UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1994
Commission File No. 0-1437
THE FIRST REPUBLIC CORPORATION OF AMERICA
(Exact name of Registrant as specified in its charter)
DELAWARE 13-1938454
(State or other jurisdiction of (I.R.S. EmployerIdentification No.)
incorporation or organization)
302 Fifth Avenue
New York, New York 10001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 279-6100
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock Par Value $1 per share
(Title of Class)
Indicate by check mark whether 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[X] No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of September 16, 1994, 674,107 common shares were
outstanding, and the aggregate market value of common shares
held by nonaffiliates of Registrant was approximately
$2,339,000 (based upon the price paid by Registrant for shares).
Documents Incorporated by Reference
See Item 14(c)
<PAGE>
The First Republic Corporation of America
10-K Contents
Page
PART I
Item 1. Business 1
Item 2. Properties 5
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters 10
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 44
PART III
Item 10. Directors and Executive Officers of the Registrant 45
Item 11. Executive Compensation 47
Item 12. Security Ownership of Certain Beneficial Owners and
Management 49
Item 13. Certain Relationships and Related Transactions 51
PART IV
Item 14. Exhibits, Financial Statements, Schedules and
Reports on Form 8-K 54
Signatures 63
<PAGE>
PART I
ITEM 1. BUSINESS
a. General Development of Business
The First Republic Corporation of America (the "Company") was
incorporated in the State of Delaware in February 1961, and is
presently engaged, either directly or through its
subsidiaries, in the real estate, hotel, seafood, textile, and
health care businesses. See Item 1(c) for a description of the
business engaged in by the Company and its subsidiaries.
During the 1994 fiscal year, the Company obtained a $3,000,000
mortgage loan on the Greensboro South Shopping Center it owns
in Greensboro, North Carolina, which loan bears interest at
the rate of 8.5% per annum, is self-liquidating, and provides
for 180 payments of $29,543, including interest and principal,
commencing April 1, 1994 and expiring March 1, 2009.
b. Financial Information about Industry Segments
The sales and operating profit (loss) from operations and the
identifiable assets attributable to each industry segment for
the three years ended June 30, 1994 are set forth in Note 13
(Industry Segments) of the Notes to Consolidated Financial
Statements, which are incorporated herein by reference to Item
8. hereof.
c. Narrative Description of Business
Real Estate
The Company owns various loft buildings, office buildings,
industrial buildings, shopping centers, residential and other
properties, situated along the East Coast of the United States
in Massachusetts, Rhode Island, New York, New Jersey,
Pennsylvania, Virginia, North Carolina and Florida. A general
description of these properties is provided in Item 2. below.
Real estate revenues accounted for 31%, 32% and 31% of
consolidated revenues from operations for the fiscal years
ended June 30, 1994, 1993 and 1992, respectively.
<PAGE>
Hotel
The Company owns and operates a 288 room hotel and convention
center known as the Sheraton Inn--Syracuse, located in
Liverpool, New York. There are approximately 20 facilities in
the Liverpool/Syracuse area with which the hotel competes.
Currently, the Company believes it is the third largest hotel
in terms of revenues in the area.
Hotel revenues accounted for 11% of consolidated revenues from
operations for each of the fiscal years ended June 30, 1994,
1993 and 1992.
Seafood
The Company's 80.2% owned subsidiary, Bluepoints Company Inc.
("Bluepoints"), holds title to approximately 13,000 acres of
land under the water of the Great South Bay between Fire
Island and Long Island's South Shore in New York State.
Bluepoints harvests hard-shell clams on this property.
Bluepoints competes with others on the basis of quality of
product and reliability of delivery. The price of hard-shell
clams continued at or near historically high levels during the
past fiscal year.
Although once a substantial factor in the market, a
significant decrease in clam production at Bluepoints over the
past several years, combined with some substantial new
production by competitors harvesting clams in other areas
along the Eastern Seaboard, has resulted in a diminished role
for Bluepoints in the hard-shell clam market. The aggregate
number of bushels of clams harvested during the fiscal year
ended June 30, 1994 decreased 6% compared with the prior
fiscal year. However, due to favorable water conditions for
fiscal year ended June 30, 1993, the aggregate number of
bushels of clams increased 32% as compared with the fiscal
year ended June 30, 1992. For the period July 1, 1994 through
August 31, 1994, the aggregate number of clams harvested
increased 7% compared with the same period in the prior year.
Bluepoints has expanded its hatchery facilities in an effort
to increase inventory. However, climate and other
environmental factors beyond the control of Bluepoints affect
the propagation and growth of clams. New York State
environmental authorities are continually monitoring the
harvesting area for pollution. From time to time, and at
present, certain small areas of Bluepoints' property exceed
the maximum coliform count set by Federal law, and shellfish
located in such areas may not be harvested. At the present
time, State authorities have closed other portions of the
Great South Bay to clamming operations because the coliform
count exceeds Federal standards.
Bluepoints, through foreign subsidiaries, operates a shrimp
farm and is a 62.5% owner of a shrimp hatchery, which are both
located in Ecuador. Sales of shrimp from the foregoing
operations approximated $671,000 and $1,198,000 for the fiscal
years
<PAGE>
ended June 30, 1994 and 1993, respectively. In addition,
Bluepoint also owns a 38% interest in another Ecuadorian
shrimp farming operation. See Item 12 and 13 below for
information relating to shares of stock of Bluepoints and
these foreign subsidiaries owned by certain officers and
directors of the Company.
The Company also owns a 50% interest in Lambert Seafood
Company, a scallop operation in Cape Canaveral, Florida. In
the current fiscal year, there was a reduced scallop harvest
as compared to last year when there was an excellent scallop
harvest; there can be no assurance that extensive beds of
scallops will be found in the future. Lambert's revenues for
scallop operations decreased from $6,858,000 in the prior year
to $3,702,000 in the current fiscal year.
Seafood revenues accounted for 13%, 15% and 13% of
consolidated revenues from continuing operations for the
fiscal years ended June 30, 1994, 1993 and 1992, respectively.
Textile
Hanora Spinning, Inc. ("Hanora"), a wholly-owned subsidiary of
the Company, operates a yarn spinning plant in Woonsocket,
Rhode Island. Hanora, which is not a significant factor in the
market it serves, competes with a number of other yarn
spinning plants on the basis of quality of product and price.
During the fiscal year ended June 30, 1994, Hanora purchased
approximately $149,000 of additional equipment. The backlog of
yarn sales on August 31, 1994 was approximately $5,500,000 as
compared to $4,000,000 a year ago. Approximately 80% of the
current backlog is expected to be shipped in the fiscal year
ending June 30, 1995. One customer accounted for approximately
14% of Hanora's total sales during the 1994 fiscal year. The
loss of this customer would not have a material adverse effect
on the Company and its subsidiaries taken as a whole.
Hanora South, Inc. ("Hanora South"), a wholly-owned subsidiary
of the Company, operates a yarn spinning plant in Lake City,
South Carolina which produces craft, sweater, hosiery,
upholstery and industrial yarns as a commission spinner for
Hanora. J&M, Dyers, Inc. ("J & M"), another wholly-owned
subsidiary of the Company, which operates a yarn dyeing plant
in Sumter, South Carolina, is a commission dyer for rawstock,
package, ombre and skein dyeing. Neither of these subsidiaries
is a significant factor in the markets they serve and each
competes with a number of other firms that are substantially
larger; at the present time, neither has a significant backlog
of orders.
Whitlock Combing Co. Inc. ("Whitlock"), a wholly-owned
subsidiary owned a wool combing plant in Allendale, South
Carolina. In April 1992, Whitlock entered into an agreement
pursuant to which, in June 1992, it sold substantially all of
the assets of its wool combing business to Wellman, Inc., and
ceased all of its remaining operations. Pursuant to a Consent
Order entered into in 1985 with the South Carolina Department
of Health and Environmental Control ("DHEC"), Whitlock
recognized
<PAGE>
approximately $119,000 and $435,000 of costs during the fiscal
years ended June 30, 1994 and 1993, respectively, to clean up
the property on which the wool combing plant is located and to
implement a groundwater monitoring program. It is estimated
that the anticipated remaining cost of completing all remedial
action will not be significant.
Textile revenues accounted for 37%, 38% and 40% of
consolidated revenues from operations for the fiscal years
ended June 30, 1994, 1993 and 1992, respectively.
Health Care
The Company owns a 49.9% partnership interest in two nursing
homes located in Jersey City, New Jersey (the "Jersey City
Facility") and Rochelle Park, New Jersey (the "Rochelle Park
Facility"). The Jersey City and Rochelle Park Facilities (see
Item 2--Health Care Segment below) contain 180 beds and 240
beds, respectively, and each facility provides skilled and
intermediate nursing care to both private and Medicaid
residents. The Rochelle Park Facility also includes a 121-unit
senior citizen residence and an adult day care center. Skilled
and intermediate care facilities provide nursing services
through the use of professional and nonprofessional employees.
The nursing homes attempt to obtain residents through
referrals from acute care hospitals, physicians, residential
care facilities, church groups and other service organizations
in the communities in which the facilities are located. There
are competing facilities in these communities. In competing
for residents, the reputation of the Company's facilities in
the community and their physical appearance are important
factors, since members of the resident's family generally
participate to a greater extent in selecting skilled and
intermediate nursing facilities than in selecting an acute
care hospital. The Company's facilities also experience
competition in employing and retaining high quality
professionals and nonprofessional employees, including nurses,
technicians, aides and others. The Company also owns a 49.9%
partnership interest in a nursing home in Whiting, New Jersey.
This facility is net leased to the operator of the facility
under a lease which expires on December 31, 2011.
Merrimac
The Company, through Merrimac Corp. and its subsidiaries
("Merrimac"), was engaged in the manufacture, purchase and
distribution of upscale and moderately priced giftware and the
commercial real estate business. Merrimac was merged into the
Company in the 1993 fiscal year. See item 2 below for
information relating to the properties formerly owned by
Merrimac in Brookhaven, Pennsylvania and Newburyport,
Massachusetts, and Note 2 of Notes to Consolidated Financial
Statements for additional information relating to Merrimac.
<PAGE>
ITEM 2. PROPERTIES
Location General Character (1)
Real Estate Segment
Video Film Center 10-story office building
315-329 W. 44th Street square feet; 70% rented
New York, New York
Junior Coat Building 18-story office, showroom and
250 W. 39th Street manufacturing facility;
New York, New York 182,000 rentable square feet;
90% rented.
Jefferson National Bank Building 6-story office building; 39,300
4100 Pinetree Drive rentable square feet; 100% rented.
Miami Beach, Florida
First Republic Office Park Two, two-story office buildings with
Thruway and Electronics Parkway 35,000 rentable square feet each;
Liverpool, New York 14 acres of land; 96% rented.
Waltham Engineer 17 multi-story industrial buildings;
Waltham, Massachusetts in excess of 380,000 rentable square
feet;parking facilities; 90% rented.
East Newark Industrial Center 30 multi-story industrial buildings;
East Newark, New Jersey in excess of 1,000,000 rentable
square feet;parking facilities;
80% rented; second mortgage held by
Bluepoints in the amount of
$401,772 at September 1, 1994.
Nyanza Building Four-story and basement industrial
Woonsocket, Rhode Island building; 300,000 rentable square feet;
used by Company as spinning plant
(100,000 sq. ft.) and balance rented
to others; 85% rented.
Greensboro North Shopping Center Approximately 13.5 acres of land and
Greensboro, North Carolina 128,000 square feet of space in
buildings located thereon; 40% rented.
Greensboro South Shopping Center Approximately 13 acres of land and
Greensboro, North Carolina 141,000 square feet of space in
buildings located thereon; 95% rented.
<PAGE>
Location General Character (1)
Shopping Center Approximately 13.5 acres of land and
Richmond, Virginia 130,000 square feet of space in
buildings located thereon;
100% rented.
London Bridge Shopping Center Approximately 10.2 acres of land and
Virginia Beach, Virginia 100,000 square feet of space in
buildings located thereon; 98% rented.
Vacant land Approximately 21 acres; suitable for
Melbourne, Florida development as a shopping center.
Sunscape Apartments 167-unit residential garden apartments
Orlando, Florida located on approximately 12 acres
of land; 90% rented. (Company owns
50% of Sunscape Associates, a
partnership which owns the apartments).
Shopping Center Approximately 22.7 acres of land and
Brookhaven, Pennsylvania 196,000 square feet of space in
buildings located thereon; 90% rented.
Newburyport, Massachusetts 4-story building; 168,000 rentable
square feet of space; 10% rented.
3-story building, 13,800 rentable
square feet of space; 100% rented.
Two-story building and warehouse;
5,000 square feet, presently vacant.
Hotel Segment
Sheraton Inn-Syracuse 288-room motor hotel and convention
Thruway and Electronics Parkway center; indoor pool; operated under
Liverpool, New York Sheraton franchise.
Seafood Segment (2)
West Sayville, New York Approximately 13,000 acres of
underwater land in the Great South
Bay of Long Island; approximately 5
acres of upland and 22,500 square
feet of space in two buildings
located thereon; used for unloading
product, storage, inspection,
shipping, shop maintenance, hatchery
and administration.
<PAGE>
Location General Character (1)
Mattituck, New York Approximately 1 acre of land in
Long Island; to be used as a grow
out pond for the clam hatchery.
Crisfield, Maryland Approximately .78 acres of land and
33,625 square feet of space in three
buildings located thereon;
previously used to receive, process,
store and ship soft-shell crabs,
presently vacant.
Englishman Island Approximately 600 acres of land
including Guayaquil County, Ecuador
288 acres owned and the balance held
under a 10-year concession, expiring
April 1995, containing shrimp ponds
and drainage canals.
Vacant Land Bluepoints has a 62.5% interest in a
Guayaquil, Ecuador company that owns approximately
100,000 square feet of riverfront
land.
Ayangue Bluepoints has a 62.5% interest in a
Guayas Province, Ecuador company that owns approximately
56 acres of land used for a shrimp
hatchery.
Cape Canaveral, Florida Various leaseholds (approximately 11
acres) used by scallop operation for
offloading, processing, packaging,
warehouse and office. (Company owns
50% of Lambert International
Fisheries Inc. and Cape King
Associates which hold leaseholds.)
Textile Segment
Allendale, South Carolina Approximately 195 acres of land, on
which a plant containing one
building with approximately 156,000
square feet and comprising
approximately 20 acres is located,
presently vacant.
Pageland, South Carolina Approximately 10 acres of land and
36,125 square foot building located
thereon; previously used as bulking
and twisting plant, warehouse and
office, presently being rented.
<PAGE>
Location General Character (1)
Lake City, South Carolina Approximately 21.5 acres of land and
95,000 square feet of space in two
buildings located thereon; used for
a yarn spinning plant, warehouse and
administration.
Sumter, South Carolina Approximately 10.5 acres of land and
61,000 square foot building located
thereon; used as yarn dyeing plant,
warehouse and office.
Health Care Segment
Rochelle Park, New Jersey 240-bed nursing home; owned by
partnership in which the Company has a
49.9% partnership interest.
121-unit senior citizen residence;
owned by partnership in which the
Company has a 49.9% partnership
interest.
Jersey City, New Jersey 180-bed nursing home; owned by
partnership in which the Company
has a 49.9% partnership interest.
Whiting, New Jersey 180-bed nursing home; leased to
tenant by partnership in which the
Company has a 49.9% partnership
interest.
Corporate Office
302 Fifth Avenue 5,400 square feet of executive
New York, New York offices; month-to-month tenant
at a rent of $7,709 per month.
See Item 13. below.
(1)-Reference is made to Schedule XI for information with
respect to mortgages encumbering certain properties listed in
the table.
(2)-Except as otherwise noted, the properties listed in the
Seafood Segment are owned by Bluepoints Company, Inc., an
80.2% owned subsidiary of the Coof<PAGE>
ITEM 3. LEGAL PROCEEDINGS
See Item 1(c) for information with respect to environmental
matters relating to the property owned by Whitlock Combing Co.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
<PAGE>
PART II
ITEM 5.MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SECURITY HOLDER MATTERS
a. The Company's common stock is traded in the over-the-counter market.
There have not been any quotations for the Company's common stock in the
National Daily Quotation Service for the past several years.
During the two most recent fiscal years, the Company has purchased
shares at prices ranging from a high of $57.50 in July 1992
to a low of $39.00 in June 1994.
Due to the absence of quotations it may be deemed that there
is no established public trading market for the Company's common stock.
b. As of September 16, 1994, there were 857 holders of record of the Company's
common stock.
c. No dividends have been paid during the two years ended June 30, 1994. The
Company has no intention of paying dividends in the foreseeable future.
<PAGE>
ITEM 6.SELECTED FINANCIAL DATA
Fiscal Year Ended June 30
1994 1993 1992 1991 1990
(In thousands except per share amounts)
Revenues $48,119 $47,036 $49,152 $53,811 $55,850
Income before
interest and income
taxes $3,391 $743 $3,062 $1,692 $1,818
Interest costs $2,248 $2,239 $2,636 $2,929 $2,797
Income (loss) from
continuing operations before
extraordinary income
and cumulative
effect of accounting
change $ 88 $(1,369) $ 84 $(436) $(1,062)
Net income (loss)
per shareof common
stock from continuing
operations $ .13 $(2.00) $ .12 $ (.63) $(1.54)
Total assets $80,164 $79,106 $79,705 $84,124 $131,449
Long-term debt $23,870 $22,234 $21,598 $16,049 $16,728
Stockholders' equity $42,264 $40,872 $42,732 $42,705 $37,233
Cash dividends per
common share NONE NONE NONE NONE NONE
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Working capital at June 30, 1994 decreased by approximately
$1,169,000 as compared to the prior year. The Company has
initiated foreclosure proceedings on a building in the Bronx,
New York and has reclassified a $934,215 mortgage that is past
due as a long-term receivable.
Net cash provided by operating activities was approximately
$5,712,000 during the 1994 fiscal year. Net cash provided by
financing activities was approximately $966,000. Net cash of
approximately $6,866,000 was used for investing activities.
During the three years ended June 30, 1994, the Company
incurred capital expenditures of approximately $10,456,000. In
addition, approximately $1,587,000 was expended for tenants'
improvements during this three year period.
Results of Operations
Real Estate
In fiscal 1994 real estate operating profits decreased $85,000
on a revenue increase of $38,000 as compared to the prior
year. The decrease in operating profits was primarily
attributable to $100,000 of interest expense on a new mortgage
obtained on the Greensboro South Shopping Center. The
Company's real estate operating profits decreased $1,377,000
in fiscal 1993 as compared with the prior year, while revenues
decreased $307,000 over the same period. The decrease in
operating profits was primarily attributable to a $287,000
increase in repairs and maintenance, a $250,000 increase in
real estate taxes, a $125,000 increase in salaries and fringe
costs, and an increase of $285,000 in utility and snow removal
costs caused by the colder than normal winter.
Hotel
Operating profits for the Sheraton Inn--Syracuse for fiscal
1994 decreased approximately $244,000 on an approximately
$10,000 decrease in revenues from the prior year. This was due
primarily to $160,000 of additional fees paid to the
management company that oversees the operations of the hotel
and other small increases in operating costs. Profits and
revenues for the hotel for the year ended June 30, 1993 were
approximately the same as in the prior year.
Seafood
Overall, revenues for the seafood division decreased by 13% as
compared to the prior year. Losses from operations in fiscal
1994 were $2,170,000 as compared to a loss of $847,000 last
year. The reduction in revenues was attributable to declining
shrimp sales from Ecuador, which were partially offset by the
<PAGE>
importation of shrimp from Costa Rica. Due to the lower
revenues, Ecuadorian operations sustained a loss of
$1,848,000. Declining shrimp production resulted from poor
water quality in the Company's shrimp ponds. Although the
Company is taking steps to improve water quality, these
problems have continued into the current fiscal year. Although
the Company received a $190,000 distribution from its scallop
investment, it incurred a $492,000 loss due substantially to
write down of leasehold carrying costs and depreciation
expense on remaining assets. Bluepoints' Long Island
operations had income of $282,000, significantly lower than
last year due to reduced profits from sale of shrimp imported
from Ecuador and higher operating costs in the clam
operations. There was a loss of $112,000 from the discontinued
soft shell crab operation, whose assets were put up for sale
last year. The fiscal 1993 revenues for the seafood division
increased by 14%. Losses from operations in fiscal 1993 were
$847,000 as compared to a loss of $1,124,000 in fiscal 1992.
The Company received a $250,000 distribution from its scallop
investment, but incurred a $850,000 loss due to losses on
disposal of nonperforming scallop operation assets. In fiscal
1993, there was a loss of $513,000 from the foreign seafood
operations and a $118,000 loss incurred in the discontinued
soft-shell crab operation. Bluepoints' Long Island operations
had income of approximately $634,000. In fiscal 1992, revenues
for the seafood division increased by 2%. Losses from
operations in fiscal 1992 were $1,124,000 as compared to a
loss of $1,463,000 in fiscal 1991. Losses of $160,000 from the
soft-shell crab operation were substantially due to markdowns
taken when disposing of the remaining inventory upon
termination of operations. The Company incurred a $512,000
loss on the scallop investment, and a net loss of
approximately $782,000 from its foreign seafood operations.
Bluepoints' Long Island operations in fiscal 1992 had income
of approximately $330,000.
Textile
Although revenues for the textile division were approximately
the same as last year, earnings increased $1,885,000. Hanora
Spinning's earnings increased $494,000 to $1,138,000 due
substantially to higher operating margins. Hanora South and J
& M incurred combined losses of $490,000 as compared to last
years losses of $758,000. Whitlock incurred a loss of $563,000
which included costs to clean up the property on which its
wool combing plant was located, and has put up the property
for sale. During the three years ended June 30, 1994, the
Company purchased approximately $1,331,000 of machinery and
equipment for the textile operations. In fiscal 1993, revenues
decreased 11% in the textile division as compared to fiscal
1992 due to the cessation of operations at Whitlock. Hanora
revenues increased 25% and the revenues of Hanora South and J
& M increased 2%. Losses from operations in fiscal 1993 were
$1,800,000 as compared to a loss of $1,838,000 in fiscal 1992.
Hanora's earnings were $644,000 and Hanora South and J & M
incurred a combined loss of $758,000. Whitlock, which as a
result of ongoing losses, sold its equipment and substantially
ceased operations in June 1992, incurred a loss of $1,686,000,
including an $800,000 writedown on its remaining assets which
were offered for sale. The loss for the year ended June 30,
1992 was approximately $1,838,000 as compared to fiscal 1991's
loss of approximately $3,198,000. Hanora's earnings increased
$509,000 due primarily to higher revenues and increased
selling margins.
<PAGE>
Hanora South and J & M incurred combined
losses of $1,308,000 as a result of the loss of their major
customer in fiscal 1990. Whitlock incurred a loss of
$1,220,000 as a result of lower than anticipated productivity
from a new production line set up during the 1990 fiscal year
and a 46% decrease in revenues.
Health Care
In fiscal 1994, the Company recognized income of $713,000 from
its investment in health care operations. In fiscal 1993, the
Company recognized income of $755,000 from this investment.
From the date of acquisition through June 30, 1992, the
Company recognized income of $345,000.
Merrimac
Merrimac's operations were merged into the Company in June
1993 and are reflected in the Company's real estate and other
operations for fiscal 1994. Merrimac's operations for fiscal
1993 (real estate, giftware and other) had revenues of
approximately $1,401,000, resulting in a loss of approximately
$294,000. In fiscal 1992, revenues were approximately
$1,500,000 resulting in a profit of approximately $284,000.
The results of operations in fiscal 1993 reflect interest
payments on a mortgage on the Brookhaven Shopping Center of
approximately $151,000 and a reduction of royalty receipts.
Fiscal 1993 and 1992 results were included in the Company's
real estate and other operations.
Corporate/Other
Corporate/other expenses which reflect the results of
Merrimac's operations decreased from $3,425,000 to $1,496,000.
This was due to $1,322,000 of income resulting from the
termination of a royalty agreement with the purchaser of the
Merrimac Silversmith assets, and a $446,000 reduction in the
Merrimac pension obligation pursuant to curtailment of the
plan. Aside from the foregoing, other corporate expenses,
which includes interest on the Company's term loan and
revolving line of credit, have remained relatively constant
for the last three years.
<PAGE>
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
The First Republic Corporation of America
We have audited the accompanying consolidated balance sheets of the First
Republic Corporation of America (the "Company") and subsidiaries as of
June 30, 1994 and 1993, and the related consolidated statements of income,
retained earnings, and cash flows for each of three years in the period ended
June 30, 1994. Our audits also included the financial statement schedules
listed in the accompanying index to financial statements (Item 14.a.). These
financial statements and schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits. We did not audit the financial
statements of (a) Marchelot S.A. and its subsidiaries and the hotel division,
which statements reflect total assets constituting 14% in 1994 and 11% in
1993, and total revenues constituting 13% in 1994, 12% in 1993 and 15%
in 1992, of the related consolidated totals, (b) the Mondragon Companies,
accounted for on the equity method, and (c) certain health care entities
(Bristol Manor Health Care Center, Inc., The Whitehall Residence, Inc.,
Logan Manor Corp., Harbor View Health Care Center, Inc.), accounted for
on the equity method. Those statements were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to
the amounts included for such entities, is based solely on the reports of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the reports
of the other auditors provide a reasonable basis for our opinion.
<PAGE>
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of The First Republic Corporation of
America and subsidiaries at June 30, 1994 and 1993, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended June 30, 1994, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
New York, New York
September 30, 1994
<PAGE>
BDO Stern Cia. Ltda.
Auditores
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Marchelot S.A. and Subsidiaries
New York, U.S.A.
We have audited the consolidated balance sheet of Marchelot S.A. (a wholly-
owned subsidiary of Bluepoints of Bermuda) and its subsidiaries Emporsa,
Empacadora y Exportadora S.A., Larfico, Larvas del Pacifico S.A. and
Comercorp S.A. as of June 30, 1994 and 1993, and the related consolidated
statements of operations and deficit for each of the three years in the period
ended June 30, 1994, and the consolidated statements of cash flows for the
years ended June 30, 1994 and 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion of these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audits provide a
reasonable basis for our opinion.
As indicated in Note A to the attached financial statements to June 30, 1994
and 1993 the Government of Ecuador requires that the Sucre financial
statements be adjusted for inflation. The principal effects produced for local
purposes of the referred monetary correction of 1994 and 1993 were to
increase properties by S/.3.672 million, deferred charges by S/.1.320 million,
inventories by S/.109 million and anticipated expenses by S/.14 million,
reduce investments in shares by S/.1.248 million, and the net difference
caused a decrease in equity of S/.4.473 million. Also, the companies
eliminated the prior year's losses of S/.906 million with the superavit from
revaluation and S/.244 million from the monetary reexpression. All these
transactions were reversed in the financial statements for the purpose of
presenting them at their cost of purchase, in conformity with accounting
principles generally accepted in the United States of America. The financial
statements in U.S.A. Dollars will not be modified as a result of this monetary
reexpression in Sucres.
<PAGE>
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Marchelot S.A. and
Subsidiaries as of June 30, 1994 and 1993, the consolidated results of their
operations for each of the three years in the period ended June 30, 1994, and
their cash flows for the years ended June 30, 1994 and 1993, in conformity
with generally accepted accounting principles prevailing in the United States
of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note Q to the
financial statements, the Company incurred in recurring operating losses and
has a net capital deficiency, which establishes a significant doubt on its
capacity to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
As indicated in Notes A and E, on May 23, 1991, Marchelot S.A. acquired
38% of the issued and outstanding shares of the unconsolidated subsidiaries
Isca C.A. and Langomorro Cia. Ltda., and 12.5% additional of Larfico S.A.
and Comercorp S.A., currently 62.5%-owned subsidiaries, for a total of US
$1.3 million (S/.1,457 million). These investments originated an excess of
cost over net assets of those Subsidiaries of US $1.0 million (S/.1,131
million), accounted for as intangible assets. Such excess was originated
based principally on the accumulated deficit of these four companies, due to
be recurring operating losses which were approximately US $2.5 million
(S/.2,670 million) at the date of acquisition.
As of June 30, 1994, property, machinery and equipment include S/.1,046
million (US $518,981) for wall repairs and other work in the pools and
reservoirs which were executed by individual contractors.
Our examinations included also the translation of the amounts from
Ecuadorean Sucres to U.S. Dollars for consolidation purpose with Bluepoints
of Bermuda's financial statements. In our opinion, this translation was made
in conformity with generally accepted accounting principles, applied to the
financial statements in foreign currency and incorporated into the
dated financial statements.
August 2, 1994
Guayaquil, Ecuador
<PAGE>
Dermody, Burke & Brown
Certified Public Accountants, P.C.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
FIRST REPUBLIC CORPORATION OF AMERICAN
SHERATON INN - SYRACUSE
We have audited the balance sheets of FIRST REPUBLIC CORPORATION
OF AMERICA, SHERATON INN - SYRACUSE as of June 30, 1994 and
1993, and the related statements of income, division control and cash flows
for the years ended June 30, 1994, 1993 and 1992. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
The Sheraton Inn - Syracuse is owned and operated by First Republic
Corporation of America and its affiliated company, First Republic Building
Corporation. The accounting records maintained in Syracuse relate only to
the transactions incurred in the daily operation of the Hotel. Transactions
involving debt financing, tax escrow payments, corporate income taxes and
property accounts are not reflected on the Hotel's books but are the
accounting responsibility of First Republic and its affiliate. These financial
statements are issued for inclusion in the financial statements of First
Republic Corporation of America and should not be considered separately in
determining the financial position and results of operations of the Sheraton
Inn - Syracuse.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the operations of FIRST
REPUBLIC CORPORATION OF AMERICA, SHERATON INN -
SYRACUSE at June 30, 1994 and 1993, and the results of its operations and
its cash flows for the three year period ended June 30, 1994, in conformity
with generally accepted accounting principles.
DERMODY, BURKE AND BROWN
Certified Public Accountants, P.C.
Syracuse, New York
August 24, 1994
<PAGE>
LOEB & TROPER
655 THIRD AVENUE, 12TH FLOOR, NEW YORK, NY 10017
TEL: (212) 867-4000
FAX: (212) 867-9810
Independent Auditor's Report
Board of Directors
Logan Manor Corp.
We have audited the accompanying balance sheet of Logan Manor
Corp. as of June 30, 1994 and 1993, and the related statements of operations
and cash flows for the six months then ended. These financial statements are
the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Logan Manor Corp. as of
June 30, 1994 and 1993, and the results of its operations and its cash flows
for the six months then ended in conformity with generally accepted
accounting principles.
Logan Manor Corp. is a member of a group of affiliated entities and,
as disclosed in the financial statements, has significant transactions with
members of the group, including significant borrowings. Because of these
relationships, it is possible that the terms of these transactions are not the
same as those which would result from transactions among wholly unrelated
parties.
August 8, 1994
<PAGE>
LOEB & TROPER
Independent Auditor's Report
Board of Directors
Logan Manor Corp.
We have audited the accompanying balance sheet of Logan Manor
Corp. as of December 31, 1993 and 1992, and the related statements of
operations and cash flows for the years then ended. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Logan Manor Corp. as of
December 31, 1993 and 1992, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
Logan Manor Corp. is a member of a group of affiliated entities and,
as disclosed in the financial statements, has significant transactions with
members of the group, including significant borrowings. Because of these
relationships, it is possible that the terms of these transactions are not the
same as those which would result from transactions among wholly unrelated
parties.
February 28,1994
<PAGE>
LOEB & TROPER
Independent Auditor's Report
Board of Directors
Bristol Manor Health Care Center, Inc.
We have audited the accompanying balance sheet of Bristol Manor
Health Care Center, Inc. as of June 30, 1994 and 1993, and the related
statements of operations and cash flows for the six months then ended.
These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bristol Manor Health Care
Center, Inc. as of June 30, 1994 and 1993, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Bristol Manor Health Care Center, Inc. is a member of a group of
affiliated entities and, as disclosed in the financial statements, has
significant transactions with members of the group, including significant
borrowings. Because of these relationships, it is possible that the terms
of thesetransactions are not the same as those which would result from
transactions among wholly unrelated parties.
August 8, 1994
<PAGE>
LOEB & TROPER
Independent Auditor's Report
Board of Directors
Bristol Manor Health Care Center, Inc.
We have audited the accompanying balance sheet of Bristol Manor
Health Care Center, Inc. as of December 31, 1993 and 1992, and the related
statements of operations and cash flows for the years then ended. These
financial statements are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bristol Manor Health Care
Center, Inc. as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Bristol Manor Health Care Center, Inc. is a member of a group of
affiliated entities and, as disclosed in the financial statements, has
significant transactions with members of the group, including significant
borrowings. Because of these relationships, it is possible that the terms of
these transactions are not the same as those which would result from
transactions among wholly unrelated parties.
February 28, 1994
<PAGE>
LOEB & TROPER
Independent Auditor's Report
Board of Directors
The Whitehall Residence, Inc.
We have audited the accompanying balance sheet of The Whitehall
Residence, Inc. as of June 30, 1994 and 1993, and the related statements of
operations and cash flows for the six months then ended. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Whitehall Residence,
Inc. as of June 30, 1994 and 1993, and the results of its operations and its
cash flows for the six months then ended in conformity with generally
accepted accounting principles.
The Whitehall Residence, Inc. is a member of a group of affiliated
entities and, as disclosed in the financial statements, has significant
transactions with members of the group, including significant borrowings.
Because of these relationships, it is possible that the terms of these
transactions are not the same as those which would result from transactions
among wholly unrelated parties.
The accompanying financial statements have been prepared assuming
that The Whitehall Residence, Inc. will continue as a going concern. As
discussed in Note H to the financial statements, the Corporation has suffered
recurring losses from operations and has a retained earnings deficit that raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note H.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
August 8, 1994
<PAGE>
LOEB & TROPER
Independent Auditor's Report
Board of Directors
The Whitehall Residence, Inc.
We have audited the accompanying balance sheet of The Whitehall
Residence, Inc. as of December 31, 1993 and 1992, and the related
statements of operations and cash flows for the years then ended. These
financial statements are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Whitehall Residence,
Inc. as of December 31, 1993 and 1992, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
The Whitehall Residence, Inc. is a member of a group of affiliated
entities and, as disclosed in the financial statements, has significant
transactions with members of the group, including significant borrowings.
Because of these relationships, it is possible that the terms of these
transactions are not the same as those which would result from transactions
among wholly unrelated parties.
The accompanying financial statements have been prepared assuming
that The Whitehall Residence, Inc. will continue as a going concern. As
discussed in Note G to the financial statements, the Corporation has suffered
recurring losses from operations and has a retained earnings deficit that raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note G.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
February 28, 1994
<PAGE>
LOEB & TROPER
Independent Auditor's Report
Board of Directors
Harbor View Health Care Center, Inc.
We have audited the accompanying balance sheet of Harbor View
Health Care Center, Inc. as of June 30, 1994 and 1993, and the related
statements of operations and cash flows for the six months then ended.
These financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Harbor View Health Care
Center, Inc. as of June 30, 1994 and 1993, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Harbor View Health Care Center, Inc. is a member of a group of af-
filiated entities and, as disclosed in the financial statements, has significant
transactions with members of the group, including significant borrowings.
Because of these relationships, it is possible that the terms of these
transactions are not the same as those which would result from transactions
among wholly unrelated parties.
August 8, 1994
<PAGE>
LOEB & TROPER
Independent Auditor's Report
Board of Directors
Harbor View Health Care Center, Inc.
We have audited the accompanying balance sheet of Harbor View
Health Care Center, Inc. as of December 31, 1993 and 1992, and the related
statements of operations and cash flows for the years then ended. These
financial statements are the responsibility of the Corporation's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Harbor View Health Care
Center, Inc. as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Harbor View Health Care Center, Inc. is a member of a group of af-
filiated entities and, as disclosed in the financial statements, has significant
transactions with members of the group, including significant borrowings.
Because of these relationships, it is possible that the terms of these
transactions are not the same as those which would result from transactions
among wholly unrelated parties.
February 28, 1994
<PAGE>
The First Republic Corporation of America and Subsidiaries
Consolidated Balance Sheets
June 30
1994 1993
Assets
Current assets:
Cash and cash equivalents $1,316,144 $1,504,799
Accounts and rents receivable,
net of allowances of $153,180
and $158,213, respectively 5,493,910 6,220,640
Mortgages receivable--current
portion (Note 3) 737,971 1,012,313
Other receivables 426,530 666,348
Inventories (Note 1) 4,731,545 3,781,243
Prepaid expenses and other assets 1,269,255 2,486,473
Total current assets 13,975,355 15,671,816
Property, plant and equipment (Note 5):
Land 9,889,089 9,598,158
Buildings and improvements 38,389,151 37,346,639
Leaseholds and improvements 5,782,598 6,404,218
Machinery, equipment, parts and
vehicles 12,532,328 12,193,128
Furniture and furnishings 933,871 1,049,812
Construction-in-progress 1,904,149 969,522
69,431,186 67,561,477
Less accumulated depreciation
and amortization 29,276,551 27,679,765
40,154,635 39,881,712
Mortgages receivable--net of
current portion (Note 3) 2,902,044 3,244,478
Deferred charges 6,107,863 5,092,889
Other assets:
Cash and securities in trust for
tenants' security deposits 1,529,315 1,484,881
Mortgage escrow funds and
security deposits 218,376 82,239
Investments in and advances
to affiliated entities (Notes 1
and 4) 11,598,245 10,252,102
Assets held for sale (Note 4) 1,983,300 2,144,229
Due from related parties (Note 12) 745,000 283,000
Other (Note 4) 949,495 968,232
17,023,731 15,214,683
Total assets $80,163,628 $79,105,578
See notes to consolidated financial statements.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Consolidated Balance Sheets (continued)
June 30
1994 1993
Liabilities and stockholders'
equity
Current liabilities:
Notes payable banks (Note 5) $2,568,016 $2,830,964
Notes payable, related party 640,000 640,000
Current portion of long-term
debt (Note 5) 1,312,114 1,352,770
Accounts payable 2,111,893 1,698,925
Accrued expenses and taxes payable 1,356,246 2,004,036
Due to related parties (Notes 5 and 12) 1,328,000 755,000
Subordinated debentures payable (Note 6) - 469,336
Other liabilities 96,005 188,698
Total current liabilities 9,412,274 9,939,729
Long-term debt (Note 5) 23,870,298 22,233,897
Deferred income tax (Note 8) 673,926 1,696,926
Other liabilities:
Tenants security deposits payable 1,529,315 1,484,881
Accrued pension (and sundry in 1993)
(Note 9) 1,235,000 1,791,710
2,764,315 3,276,591
Minority interests 775,372 664,218
Deferred income (Note 3 ) 403,727 421,983
Total liabilities 37,899,912 38,233,344
Stockholders' equity:
Common stock, $1 par value:Authorized,
2,400,000 shares
Issued, 1,175,261 shares 1,175,261 1,175,261
Additional paid-in capital 15,000,753 15,000,753
Retained earnings 30,429,660 28,868,990
46,605,674 45,045,004
Less treasury stock, at cost-501,
154 and 497,498 shares (Note 7) 4,341,958 4,172,770
Total stockholders' equity 42,263,716 40,872,234
Leases, commitments and
contingencies(Notes 5, 9, 10 and 11)
Total liabilities and stockholders'
equity $80,163,628 $79,105,578
See notes to consolidated financial statements.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Consolidated Statements of Income
Year ended June 30
1994 1993 1992
Revenues:
Sales' textiles and seafood $23,717,207 $24,764,199 $26,009,745
Rents and other revenues'
real estate and hotel operations 20,544,116 20,516,437 20,769,349
Other (including interest income of
approximately $94,000, $95,000 and
$323,000, respectively) (Notes 9
and 13) 3,857,729 1,755,494 2,372,600
Equity in loss of affiliated entities
(Note 4) (1,416,679) (228,481) (577,397)
46,702,373 46,807,649 48,574,297
Costs and expenses:
Cost of sales 20,704,424 22,272,121 24,384,905
Operating costs-real estate and
hotel operations 12,323,408 12,074,090 11,098,273
Depreciation and amortization 3,833,184 4,113,181 4,536,731
Interest 2,248,497 2,238,893 2,636,284
Selling, general and administrative 7,072,603 6,953,024 5,826,749
Writedown of property and equipment
(Note 4) -- 800,000 --
Minority interests (622,413) (147,711) (334,165)
45,559,703 48,303,598 48,148,777
Income (loss) before income taxes,
extraordinary item and cumulative
effect of change in accounting for
income taxes 1,142,670 (1,495,949) 425,520
Income tax (expense) benefit (Note 8) (1,055,000) 127,000 (342,000)
Income (loss) before extraordinary item and cumulative
effect of accounting change 87,670 (1,368,949) 83,520
Extraordinary income-share of gain on extinguishment of debt
by affiliated entities, net of income taxes of $120,000
(Note 4)
300,000 - -
Cumulative effect as of July 1, 1993 of change in method of
accounting for income taxes (Note 1) 1,173,000 - -
Net income (loss) $1,560,670 $(1,368,949) $83,520
Per share of common stock (Note 1):
Operations before extraordinary item and cumulative effect
of accounting change
$.13 $(2.00) $0.12
Extraordinary income .44 -- --
Cumulative effect of accounting change 1.74 -- --
Net income (loss) $2.31 $(2.00) $0.12
See notes to consolidated financial statements.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Consolidated Statements of Retained Earnings
Year ended June 30
1994 1993 1992
Balance, beginning of year $28,868,990 $30,237,939 $30,154,419
Net income (loss) for the year 1,560,670 (1,368,949) 83,520
Balance, end of year $30,429,660 $28,868,990 $30,237,939
See notes to consolidated financial statements.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Consolidated Statements of Cash Flows
Year ended June 30
1994 1993 1992
Operating activities
Net income (loss) $1,560,670 $(1,368,949) $ 83,520
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation and amortization 3,833,184 4,113,181 4,536,731
Writedown of property and equipment - 800,000 -
Provision (credit) for deferred
income taxes 150,000 - (100,000)
Cumulative effect of changes in
method of accounting for income
taxes (1,173,000) - -
Equity in net loss of
affiliated entities 996,679 228,481 577,397
Minority interests' share of
loss in subsidiaries (622,413) (147,711) (334,165)
Changes in operating assets and
liabilities from operations:
Net accounts, rents and other
receivables 966,548 (59,091) (749,630)
Inventories (950,302) (175,477) 1,696,683
Prepaid and other assets 1,217,218 (983,506) 249,327
Due from related parties - (709,602) (20,495)
Accounts payable 412,968 (120,807) (381,842)
Accrued and other current
liabilities (740,483) (815,256) 735,555
Due to related parties 573,000 (202,689) 457,255
Other liabilities (512,276) (516,365) 236,436
Cash provided by operating
activities 5,711,793 42,209 6,986,772
Investing activities
Purchases of property plant
and equipment (4,106,107) (4,289,928) (2,059,938)
Distribution in excess of
equity in earnings from
(investment in) affiliated
entities -net (Note 4) (2,342,822) 644,000 (5,696,948)
Repayment of notes receivable - - 3,000,000
Proceeds from sale of machinery
and equipment - 1,150,000 2,500,000
Payments received on
mortgages receivable 616,776 584,182 428,582
Other investing activities (1,034,135) (406,305) (251,379)
Net cash used by investing
activities (6,866,288) (2,318,051) (2,079,683)
<PAGE>
The First Republic Corporation of America and Subsidiaries
Consolidated Statements of Cash Flows (continued)
Year ended June 30
1994 1993 1992
Financing activities
Proceeds from mortgage and
notes payableto banks $11,705,000 $19,600,000 $13,600,000
Payments on mortgages and
notes payableto banks (10,372,203) (17,162,506) (18,322,100)
Repayment of subordinated
debenture (469,336) - -
Minority interests' additional
paid-in capital 271,567 342,513 -
Purchases of treasury stock (169,188) (490,828) (56,380)
Payments on notes payable
to others - - (190,419)
Net cash provided by (used in)
financing activities 965,840 2,289,179 (4,968,899)
Net (decrease) increase in cash
and cash equivalents (188,655) 13,337 (61,810)
Cash and cash equivalents at
the beginning of year 1,504,799 1,491,462 1,553,272
Cash and cash equivalents at
the end of year $1,316,144 $1,504,799 $1,491,462
See notes to consolidated financial statements.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
The First Republic Corporation of America and all majority
owned or controlled subsidiaries (the "Company"). All
significant intercompany accounts and transactions have been
eliminated in consolidation. The Company records its
investment in partnerships and corporations in which it owns
interests ranging from 38% to 50% in accordance with the
equity method. Any excess of the purchase price of such
investment over the Company's proportionate share of net
assets is being amortized over forty years.
Inventories
Inventories are valued at the lower of cost or market with
cost being determined by specific identification.
Inventories are summarized as follows:
June 30
1994 1993
Work-in-process and raw materials $1,978,575 $1,845,245
Finished goods 2,752,970 1,935,998
$4,731,545 $3,781,243
Property, Plant and Equipment
Property, plant and equipment is carried at cost, and assets
that become permanently impaired are written down to their
estimated realizable value. Depreciation is provided by annual
charges to income at rates which are intended to amortize the
cost of depreciable assets over their estimated useful lives
as follows:
Estimated
Classification Useful Life
Buildings 15 to 40 years
Building improvements and equipment 2 to 40 years
Leaseholds and improvements 3 to 31.5 years
Machinery, equipment, parts and vehicles 5 to 10 years
Furniture and furnishings 5 years
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
The straight-line method of depreciation is used for financial
statement purposes; the declining-balance, the modified
accelerated and accelerated cost recovery system methods as
appropriate, are being used for Federal income tax purposes.
Tenants' improvements and leasing commissions are amortized
principally over the terms of the respective leases.
Revenues
Sales of textiles and seafood are recognized when shipments
are made to customers. Rental revenue is recognized on an
accrual basis in accordance with the terms of the lease except
that leases with scheduled rent increases are recognized on a
straight-line basis over the life of the lease. Hotel revenues
are recognized when the related services are rendered.
Per Share Data
Per share amounts are based on the weighted average number of
shares of common stock outstanding in 1994, 1993 and 1992
(675,635, 683,625 and 687,855, respectively).
Change in Method of Accounting for Income Taxes
Effective July 1, 1993, the Company adopted FASB Statement No.
109, "Accounting for Income Taxes." Under Statement 109, the
liability method is used in accounting for income taxes. Under
this method, deferred tax assets and liabilities are
determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using
the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. Prior to the adoption of
Statement 109, income tax expense was determined using the
deferred method. Deferred tax expense was based on items of
income and expense that were reported in different years in
the financial statements and tax returns and were measured at
the tax rate in effect in the year the difference originated.
As permitted by Statement 109, the Company has elected not to
restate the financial statements of any prior years. The
change had no effect on pretax income from operations for the
year ended June 30, 1994. The cumulative effect of the change
increased net income by $1,173,000 or $1.74 per share.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Foreign Operations
The Company has a subsidiary which, together with certain
entities in which the subsidiary owns a minority interest,
operates in Ecuador which has a hyperinflationary currency.
Exchange gain or loss resulting from translation of the
foreign entities' financial statements were not material.
Financial statements of foreign entities with a
hyperinflationary currency are translated using the U.S.
dollar as the functional currency. The excess of cost over net
assets of foreign entities acquired is being amortized on a
straight-line basis over forty years.
Cash Flows
The Company considers all highly liquid investments with
maturities of three months or less when purchased to be cash
equivalents. The Company paid income taxes of approximately
$470,000, $1,350,000 and $520,000 and interest of
approximately $2,200,000, $2,200,000 and $2,750,000 for the
years ended June 30, 1994, 1993 and 1992, respectively.
Financial Instruments and Concentrations of Credit
Financial instruments which potentially subject the Company to
significant concentrations of credit risk consist principally
of cash and cash equivalents, mortgages receivable and
accounts and rents receivable.
The Company maintains operating cash accounts at financial
institutions in many states along the Eastern seaboard and,
for its foreign subsidiaries, in Equador. Such accounts are
subject to risk to the extent that the balances exceed the
institutions' insurable limits and to the extent that the
institutions maintain their solvency.
Mortgages receivable are subject to credit risk in that such
receivables are within the real estate industry and the
mortgages are in either New York or Florida. The Company's
management has attempted to mitigate the risk of such
mortgages by evaluating the credit worthiness of the
prospective borrowers prior to acceptance and requiring
collateral to collateralize the value of the mortgage.
<PAGE>
The First epublic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Concentrations of credit risk with regard to accounts and
rents receivable are limited due to the large number of
entities comprising the Company's customer base and such base
being dispersed over the industries in which the Company,
either directly or indirectly through its subsidiaries,
operates.
Based on an analysis of the financial instruments which
potentially subject the Company to significant concentrations
of credit risk, the Company's management believes that there
are no significant concentrations of credit risk at June 30,
1994.
2. Industry Segments
The following table sets forth information about the
Company's industry segments for each of the three years
ended June 30, 1994:
Year ended June 30
1994 1993 1992
Revenues:
Real estate $15,145,026 $15,106,721 $15,413,765
Hotel 5,399,090 5,409,716 5,355,584
Seafood 6,124,693 7,074,736 6,225,927
Textile 17,592,514 17,689,463 19,783,818
Other 3,857,729 1,755,494 2,372,600
$48,119,052 $47,036,130 $49,151,694
Operating profit (loss)
before income taxes:
Real estate $ 3,856,999 $ 3,941,723 $ 5,319,106
Hotel 243,369 487,045 475,055
Seafood (2,169,671) (847,396) (1,123,937)
Textile 85,467 (1,800,047) (1,838,393)
Corporate expenses,
interest and other (1,495,907) (3,424,985) (2,740,476)
Minority interests 622,413 147,711 334,165
$1,142,670 $(1,495,949) $ 425,520
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Industry Segments (continued)
Year ended June 30
1994 1993 1992
Identifiable assets:
Real estate $34,914,215 $34,133,213 $33,525,319
Hotel 3,301,524 3,754,476 4,373,004
Seafood 15,848,156 12,469,796 12,480,103
Textile 18,766,487 20,017,057 20,629,388
Corporate assets 7,333,246 8,731,036 8,697,362
$80,163,628 $79,105,578 $79,705,176
Depreciation and amortization:
Real estate $1,557,794 $1,598,018 $1,454,134
Hotel 617,744 733,456 769,835
Seafood 263,399 268,348 395,477
Textile 1,184,057 1,273,683 1,506,245
Corporate and other 210,190 239,676 411,040
$3,833,184 $4,113,181 $4,536,731
Capital expenditures--net:
Real estate $2,216,955 $2,092,488 $1,338,650
Hotel 262,763 118,901 193,593
Seafood 1,323,087 473,651 248,985
Textile 240,715 886,166 204,342
Corporate and other 62,587 718,722 74,368
$4,106,107 $4,289,928 $2,059,938
The Company's operations in the industry segments detailed
above reflect continuing operations only and consist of
rentals and sales of the following products:
Real Estate--ownership of loft, office and industrial
buildings, shopping centers, residential property and vacant
land.
Hotel--operation of a motor hotel in Liverpool, New York.
Seafood--harvesting and sale of hard-shell clams on property
owned by the Company, sales of shrimp imported from Ecuador,
grown in Company owned ponds and sales of shrimp imported
from Costa Rica.
<PAGE>
The First Repubnlic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Industry Segments (continued)
Textile--operations of two yarn spinning plants, a dye house
and through June 1992 when operations were substantially
terminated a wool combing plant.
Corporate and Other--includes Merrimac's operations other than
real estate, income from Health Care investments and other
revenues.
For the years ended June 30, 1994, 1993 and 1992,
respectively, Emporsa, Comercorp and Larfico (Ecuadorian
subsidiaries' see Note 4) had combined sales of approximately
$671,000, $1,198,000, and $1,374,000 and combined net losses
of $1,687,000, $472,000 and $657,000. As of June 30, 1994 and
1993, respectively, these entities had total assets of
approximately $6,125,000 and $4,961,000 and liabilities of
$6,521,000 and $5,350,000.
3. Mortgages Receivable
A summary of mortgages receivable is as follows:
Interest June 30
Description Rate Maturity Date 1994 1993
First lien on motel 8.0 December 1, 1996(1) $688,903 $720,245
First lien on
condominiums 7.4-10.5 (2) 2,016,897 2,588,657
First lien on building 11.5 December 1, 1992(3) 934,215 947,889
3,640,015 4,256,791
Less payment due
within one year
included in current
assets 737,971 1,012,313
$2,902,044 $3,244,478
(1)-A gain of $786,230, which was realized on the sale of a
motel during the fiscal year ended June 30, 1977, has been
treated in accordance with the installment method which
requires the recognition of gain as cash is collected. The
balance of the gain of $403,727 and $421,983 is classified
in the accompanying financial statements as deferred income
at June 30, 1994 and 1993, respectively.
(2)-Payment terms of mortgages require monthly payments for
seven years with the remaining principal balance due at that
time. The maturity dates range from December 1, 1994 to
December 1, 1998.
3. Mortgages Receivable (continued)
(3)-The note was not paid at maturity and was extended on a
month-to-month basis. In August 1994, the Company initiated
foreclosure proceedings. The Company believes the value of
the collateral exceeds the balance due on the mortgage and
does not anticipate any loss on the mortgage. The note has
been reclassified as a long-term receivable on the June 30,
1994 balance sheet.
Maturities are as follows:
Amount
Year ending June 30:
1993 (past due) $934,215
1995 737,971
1996 1,296,013
1997 619,226
1998 605
1999 51,985
$3,640,015
4. Investments in and Advances to Affiliated Entities
The following table summarizes the Company's investments in
and advances to affiliates, which are accounted for by the
equity method:
Investments
and Advances Equity in Income (Loss)
Ownership June 30 Year ended June 30
Percentage 1994 1993 1994 1993 1992
(In Thousands)
Sunscap
Associates 50% $ 466 $ 554 $ (88) $ (103) $ (121)
Lambert Seafood
Company 50% 1,899 2,495 (492) (850) (512)
Mondragon Companies 38% 3,377 1,759 (1,130) (30) (278)
Health Care Entities 49.9% 5,843 5,430 293(1) 755 345
Other Various 13 14 - - (11)
$11,598 $10,252 $(1,417) $(228) $(577)
(1)--Excludes the Company's $420,000 proportionate share of
extraordinary gain on extinguishment of debt in June 1994
and is net of amortization of the Company's cost of
investment which exceeded its underlying share of
Partnerships' deficiency at date of acquisition.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Investments in and Advances to Affiliated Entities (continued)
Real Estate
Sunscape Associates ("Sunscape") owns a 167 unit garden
apartment complex located in Orlando, Florida. The other 50%
interest in Sunscape is owned by corporate entities which in
turn are owned by officers and directors of the Company.
Seafood
Lambert Seafood Company ("Lambert"):
The Company owns a 50% interest in Lambert which is located in
Florida, and is engaged in the business of collecting,
processing, and selling scallops.
Condensed financial information of Lambert is as follows:
June 30
1994 1993
Assets
Cash $144,000 $259,000
Other current assets 384,000 564,000
Property and equipment, net of
accumulated depreciation 2,678,000 3,539,000
Other assets 838,000 817,000
Total assets $4,044,000 $5,179,000
Liabilities
Notes payable and other
current liabilities $350,000 $165,000
Loans payable-venturers 3,525,000 3,834,000
Total liabilities 3,875,000 3,999,000
Stockholders' equity 169,000 1,180,000
Total liabilities and equity $4,044,000 $5,179,000
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Investments in and Advances to Affiliated Entities (continued)
Year ended June 30
1994 1993 1992
Revenues $3,702,000 $6,858,000 $338,000
Costs and expenses (4,232,000) (5,984,000) (1,441,000)
Loss on disposal of assets (481,000) (2,558,000) -
Net (loss) $(1,011,000) $(1,684,000) $(1,103,000)
Bluepoints Company Inc. ("Bluepoints"):
Bluepoints, an 80.2% owned subsidiary of the Company, owns
Marchelot S.A. which in turn owns a 38% interest in two
Ecuadorian corporations, Isca C.A. and Langomorro CIA. Ltda.
(collectively, the "Mondragon Companies"), engaged in shrimp
farming operations in Ecuador, The remaining 19.8% of
Bluepoints is owned by certain stockholders of the Company.
For the year ended June 30, 1994, 1993 and 1992 Bluepoints
purchased approximately $600,000, $2,105,000 and $2,019,000,
respectively, of shrimp from the Mondragon Companies.
Health Care
The Company owns 49.9% partnership interests in three nursing
homes located in Rochelle Park, Jersey City and Whiting, New
Jersey. The Rochelle Park Facility also includes a senior
citizen residence and day care center.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Investments in and Advances to Affiliated Entities (continued)
Condensed combined financial information of the 49.9%
partnerships is as follows:
June 30
1994 1993
Cash $1,103,000 $1,260,000
Accounts receivable, net 1,878,000 1,779,000
Other current assets 392,000 570,000
Other assets 905,000 -
Property and equipment, net of
accumulated depreciation 25,723,000 26,283,000
Total assets $30,001,000 $29,892,000
Accounts payable $1,271,000 $1,789,000
Other current liabilities 1,226,000 1,646,000
Mortgages payable, current 1,230,000 -
Mortgages payable, noncurrent 28,592,000 30,647,000
Total liabilities 32,319,000 34,082,000
Partners' capital deficiency (2,318,000) (4,190,000)
Total liabilities and capital
deficiency $30,001,000 $29,892,000
Eleven
months ended
Year ended June 30 June 30,
1994 1993 1992
Revenues $21,273,000 $20,561,000 $21,666,000
Expenses 20,287,000 18,851,000 20,976,000
Income before
extraordinary income 986,000 - -
Extraordinary income 840,000 - -
Net income $1,826,000 $1,710,000 $ 690,000
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. Long-Term Debt and Credit Facilities
Long-term debt consists of the following:
June 30
1994 1993
Mortgages payable due 1994-2009 bearing
interest at fixed rates of 8.5% to 11%
and variable rates (8.25% at June 30,
1994) based on prime (1) (3)(4) $23,189,684 $21,197,916
Onondaga County Industrial Development
Agency Bonds (1)(2) 1,800,000 2,100,000
5.5%-9.85% notes to development
authorities due 1994-2000(1) 192,728 288,751
Related party 50,000 50,000
25,232,412 23,636,667
Less payments due within one year:
Third parties 1,312,114 1,352,770
Related party 50,000 50,000
$23,870,298 $22,233,897
(1)--The net book value of real estate assets pledged as
collateral is approximately $14,600,000 and $13,300,000 at
June 30, 1994 and 1993, respectively.
(2)--The Company entered into an agreement with the Onondaga
County Industrial Development Agency (the "Agency") to
finance the construction of two office buildings in
Liverpool, New York. Under the terms of the agreement, the
Agency issued $4,000,000 of industrial development revenue
bonds. The financing was structured in the form of a lease
whereby the Company committed to pay $74,050 per quarter plus
interest (payable monthly) through December 1999. Interest
is at a variable rate with a maximum of 9.5% per annum. At
the completion of the lease term, the property will be
transferred to the Company for a nominal sum. This
transaction has been recorded as a purchase of the property.
The Company has provided a letter of credit in the amount of
$1,800,000 at June 30, 1994 as collateral for the foregoing
financing.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. Long-Term Debt and Credit Facilities (continued)
(3)--In fiscal 1994, the Company obtained a $3,000,000
mortgage loan collateralized by the Greensboro South Shopping
Center in Greensboro, North Carolina. The self-liquidating
loan bears interest at a fixed rate of 8.5% per annum and
provides for monthly payments of $29,543 including interest
and principal commencing April 1, 1994 and expiring March 1,
2009.
(4)--On July 15, 1992, the Company replaced its existing
indebtedness with its principal lender with a $10,000,000
term loan and a $3,000,000 revolving line of credit (the
"Loan Agreement"), collateralized by a mortgage on the East
Newark Industrial Center. At June 30, 1994, $2,100,000 is
outstanding under the line of credit and is included in
"Notes payable banks." The term loan, which has an
outstanding balance of $8,777,790 at June 30, 1994 and
$9,444,450 at June 30, 1993, requires monthly principal
payments of $55,555 and matures on August 1, 1997 when the
remaining unpaid principal balance of $6,666,640 will become
due. The revolving line, which is renewable annually, is due
in January 1995. The interest rate on both facilities is one
percent in excess of the lender's prime rate.
The Loan Agreement, as amended, requires the Company to
maintain stockholders' equity of at least $40,000,000
($42,000,000 effective July 1, 1994), working capital of at
least $2,500,000 and a certain debt to equity ratio. In
addition, it places restrictions on the Company's ability to
incur additional indebtedness and on its capital
expenditures.
Aggregate principal payments are as follows:
Amount
Year ending June 30:
1995 $1,362,114
1996 1,307,716
1997 7,322,285
1998 8,851,594
1999 554,112
Thereafter 5,834,590
$25,232,411
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Subordinated Debentures
The subordinated debentures, which bore interest at an annual
rate of 8.5%, were paid April 15, 1994. The balance at June
30, 1993 of $469,336 is net of unamortized discount of $9,864.
7. Treasury Stock
During the years ended June 30, 1994, 1993 and 1992, there
were 3,656, 9,644 and 967 shares of stock purchased for
treasury at a cost of $169,188, $490,828 and $56,380,
respectively.
8. Income Taxes
At June 30, 1994, the Company has net operating loss
carryforwards of approximately $71,300,000 for income tax
purposes that expire in years 2000 through 2002. Those
carryforwards, which resulted from the merger of Merrimac
Corporation into the Company on June 30, 1993, are available
to reduce future taxable income, if any, of the Company but
not the taxable income of any other member of the Company's
group. Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets as of
June 30, 1994 are as follows:
Deferred tax liabilities:
Book basis of fixed assets over tax basis $ 981,000
Book basis of carrying value of investee over tax basis 531,000
Gain not recognized on installment sale for taxpurposes 261,000
1,773,000
Deferred tax assets:
Net operating loss carryforwards 24,242,000
Miscellaneous 60,000
24,302,000
Valuation allowance 23,202,000
1,100,000
Net deferred tax liability $ 673,000
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
8. Income Taxes (continued)
Significant components of the provision (credit) for income
taxes for the years ended June 30, 1994, 1993 and 1992 are as
follows:
Liability
Method Deferred Method
1994 1993 1992
Current:
Federal $330,000 $(440,000) $100,000
State 575,000 313,000 342,000
Total current 905,000 (127,000) 442,000
Deferred:
Federal 133,000 - (100,000)
State 17,000 - -
Total deferred 150,000 - (100,000)
$1,055,000 $(127,000) $342,000
The components of the provision (credit) for deferred income
taxes for the years ended June 30, 1994, 1993 and 1992 are as
follows:
1994 1993 1992
Depreciation $(21,000) $(223,000) $(27,000)
Accrual for future
services 136,000 (136,000) -
Provision for loss
on investments - - (148,000)
Partnership income - 315,000 -
Other 35,000 44,000 75,000
Provision for deferred
income taxes $150,000 $ - $(100,000)
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
8. Income Taxes (continued)
The reconciliation of income tax computed at the U.S. federal
statutory tax rates to income tax (credit) expense for the
years ended June 30, 1994, 1993 and 1992 follows:
Liability Method Deferred Method
1994 1993 1992
Amount Percent Amount Percent Amount Percent
Tax at U.S.
statutory rates $ 389,000 34.0% $(509,000) (34.0)% $145,000 34.0%
Increases
(reductions)
resulting from:
Alternative
minimum tax 130,000 11.4 - - - -
State taxes, net
of federal income
taxes 391,000 34.2 207,000 13.8 226,000 53.1
Adjustment of prior
years under
(overaccrual) of
income tax 200,000 17.5 (300,000) (20.1) (200,000) (47.0)
Minority interest (211,000)(18.5) (50,000) (3.3) (114,000) (26.8)
Loss from foreign
operations not
subject to U.S.
federal income
taxes 628,000 54.9 174,000 11.6 266,000 62.5
Equity in net loss
of investees for
which no tax
benefit is
recognized 167,000 14.6 289,000 19.3 - -
Net operating
loss carryforwards (712,000)(62.2) - - - -
Other items 73,000 6.4 62,000 4.2 19,000 4.6
$1,055,000 92.3% $(127,000) (8.5)% $342,000 80.4%
9. Benefit Plans
The Company and certain subsidiaries have profit-sharing plans
covering substantially all nonunion employees. Contributions
to one of the plans is discretionary. Total plan costs were
approximately $205,000 for each of the years ended June 30,
1994, 1993 and 1992.
The Company's subsidiary Merrimac Corporation ("Merrimac"),
had noncontributory pension plans covering certain employees.
All covered employees participated in the basic pension plan
with benefits based upon years of service. In addition,
Merrimac maintained a supplementary plan for salaried
employees covered by the basic pension plan. This
supplementary plan provided benefits based upon salary and
years of credited service, with deductions for employees'
primary social security benefits and benefits
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. Benefit Plans (continued)
received under the basic plan. The funding policy is to
contribute at least the minimum amounts required by the
Employee Retirement Income Security Act of 1974 or additional
amounts to assure that plan assets will be adequate to provide
retirement benefits.
The following table sets forth the funded status of the
Merrimac pension plans at June 30, 1994 and 1993:
June 30
1994 1993
Accumulated Accumulated
Benefits Benefits
Exceed Assets Exceed Assets
Actuarial present value of
benefit obligations Vested $5,351,000 $5,547,000
Projected benefit obligation 5,351,000 5,547,000
Plan assets (primarily
short-term money funds) at
fair market value 4,491,000 4,859,000
Plan assets less than projected
benefit obligation 860,000 688,000
Unrecognized net gain 375,000 627,000
Net pension liability recognized
in the Consolidated Balance Sheet $1,235,000 $1,315,000
Since a significant part of Merrimac's operations has been
discontinued, substantially all employees included in the Plan
have been terminated and no additional service benefits will
accrue to such employees. Pursuant to such benefit
curtailment, projected benefit obligation was reduced by
$446,000 and included in other revenue for the year ended June
30, 1994.
Net periodic pension cost included the following components:
June 30
1994 1993 1992
Interest cost on projected
benefit obligation $372,000 $398,000 $411,000
Actual return on assets (24,000) (369,000) (693,000)
Net amortization and
deferral (342,000) (62,000) 312,000
Total pension expense
(benefit) $ 6,000 $(33,000) $30,000
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. Benefit Plans (continued)
The more significant actuarial assumptions used at both June
30, 1994 and 1993 and for the years then ended were:
Measurement of projected benefit obligation:
Discount rate 7%
Long-term rate of compensation increase N/A
Long-term rate of return on plan assets 7%
10. Leases
Leases in the financial statements of lessee:
The Company is the lessee under an operating lease involving
land which expires in 2065. Rent expense includes real estate
taxes, and in certain instances utilities and maintenance
costs, and rentals under a month-to-month lease.
Future minimum rental payments on noncancellable operating
leases consisted of the following at June 30, 1994:
Amount
Year ending June 30:
1995 $ 8,952
1996 8,952
1997 8,952
1998 8,952
1999 8,952
Thereafter 581,826
$626,586
Total rent expense for all operating leases amounted to
approximately $120,000, $122,000 and $118,000, for the years
ended June 30, 1994, 1993 and 1992, respectively.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. Leases (continued)
Leases in the financial statements of the lessor:
The Company owns various office buildings, industrial
buildings and shopping centers from which it earns rental
income under leases with various tenants. Real estate assets
held for rental amount to $34,690,247 with accumulated
depreciation of $12,710,993 are included in property, plant
and equipment in the accompanying consolidated balance sheet
at June 30, 1994. Generally leases provide for tenants to pay
additional amounts based on real estate taxes and operating
expenses incurred to maintain and operate these properties
in excess of base year amounts. Lease terms for these
properties range from 1 to 20 years.
Future minimum rentals (excluding operating expenses and
other items billable to tenants which aggregated
approximately $2,700,000, $3,000,000 and $2,500,000 in 1994,
1993 and 1992, respectively) to be received under the
above-mentioned leases all of which are classified and
accounted for as operating leases, are as follows:
Amount
Year ending June 30:
1995 $12,100,000
1996 10,200,000
1997 7,500,000
1998 5,600,000
1999 4,400,000
Thereafter 19,100,000
$58,900,000
11. Commitments and Contingencies
a. In 1985, Whitlock entered into a Consent Order with the
South Carolina Department of Health and Environmental
Control in which it agreed to clean up the property on
which its plant is located and implement a groundwater
monitoring program. In December 1990, soil borings and
groundwater samples collected from the site revealed the
presence of certain substances reflecting the need to
continue remediation. During the fiscal years ended June
30, 1994, 1993 and 1992, Whitlock incurred approximately
$519,000, $35,000 and $34,000 of costs, respectively, to
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. Commitments and Contingencies (continued)
comply with the consent order; $400,000 of costs incurred
during June 30, 1994 in connection with the remediation
program had been charged to 1993 operations and was
included as a liability on the Company's balance sheet at
June 30, 1993. Substantially all clean-up costs have been
incurred.
b. The Company, together with the other partners of the
Health Care Partnerships, have issued joint and several
guarantees on approximately $4,700,000 of Health Care
Partnerships' loans which are payable in monthly
installments through June 1999.
c. The Company is involved in other litigation which arose
in the ordinary course of business. Based on management's
assessment of all existing litigation, management believes
that the ultimate impact on the Company, if any, will not
be material.
12. Related Party Transactions
Certain stockholders, directors, officers or their relatives
("related parties") own interests in certain investments of
the Company as follows:
Percent Ownership by
Investment The Company Related Party
Bluepoints Company Inc. 80.2% 19.8% (2)
Sunscape Associates 50.0% 50.0%
The Mondragon Companies 38.0% 50.0%
Larfico 62.5% 25.0%
Comercorp 62.5% 25.0%
<PAGE>
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. Related Party Transactions (continued)
Certain transactions were entered into with the
above-mentioned related parties and companies in which they
have an ownership interest as follows:
Amount Related Party
Transactions 1994 1993 1992 Ownership
Insurance purchased in
participation with the
Rosen Group Properties:
Premiums incurred $ 310,000 $ 385,000 $ 349,000 -
Administrative fee
received 75,000 75,000 50,000 -
Payable to Rosen Group
Properties for premiums
above 310,000 276,000 292,000 -
Home office rent 95,000 96,000 95,000 100%
Loans payable-- Northern
Star Textile Corp. - - 500,000 100%(1)
Interest on $640,000 Note
to A.A. Rosen 56,000 56,000 55,000 -
(1)--On August 29, 1991 the Company obtained a loan of
$2,500,000 from Northern Star Textile Corporation, 57% of
which is owned by the Rosen family and 43% by the Nimkoff
family. The loan bore interest at 1/2% above prime and was
payable on demand. The proceeds of the loan were used to pay
off a short-term loan to European American Bank which bore
interest at the same rate. The Company has repaid the loan.
(2)--At June 30, 1994, the minority share of stockholders'
deficiency of Bluepoints Company Inc. amounted to $745,000.
Such deficiency results from losses funded by the Company on
behalf of the minority shareholders and represents a
receivable from the minority shareholders which has been
jointly guaranteed by a major stockholder and an officer of
the Company.
See Note 4 for other related party information.
13. Other Matters
a. Other revenue for the year ended June 30, 1994 includes
$1,321,775 received in full satisfaction of all remaining
royalty obligations pursuant to royalty agreement which was
terminated.
13. Other Matters (continued)
b. In June 1992, Whitlock Combing Company, Inc.
("Whitlock"), a wholly-owned subsidiary of the Company,
sold substantially all of its assets for $3,650,000. A gain
of approximately $407,000 on the sale was classified as
deferred income, and upon satisfying certain conditions of
the sale contract in fiscal 1993, the gain was recognized
in income. In the fourth quarter of fiscal 1993 the
remaining assets of Whitlock which are being held for sale,
were written down by $800,000 to their estimated realizable
value of approximately $1,500,000. For the years ended June
30, 1994, 1993 and 1992, respectively, Whitlock had sales
of approximately $-0-, $354,000 and $5,271,000 and losses
of $563,000, $1,686,000 and $1,220,000.
c. The Company is committed to expend approximately $1.1
million for the construction of space for a new tenant at
one of the properties.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a. and b. Identification of directors and executive officers:
All Positions and
Name Age Offices with Registrant Served Since
Irving S. Bobrow 80 Director April 1983
Harry Bergman 52 Director October 1991
Treasurer June 1988
Secretary June 1988
Norman A. Halper 75 Director October 1969
President April 1983
A.A. Rosen 82 Chairman of the Board July 1981
Jonathan P. Rosen 50 Director February 1972
Vice President September 1978
William M. Silverman 52 Director December 1981
Louis H. Nimkoff 32 Vice President June 1988
Robert Nimkoff 33 Director April 1991
Vice President June 1988
Jane G. Weiman 50 Director December 1991
The term of office for all directors and executive officers
will expire at the next annual meeting of stockholders, which
is anticipated to be held in December 1994, upon the election
and qualification of their successors.
c. Not applicable.
<PAGE>
d. Family Relationships
Jonathan P. Rosen is the son of A.A. Rosen.
Louis H. Nimkoff and Robert Nimkoff are brothers and are the
nephews of A.A. Rosen.
Jane G. Weiman is the sister-in-law of William M. Silverman
and the niece of A.A. Rosen.
e. Business Experience
Irving S. Bobrow is a member of the New York Bar. For more
than the past five years, Mr. Bobrow has been a member of
the law firm of Bobrow & Rosen in New York City and has
engaged in real estate investments for his own account.
William M. Silverman is a member of the New York Bar. For
more than the past five years, Mr. Silverman has been a
member of the law firm of Otterbourg, Steindler, Houston
and Rosen P.C. in New York City.
Jane G. Weiman has been a private investor for more than
the past five years. For the past several years Mrs. Weiman
has also been an officer of the Board of the Washington
D.C. Urban League and an advisor to Washington D.C.
Counsel-Member-at-Large, John Ray. Mrs. Weiman became a
Director of the Company in December 1991.
All other directors and executive officers have served as
such for more than the past five years.
f. Not applicable.
g. Not applicable.
The Company believes, based on written representations
received by it, that for the year ended June 30, 1994, all
filing requirements under Section 16(a) of the Securities
Exchange Act of 1934 applicable to beneficial owners of the
Company's securities and the Company's officers and
directors were complied with.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The chairman of the Company's Board of Directors has annually reviewed and
set the compensation of the Chief Executive Officer of the Company who, in
turn, has reviewed and set the compensation of the other officers of the
Company. All such compensation is reviewed on or about April 1 of each year
taking into consideration (i) the Company's financial performance during the
preceding year, (ii) the performance of the employee during that year, and
(iii) the need to retain competent executive officers dedicated to the
enhancement of the Company's performance in future years by paying salaries
comparable to those being paid to such executive officers by other companies
involved in similar lines of business.
The following table sets forth all compensation paid or accrued by the Company
during the last three fiscal years for services in all capacities to the
Chief Executive Officer and each executive officer of the Company whose cash
compensation exceeds $100,000.
(a) (b) (c) (i)
Name and Annual Other
Principal Position Year Compensation Compensation (1)
A.A. Rosen 6-30-94 $223,300 $15,810
Chairman 6-30-93 212,504 12,325
6-30-92 214,038 16,360
Norman A. Halper 6-30-94 223,300 15,810
President and Chief 6-30-93 212,504 12,325
Executive Officer 6-30-92 214,038 16,360
Harry Bergman 6-30-94 137,717 10,359
Secretary--Treasurer 6-30-93 128,693 10,873
6-30-92 119,443 9,838
(1) The Company and certain of its subsidiaries maintain two profit-sharing
plans which cover a significant number of their employees. Vesting begins
at 20% after two years of service with 100% vesting being reached after
six years service. Company contributions to one such plan is at the
discretion of the Board of Directors. The Company is required to make
minimum contributions to the second plan and, at the discretion of the
Board of Directors, may make additional contributions. The executive
officers listed above are covered under the second plan and the amount
contributed by the Company to such plan on behalf of each executive
officer is set forth under the heading "Other Compensation" in the
Executive Compensation Summary.
Compensation of Directors
Each director who is not an officer of the Company is paid $3,000 per
quarter.
<PAGE>
The following tabular information compares the yearly change in the
cumulative stockholder return on the Company's Common Stock against
the cumulative return of the Dow Jones Equity Market Index and the
Dow Jones Conglomerates Index for the five fiscal years ended June 30, 1994.
The stockholder return on the Company's Common Stock has been determined
solely based on the price of the Common Stock since there have been no
dividends declared on the Common Stock. Since there has been only limited or
sporadic quotations for the Common Stock during the five year period, the
price of the Common Stock at the relevant dates has been determined by
utilizing the price at which the Company purchased shares of Common Stock on
the dates closest to each measuring date.
1990 1991 1992 1993 1994
The First Republic
Corporation of America 100 92 88 74 60
Dow Jones Equity Market Index 100 108 123 141 143
Dow Jones Independent -
Conglomerates 100 110 121 155 156
The paper copy of the performance graph is being submitted to the Securities
Exchange Commission pursuant Item 304(d)(2) of Regulation S-T.
(Insert Chart)
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
a. Security Ownership of Certain Beneficial Owners
The following table sets forth certain information with respect to all
persons who are known to the Company to be the beneficial owner of more
than 5% of its common stock as of September 16, 1994:
Name and Address Amount and Nature
Title of of Beneficial of Beneficial Percent
Class Owner Ownership (1) of Class
Common Mary Nimkoff 108,582 (2) 16.11%
99 Grove Point
Westport, Connecticut
Common Jonathan P. Rosen 227,726 (3) 33.78
40 East 69th St.
New York, New York
Common Lynn M. Silverman 113,350 16.81
911 Park Avenue
New York, New York
Common Jane G. Weiman 113,290 16.81
5610 Wisconsin Avenue
Chevy Chase, Maryland
(1)--Except as noted below in Notes (2) and (3), all shares
are owned directly by the parties listed in the table.
(2)--Includes 8,060 shares representing her proportionate
interest in 19,188 shares owned by Tranel, Inc. Tranel,
Inc. is a corporation of which 42%, 15.2%, 34.8%, 4% and
4% of the shares of which are owned by Mary Nimkoff,
Jonathan P. Rosen, Miriam N. Rosen, Louis H. Nimkoff and
Robert Nimkoff, respectively.
(3)--Includes 2,917 shares representing his proportionate
interest in 19,188 shares owned by Tranel, Inc.
<PAGE>
b. Security Ownership of Management
The following table sets forth as of September 16, 1994 certain information
with respect to security holdings in the Company and Bluepoints, an 80.2%
owned subsidiary of the Company, by directors of the Company and all officers
and directors as a group:
Common Stock
Common Stock of Bluepoints
Amount Percent Amount Percent
Name of Officer Beneficially of Beneficially of
or Director Owned (1) Class Owned Class
Irving S. Bobrow 200 .03%
Robert Nimkoff 767 (2) .11
Norman A. Halper 400 .06
Jonathan P. Rosen 227,726 33.78 500 (4) 4.95%
A.A. Rosen (3) (3)
William M. Silverman 200 (5) .03 (5)
Jane G. Weiman 113,290 16.81 500 4.95%
All officers and
directors as a
group (8 persons) 344,850 51.16% 1,000 9.90%
(1)--Messrs. Bobrow, Halper, Silverman and Mrs. Weiman own
their shares directly. Jonathan P. Rosen owns 224,809
shares directly. See Notes (2) and (3) of the preceding
table.
(2)--Robert Nimkoff owns 767 shares representing his
proportionate interest in 19,188 shares owned by Tranel,
Inc.
(3)--Does not include (a) 6,677 shares representing his
wife's (Miriam N. Rosen) proportionate interest in 19,188
shares owned by Tranel, Inc., and (b) 25,082 shares of
common stock and 500 shares of Bluepoints owned by his wife
directly. A.A. Rosen disclaims beneficial ownership of such
shares.
(4)--Owned directly.
(5)--Does not include 113,350 shares of common stock and 500
shares of Bluepoints owned by his wife (Lynn M. Silverman)
directly. Mr. Silverman disclaims beneficial ownership of
such shares.
c. Changes in Control
The Company knows of no contractual arrangements which may at a subsequent
date result in a change in control of the Company.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
a. Transactions with Management and Others
Lynn M. Silverman a principal stockholder of the Company, Jane G. Weiman, a
director and principal stockholder of the Company, Jonathan P. Rosen, a
director, vice president and principal stockholder of the Company, and Miriam
N. Rosen, wife of A.A. Rosen and mother of Jonathan P. Rosen, own in the
aggregate 19.8% of the outstanding shares of Bluepoints. The remainder of the
shares of Bluepoints is owned by the Company. Lynn M. Silverman is the wife of
William M. Silverman, a director of the Company. A.A. Rosen and Jonathan P.
Rosen have jointly provided a guarantee to the Company to reimburse it for the
minority shareholders proportionate share of losses which have been previously
funded by the Company on behalf of the minority shareholders.
Bluepoints holds a second mortgage loan on the industrial center owned by the
Company in East Newark, New Jersey. From July 1993 through September 1994,
the Company made payments of $149,850 with respect to such loan, $52,430 of
which was applied to the payment of interest and $97,420 to amortization of
principal. As of September 1, 1994, the outstanding principal balance of the
loan was $401,772. The loan bears interest at the rate of 8% per annum,
provides for monthly payments of $9,990 and is self-liquidating over a period
which expires in July 1998.
The Company's corporate office is located in a building owned by 302 Fifth Ave.
Associates, a partnership owned 100% by A.A. Rosen, Miriam Rosen and Jonathan
Rosen. The Company is a month-to-month tenant, paying rent of $7,709 per month,
which the Company believes is comparable to other rentals in the areas.
A.A. Rosen owns 50% of Isca C.A. and Langomorro CIA, Ltda. (collectively
referred to as "Mondragon"), two Ecuadorian Corporations engaged in shrimp
farming operations. In the current fiscal year substantially all of Mondragon
shrimp production, approximately $600,000 was sold to Bluepoints. A.A. Rosen
also holds a $640,000 note payable by Bluepoints which note was originally
issued in May 1991 in connection with the acquisition by Bluepoints of a 38%
interest in Mondragon and an additional 12-1/2% interest in Larfico Larvas Del
Pacifico S.A., an Ecuadorian Corporation which owns and operates a shrimp
hatchery and Comercorp S.A. which owns certain real property in Ecuador. From
July 1, 1993 through August 21, 1994 A.A. Rosen received $56,000 in interest on
the $640,000 note.
<PAGE>
b. Certain Business Relationships
The Company and its subsidiaries purchase substantially all of their
property, casualty and liability insurance through participation with a
group of other entities controlled by A.A. Rosen and Jonathan P. Rosen
(the "Rosen Group Properties"). This procedure enables the group to obtain
negotiated insurance rates. During the fiscal years ended June 30, 1994,
1993 and 1992, total premiums incurred by the Company and its subsidiaries
under this arrangement amounted to approximately $310,000, $385,000 and
$349,000, respectively. The Company received fees of $75,000 in fiscal
1994 and 1993 and $50,000 in fiscal 1992, representing charges to the group
for administrative services performed by Company personnel in connection
with the foregoing. At June 30, 1994 approximately $310,000 was payable to
Rosen Group Properties.
Tranel Inc. and Statecourt Enterprises, Inc. each owns a 25% interest in
167-unit garden complex located in Orlando, Florida in which the Company
owns the remaining 50%. Tranel Inc. is owned by Mary Nimkoff, Jonathan P.
Rosen, Miriam N. Rosen, Robert Nimkoff and Louis H. Nimkoff (see Item 12)
and Statecourt Enterprises, Inc. is owned 48% by A.A. Rosen, 20% by Jonathan
P. Rosen and 32% by the Miriam N. Rosen Trust.
c. Indebtedness of Management
A.A. Rosen owns 25% of the outstanding stock of Larfico, an Ecuadorian
corporation that owns a hatchery that produces post-larval shrimp and 50% of
the outstanding stock of Mondragon, an Ecuadorian company engaged in shrimp
farming operations. Bluepoints beneficially owns 62.5% of the outstanding
stock of Larfico and all of the outstanding stock of Emporsa, an Ecuadorian
corporation engaged in shrimp farming operations. As of August 31, 1994,
Larfico was indebted to Bluepoints for $196,667 of loans made by Bluepoints
to Larfico at various dates between November 8, 1985 and August 5, 1988.
Such loans bear interest at 1% over the prime rate in effect at European
American Bank and are due August 1995. Since July 1, 1993, the largest
aggregate amount of outstanding indebtedness from Larfico to Bluepoints was
$196,667.
Since July 1, 1993, the largest amount of outstanding indebtedness from
Emporsa and Larfico to Mondragon was $1,010,000 of loans which is the
balance at June 30, 1994. Such loans bear no interest and have no fixed
maturity. Since July 1, 1993, the largest amount of outstanding indebtedness
from Mondragon to Larfico and Emporsa was $208,000. The balance at June 30,
1994 was $157,000. Said indebtedness has no fixed maturity and is
noninterest bearing.
<PAGE>
As of June 30, 1994, Emporsa and Larfico were indebted to A.A. Rosen for
$87,000 of loans. Such loans bear interest at prime plus 1% and have no
fixed maturity. Since July 1, 1993, the largest amount of outstanding
indebtedness from Emporsa and Larfico to A.A. Rosen was $87,000.
As of August 31, 1994, Bluepoints was indebted to the Company for $11,838,000
of loans made by the Company to Bluepoints at various dates between November
8, 1985 and August 31, 1994. Such loans bear interest at the rate of 1% over
the prime rate in effect at European American Bank and are due on demand or
at various dates through September 1995. Since July 1, 1993, the largest
aggregate amount of outstanding indebtedness from Bluepoints to the Company
was $11,838,000. A substantial portion of the foregoing loans was used by
Bluepoints to acquire and fund the Ecuadorian shrimp operations.
d. Not applicable.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND
REPORTS ON FORM 8-K
a. 1. Financial Statements
The following financial statements of The First Republic Corporation of
America and Subsidiaries are included in Part II, Item 8:
Reports of Independent Auditors
Consolidated Balance Sheets__June 30, 1994 and 1993
Consolidated Statements of Income__Years Ended
June 30, 1994, 1993 and 1992
Consolidated Statements of Retained Earnings__Years Ended
June 30, 1994, 1993 and 1992
Consolidated Statements of Cash Flows__Years Ended
June 30, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
a. 2. Financial Statement Schedules:
Schedule II__Amounts Receivable from Related Parties and Underwriters,
Promotors, and Employees Other Than Related Parties
Schedule VIII__Valuation and Qualifying Accounts
Schedule IX__Short-Term Borrowings
Schedule X__Supplementary Income Statement Information
Schedule XI__Real Estate and Accumulated Depreciation
Schedule XII__Mortgage Loans on Real Estate
All other schedules have been omitted because they arenot applicable or
the required information is shown in the financial statements or
the notes thereto.
b. Reports on Form 8-K
None
c. Exhibits
3 Articles of Incorporation and bylaws
(i) Articles of Incorporation are incorporated by reference to Form
10-K for the fiscal year ended June 30, 1981.
(ii) Bylaws are incorporated by reference to Form 10-K for the
fiscal year ended June 30, 1992.
21 Subsidiaries of the Company
27 Financial Data Schedule
<PAGE>
The First Republic Corporation of America and Subsidiaries
Schedule II__Amounts Receivable from Related Parties and Underwriters,
Promoters, and Employees Other Than Related Parties
- - ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E
- - ------------------------------------------------------------------------------
Deductions Balance at End Period
------------------ ----------------------
(1) (2) (1) (2)
Name of Balance at Additions Amounts Amounts Current Not Current
Debtor Beginning Collected Written
of Period Off
- - ------------------------------------------------------------------------------
June 30, 1994
Due from $283,000 $462,000 $745,000
certain ---------------------- ---------
sharehol-
ders (a)
June 30, 1993
Due from None $283,000 $283,000
certain --------------------- ---------
sharehol-
ders (a)
(a)__Represents receivables from minority shareholders of Bluepoints Company
Inc., which has been jointly guaranteed by a major stockholder and an
officer of the Company.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Schedule VIII__Valuation and Qualifying Accounts
Col. A Col B Col. C Col. D Col. E
- - ----------------------------------------------------------------------------
Additions
-----------------------
Description Balance at Charges to Charges to Deductions Balance at
Beginning Cost and Other Accts Describe End of
of Period Expenses Describe Period
- - ------------------------------------------------------------------------------
Year ended June 30, 1994:
Allowance $158,213 $150,000 $155,033(a) $153,180
for doubt- ====================== =========================
ful accnts
Year ended June 30, 1993:
Allowance $ 84,297 $ 73,916 $ - $158,213
for doubt- ====================== =========================
ful accnts
Year ended June 30, 1992:
Allowance $102,797 $ 18,500(a) $ 84,297
for doubt- ========== =========================
ful accnts
(a) Amounts charged off and credits issued, net of recoveries on accounts
previously written off.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Schedule IX__Short-Term Borrowings
- - ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E Col. F
- - ------------------------------------------------------------------------------
Category of Aggrete Balance at Weighted Maximum Average Weighted
Short-Term Borrowings End of Average Amount Amount Average
Period Interest Outstanding Outstanding Interest
Rate During the During the During the
Period Period(d) Period(e)
- - -------------------------------------------------------------------------------
Year ended June 30, 1994:
Domestic (a) $2,100,000 8.25 $2,600,000 $1,565,000 7.25
Foreign (b) 468,016 21.7 630,964 519,000 21.7
Year ended June 30, 1993:
Domestic (c) (f) $2,200,000 7.0 $5,250,000 $1,300,000 7.0
Foreign (b) 630,964 15.0 630,964 582,592 14.63
Year ended June 30, 1992:
Domestic (c) (f) $ 670,765 6.5 $12,200,000 $8,865,000 7.4
Foreign (b) 550,315 22.0 939,619 642,000 21,27
(a)__The general terms of the notes are unsecured and payable on demand and
are issued under lines of credit.
(b)__The general terms of the notes vary from unsecured payment on demand to
payable within a year.
(c)__The general terms of the notes are payable on demand and are issued
under lines of credit, secured by the real estate of the East Newark
Industrial Center.
(d)__The average amount outstanding during the period was computed by
dividing the total of month-end principal balances or the total of
month-end daily average balances by the number of months in the period.
(e)__The weighted average interest rate during the period was computed by
dividing the actual interest expense by average short-term debt
outstanding.
(f)__The balance above reflects the impact of the Company's refinancing on
its line of credit (see Note 5 to the Consolidated Financial Statements).
<PAGE>
The First Republic Corporation of America and Subsidiaries
Schedule X__Supplementary Income Statement Information
- - ----------------------------------------------------------------------------
Col. A Col. B
- - ----------------------------------------------------------------------------
Item Charged to Costs and Expenses
- - ----------------------------------------------------------------------------
Year ended June 30, 1994:
1. Maintenance and repairs $2,627,896
2. Depreciation and amortization
of intangible assets *
3. Taxes, other than payroll and income taxes:
Real estate taxes 3,028,221
Sundry other taxes *
4. Royalties None
5. Advertising costs *
Year ended June 30, 1993:
1. Maintenance and repairs $2,597,848
2. Depreciation and amortization
of intangible assets *
3. Taxes, other than payroll and income taxes:
Real estate taxes 2,913,650
Sundry other taxes *
4. Royalties None
5. Advertising costs *
Year ended June 30, 1992:
1. Maintenance and repairs $3,035,418
2. Depreciation and amortizationof
intangible assets *
3. Taxes, other than payroll and income taxes:
Real estate taxes 2,691,468
Sundry other taxes *
4. Royalties None
5. Advertising costs *
* Amounts for depreciation and amortization of intangible assets, advertising
and sundry other taxes are not presented as such amounts are less than 1% of
total sales and revenues.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Schedule XI__Real Estate and Accumulated Depreciation
Year ended June 30, 1994
Column A Column B Column C Column D
- - ------------------------------------------------------------------------------
Initial Cost to Cost Capitalized
Company Subsequent to
--------------------- Acquisition
------------------
Description Encumberances Land Buildings and Additions Carrying
Related Assets Costs
- - ------------------------------------------------------------------------------
250 W. 39th St.
Building, New
York, NY-
Eighteen Story $ 437,559 $1,155,129 $(603,978)
office building
Waltham Engineeing
Center, Waltham, MA-
Seventeen multi-
story Industrial 188,573 2,163,945 290,169
buildings
Sheraton Inn Motor
Hotel- Syracuse,
Liverpool NY 1,651,923 3,970,445
Hotel operations
Video Film Center,
New York, NY-
Ten Story office $ 6,000,000 625,000 3,439,061 721,293
building
East Newwark,
NJ- Thirty multi-
stroy indrustrial 10,877,790(b) 605,089 4,068,693 (2,549,279)
buildings
Greensboro Plaza,
Greensboro, NC- 379,947 1,696,953
Shopping center
Greensboro South,
Greensboro, NC- 2,975,004 419,739 1,350,376 1,382,866
Shopping center
Nyanza Building
Woonsocket, Rhode
Island-, Four story 60,000 1,288,139 (1083,733)
industrial building
Richmond Shopping
Center, Richmond,
VA- Shopping 293,814 758,886 53,830
center
First Republic Office
Park, Liverpool, NY
Two, two-story 1,800,000(c) 351,600 4,124,526 (12,758)
office buildings
Virginia Beach
Shoping Center,
Virginia Beach, 2,688,630 250,241 772,113 247,836
VA-, Shopping center
The First Republic
Building Corp.,
Liverpool, NY- 413,779 5,681,562
Motor hotel(c)
Jefferson National
Bank Building-Mami,
FL-, Six story 2,044,409 5,643,015
office building
Brookhaven Shopping
Center, Brookhaven, 1,927,185 521,798 3,632,019 (599,153)
PA, Shopping Center
260 Merrimac Street
Newburyport, MA
Three story 195,213 377,317
office building
Melbourne, FL
Vacant land 1,439,714 3,150
___________________________________________________
Totals $26,268,609 $8,226,475 $37,803,657 $1,820,688
===================================================
<PAGE>
The First Republic Corporation of America and Subsidiaries
Schedule XI__Real Estate and Accumulated Depreciation (continued)
Year ended June 30, 1994
Column E Column F Column G Column H Column I
- - ------------------------------------------------------------------------------
Gross Amount at which Life on which
Carried at Close of Period(a) Department in
- - ----------------------------- Latest Income
Buildings Date of Statements is
and Related Accumulated Construc- Date Computed
Land Assets Total Depreciation tion Acquire
- - ------------------------------------------------------------------------------
$437,559 $551,151 $988,710 $103,245 5/19/67 5--15 years
188,573 2,454,114 2,642,687 654,347 7/1/62 10--20 years
5,622,368 5,622,368 3,909,369 3/17/69 5--15 years
625,000 4,160,354 4,785,354 3,025,834 10/4/68 33--1/3 years
605,089 1,519,414 2,124,503 675,661 3/11/63 21--1/3 years
379,947 1,696,953 2,076,900 1,550,009 12/1/74 21--1/3 years
706,906 2,446,075 3,152,981 1,432,225 12/1/74 21--1/3 years
60,000 204,406 264,406 56,643 11/1/68 10--20 years
360,507 746,023 1,106,530 561,285 3/15/76 25 years
351,600 4,111,768 4,463,368 917,288 10/1/85 5--40 years
397,338 872,852 1,270,190 544,025 3/30/76 25-31.5 years
413,779 5,681,562 6,095,341 5,349,227 9/21/62 10-25 years
2,044,409 5,643,015 7,687,424 1,104,713 4/27/88 31--1/2 years
149,456 3,405,208 3,554,664 1,881,744 12/16/76 5--33 years
195,213 377,317 572,530 203,974 11/25/87 10--25 years
1,442,864 1,442,864
- - -------------------------------------------------
$8,358,240 $39,492,580 $47,850,820 $21,969,589
=================================================
(a)__Cost for Federal income tax purposes approximates amounts reflected in
Column E.
(b)__A mortgage is held by the bank who provides a line of credit to the
Company. (See Note 5 to the Consolidated Financial Statements.)
(c)__Assets of the First Republic Building Corp. are also pledged as
collateral for the Onondaga County Industrial Development Agency Bonds.
(See Note 5 to the Consolidated Financial Statements.)
<PAGE>
The First Republic Corporation of America and Subsidiaries
Schedule XI--Real Estate and Accumulated Depreciation (continued)
Year ended June 30
1994 1993
------------------------------------------------------
Real Estate Accumulated Real Estate Accumulated
Owned Depreciation Owned Depreciation
------------------------------------------------------
The following is a reconciliation
of the real estate owned and
accumulated depreciation,
beginning and end of the year:
Balance, beginning $47,118,995 $21,230,995 $47,348,779 $20,372,773
of year
Additions including
transfers from construc-
tions-in-progress
during year 1,590,811 1,597,580 855,696 1,943,702
Deductions:
Write-offs of fully
depreciated assets (858,986) (858,986) (1,085,480) (1,085,480)
------------------------------------------------------
Balance, end of year $47,850,820 $21,969,589 $47,118,995 $21,230,995
======================================================
1992
--------------------------------
Real Estate Accumulated
Owned Depreciation
$46,262,669 $18,928,345
1,532,243 1,890,561
(446,133) (446,133)
- - ----------------------------------
$47,348,779 $20,372,773
==================================
Note: Includes assets used in the real estate and hotel operations.
<PAGE>
The First Republic Corporation of America and Subsidiaries
Schedule XII__Mortgage Loans on Real Estate
- - ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E Col. F Col. G Col. H
- - ------------------------------------------------------------------------------
Description Interest Final Periodic Prior Face Carrying Principal
Rate Maturity Payments Liens Amount Amount Amount of
Date Terms of of loans
Mortgages Mortgages Subject
(c) to
Delinquent
Principal
or Interest
- - -------------------------------------------------------------------------------
First lien on December
motel-, Miami 8.00% 1, 1996 $ 7,338 None $688,903 $ 688,903 None
Beach Florida
First lien on
building- 11.50 December 10,165(a) None 934,215 934,215 $934,215
Bronx, NY 1, 1992
35 First lien
on condominiums
Orlando, FL 7.4-10.5 December
(approximately 1, 1994
all had out- to 21,000(b) None 2,016,897 2,016,897 None
standing balances February ---------------------
of between 1, 1996
$55,000 to $66,500)
Totals $3,640,015 $3,640,015
=======================
(a)__Balloon payment of $954,000 was due December 1, 1992. The note was
extended on a month-to-month basis under the same terms and conditions
and in August 1994, foreclosure proceedings were commenced by the
Company (see Note 3 to the consolidated financial statements).
(b)__Payment terms of mortgages are monthly payments for seven years and
remaining principal balance due at that time.
(c)__Cost for Federal income tax purposes approximates amounts reflected in
Column F.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE FIRST REPUBLIC CORPORATION OF AMERICA
By /s/ Norman A. Halper
--------------------------------------
Norman A. Halper, Chief Executive
and Chief Operating Officer
By /s/ Harry Bergman
--------------------------------------
Harry Bergman, Chief Financial and
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date
-----------------------------------
/s/ Harry Bergman
- - ------------------------------------
Harry Bergman, Director
/s/ Irving S. Bobrow
- - -------------------------------------
Irving S. Bobrow, Director
/s/ Norman A. Halper
- - --------------------------------------
Norman A. Halper, Director
/s/ Robert Nimkoff
- - --------------------------------------
Robert Nimkoff, Director
/s/ A.A. Rosen
- - --------------------------------------
A.A. Rosen, Director
/s/ Jonathan P. Rosen
- - --------------------------------------
Jonathan P. Rosen, Director
<PAGE>
Exhibit 21
The First Republic Corporation of America
List of Subsidiaries
The First Republic Building Corp.
Bluepoints Company Inc.
Bluepoints Company Inc. of Maryland
Hanora Spinning Inc.
Quality Yarns Inc.
Whitlock Combing Company, Inc.
Hanora South Inc.
J & M Dyers Inc.
FRC of Delaware Inc.
FRCA Sunscape Corp.
Midland Health Care Inc.
Midland at Rochelle Park Inc.
Midland Health Care at Logan Manor Inc.
Marchelot S.A.
<PAGE>
Exhibit 27
The First Republic Corporation of America
and Subsidiaries
Artile 5 FD5__10-K
At June 30, 1994 and for Year then ended
June 30, 1994
Item Description
- - ----------------------------------------------------------
Cash and cash items $1,316,144
Marketable securities -
Notes and accounts receivable-trade 5,647,090
Allowances for doubtful accounts 153,180
Inventory 4,731,545
Total current assets 13,975,355
Property, plant and equipment 69,431,186
Accumulated depreciation 29,276,551
Total assets 80,163,628
Total current liabilities 9,412,274
Bonds, mortgages and similar debt 23,870,298
Preferred stock-mandatory redemption -
Preferred stock-no mandatory redemption -
Common stock 1,175,261
Other stockholders' equity 41,088,455
Total liabilities and stockholders' equity 80,163,628
Net sales of tangible products 23,717,207
Total revenues 46,702,373
Cost of tangible goods sold 20,704,424
Total costs and expenses applicable to sales and revenues 22,606,782
Other costs and expenses -
Provision for doubtful accounts and notes 150,000
Interest and amortization of debt discount 2,248,497
Income before taxes and other items 1,142,670
Income tax expense 1,055,000
Income continuing operations 87,670
Discontinued operations -
Extraordinary items 300,000
Cumulative effect-changes in accounting principles 1,173,000
Net income or loss 1,560,670
Earnings per share-primary 2.31
Earnings per share-fully diluted 2.31
