SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997 Commission File Number 0-1437
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THE FIRST REPUBLIC CORPORATION OF AMERICA
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(Exact name of registrant as specified in its charter)
DELAWARE 13-1938454
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
302 Fifth Avenue, New York, NY 10001
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (212) 279-6100
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Former name, former address and former fiscal year, if changed since last
report:
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 and 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 |_|
As of December 1, 1997, there were 672,024 shares of common stock outstanding.
1
<PAGE>
PART I. FINANCIAL INFORMATION
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, June 30,
1997 1997
------------- ------------
(UNAUDITED) (SEE NOTE
BELOW)
Assets
- ------
Current Assets
Cash and Cash Equivalents $ 1,600,824 $ 1,932,075
Accounts Receivable 4,541,082 4,904,189
Inventories (Note 2) 4,229,729 3,501,650
Other Current Assets 1,754,313 1,785,693
----------- -----------
Total Current Assets 12,125,948 12,123,607
----------- -----------
Property, Plant and Equipment 77,559,836 78,245,538
Less: Accumulated Depreciation 36,277,446 36,977,764
----------- -----------
Net Properties 41,282,390 41,267,774
----------- -----------
Other Assets 29,782,203 27,944,512
----------- -----------
TOTAL ASSETS $83,190,541 $81,335,893
=========== ===========
Liabilities & Stockholders' Equity
- ----------------------------------
Current Liabilities $11,403,659 $ 9,951,962
----------- -----------
Long Term Debt 26,280,382 26,297,499
----------- -----------
Other Liabilities and Deferred Credits 3,403,557 3,477,337
----------- -----------
Stockholders' Equity:
Common Stock 1,175,261 1,175,261
Other Stockholders' Equity 40,927,682 40,433,834
----------- -----------
Total Stockholders' Equity 42,102,943 41,609,095
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $83,190,541 $81,335,893
=========== ===========
NOTE: The balance sheet at June 30, 1997 has been derived from the audited
financial statements at that date and condensed.
SEE NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
2
<PAGE>
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three months ended
September 30,
1997 1996
---- ----
Revenues
Net Sales-Products $ 6,769,072 $ 4,965,357
Real Estate and Hotel Operations $ 5,907,255 5,538,275
Other (including equity in net
loss of affiliated entities) 42,898 84,114
----------- -----------
Total Revenues 12,719,225 10,587,746
----------- -----------
Expenses
Cost of Sales 5,742,471 4,530,919
Operating-real estate and hotel 2,360,144 2,753,175
Selling, general & administrative 1,695,349 1,342,462
Depreciation and amortization 954,065 851,304
Real estate taxes 639,244 665,184
Interest 800,932 824,680
----------- -----------
Total Expenses 12,195,205 10,967,724
----------- -----------
Income (Loss) before income
taxes and minority interests 524,020 (379,978)
Income taxes - Note 3 (313,000) (110,000)
Minority interests 284,148 231,915
----------- -----------
Net Income $ 495,168 $ (258,063)
=========== ===========
Income per share:
Net Income (Loss) $ .74 $ (.38)
=========== ===========
Average shares outstanding 672,051 672,269
SEE NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
September 30,
1997 1996
---- ----
OPERATING ACTIVITIES
Net Income (Loss) $ 495,168 $ (258,063)
Adjustments to Reconcile Income (Loss) to Net
Cash Provided (Used) by Operating Activities:
Depreciation and Amortization 954,065 851,304
Minority Interests' Share of Loss in
Subsidiaries
Changes in Operating Assets and Liabilities: (284,148) (231,915)
Decrease in Accounts and Other Receivables 362,380 430,463
(Increase) Decrease in Inventories (728,079) 35,834
Decrease (Increase) in Other Assets 31,380 (748,970)
Increase (Decrease) in Accounts Payable 151,697 (277,722)
(Decrease) Increase in Other Liabilities (73,780) 885
----------- -----------
NET CASH PROVIDED (USED) BY OPERATIONS 908,683 (198,184)
----------- -----------
INVESTING ACTIVITIES
Purchase of Property Plant and Equipment (968,681) (1,144,499)
Investment in and Advances to Affiliated
Entities-Net (1,553,543) (394,156)
Payments Received on Mortgages Receivable 727 10,546
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (2,521,497) (1,528,109)
----------- -----------
FINANCING ACTIVITIES
Proceeds from Mortgages and Notes Payable to
Banks 1,615,000 5,200,000
Payments on Mortgages and Notes Payable to Banks (332,117) (3,247,938)
Other Financing Activities (1,320) --
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,281,563 1,952,062
----------- -----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (331,251) 225,769
Cash and Cash Equivalents at Beginning of Period 1,932,075 1,009,079
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,600,824 $ 1,234,848
=========== ===========
SEE NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of September 30, 1997 and the
consolidated statements of operations and cash flows for the three month periods
ended September 30, 1997 and 1996, have been prepared by the Company, without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at September 30, 1997 and for all periods
presented, have been made.
2. INVENTORIES
September 30, June 30,
1997 1997
---- ----
Work-in process and
raw materials $1,884,951 $1,600,565
Finished goods 2,344,778 1,901,085
---------- ----------
$4,229,729 $3,501,650
---------- ----------
3. INCOME TAXES
Three Months Ended
September 30,
1997 1996
---- ----
Federal $ 50,000 $ --
State 263,000 110,000
-------- --------
$313,000 $110,000
-------- --------
4. EARNINGS PER SHARE
Statement No. 128 issued by the Financial Accounting Standards Board in February
1997 will have no impact on the earnings per share calculation of the Company.
5. SUBSEQUENT EVENT
On November 25,1997 the Company and its partners sold the two nursing homes
owned by them in Jersey City and Rochelle Park, New Jersey and the Senior
Citizen Residence/Adult Day Care Center adjacent to the Rochelle Park Facility.
The net proceeds to the Company of approximately $5 million approximates the net
carrying value of these assets at September 30, 1997.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(IN THOUSANDS)
Liquidity and Capital Resources
Working capital for the three months ended September 30, 1997 decreased by
approximately $1,449. Net cash provided by operating activities was
approximately $909. Net cash provided by financing activities was approximately
$1,282. Net cash of approximately $2,521 was used for investing activities.
The Company had a $10,000 term loan and a $2,000 revolving line of credit with
its principal lender, collateralized by a mortgage on the East Newark Industrial
Center. At September 30, 1997, $2,000 was outstanding under the line of credit.
On October 21, 1997 the $2,000 was repaid. The term loan, which had an
outstanding balance of $6,611 at September 30, 1997, required monthly principal
payments of $56 and matured on October 21, 1997 when the remaining unpaid
principal balance of $6,555 was paid. On October 21, 1997 the Company replaced
its existing indebtedness and entered into a loan agreement with a new lender.
The new agreement provides for a $9,000 term loan with an interest rate at the
Company's option equal to either (a) LIBOR plus 1.75%, (b) the Alternate Base
Rate (as defined) plus 0.25% or (c) the Fixed Rate (as defined) plus 1.75% and a
$3,000 revolving line of credit with an interest rate equal to either (a) LIBOR
plus 2% or, (b) the Alternate Base Rate (as defined) plus 0.50%. These loans are
also collateralized by a mortgage on the East Newark Industrial Center. The term
loan requires amortization payments of $359 per annum. The term loan matures in
five years and the revolving line of credit matures in three years.
Results of Operations
Three months ended September 30, 1997 and 1996
Income from operations before income taxes and minority interests increased
$904. The components are as follows:
(Decrease)
1997 1996 Increase
---- ---- --------
Real Estate $ 1,728 $ 935 $793
Hotel 108 171 (63)
Seafood (555) (636) 81
Textiles 259 13 246
Corporate (1,016) (863) (153)
------- ----- ----
$524 $(380) $904
------- ----- ----
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(IN THOUSANDS)
REAL ESTATE
Revenues increased $401 due to increases in occupancy rates. Repairs and
maintenance expenses decreased $402. There were no other significant variations
in any expense category.
HOTEL
Revenues decreased $32 over last year. Hotel earnings decreased $63 as a
result of the lower revenues and slightly higher expenses.
SEAFOOD
Revenues increased $663 in the current period as the Company now includes
the sales of the Lambert scallop operation ($788) which was accounted for last
year on the equity method. Losses are continuing in the seafood division due
primarily to curtailed production at our clam operation, and continuing losses
in Ecuador due to lower than anticipated shrimp production. Losses in Ecuador
were $371 this year as compared to last years loss of $292 due to problems at
our shrimp hatchery caused by unusually high rainfall due to the weather
phenomenon known as "El Nino".
TEXTILES
Hanora Spinning's earnings increased $70 to $293 for the quarter due to
higher revenues. Hanora South and J & M Dyers recognized a combined profit of $4
compared to last years loss of $162 due to higher revenues at J & M. Whitlock
Combing incurred a loss of $38 in the current period as compared to a loss of
$43 last year relating to its property in South Carolina which is being offered
for sale. Overall, textile revenues increased $1,140.
CORPORATE/OTHER
Corporate expenses including the operations of the nursing homes and
interest on the Company's term loan and revolving line of credit increased by
$153. Last year there was $200 of sundry income due to the settlement of a
lawsuit instituted by the Company.
7
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
Exhibits: None
Reports: There were no reports on Form 8-K filed during the quarter ended
September 30 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE FIRST REPUBLIC CORPORATION OF AMERICA
-----------------------------------------
Registrant
Date: December 4, 1997 /s/ Norman A. Halper
------------------------------
Norman A. Halper
President
Date: December 4, 1997 /s/ Harry Bergman
------------------------------
Harry Bergman
Treasurer
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,600,824
<SECURITIES> 0
<RECEIVABLES> 4,811,492
<ALLOWANCES> 270,410
<INVENTORY> 4,229,729
<CURRENT-ASSETS> 12,125,948
<PP&E> 77,559,836
<DEPRECIATION> 36,277,446
<TOTAL-ASSETS> 83,190,541
<CURRENT-LIABILITIES> 11,403,659
<BONDS> 26,280,382
0
0
<COMMON> 1,175,261
<OTHER-SE> 40,927,682
<TOTAL-LIABILITY-AND-EQUITY> 83,190,541
<SALES> 6,769,072
<TOTAL-REVENUES> 12,719,225
<CGS> 5,742,471
<TOTAL-COSTS> 5,621,802
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 30,000
<INTEREST-EXPENSE> 800,932
<INCOME-PRETAX> 524,020
<INCOME-TAX> 313,000
<INCOME-CONTINUING> 495,168
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 495,168
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
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