SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 0R 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 2000 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 October 26, 2000, there were 669,163 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,
2000 2000
------------ ------------
(UNAUDITED) (SEE NOTE
BELOW)
Assets
Current Assets
Cash and Cash Equivalents $ 764,057 $ 2,302,713
Accounts Receivable 7,677,635 7,074,613
Inventories (Note 2) 12,491,774 9,315,724
Other Current Assets 3,230,272 3,352,381
------------ ------------
Total Current Assets 24,163,738 22,045,431
------------ ------------
Property, Plant and Equipment 76,436,392 76,712,511
Less: Accumulated Depreciation 30,369,715 30,826,778
------------ ------------
Net Property, Plant and Equipment 46,066,677 45,885,733
------------ ------------
Other Assets 32,374,562 31,797,355
------------ ------------
TOTAL ASSETS $102,604,977 $ 99,728,519
============ ============
Liabilities & Stockholders' Equity
Current Liabilities - Note 6 $ 18,744,599 $ 15,266,392
------------ ------------
Long-Term Debt 27,110,365 27,318,488
------------ ------------
Other Liabilities 2,428,446 2,645,593
------------ ------------
Stockholders' Equity:
Common Stock 1,175,261 1,175,261
Other Stockholders' Equity 53,146,306 53,322,785
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Total Stockholders' Equity 54,321,567 54,498,046
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $102,604,977 $ 99,728,519
============ ============
NOTE: The balance sheet at June 30, 2000 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>
Three months ended
September 30,
2000 1999
---- ----
<S> <C> <C>
Revenues
Sales-Textile and Seafood $ 9,359,560 $ 7,128,561
Real Estate and Hotel Operations 5,867,438 5,824,460
Other 573,311 369,170
------------ ------------
Total Revenues 15,800,309 13,322,191
------------ ------------
Expenses
Cost of Sales - textiles and seafood 9,251,626 6,966,938
Operating-real estate and hotel 2,589,692 2,371,625
Selling, general & administrative 1,904,368 1,858,371
Depreciation and amortization 1,050,604 1,165,799
Real estate taxes 535,123 520,602
Interest 682,338 744,482
Minority interests' share of loss of subsidiaries (410,466) (366,625)
------------ ------------
Total Expenses 15,603,285 13,261,192
------------ ------------
Income before income taxes and
equity in loss of affiliated entities 197,024 60,999
Equity in loss of affiliated entities (242,733) (382,144)
Income taxes - Note 3 (128,000) (67,000)
------------ ------------
Net Loss $ (173,709) $ (388,145)
============ ============
Loss per share:
Net Loss - Basic and Diluted $ (.26) $ (.58)
============ ============
Average shares outstanding - Basic and Diluted 669,473 669,991
</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>
Three Months Ended
September 30,
2000 1999
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Loss $ (173,709) $ (388,145)
Adjustments to Reconcile Net Loss
Cash Used Operating Activities:
Depreciation and Amortization 1,050,604 1,165,799
Minority Interests' Share of Loss in
Subsidiaries (410,466) (366,625)
Changes in Operating Assets and Liabilities:
Increase in Accounts Receivables (603,022) (562,238)
Increase in Inventories (3,176,050) (1,920,708)
Decrease in Other Current Assets 122,109 194,887
(Decrease) Increase in Accounts Payable (471,793) 196,371
Decrease in Other Liabilities (217,147) (153,191)
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NET CASH USED IN OPERATIONS (3,879,474) (1,833,850)
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INVESTING ACTIVITIES
Purchase of Property, Plant and Equipment (1,231,548) (960,736)
Investment in and Advances to Affiliated Entities-Net (169,511) (222,600)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,401,059) (1,183,336)
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FINANCING ACTIVITIES
Proceeds from Mortgages and Notes Payable to Banks -- 670,000
Payments on Mortgages and Notes Payable to Banks (208,123) (295,648)
Other Financing Activities (Note 6) 3,950,000 3,000,000
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NET CASH PROVIDED BY FINANCING ACTIVITIES 3,741,877 3,374,352
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(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,538,656) 357,166
Cash and Cash Equivalents at Beginning of Period 2,302,713 1,506,113
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 764,057 $ 1,863,279
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</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 September 30, 2000 and the
consolidated statements of operations and cash flows for the three month periods
ended September 30, 2000 and 1999, 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, 2000 and for all periods
presented, have been made.
2. INVENTORIES
September 30, June 30,
2000 2000
---- ----
Work-in process and
raw materials $ 1,654,904 $ 1,511,915
Finished goods 10,836,870 7,803,809
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$12,491,774 $ 9,315,724
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3. INCOME TAXES
Three Months Ended
September 30,
2000 1999
---- ----
Federal $ 20,000 $ 5,000
State 108,000 62,000
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$128,000 $ 67,000
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4. EARNINGS PER SHARE
Earnings per share are based upon the weighted average shares outstanding and
the Company does not have any dilutive securities.
5. INDUSTRY SEGMENTS
Three months ended
September 30,
2000 1999
---- ----
Revenues:
Real Estate $ 4,126,116 $ 4,174,460
Hotel 1,741,322 1,650,000
Seafood 6,394,096 4,671,561
Textile 2,965,464 2,457,000
Corporate and Other 573,311 369,170
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$15,800,309 $13,322,191
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5
<PAGE>
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30,
2000 1999
---- ----
Identifiable Assets:
Real Estate $ 35,791,429 $ 41,815,361
Hotel 6,295,287 6,374,594
Seafood 32,591,252 24,311,853
Textile 9,632,765 9,702,365
Corporate 18,294,244 17,381,295
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$102,604,977 $ 99,585,468
============ ============
Results of operations are shown in Managements Discussion and Analysis of
Financial Condition and Results of Operations.
6. RELATED PARTY TRANSACTION
At September 30, 2000 the Company had outstanding $9,550,000 in loans from
related parties. Proceeds from the loans were used to finance Bluepoints
expanded importation and sale of lobster tails. The loans, which bore interest
at 8% and had no fixed repayment terms or maturity dates, were repaid in October
2000.
7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Statement of Financial Accounting Standard No.133, Accounting for Derivative
Instruments and Hedging Activities became effective for all fiscal years
beginning after June 15, 2000. This pronouncement does not have any effect on
the Company's consolidated financial statements and it is not expected that it
will have a material effect in the future due to the Company's limited use of
derivative instruments or hedges.
8. SUBSEQUENT EVENT
On October 4, 2000 the Company sold its office building on West 39th Street in
New York City for $20,800,000. The Company recognized a gain of approximately
$18,627,000 and received net proceeds of approximately $20,050,000. The Company
used approximately $9,688,000 of proceeds to repay its indebtedness to related
parties.
6
<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, 2000 decreased by
approximately $1,360. Net cash used by operating activities was approximately
$3,879. Net cash provided by financing activities was approximately $3,742. Net
cash of approximately $1,401 was used for investing activities.
The Company's credit agreement with its principal lender provides for a $9,000
term loan with an interest rate of 7.5% per annum 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 on October 21,
2002 and the revolving line of credit matures on October 21, 2001. At September
30, 2000 the term loan balance was $7,983 and $1,750 was outstanding under the
revolving line of credit.
The Company has borrowed funds from related parties to finance expanded
importation and sale of lobster tails. At September 30, 2000 the balance was
$9,550, which was repaid in October from proceeds from the sale of the West 39th
Street property.
On August 31, 1998, the Company obtained a $4,000 construction loan from a bank
for its property at 260 Merrimac Street in Newburyport, Massachusetts. The loan
was obtained for the purpose of converting the vacant property, formerly
occupied by Towle Manufacturing Company into commercial space suitable for
rental. Initially $2,685 was borrowed, with $1,315 available to be borrowed when
additional space is rented. An additional $670 was borrowed on August 25, 1999.
The construction loan, which matured on August 31, 2000 has been extended in
anticipation of its conversion to a five year term loan to mature on September
30, 2005. Interest on the construction loan was at the bank's prime rate from
time to time, or at LIBOR plus 1.75% for one to twelve month periods, elected by
the Company. Interest on the term loan will be based upon the five year United
States Treasury Bond rate plus 1.75%.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(IN THOUSANDS)
Results of Operations
Three months ended September 30, 2000 and 1999
Income from operations before income taxes and minority interests increased
$232. The components are as follows
(Decrease)
2000 1999 Increase
---- ---- ----------
Real Estate $ 1,456 $ 1,548 $ (92)
Hotel 234 206 28
Seafood (1,008) (1,438) 430
Textiles (103) (193) 90
Corporate (1,035) (811) (224)
------- ------- -------
$ (456) $ (688) $ 232
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REAL ESTATE
Revenues decreased $48 as a result of the sale of the Company's Miami
Beach property on May 1, 2000. Earnings decreased $92 primarily due to increased
repairs and maintenance at Nyanza ($42) and West 39th Street ($45). There were
no significant variations in any other expense category. Operating profits were
substantially the same at all of the other properties.
HOTEL
Revenues increased $91 over last year. Hotel earnings increased $28 as a
result of the higher revenues.
SEAFOOD
Revenues increased $1,723 in the current period primarily due to an
expansion of the Company's Florida operations to include the sale and processing
of shrimp. Losses are continuing in the seafood division due primarily to
curtailed production at the Company's clam operation, and continuing losses in
Ecuador due to lower than anticipated shrimp production. Losses in Ecuador were
$583 this year as compared to last years loss of $633 due principally to the
onset of White Spot Virus in Ecuador that has decimated that country's shrimp
production. Operations in Florida lost $177 as compared to a loss last year of
$495. Bluepoints Long Island operations had a loss of $248 as compared to a loss
of $310 last year.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(IN THOUSANDS)
TEXTILES
Hanora Spinning's earnings increased $70 to $89 for the quarter due to
higher revenues. Hanora South and J & M Dyers recognized a combined loss of $145
compared to last years loss of $190 due to higher revenues. Whitlock Combing
incurred a loss of $47 in the current period as compared to a loss of $22 last
year relating to its property in South Carolina which is being offered for sale.
Overall, textile revenues increased $507.
CORPORATE/OTHER
Corporate expenses including interest on the Company's term loan and
revolving line of credit increased by $224 due substantially to increased salary
and fringe costs of $150 and higher professional fees of $50.
Forward-Looking Statements
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21B of the Securities Act of 1934, as amended. Such
forward-looking statements include statements regarding the intent, belief or
current expectations of the Company and its management and involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
following: the ability of the Company to increase production at its Ecuadorian
shrimp farms and to address the virus problem that is affecting shrimp
production in Ecuador, the clam inventory in the Great South Bay, the
availability of scallops in the area covered by the Company's Cape Canaveral,
Florida operations, the success of the Company's Mariculature System and
Tolerine product, demand for the Company's textile services, and general
economic and business conditions, which will, among other things, affect the
demand for space and rooms at the Company's real estate and hotel properties,
the availability and creditworthiness of prospective tenants, lease rents and
terms and availability of financing; and adverse changes in the real estate
markets, including, among other things, competition with other companies, risk
of real estate development and acquisition, governmental actions and initiatives
and environmental safety requirements.
9
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PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
Exhibits: None
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: November 21, 2000 /s/ Norman A. Halper
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Norman A. Halper
President
Date: November 21, 2000 /s/ Harry Bergman
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Harry Bergman
Treasurer
