SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 1O-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 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 February 28, 1998, there were 671,192 shares of common stock outstanding.
1
<PAGE>
PART I. FINANCIAL INFORMATION
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
1997 1997
------------ ---------
(UNAUDITED) (SEE NOTE
BELOW)
Assets
Current Assets
Cash and Cash Equivalents $ 2,511,378 $ 1,932,075
Accounts Receivable 4,397,441 4,904,189
Inventories (Note 2) 5,025,215 3,501,650
Other Current Assets 2,610,639 1,785,693
----------- -----------
Total Current Assets 14,544,673 12,123,607
----------- -----------
Property, Plant and Equipment 79,552,051 78,245,538
Less: Accumulated Depreciation 36,594,958 36,977,764
----------- -----------
Net Properties 42,957,093 41,267,774
----------- -----------
Other Assets 26,402,879 27,944,512
----------- -----------
TOTAL ASSETS $83,904,645 $81,335,893
=========== ===========
Liabilities & Stockholders' Equity
Current Liabilities $ 9,460,919 $ 9,951,962
----------- -----------
Long Term Debt 28,568,314 26,297,499
----------- -----------
Other Liabilities and Deferred Credits 3,428,997 3,477,337
----------- -----------
Stockholders' Equity:
Common Stock 1,175,261 1,175,261
Other Stockholders' Equity 41,271,154 40,433,834
----------- -----------
Total Stockholders' Equity 42,446,415 41,609,095
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $83,904,645 $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
CONDENSED CONSOLIDATED OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended Three months ended
December 31, December 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Net Sales-Products $ 13,482,999 $ 10,249,759 $ 6,713,927 $ 5,284,402
Real Estate and Hotel Operations 11,999,127 11,381,394 6,091,872 5,843,119
Other (including equity in net
loss of affiliated entities) 214,013 361,284 171,115 277,170
------------ ------------ ------------ ------------
Total Revenues 25,696,139 21,992,437 12,976,914 11,404,691
------------ ------------ ------------ ------------
Expenses
Cost of Sales 11,928,925 9,252,575 6,186,454 4,721,656
Operating-real estate and hotel 4,877,633 5,651,866 2,517,489 2,898,691
Selling, general & administrative 3,275,148 2,669,553 1,576,799 1,327,091
Depreciation and amortization 1,800,164 1,728,821 846,099 877,517
Real estate taxes 1,299,005 1,322,738 659,761 657,554
Interest 1,667,289 1,669,024 866,357 844,344
------------ ------------ ------------ ------------
Total Expenses 24,848,164 22,294,577 12,652,959 11,326,853
------------ ------------ ------------ ------------
Income (Loss) before income
taxes and minority Interests 847,975 (302,140) 323,955 77,838
Income taxes - Note 3 (467,000) (264,000) (154,000) (154,000)
Minority interests in losses 485,121 648,719 200,973 416,804
------------ ------------ ------------ ------------
Net Income $ 866,096 $ 82,579 $ 370,928 $ 340,642
============ ============ ============ ============
Income per share:
Net Income $ 1.29 $ .12 $ .55 $ .50
============ ============ ============ ============
Average shares outstanding 671,873 672,250 671,694 672,232
</TABLE>
SEE NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENT
3
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THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 866,096 $ 82,579
Adjustments to Reconcile Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 1,800,164 1,728,821
Minority Interests' Share of Loss in
Subsidiaries (485,121) (648,719)
Changes in Operating Assets and Liabilities:
Decrease in Accounts and Other Receivables 492,784 516,801
Increase in Inventories (1,523,565) (275,486)
(Increase) decrease in Other Assets (824,946) 92,381
Increase (decrease) in Accounts Payable 208,957 (221,025)
Decrease in Other Liabilities (48,340) (566,750)
------------ ------------
CASH PROVIDED BY OPERATIONS 486,029 708,602
------------ ------------
INVESTING ACTIVITIES
Purchase of Property Plant and Equipment (3,489,483) (2,320,101)
Investment in and Advances to Affiliated Entities-Net 2,026,754 (666,557)
Payments Received on Mortgages Receivable 13,964 620,546
------------ ------------
NET CASH USED BY INVESTING ACTIVITIES (1,448,765) (2,366,112)
------------ ------------
FINANCING ACTIVITIES
Proceeds from Mortgages and Notes Payable to Banks 10,272,000 6,700,000
Payments on Mortgages and Notes Payable to Banks (8,701,185) (4,583,877)
Other Financing Activities (28,776) (5,980)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,542,039 2,110,143
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS 579,303 452,633
Cash and Cash Equivalents at Beginning of Period 1,932,075 1,009,079
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,511,378 $ 1,461,712
============ ============
</TABLE>
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 December 31, 1997 and the
consolidated statements of operations and cash flows for the six month periods
ended December 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 December 31, 1997 and for all periods
presented, have been made.
2. INVENTORIES
December 31, June 30,
1997 1997
---- ----
Work-in process and
raw materials $2,128,094 $1,600,565
Finished goods 2,897,121 1,901,085
---------- ----------
$5,025,215 $3,501,650
========== ==========
3. INCOME TAXES
Six Months Ended
December 31,
1997 1996
---- ----
Federal $100,000 $ --
State 367,000 264,000
-------- --------
$467,000 $264,000
-------- --------
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
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(IN THOUSANDS)
Liquidity and Capital Resources
Working capital for the six months ended December 31, 1997 increased by
approximately $2,912. Net cash provided by operating activities was
approximately $486. Net cash provided by financing activities was approximately
$1,542. Net cash of approximately $1,449 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 October 21, 1997, $2,000 was outstanding under the line of credit and
the term loan had an outstanding balance of $6,555. On October 21, 1997 the
Company paid off these loans 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. At December 31, 1997 the term loan balance was $8,970 with interest at
7.65%, there was no outstanding balance on the revolving line of credit. The
Company exercised the fixed rate option which will be effective April 24, 1998,
and the new rate of interest at that date will be 7.5%.
On November 25, 1997 the Company and its partners sold the two nursing homes
owned by them and located in Jersey City and Rochelle Park, New Jersey and the
senior citizen residence/adult day care center adjacent to the Rochelle Park
facility. The anticipated proceeds to the Company aggregate approximately $5
million (of which $4,200 has been received as of December 31, 1997) and
approximates the net carrying value of these assets.
The Company re-financed its mortgage on the Brookhaven Shopping Center with its
existing lender on December 22, 1997. The mortgage, which had an outstanding
balance of approximately $1,500, was re-financed with a new $2,500 mortgage. The
new mortgage bears interest at 7.8%, provides for monthly payments of $21 and
matures in December 2007 when a balloon payment of $1,713 is due.
6
<PAGE>
Results of Operations
Six months ended December 31, 1997 and 1996
Income from operations before income taxes and minority interests increased
$1,150. The components are as follows:
(Decrease)
1997 1996 Increase
---- ---- --------
Real Estate $ 3,446 $ 2,517 $ 929
Hotel 259 312 (53)
Seafood (1,270) (1,290) 20
Textiles 319 (14) 333
Corporate (1,906) (1,827) (79)
------- ------- -------
$ 848 $ (302) $ 1,150
------- ------- -------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(IN THOUSANDS)
REAL ESTATE
Revenues increased $660 due to increases in occupancy rates. Repairs and
maintenance expenses decreased $515. There were no other significant variations
in any expense category.
HOTEL
Revenues decreased $21 over last year. Hotel earnings decreased $53 as a
result of the lower revenues and slightly higher expenses.
SEAFOOD
Revenues increased $1,896 over last year as the Company now includes the
sales of the Lambert scallop operation ($1,012) 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, lack of scallops at
Lambert, and continuing losses in Ecuador due to lower than anticipated shrimp
production. Losses in Ecuador were $539 this year as compared to last years loss
of $750.
7
<PAGE>
TEXTILES
Hanora Spinning's earnings increased $121 to $426 due to higher operating
margins. Hanora South and J & M Dyers recognized a combined loss of $26 compared
to last year's loss of $224 due to higher revenues at J & M. Whitlock Combing
incurred a loss of $81 in the current year as compared to a loss of $95 last
year relating to its property in South Carolina which is being offered for sale.
Overall, textile revenues increased $1,366.
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
$80. Last year there was $200 of sundry income due to the settlement of a
lawsuit instituted by the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION - CONTINUED
(IN THOUSANDS)
Three months ended December 31, 1997 and 1996
Income from operations before income taxes and minority interests increased
$246. The components are as follows:
(Decrease)
1997 1996 Increase
---- ---- --------
Real Estate $ 1,718 $ 1,582 $ 136
Hotel 151 141 10
Seafood (715) (654) (61)
Textiles 60 (27) 87
Corporate (890) (964) 74
------- ------- -------
$ 324 $ 78 $ 246
------- ------- -------
8
<PAGE>
REAL ESTATE
Revenues increased $259. There were no significant variations in any
expense category.
HOTEL
Hotel earnings increased $10. There were no significant variations in any
expense category.
SEAFOOD
Losses increased $61. A reduction in losses from Ecuador of $290 due to
increased production in the quarter was offset by a loss of $329 at Lambert due
to a lack of product.
TEXTILES
Earnings increased $87. Hanora Spinning's earnings increased $51. Hanora
South and J & M Dyers recognized combined losses of $30 as compared to last
year's loss of $62. Whitlock Combing had a $4 decrease in losses.
CORPORATE/OTHER
Corporate expenses decreased $74. There were no other significant
variations in any expense.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
Exhibits: None
Reports: A Form 8-K was filed on November 25, 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: March 6, 1998 /s/ Norman A. Halper
----------------------------------
Norman A. Halper
President
Date: March 6, 1998 /s/ Harry Bergman
----------------------------------
Harry Bergman
Treasurer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,511,378
<SECURITIES> 0
<RECEIVABLES> 4,697,851
<ALLOWANCES> 300,410
<INVENTORY> 5,025,215
<CURRENT-ASSETS> 14,544,673
<PP&E> 79,552,051
<DEPRECIATION> 36,594,958
<TOTAL-ASSETS> 83,904,645
<CURRENT-LIABILITIES> 9,460,919
<BONDS> 28,568,314
0
0
<COMMON> 1,175,261
<OTHER-SE> 41,271,154
<TOTAL-LIABILITY-AND-EQUITY> 83,904,645
<SALES> 13,482,999
<TOTAL-REVENUES> 25,696,139
<CGS> 11,928,925
<TOTAL-COSTS> 11,251,950
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,667,289
<INCOME-PRETAX> 827,975
<INCOME-TAX> 467,000
<INCOME-CONTINUING> 866,096
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 866,096
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.29
</TABLE>
