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 March 31, 2000 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 May 16, 2000, there were 669,739 shares of common stock outstanding.
1
<PAGE>
PART I. FINANCIAL INFORMATION
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
------------ ------------
(UNAUDITED) (SEE NOTE
BELOW)
<S> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents $ 1,361,584 $ 1,506,113
Accounts Receivable 6,687,263 4,467,651
Inventories (Note 2) 10,275,625 5,293,998
Other Current Assets 3,092,420 2,977,603
------------ ------------
Total Current Assets 21,416,892 14,245,365
------------ ------------
Property, Plant and Equipment 86,639,966 85,586,539
Less: Accumulated Depreciation 34,658,850 33,253,658
------------ ------------
Net Property, Plant and Equipment 51,981,116 52,332,881
------------ ------------
Other Assets 30,783,653 29,977,835
------------ ------------
TOTAL ASSETS $104,181,661 $ 96,556,081
============ ============
Liabilities and Stockholders' Equity
Current Liabilities - Note 6 $ 17,845,251 $ 9,355,949
------------ ------------
Long-Term Debt 29,253,540 29,818,421
------------ ------------
Other Liabilities 2,467,756 2,502,169
------------ ------------
Stockholders' Equity:
Common Stock 1,175,261 1,175,261
Other Stockholders' Equity 53,439,853 53,704,281
------------ ------------
Total Stockholders' Equity 54,615,114 54,879,542
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $104,181,661 $ 96,556,081
============ ============
</TABLE>
NOTE: The balance sheet at June 30, 1999 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 STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended Three months ended
March 31, March 31,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Sales-Textile and Seafood $ 28,245,953 $ 21,159,789 $ 10,253,461 $ 9,333,364
Real Estate and Hotel Operations 17,543,675 15,687,030 5,574,159 5,201,561
Other 1,030,678 1,188,359 537,467 336,608
------------ ------------ ------------ ------------
Total Revenues 46,820,306 38,035,178 16,365,087 14,871,533
------------ ------------ ------------ ------------
Expenses
Cost of Sales - textile and seafood 26,221,666 19,060,884 9,473,033 8,112,179
Operating-real estate and hotel 7,924,421 6,861,254 2,862,706 2,540,226
Selling, general & administrative 5,267,309 4,567,844 1,725,085 1,290,916
Depreciation and amortization 3,606,567 2,719,117 1,200,134 890,951
Real estate taxes 1,591,248 1,559,935 535,050 521,989
Interest 2,207,437 2,392,857 740,130 857,553
Minority interests' share of loss
of subsidiaries (841,943) (577,966) (307,010) (58,263)
------------ ------------ ------------ ------------
Total Expenses 45,976,705 36,583,925 16,229,128 14,155,551
------------ ------------ ------------ ------------
Income before income taxes and
equity in loss of affiliated entities 843,601 1,451,253 135,959 715,982
Equity in loss of affiliated entities (810,149) (553,942) (321,037) (33,249)
Income taxes - Note 3 (292,000) (320,000) (105,000) (123,000)
------------ ------------ ------------ ------------
Net (Loss) Income $ (258,548) $ 577,311 $ (290,078) $ 559,733
============ ============ ============ ============
Income per share:
Net (Loss) Income - basic and
diluted ($ .39) $ .86 ($ .44) $ .83
============ ============ ============ ============
Average shares outstanding
basic and diluted 669,985 670,171 669,977 670,082
</TABLE>
SEE NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENT
3
<PAGE>
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net (Loss) Income $ (258,548) $ 577,311
Adjustments to Reconcile Net (Loss) Income to
Cash Used in Operating Activities:
Depreciation and Amortization 3,606,567 2,719,117
Minority Interests' Share of Loss in
Subsidiaries (841,943) (577,966)
Changes in Operating Assets and Liabilities:
Increase in Accounts Receivable (2,219,612) (1,679,816)
Increase in Inventories (4,981,627) (531,985)
Decrease (Increase) in Other Assets 470,708 (914,286)
Increase (Decrease) in Accounts Payable 1,238,302 (1,804,209)
Decrease in Other Liabilities (34,413) (142,455)
------------ ------------
CASH USED IN OPERATIONS (3,020,566) (2,354,289)
------------ ------------
INVESTING ACTIVITIES
Purchase of Property, Plant and Equipment (3,254,802) (10,819,933)
Investment in and Advances to Affiliated Entities-Net (549,400) (387,738)
Payments Received on Mortgages Receivable -- 2,394
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (3,804,202) (11,205,277)
------------ ------------
FINANCING ACTIVITIES
Proceeds from Mortgages and Notes Payable to Banks 670,000 10,735,000
Payments on Long Term Debt and Notes Payable to Banks (1,234,881) (4,319,062)
Other Financing Activities (Note 6) 7,245,120 (9,200)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,680,239 6,406,738
------------ ------------
DECREASE IN CASH AND CASH EQUIVALENTS (144,529) (7,152,828)
Cash and Cash Equivalents at Beginning of Period 1,506,113 8,590,167
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,361,584 $ 1,437,339
============ ============
</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 March 31, 2000, the condensed
consolidated statements of operations for the three and nine months' periods
ended 3/31/100 and 1999, the condensed consolidated statements of and cash flows
for the nine month periods ended March 31, 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 March 31, 2000 and
for all periods presented, have been made.
2. INVENTORIES
March 31, June 30,
2000 1999
----------- -----------
Work-in process and
raw materials $ 1,858,277 $ 1,913,784
Finished goods 8,417,348 3,380,214
----------- -----------
$10,275,625 $ 5,293,998
----------- -----------
3. INCOME TAXES
Nine Months Ended
March 31,
---------
2000 1999
----------- -----------
Federal $ 30,000 $ 50,000
State 262,000 270,000
----------- -----------
$ 292,000 $ 320,000
----------- -----------
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
<PAGE>
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
5. INDUSTRY SEGMENTS
Nine months ended
March 31,
2000 1999
------------ ------------
Revenues:
Real Estate $ 12,823,072 $ 12,027,924
Hotel 4,720,603 3,659,106
Seafood 20,243,569 11,862,371
Textile 8,002,384 9,297,418
Corporate and Other 1,030,678 1,188,359
------------ ------------
$ 46,820,306 $ 38,035,178
============ ============
March 31,
2000 1999
------------ ------------
Identifiable Assets:
Real Estate $ 41,476,389 $ 39,981,288
Hotel 6,491,849 6,617,856
Seafood 28,120,984 21,027,422
Textile 9,880,093 10,944,502
Corporate 18,212,346 14,432,071
------------ ------------
$104,181,661 $ 93,003,139
============ ============
Results of operations are shown in Managements Discussion and Analysis of
Financial Condition and Results of Operations.
6. RELATED PARTY TRANSACTION
At March 31, 2000 the Company had outstanding $7,251,000 in loans from related
parties. Proceeds from the loans were used to finance expanded importation and
sale of lobster tails. The loans bear interest at 8% and have no fixed repayment
terms or maturity dates.
7. SUBSEQUENT EVENT
On May 1, 2000 the Company sold the Colonial Bank Building in Miami Beach,
Florida for $5,972,000 and recognized a gain of approximately $81,000. The net
proceeds to the Company after expenses and repayment of the existing mortgage
was $3,991,000.
6
<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, 2000 decreased by
approximately $1,318. Net cash used in operating activities was approximately
$3,021. Net cash provided by financing activities was approximately $6,680. Net
cash of approximately $3,804 was used in 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 in October 2000. At March 31, 2000
the term loan balance was $8,163 and $2,500 was outstanding under the revolving
line of credit. An additional $375 of the revolving line of credit was utilized
at March 31, 2000 for setting up commercial letters of credit for the
importation of various seafood products.
The Company has borrowed funds from related parties to finance expanded
importation and sale of lobster tails. At March 31, 2000 the balance was $7,251.
The loans bear interest at 8% and have no fixed repayment terms or maturity
dates.
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 was rented. An additional $670 was borrowed on August 25, 1999.
The construction loan matures on August 31, 2000. The loan can be converted to a
five year term loan upon completion of construction and the leasing of 75% of
the rentable space in the building. At March 31, 2000 appproximately 80% was
leased and the Company intends to exercise the conversion option by May 25,
2000. Interest on the construction loan was at the bank's prime rate from time
to time, or at LIBOR plus 1.6% for one to twelve month periods, as elected by
the Company. The Company will have the option to elect a fixed rate of interest
during the term loan period.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(IN THOUSANDS)
Results of Operations
Nine months ended March 31, 2000 and 1999
Income from operations before income taxes and minority interests decreased
$1,127. The components are as follows:
(Decrease)
2000 1999 Increase
------- ------- --------
Real Estate $ 4,156 $ 4,470 $ (314)
Hotel 413 214 199
Seafood (2,322) (1,310) (1,012)
Textiles (268) (200) (68)
Corporate (2,787) (2,855) 68
------- ------- -------
$ (808) $ 319 $(1,127)
------- ------- -------
REAL ESTATE
Revenues increased $795 and earnings decreased $314. The earnings decrease
was due to a $180 insurance recovery last year at our Richmond Virginia Shopping
Center, increased repairs and maintenance this year at the East Newark, Waltham
and Nyanza building of $488 and increased energy costs of $244 due to a
substantial increase in fuel costs. There were no significant variations in any
other expense category.
HOTEL
Revenues increased $1,062 over last year. A $4,000 renovation project,
which allowed the hotel to operate as a Holiday Inn franchise, was completed in
January 1999. Hotel earnings increased $199 as a result of the higher revenues.
SEAFOOD
Revenues increased $8,381 in the current period due primarily to the sale
of lobster tails, a new venture for the Company that started in October 1998.
Earnings for this operation was $435. Losses are continuing in the seafood
division due primarily to curtailed production at the Company's clam operation,
increasing losses in the scallop operation and continuing losses in Ecuador due
to lower than anticipated shrimp production. Losses in Ecuador were $1,689 this
year as compared to last years loss of $980 due principally to a virus that has
decimated that country's shrimp production. Scallop operations in Florida lost
$624 as compared to a loss last year of $131 due to lack of availability of
product. Bluepoints Long Island operations had a loss of $444 as compared to a
loss of $357 in the prior year.
TEXTILES
Hanora Spinning's earnings decreased $132 to $248 for the nine months
ended March 31, 2000 due to lower revenues. Hanora South and J & M Dyers
recognized a combined loss of $371 compared to last years loss of $464. Whitlock
Combing incurred a loss of $145 in the current period as compared to a loss of
$116 last year relating to its property in South Carolina, which is being
offered for sale. Overall, textile revenues decreased $1,295.
CORPORATE/OTHER
Corporate expenses, including interest on the Company's term loan and
revolving line of credit, decreased by $68 due substantially to higher
professional fees incurred last year.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(IN THOUSANDS)
Results of Operations
Three months ended March 31, 2000 and 1999
Income from operations before income taxes and minority interests decreased
$1,116. The components are as follows:
(Decrease)
2000 1999 Increase
------- ------- --------
Real Estate $ 1,070 $ 1,256 $ (186)
Hotel -- 3 (3)
Seafood (537) 410 (947)
Textiles 28 (24) 52
Corporate (1,053) (1,021) (32)
------- ------- -------
$ (492) $ 624 $(1,116)
------- ------- -------
REAL ESTATE
Revenues increased $170 and earnings decreased $186. The earnings decrease
was due to repairs and maintenance at the East Newark, Waltham and Nyanza
building of $201 and increased energy costs of $176. There were no significant
variations in any expense category.
HOTEL
Revenues increased $203 over last year. A $4,000 renovation project, which
allowed the hotel to operate as a Holiday Inn franchise, was completed in
January 1999. Hotel earnings remained approximately the same.
SEAFOOD
Revenues increased $795 in the current period due primarily to the sale of
lobster tails, a new venture for the Company that started in October 1998.
Earnings for the quarter for this operation were $94. Losses are continuing in
the seafood division due primarily to the continuing losses in Ecuador due to
lower than anticipated shrimp production. Losses in Ecuador were $694 this year
as compared to last years loss of $102 due principally to a virus that has
decimated that country's shrimp production. Scallop operations in Florida earned
$12 as compared to a profit last year of $421 due to lack of availability of
product.
TEXTILES
Hanora Spinning's earnings increased $9 to $173 for the quarter due to
higher revenues. Hanora South and J & M Dyers recognized a combined loss of $100
compared to last years loss of $148. Whitlock Combing incurred a loss of $45 in
the current period as compared to a loss of $40 last year relating to its
property in South Carolina which is being offered for sale. Overall, textile
revenues increased $125.
CORPORATE/OTHER
Corporate expenses, including interest on the Company's term loan and
revolving line of credit, increased by $32.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(IN THOUSANDS)
IMPACT OF YEAR 2000
In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company completed its remediation and
testing of systems. As a result of those planning and implementation efforts,
the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company
expensed approximately $60 during 1999 in connection with remediating its
systems. The Company is not aware of any material problems resulting from Year
2000 issues, either with its products, its internal systems, or the products and
services of third parties. The Company will continue to monitor its mission
critical computer applications and those of its suppliers and vendors throughout
the year 2000 to ensure that any latent Year 2000 matters that may arise are
addressed promptly.
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 effecting 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, 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.
10
<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, 2000.
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 22, 2000 /s/ Norman A. Halper
--------------------------------
Norman A. Halper
President
Date: May 22, 2000 /s/ Harry Bergman
--------------------------------
Harry Bergman
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
At March 31, 2000 and for the nine months ended March 31, 2000
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 1,361,584
<SECURITIES> 0
<RECEIVABLES> 6,772,270
<ALLOWANCES> 85,007
<INVENTORY> 10,275,625
<CURRENT-ASSETS> 21,416,892
<PP&E> 86,639,966
<DEPRECIATION> 34,658,850
<TOTAL-ASSETS> 104,181,661
<CURRENT-LIABILITIES> 17,845,251
<BONDS> 29,253,540
0
0
<COMMON> 1,175,261
<OTHER-SE> 53,439,853
<TOTAL-LIABILITY-AND-EQUITY> 104,181,661
<SALES> 28,245,953
<TOTAL-REVENUES> 46,820,306
<CGS> 26,221,666
<TOTAL-COSTS> 17,547,602
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,207,437
<INCOME-PRETAX> 843,601
<INCOME-TAX> 292,000
<INCOME-CONTINUING> (258,548)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (258,548)
<EPS-BASIC> .39
<EPS-DILUTED> .39
</TABLE>
