRENT-LIABILITIES> 3,406,403
<BONDS> 15,858,658
0
0
<COMMON> 1,254,089
<OTHER-SE> (7,695,503)
<TOTAL-LIABILITY-AND-EQUITY> 14,024,819
<SALES> 376,500
<TOTAL-REVENUES> 1,462,009
<CGS> 373,595
<TOTAL-COSTS> 142,136
<OTHER-EXPENSES> 1,219,321
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 284,373
<INCOME-PRETAX> (273,043)
<INCOME-TAX> 0
<INCOME-CONTINUING> (273,043)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (273,043)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
