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, 1998 Commission File Number 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. Employer
incorporation or organization) Identification No.)
302 Fifth Avenue, New York, NY 10001
- --------------------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (212) 279-6100
- --------------------------------------------------------------------------------
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 June 1, 1998, there were 671,067 shares of common stock outstanding.
1
<PAGE>
PART I. FINANCIAL INFORMATION
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, June 30,
1998 1997
----------- -----------
(UNAUDITED) (SEE NOTE
BELOW)
Assets
Current Assets
Cash and Cash Equivalents $ 1,495,258 $ 1,932,075
Accounts Receivable 4,639,725 4,904,189
Inventories (Note 2) 5,535,049 3,501,650
Other Current Assets 2,936,395 1,785,693
----------- -----------
Total Current Assets 14,606,427 12,123,607
----------- -----------
Property, Plant and Equipment 82,252,591 78,245,538
Less: Accumulated Depreciation 37,458,024 36,977,764
----------- -----------
Net Properties 44,794,567 41,267,774
----------- -----------
Other Assets 27,473,764 27,944,512
----------- -----------
TOTAL ASSETS $86,874,758 $81,335,893
=========== ===========
Liabilities & Stockholders' Equity
Current Liabilities $12,562,374 $ 9,951,962
=========== ===========
Long Term Debt 28,167,822 26,297,499
----------- -----------
Other Liabilities and Deferred Credits 3,522,068 3,477,337
----------- -----------
Stockholders' Equity:
Common Stock 1,175,261 1,175,261
Other Stockholders' Equity 41,447,233 40,433,834
----------- -----------
Total Stockholders' Equity 42,622,494 41,609,095
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $86,874,758 $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)
<TABLE>
<CAPTION>
Nine months ended Three months ended
March 31, March 31,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Net Sales-Products $ 20,517,763 $ 16,907,133 $ 7,034,764 $ 6,657,374
Real Estate and Hotel Operations 17,968,554 17,081,777 5,969,427 5,700,383
Other (including equity in net
loss of affiliated entities) 660,216 610,326 446,203 249,042
------------ ------------ ------------ ------------
Total Revenues 39,146,533 34,599,236 13,450,394 12,606,799
------------ ------------ ------------ ------------
Expenses
Cost of Sales 18,381,990 15,321,073 6,453,065 6,068,498
Operating-real estate and hotel 7,696,235 8,456,886 2,818,602 2,805,020
Selling, general & administrative 4,717,062 3,959,097 1,441,914 1,289,544
Depreciation and amortization 2,898,422 2,617,454 1,098,258 888,633
Real estate taxes 1,976,801 1,957,542 677,796 634,804
Interest 2,522,929 2,480,842 855,640 811,818
------------ ------------ ------------ ------------
Total Expenses 38,193,439 34,792,894 13,345,275 12,498,317
------------ ------------ ------------ ------------
Income (Loss) before income
taxes and minority interests 953,094 (193,658) 105,119 108,482
Income taxes-Note 3 (579,000) (268,000) (112,000) (4,000)
Minority Interests 668,081 947,724 182,960 299,005
------------ ------------ ------------ ------------
Net Income $ 1,042,175 $ 486,066 $ 176,079 $ 403,487
============ ============ ============ ============
Income per share:
Net Income $ 1.55 $ 0.72 $ 0.26 $ 0.60
============ ============ ============ ============
Average shares outstanding 671,649 672,196 671,192 672,085
</TABLE>
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
<TABLE>
<CAPTION>
Nine months ended
March 31,
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income 1,042,175 486,066
Adjustments to Reconcile Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 2,898,422 2,617,454
Minority Interests' Share of Loss in
Subsidiaries (668,081) (947,724)
Changes in Operating Assets and Liabilities:
Decrease (Increase) in Accounts and Other
Receivables 249,742 (27,784)
(Increase) Decrease in Inventories (2,033,399) 27,750
(Increase) Decrease in Other Assets (1,150,702) 233,508
Increase in Accounts Payable 1,310,412 259,985
Increase (Decrease) in Other Liabilities 44,731 (686,599)
------------ ------------
CASH PROVIDED BY OPERATIONS 1,693,300 1,962,656
------------ ------------
INVESTING ACTIVITIES
Purchase of Property Plant and Equipment (6,425,215) (2,597,365)
Investment in and Advances to Affiliated Entries-Net 1,138,829 (803,151)
Payments Received on Mortgages Receivable 14,722 619,844
------------ ------------
NET CASH USED BY INVESTING ACTIVITIES (5,271,664) (2,780,672)
------------ ------------
FINANCING ACTIVITIES
Proceeds from Mortgages and Notes Payable 12,272,000 6,800,000
Payments on Long Term Debt (9,101,677) (5,760,106)
Other Financing Activities (28,776) (6,145)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,141,547 1,033,749
------------ ------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (436,817) 215,733
Cash and Cash Equivalents at Beginning of Period 1,932,075 1,009,079
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,495,258 $ 1,224,812
============ ============
</TABLE>
SEE NOTES TO CONDENSED 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 March 31, 1998 and the
consolidated statements of operations and cash flows for the nine month periods
ended March 31, 1998 and 1997, 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, 1998 and for all periods
presented, have been made.
2. INVENTORIES
March 31, June 30,
1998 1997
---- ----
Work-in process and
raw materials $2,578,643 $1,600,565
Finished goods 2,956,406 1,901,085
---------- ----------
$5,535,049 $3,501,650
========== ==========
3. INCOME TAXES
Nine Months Ended
March 31,
1998 1997
---- ----
Federal $ 100,000 $ --
State 479,000 268,000
---------- ----------
$ 579,000 $ 268,000
========== ==========
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 April 1, 1998 the Company sold its Video Film Center Building in New York
City for $17,000,000 and paid off the existing mortgage of $6,100,000. The
Company will recognize a profit before taxes of approximately $13,000,000 on the
sale.
5
<PAGE>
MANAGEMENT'S 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, 1998 decreased by
approximately $126. Net cash provided by operating activities was approximately
$1,693. Net cash provided by financing activities was approximately $3,142. Net
cash of approximately $5,272 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. At March 31,
1998 the term loan balance was $8,880 with interest at 7.65%, and $2,000 was
outstanding on the revolving line of credit with interest at 7.625%. 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 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 of approximately $5 million (of which
$4,325 has been received as of March 31, 1998) approximate the net carrying
value of these assets. The Company's 50% in a third nursing home owned by the
Company and its partners was sold by the Company in May 1998 for the sum of
$1,750, all cash.
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 for $2,500 with interest at
7.8%, and calls for monthly payments of $21 and matures in December 2007 when a
balloon payment of $1,713 is due.
6
<PAGE>
Results of Operations
Nine months ended March 31, 1998 and 1997
Income from operations before income taxes and minority interests increased
$1,147. The components are as follows:
(Decrease)
1998 1997 Increase
---- ---- --------
Real Estate $ 4,854 $ 3,767 $ 1,087
Hotel 406 415 (9)
Seafood (2,005) (1,855) (150)
Textiles 498 122 376
Corporate (2,800) (2,643) (157)
------- ------- -------
$ 953 $ (194) $ 1,147
------- ------- -------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(IN THOUSANDS)
REAL ESTATE
Revenues increased $781 due to increases in occupancy rates. Repairs and
maintenance expenses decreased $626. There were no other significant variations
in any expense category.
HOTEL
Revenues increased $15 over last year. Hotel earnings decreased $9 due to
slightly higher expenses.
SEAFOOD
Revenues increased $2,477 over last year due to increased sales of shrimp
in Ecuador and the sales of the Lambert scallop operation ($1,062) 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
which had a loss of $773 this year as compared to last year's loss of $594, lack
of scallops at Lambert which had a loss of $602 this year as compared to last
year's of $200, and losses in Ecuador during the first six months of the year
due to lower than anticipated shrimp production. Losses in Ecuador were $630
this year as compared to last year's loss of $1,061.
7
<PAGE>
TEXTILES
Hanora Spinning's earnings increased $120 to $676 due to higher operating
margins. Hanora South and J & M Dyers recognized a combined loss of $79 compared
to last year's loss of $299 due to higher revenues at J & M. Whitlock Combing
incurred a loss of $99 in the current year as compared to a loss of $135 last
year relating to its property in South Carolina which is being offend for sale.
Overall, textile revenues increased $1,884.
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
$157. 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 March 31, 1998 and 1997
Income from operations before income taxes and minority interests decreased $3.
The components are as follows:
(Decrease)
1998 1997 Increase
---- ---- --------
Real Estate $ 1,408 $ 1,250 $ 158
Hotel 147 103 44
Seafood (735) (565) (170)
Textiles 179 136 43
Corporate (894) (816) (78)
------- ------- -------
$ 105 $ 108 $ (3)
------- ------- -------
8
<PAGE>
REAL ESTATE
Revenues increased $121. There were no significant variations in any
expense category.
HOTEL
Revenues increased $36. There were no significant variations in any
expense category.
SEAFOOD
Losses increased $170. A reduction in losses from Ecuador of $220 due to
increased production in the quarter was offset by a loss of $306 at Lambert due
to a lack of product.
TEXTILES
Earnings increased $43. Hanora Spinning's earnings decreased $1. Hanora
South and J & M Dyers recognized combined losses of $53 as compared to last
year's loss of $75. Whitlock Combing had a $22 decrease in losses.
CORPORATE/OTHER
Corporate expenses increased $78. There were no 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 June 4,1998
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: June 5, 1998 /s/ Norman A. Halper
------------------------------------
Norman A. Halper
President
Date: June 5,1998 /s/ Harry Bergman
------------------------------------
Harry Bergman
Treasurer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> JUN-30-1997
<PERIOD-END> MAR-31-1998
<CASH> 1,495,258
<SECURITIES> 0
<RECEIVABLES> 4,970,135
<ALLOWANCES> 330,410
<INVENTORY> 5,535,049
<CURRENT-ASSETS> 14,606,427
<PP&E> 82,252,591
<DEPRECIATION> 37,458,024
<TOTAL-ASSETS> 86,874,758
<CURRENT-LIABILITIES> 12,562,374
<BONDS> 28,167,822
0
0
<COMMON> 1,175,261
<OTHER-SE> 41,447,233
<TOTAL-LIABILITY-AND-EQUITY> 86,874,758
<SALES> 20,517,763
<TOTAL-REVENUES> 39,146,533
<CGS> 18,381,990
<TOTAL-COSTS> 17,288,520
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,522,929
<INCOME-PRETAX> 953,094
<INCOME-TAX> 579,000
<INCOME-CONTINUING> 1,042,175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,042,175
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.55
</TABLE>
