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 October 31, 2000 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
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(State of Incorporation) (I.R.S. Employer
Identification No.)
149 Colonial Road, Manchester, Connecticut 06040
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(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
Independent Auditor's Review Letter 1
Consolidated Balance Sheets -
October 31, 2000 and April 30, 2000 2 & 3
Consolidated Statements of Operations
Six Months Ended October 31, 2000 and 1999
Three Months Ended October 31, 2000 and 1999 4
Consolidated Statements of Cash Flows
Six Months Ended October 31, 2000 and 1999
Three Months Ended October 31, 2000 and 1999 5 & 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8 & 9
PART II. OTHER INFORMATION
Signatures 10
<PAGE>
[LETTERHEAD OF KOSTIN RUFFKESS & COMPANY, LLC]
To the Board of Directors
First Hartford Corporation and Subsidiaries
INDEPENDENT ACCOUNTANTS' REPORT
We have reviewed the accompanying consolidated balance sheet of First Hartford
Corporation and Subsidiaries as of October 31, 2000, and the related
consolidated statements of operations, and cash flows for the three months and
six months then ended. These consolidated financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the consolidated financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements in order for them
to be in conformity with generally accepted accounting principles.
/s/ Kostin Ruffkess & Company, LLC
West Hartford, Connecticut
December 12, 2000
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
Assets Oct. 31, April 30,
2000 2000
----------- -----------
Real Estate and equipment:
Developed properties $20,377,865 $20,374,092
Equipment and leasehold improvements 123,374 121,967
----------- -----------
20,501,239 20,496,059
Less accumulated depreciation and
amortization 1,533,740 1,303,929
----------- -----------
18,967,499 19,192,130
Properties under construction and
investment in undeveloped properties 136,374 -0-
----------- -----------
19,103,873 19,192,130
Cash 1,773 146,405
Accounts receivable, less
allowance for doubtful accounts 182,391 165,189
Deposits, escrows, and prepaid and
deferred expenses 1,419,516 1,111,735
Due from related parties and affiliates, and
investment in affiliated partnership 3,374,494 2,807,533
Deferred Tax Assets 1,700,000 1,700,000
----------- -----------
$25,782,047 $25,122,992
=========== ===========
2
<PAGE>
PART I - FINANCIAL INFORMATION
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
Oct. 31, April 30,
2000 2000
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Liabilities:
Mortgages and notes payable
Construction loan payable $ 419,545 $ -0-
Mortgages payable 21,655,147 20,228,142
Notes Payable:
Other 5,291,158 5,501,159
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27,365,850 25,729,301
Accounts payable 1,710,389 2,277,685
Accrued Liabilities 801,626 741,742
Due to Related Parties and affiliated
partnerships 1,828,091 1,808,581
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31,705,956 30,557,309
Shareholders' equity (deficiency):
Common stock, $1 par; authorized
6,000,000 shares; issued 3,322,213
shares 3,322,213 3,322,213
Capital in excess of par 4,857,645 4,857,645
Deficit (12,035,643) (11,546,051)
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(3,855,785) (3,366,193)
Less 232,228 shares of common stock
held in treasury, at cost 2,068,124 2,068,124
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(5,923,909) (5,434,317)
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$ 25,782,047 $ 25,122,992
============ ============
3
<PAGE>
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
---------------- ------------------
October 31, 2000 October 31, 1999 October 31, 2000 October 31, 1999
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
REVENUES, INCLUDING RELATED
PARTY RESPECTIVELY:
Sale of Real Estate $ 148,367 $ -- $ -- $ --
Construction 109,310 274,739 45,549 194,996
Rental 1,772,310 1,305,504 796,525 751,953
Other 136,484 215,605 90,522 183,848
----------- ----------- ----------- -----------
2,166,471 1,795,848 932,596 1,130,797
COSTS AND EXPENSES:
Cost of Sale of Real Estate 25,356 -- -- --
Construction 69,548 142,304 30,620 106,668
Operating, selling general
and administrative 952,277 926,521 506,095 515,202
Interest 1,041,897 888,198 505,650 474,627
Depreciation and amortization 241,578 147,235 120,767 74,021
Real Estate Taxes 325,408 176,009 77,984 148,089
----------- ----------- ----------- -----------
2,656,064 2,280,267 1,241,116 1,318,607
----------- ----------- ----------- -----------
NET LOSS ($ 489,593) ($ 484,419) ($ 308,520) ($ 187,810)
=========== =========== =========== ===========
Loss Per Share ($ 0.16) ($ 0.16) ($ 0.10) ($ 0.06)
Weighted Average Number of
Common Shares Outstanding 3,089,985 3,089,985 3,089,985 3,089,985
=========== =========== =========== ===========
</TABLE>
4
<PAGE>
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
OCTOBER 31, 2000
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Cash flows from operating 6 months ended 3 months ended
activities: 10/31/00 10/31/99 10/31/00 10/31/99
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Loss ($ 489,593) ($ 484,419) ($ 308,520) ($ 187,770)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation 229,726 140,426 114,906 69,976
Amortization 11,852 6,809 5,861 4,046
Changes in assets and liabilities:
Increase (Decrease) in:
Accounts (17,202) (96,050) (254,974) (97,942)
Deposits, escrows, prepaid and
deferred expenses (319,633) (274,158) 101,997 (18,402)
Accrued liabilities 59,884 119,818 (20,281) 75,054
Decrease in:
Acct's payable (567,296) (1,032,426) 9,591 (309,333)
----------- ----------- ----------- -----------
Net cash used in oper. activities (1,092,262) (1,620,000) (351,420) (464,371)
----------- ----------- ----------- -----------
Cash flow from investing activities:
Purchases of Investments
Proceed from Sale of Real Estate (26,244) -- -- --
Purchase of equip & leasehold imp (1,407) (6,690) (1,407) (2,397)
Payments for:
Additions to properties
under construction (140,062) (1,179,721) (72,250) (303,585)
----------- ----------- ----------- -----------
Net Cash used in investing
activities: (167,713) (1,186,411) (73,657) (305,982)
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part
of these financial statements.
5
<PAGE>
FIRST HARTFORD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS, CONTINUED
OCTOBER 31, 2000
INCREASE (DECREASE) IN CASH EQUIVALENTS
<TABLE>
<CAPTION>
Cash flows from operating 6 months ended 3 months ended
activities: 10/31/00 10/31/99 10/31/00 10/31/99
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Proceeds from:
Construction Loan 419,545 2,241,195 -- 376,594
Mortgage Payable 1,575,000 -- -- --
Notes Payable 500,000 1,325,000 -- 975,000
Principal payments on:
Construction Loan -- -- -- --
Mortgage Payable (147,995) (97,121) (80,742) (47,532)
Notes Payable (710,000) -- (50,000) --
Adv. from Related Parties and
affiliated Parties (521,207) (724,861) 285,205 (527,234)
----------- ----------- ----------- -----------
Net Cash Provided by Financing
Activities 1,115,343 2,744,213 154,463 776,828
----------- ----------- ----------- -----------
Net Increase (Decrease) in cash
& Cash Equivalents (144,632) (62,198) (270,614) 6,475
Cash & Cash Equivalents
Beginning of Year 146,405 106,017 272,387 37,344
----------- ----------- ----------- -----------
Cash & Cash Equivalents
End of Year $ 1,773 $ 43,819 $ 1,773 $ 43,819
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
6
<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, 2000 produced a loss of $308,520 or (.10)
per share compared to a loss of $188,000 or (.06) per share for the quarter
ended October 31, 1999. For the six month period, a loss of $490,000 or (.16)
per share compares to a loss of $484,000 or (.16) per share for the period
ending October 31, 1999.
For the three and six month periods ending October 31, 2000, rental income
has increased to $796,000 and $1,772,000 from $752,000 and $1,306,000 from the
comparable period in 1999.
The Company is presently building a shopping center in Dover Township, New
Jersey as a Joint Venture in which the Registrant has 50% ownership.
At this time it is essentially finished and fully leased with the
exception of one outparcel. By the end of the current quarter (January 31, 2000)
all of the stores will be open. The future of the center is however, somewhat in
doubt. The anchor store (Grand Union) has filed for protection under Chapter 11
of the Federal Bankruptcy Act. Grand Union has sold approximately 200 stores
(including this one) to C & S Wholesale Groceries Inc. (Grand Union's grocery
distributor) for approximately $300,000,000. C&S Wholesale Groceries has sold
about half of these stores to a group of supermarket chains. The other stores
(including ours) are going to be put into individual Limited Liability Company
and are to be run by C&S. It is the opinion of our management that C&S is still
shopping these stores around and will look to recoup fixtures and inventories.
We are actively speaking to other supermarket chains and feel confident that the
store can be re-rented.
In the event that no buyer or re-renter is found and C&S closes the store,
the Company will suffer a material financial loss.
The Company has completed the purchase of a parcel of land in R.I. in which it
is joint venturing a new shopping center. The construction loan will close in
the second half of December, 2000.
7
<PAGE>
Summary of Significant Account Policies:
Description of business:
First Hartford Corporation (the Company) was incorporated in Maine in
1909, and is engaged in the purchase, development, ownership, management and
sale of real estate. The Company extends credit to companies/tenants throughout
the United States.
Principles of consolidation:
The accompanying financial statements include the accounts of the Company
and its wholly-owned subsidiaries, including partnerships in which the Company
is a majority owner. All significant intercompany transactions and accounts have
been eliminated in the consolidated financial statements, including construction
revenues and costs of development for the Company's own use (rental/future
sale). The Company records its investment in partnerships in which it is not a
majority owner on the equity method.
Financial Statement Presentation:
Because the Company is engaged in the development and sale of real estate
in various stages of construction, the operating cycle may extend beyond one
year. Accordingly, following the usual practice of the real estate industry, the
accompanying consolidated balance sheets are unclassified.
Revenue recognition:
Since the Registrant is primarily involved in development for its own use
(rental/future sale), construction revenue is recorded only upon sale of the
property built for sale to third parties. Revenues from projects built for third
parties are recognized on the percentage-of-completion method of accounting
based on costs incurred to date in relation to total actual costs and estimated
costs to complete. Revisions in costs and profit estimates are reflected in
operations during the accounting period in which the facts become known. The
Registrant provides for estimated losses on contracts in the year such losses
become known. There are no properties built for sale to third parties during the
years ended April 30, 2000, 1999 and 1998.
Rental revenues are recognized as income under the operating method as the
rentals become due. Other income includes management and service fees and
interest income which is recognized over the period in which the service is
provided or the interest is earned.
8
<PAGE>
Interim Financial Information (Unaudited)
The interim financial statements of the Company for the six months ended October
31, 2000 and 1999 included herein, have been prepared by the Company, without
audit, pursuant to the rules and regulations of the SEC. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principals have been condensed or
omitted pursuant to the rules and regulations relating to interim financial
statements.
9
<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: 12/14/2000
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