SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 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 checkmark 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 May 15, 1997, there were 672,084 shares of common stock outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, June 30,
1997 1996
---------- ---------
(UNAUDITED) (SEE NOTE
BELOW)
Assets
Current Assets
Cash and Cash Equivalents $ 1,224,812 $ 1,009,079
Accounts Receivable 4,928,719 5,520,779
Inventories (Note 2) 4,893,533 4,921,283
Other Current Assets 1,975,040 2,208,548
----------- -----------
Total Current Assets 13,022,104 13,659,689
----------- -----------
Property, Plant and Equipment 73,096,030 72,076,477
Less: Accumulated Depreciation 33,188,880 32,149,238
----------- -----------
Net Properties 39,907,150 39,927,239
----------- -----------
Other Assets 27,402,937 25,652,062
----------- -----------
TOTAL ASSETS $80,332,191 $79,238,990
=========== ===========
Liabilities & Stockholders' Equity
Current Liabilities $15,597,541 $10,659,740
----------- -----------
Long Term Debt 20,171,902 23,809,823
----------- -----------
Other Liabilities and Deferred Credits 3,637,139 4,323,738
----------- -----------
Stockholders' Equity:
Common Stock 1,175,261 1,175,261
Other Stockholders' Equity 39,750,348 39,270,428
----------- -----------
Total Stockholders' Equity 40,925,609 40,445,689
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $80,332,191 $79,238,990
=========== ===========
NOTE: The balance sheet at June 30, 1996 has been derived from the audited
financial statements at that date and condensed.
SEE NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended Three months ended
March 31, March 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Net Sales-Products $16,907,133 $16,680,694 $ 6,657,374 $ 5,407,724
Real Estate and Hotel Operations 17,081,777 16,726,814 5,700,383 5,428,408
Other (including equity in net
loss of affiliated entities) 610,326 (638,672) 249,042 (206,068)
----------- ----------- ----------- -----------
Total Revenues 34,599,236 32,768,836 12,606,799 10,630,064
----------- ----------- ----------- -----------
Expenses
Cost of Sales 15,321,073 15,471,295 6,068,498 5,022,085
Operating-real estate and hotel 8,456,886 7,831,197 2,805,020 2,684,331
Selling, general & administrative 3,959,097 4,167,179 1,289,544 1,174,551
Depreciation and amortization 2,617,454 2,878,527 888,633 978,619
Real estate taxes 1,957,542 2,000,406 634,804 678,636
Interest 2,480,842 2,496,899 811,818 808,525
----------- ----------- ----------- -----------
Total Expenses 34,792,894 34,845,503 12,498,317 11,346,747
----------- ----------- ----------- -----------
(Loss) Income before income
taxes and minority interests (193,658) (2,076,667) 108,482 (716,683)
Income taxes - Note 3 (268,000) (285,000) (4,000) (76,000)
Minority interests 947,724 932,141 299,005 313,927
----------- ----------- ----------- -----------
Net Income (Loss) $ 486,066 $(1,429,526) $ 403,487 $ (478,756)
=========== =========== =========== ===========
Income (Loss) per share:
Net Income (Loss) $ .72 $ (2.12) $ .60 $ (.71)
=========== =========== =========== ===========
Average shares outstanding 672,196 672,811 672,085 672,305
</TABLE>
SEE NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) $ 486,066 $(1,429,526)
Adjustments to Reconcile Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 2,617,454 2,878,527
Minority Interests' Share of Loss in
Subsidiaries (947,724) (932,141)
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts and Other
Receivables (27,784) 215,841
Decrease in Inventories 27,750 647,171
Decrease (Increase) in Other Assets 233,508 (474,217)
Increase (Decrease) in Accounts Payable 259,985 (675,517)
(Decrease) Increase in Other Liabilities (686,599) 39,771
----------- -----------
NET CASH PROVIDED BY OPERATIONS 1,962,656 269,909
----------- -----------
INVESTING ACTIVITIES
Purchase of Property Plant and Equipment (2,597,365) (2,416,776)
Investment in and Advances to Affiliated Entities-Net (803,151) 1,971,593
Payments Received on Mortgages Receivable 619,844 670,000
----------- -----------
NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES (2,780,672) 224,817
----------- -----------
FINANCING ACTIVITIES
Proceeds from Mortgages and Notes Payable 6,800,000 600,000
Payments on Long Term Debt (5,760,106) (1,319,664)
Other Financing Activities (6,145) (40,817)
----------- -----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 1,033,749 (760,481)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 215,733 (265,755)
Cash and Cash Equivalents at Beginning of Period 1,009,079 1,294,475
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,224,812 $ 1,028,720
=========== ===========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<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 March 31, 1997 and the
consolidated statements of operations and cash flows for the nine month periods
ended March 31, 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 March 31, 1997 and for all periods
presented, have been made.
2. INVENTORIES
March 31, June 30,
1997 1996
---- ----
Work-in process and
raw materials $1,901,005 $1,655,147
Finished goods 2,992,528 3,226,136
---------- ----------
$4,893,533 $4,921,283
---------- ----------
3. INCOME TAXES
Nine Months Ended
March 31,
1997 1996
---- ----
State $ 268,000 $ 285,000
---------- ----------
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.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(IN THOUSANDS)
Liquidity and Capital Resources
Working capital for the nine months ended March 31, 1997 decreased by
approximately $5,575 due to the classification of the Company's term loan which
matures on August 1, 1997 as a current liability. Accordingly as of March 31,
1997 there was a working capital deficiency of $2,575. However, the Company
expects that the deficiency will be eliminated as a result of the renewal of its
term loan described below. Net cash provided by operating activities was
approximately $1,963. Net cash provided by financing activities was
approximately $1,034. Net cash of approximately $2,781 was used for investing
activities.
On July 29, 1996 the Company obtained a $4,000 mortgage loan collateralized by
the Greensboro North Shopping Center in Greensboro, North Carolina. This loan
bears interest at 8.35% per annum and provides for monthly payments of $36
including principal and interest commencing September 1, 1996 through August 1,
2006 when the remaining unpaid balance of $2,523 will become due.
The Company has 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 March 31, 1997, $1,200 is outstanding under the line of credit. The
term loan, which had an outstanding balance of $6,944 at March 31, 1997,
requires monthly principal payments of $56 and matures on August 1, 1997 when
the remaining unpaid principal balance of $6,667 will become due. The Company
presently intends to renew this loan. The revolving line, which is renewable
annually, is due on August 1, 1997. The interest rate on both facilities is one
percent in excess of the lender's prime rate.
Results of Operations
Nine months ended March 31, 1997 and 1996
Income from operations before income taxes and minority interests increased
$1,883. The components are as follows:
1997 1996 Increase
---- ---- --------
Real Estate $ 3,767 $ 3,554 $ 213
Hotel 415 342 73
Seafood (1,855) (3,281) 1,426
Textiles 122 (28) 150
Corporate (2,643) (2,664) 21
------- ------- ------
$ (194) $(2,077) $1,883
------- ------- ------
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(IN THOUSANDS)
REAL ESTATE
Revenues increased $246. A gain of $362 was realized when a balloon
payment on a mortgage receivable was paid in December 1996. A mortgage obtained
on July 29, 1996 on the Greensboro North Shopping Center in Greensboro, North
Carolina increased overall mortgage interest expense by $149, and repairs and
maintenance increased $380. There were no other significant variations in any
expense category.
HOTEL
Revenues increased $108 over last year. Hotel earnings increased $73 as a
result of the higher revenues.
SEAFOOD
Revenues increased $520. Losses are continuing in the seafood division due
primarily to curtailed production at our clam operation due to smaller harvests
of product, and continuing losses in Ecuador due to lower than anticipated
shrimp production. Losses in Ecuador were $1,061 this year as compared to last
years loss of $1,791 due to higher yields from our shrimp ponds. Due to the
smaller harvests of product, losses from our clamming operations this year were
$590 as compared to $450 last year. Losses at Lambert for this period were $200
as compared to $400 last year and the Company re-started scallop operations in
January 1997. Profits on sales of shrimp imported from Costa Rica improved $110
on lower sales volume.
TEXTILES
Hanora Spinning's earnings decreased $111 to $556 for the year due to
lower sales volume. Hanora South and J & M Dyers recognized combined losses of
$299 compared to last years loss of $434 due to higher revenues at J & M.
Whitlock Combing incurred a loss of $135 this year as compared to a loss of $255
last year relating to its property in South Carolina which is being offered for
sale. Overall, textile revenues decreased $292.
CORPORATE/OTHER
Corporate expenses which includes the operations of the nursing homes and
interest on the Company's term loan and revolving line of credit decreased by
$21.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(IN THOUSANDS)
Three months ended March 31, 1997 and 1996
Income from operations before income taxes and minority interests increased
$825. The components are as follows:
1997 1996 Increase
---- ---- --------
Real Estate $ 1,250 $ 1,090 $ 160
Hotel 103 (18) 121
Seafood (565) (1,005) 440
Textiles 136 48 88
Corporate (816) (832) 16
------- ------- -----
$ 108 $ (717) $ 825
------- ------- -----
REAL ESTATE
Revenues increased $106. There were no significant variations in any
expense category.
HOTEL
Hotel revenues increased $165. Hotel earnings increased $121 as a result
of the higher revenues.
SEAFOOD
Losses decreased $440 substantially due to higher yields in shrimp ponds
in Ecuador, reduced losses in scallops and increased profitability on sales of
shrimp from Costa Rica.
TEXTILES
Earnings increased $88. Hanora Spinning's earnings decreased $129. Hanora
South and J & M Dyers recognized combined losses of $75 as compared to last
year's loss of $234. Whitlock Combing had a $52 decrease in losses due to the
closing of the wool combing plant in June 1992.
CORPORATE/OTHER
There were no other significant variations in any expense.
<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
March 31, 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: May 21, 1997 /s/ Norman A. Halper
--------------------------------------
Norman A. Halper
President
Date: May 21, 1997 /s/ Harry Bergman
--------------------------------------
Harry Bergman
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,224,812
<SECURITIES> 0
<RECEIVABLES> 5,149,129
<ALLOWANCES> 220,410
<INVENTORY> 4,893,533
<CURRENT-ASSETS> 13,022,104
<PP&E> 73,096,030
<DEPRECIATION> 33,188,880
<TOTAL-ASSETS> 80,332,191
<CURRENT-LIABILITIES> 15,597,541
<BONDS> 20,171,902
0
0
<COMMON> 1,175,261
<OTHER-SE> 39,750,348
<TOTAL-LIABILITY-AND-EQUITY> 80,332,191
<SALES> 16,907,133
<TOTAL-REVENUES> 34,599,236
<CGS> 15,321,073
<TOTAL-COSTS> 16,990,979
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,480,842
<INCOME-PRETAX> (193,658)
<INCOME-TAX> 268,000
<INCOME-CONTINUING> 486,066
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 486,066
<EPS-PRIMARY> .72
<EPS-DILUTED> .72
</TABLE>
