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 December 31, 1999 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 February 18, 2000, there were 669,985 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>
December 31, June 30,
1999 1999
------------ ----------------
(UNAUDITED) (SEE NOTE BELOW)
<S> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents $ 1,564,816 $ 1,506,113
Accounts Receivable 6,957,229 4,467,651
Inventories (Note 2) 9,738,623 5,293,998
Other Current Assets 2,933,107 2,977,603
------------ ------------
Total Current Assets 21,193,775 14,245,365
------------ ------------
Property, Plant and Equipment 86,825,331 85,586,539
Less: Accumulated Depreciation 34,746,249 33,253,658
------------ ------------
Net Property, Plant and Equipment 52,079,082 52,332,881
------------ ------------
Other Assets 31,007,149 29,977,835
------------ ------------
TOTAL ASSETS $104,280,006 $ 96,556,081
============ ============
Liabilities and Stockholders' Equity
Current Liabilities - Note 6 $ 17,300,426 $ 9,355,949
------------ ------------
Long-Term Debt 29,554,515 29,818,421
------------ ------------
Other Liabilities 2,514,161 2,502,169
------------ ------------
Stockholders' Equity:
Common Stock 1,175,261 1,175,261
Other Stockholders' Equity 53,735,643 53,704,281
------------ ------------
Total Stockholders' Equity 54,910,904 54,879,542
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $104,280,006 $ 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 STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended Three months ended
December 31, December 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Sales-Textile and Seafood $ 17,992,492 $ 11,826,425 $ 10,863,931 $ 7,047,841
Real Estate and Hotel Operations 11,969,516 10,485,469 6,145,056 5,412,419
Other 493,211 851,751 124,041 421,187
------------ ------------ ------------ ------------
Total Revenues 30,455,219 23,163,645 17,133,028 12,881,447
------------ ------------ ------------ ------------
Expenses
Cost of Sales - textile and seafood 16,748,633 10,948,705 9,781,695 6,492,640
Operating-real estate and hotel 5,061,715 4,321,028 2,690,090 2,232,788
Selling, general & administrative 3,542,224 3,276,928 1,683,853 1,628,711
Depreciation and amortization 2,406,433 1,828,166 1,240,634 926,387
Real estate taxes 1,056,198 1,037,946 535,596 528,311
Interest 1,467,307 1,535,304 722,825 737,916
Minority interests' share of loss
of subsidiaries (534,933) (519,703) (168,308) (241,657)
------------ ------------ ------------ ------------
Total Expenses 29,747,577 22,428,374 16,486,385 12,305,096
------------ ------------ ------------ ------------
Income before income taxes and
equity in loss of affiliated entities 707,642 735,271 646,643 576,351
Equity in loss of affiliated entities (489,112) (520,693) (106,968) (263,162)
Income taxes - Note 3 (187,000) (197,000) (120,000) (94,000)
------------ ------------ ------------ ------------
Net Income $ 31,530 $ 17,578 $ 419,675 $ 219,189
============ ============ ============ ============
Income per share:
Net Income - basic and
diluted $ .05 $ .03 $ .63 $ .33
============ ============ ============ ============
Average shares outstanding
basic and diluted 669,990 670,215 669,988 670,210
</TABLE>
SEE NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENT
3
<PAGE>
THE FIRST REPUBLIC CORPORATION OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 31,530 $ 17,578
Adjustments to Reconcile Net Income to
Cash Used in Operating Activities:
Depreciation and Amortization 2,406,433 1,828,166
Minority Interests' Share of Loss in
Subsidiaries (534,933) (519,703)
Changes in Operating Assets and Liabilities:
Increase in Accounts and Other Receivables (2,489,578) (883,996)
Increase in Inventories (4,444,625) (454,893)
Increase in Other Assets (6,885) (1,253,708)
Increase (Decrease) in Accounts Payable 269,477 (1,887,496)
Increase (Decrease) in Other Liabilities 11,992 (206,598)
------------ ------------
CASH USED IN OPERATIONS (4,756,589) (3,310,650)
------------ ------------
INVESTING ACTIVITIES
Purchase of Property, Plant and Equipment (2,152,634) (8,636,862)
Investment in and Advances to Affiliated Entities-Net (443,000) (2,017,861)
Payments Received on Mortgages Receivable -- 1,597
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (2,595,634) (10,653,126)
------------ ------------
FINANCING ACTIVITIES
Proceeds from Mortgages and Notes Payable to Banks 670,000 10,735,000
Payments on Mortgages and Notes Payable to Ban (933,906) (4,034,821)
Other Financing Activities (Note 6) 7,674,832 (1,200)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,410,926 6,698,979
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 58,703 (7,264,797)
Cash and Cash Equivalents at Beginning of Period 1,506,113 8,590,167
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,564,816 $ 1,325,370
============ ============
</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, 1999 and the
consolidated statements of operations and cash flows for the six month periods
ended December 31, 1999 and 1998, 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, 1999 and for all periods
presented, have been made.
2. INVENTORIES
December 31, June 30,
1999 1999
---- ----
Work-in process and
raw materials $1,852,194 $1,913,784
Finished goods 7,886,429 3,380,214
---------- ----------
$9,738,623 $5,293,998
---------- ----------
3. INCOME TAXES
Six Months Ended
December 31,
1999 1998
---- ----
Federal $ 15,000 $ 25,000
State 172,000 172,000
-------- --------
$187,000 $197,000
-------- --------
4. EARNINGS PER SHARE
Statement No. 128 issued by the Financial Accounting Standards Board and adopted
by the Company in fiscal 1998, had no impact on the earnings per share
calculation of the Company due to the fact that 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
Six months ended
December 31,
1999 1998
---- ----
Revenues:
Real Estate $ 8,686,105 $ 8,060,998
Hotel 3,283,411 2,424,471
Seafood 13,045,413 5,459,290
Textile 4,947,079 6,367,135
Corporate and Other 493,211 851,751
----------- -----------
$30,455,219 $23,163,645
=========== ===========
December 31,
1999 1998
---- ----
Identifiable Assets:
Real Estate $ 41,494,784 $ 39,900,294
Hotel 6,216,783 6,005,099
Seafood 28,969,488 20,726,952
Textile 9,502,905 10,821,424
Corporate 18,096,046 19,102,312
------------ ------------
$104,280,006 $ 96,556,081
============ ============
Results of operations are shown in Managements Discussion and Analysis of
Financial Condition and Results of Operations.
6. RELATED PARTY TRANSACTION
The Company has borrowed $7,675,000 from related parties to finance Bluepoint's
expanded importation and sale of lobster tails. The loans bear interest at 8%
and have no fixed repayment terms or maturity dates.
6
<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, 1999 decreased by
approximately $996. Net cash used in operating activities was approximately
$4,757. Net cash provided by financing activities was approximately $7,411. Net
cash of approximately $2,596 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 in October 2000. At December 31,
1999 the term loan balance was $8,253 and $1,200 was outstanding under the
revolving line of credit. An additional $1,329 of the revolving line of credit
was utilized at December 31, 1999 for setting up commercial letters of credit
for the importation of various seafood products.
The Company has borrowed $7,675 from related parties to finance Bluepoint's
expanded importation and sale of lobster tails. 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 is 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 December 31, 1999, 73% was leased.
Interest on the construction loan will be 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
Six months ended December 31, 1999 and 1998
Income from operations before income taxes and minority interests decreased $11.
The components are as follows:
(Decrease)
1999 1998 Increase
---- ---- --------
Real Estate $ 3,086 $ 3,214 $ (128)
Hotel 413 211 202
Seafood (1,785) (1,720) (65)
Textiles (296) (176) (120)
Corporate (1,734) (1,834) 100
------- ------- -------
$ (316) $ (305) $ (11)
------- ------- -------
REAL ESTATE
Revenues increased $625 and earnings decreased $128. The earnings decrease
was due to a $180 insurance recovery last year at our Richmond Virginia Shopping
Center and increased repairs and maintenance this year at the East Newark,
Waltham and Nyanza building of $287. There were no significant variations in any
other expense category.
HOTEL
Revenues increased $859 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 $202 as a result of the higher revenues.
SEAFOOD
Revenues increased $7,586 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 $341. 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 $995 this year as compared to last years loss
of $878 due principally to a virus in Ecuador that has decimated that country's
shrimp production. Scallop operations in Florida lost $636 as compared to a loss
last year of $552 due to lack of availability of product.
TEXTILES
Hanora Spinning's earnings decreased $141 to $75 for the six months ended
December 31, 1999 due to lower revenues. Hanora South and J & M Dyers recognized
a combined loss of $271 compared to last years loss of $316. Whitlock Combing
incurred a loss of $100 in the current period as compared to a loss of $76 last
year relating to its property in South Carolina, which is being offered for
sale. Overall, textile revenues decreased $1,420.
CORPORATE/OTHER
Corporate expenses, including interest on the Company's term loan and
revolving line of credit, decreased by $100 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 December 31, 1999 and 1998
Income from operations before income taxes and minority interests increased
$300. The components are as follows:
(Decrease)
1999 1998 Increase
---- ---- --------
Real Estate $ 1,538 $ 1,561 $ (23)
Hotel 207 147 60
Seafood (347) (728) 381
Textiles (103) (86) (17)
Corporate (923) (822) (101)
------- ------- -------
$ 372 $ 72 $ 300
------- ------- -------
REAL ESTATE
Revenues increased $403 and earnings decreased $23. The earnings decrease
was due to repairs and maintenance at the East Newark, Waltham and Nyanza
building of $287. There were no significant variations in any expense category.
HOTEL
Revenues increased $330 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 $60 as a result of the higher revenues.
SEAFOOD
Revenues increased $4,375 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 was $341. 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 $362 this year as compared to last years loss
of $491 due principally to a virus in Ecuador that has decimated that country's
shrimp production. Scallop operations in Florida lost $141 as compared to a loss
last year of $101 due to lack of availability of product.
TEXTILES
Hanora Spinning's earnings decreased $69 to $56 for the quarter due to
lower revenues. Hanora South and J & M Dyers recognized a combined loss of $81
compared to last years loss of $164. Whitlock Combing incurred a loss of $78 in
the current period as compared to a loss of $47 last year relating to its
property in South Carolina which is being offered for sale. Overall, textile
revenues decreased $559.
CORPORATE/OTHER
Corporate expenses including interest on the Company's term loan and
revolving line of credit increased by $101.
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 $60,000 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, 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 December 31, 1999.
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: February 22, 2000 /s/ Norman A. Halper
----------------------------------------
Norman A. Halper
President
Date: February 22, 2000 /s/ Harry Bergman
----------------------------------------
Harry Bergman
Treasurer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,564,816
<SECURITIES> 0
<RECEIVABLES> 7,060,603
<ALLOWANCES> 103,374
<INVENTORY> 9,738,623
<CURRENT-ASSETS> 21,193,775
<PP&E> 86,825,331
<DEPRECIATION> 34,746,249
<TOTAL-ASSETS> 104,280,006
<CURRENT-LIABILITIES> 17,300,426
<BONDS> 29,554,515
0
0
<COMMON> 1,175,261
<OTHER-SE> 53,735,643
<TOTAL-LIABILITY-AND-EQUITY> 104,280,006
<SALES> 17,992,492
<TOTAL-REVENUES> 30,455,219
<CGS> 16,748,633
<TOTAL-COSTS> 11,531,637
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,467,307
<INCOME-PRETAX> 707,642
<INCOME-TAX> 187,000
<INCOME-CONTINUING> 31,530
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,530
<EPS-BASIC> .05
<EPS-DILUTED> .05
</TABLE>
