SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ending March 31, 2000
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or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
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Commission File Number: 1-10104
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United Capital Corp.
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(Exact name of Company as specified in its charter)
Delaware 04-2294493
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9 Park Place, Great Neck, New York 11021
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(Address of principal executive offices) (Zip Code)
516-466-6464
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(Company's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the Company (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.10 par value 4,730,915 shares outstanding
as of May 10, 2000.
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UNITED CAPITAL CORP. AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION
PAGE
----
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as
of March 31, 2000 and December 31, 1999 3
Consolidated Statements of Income for
the Three Months Ended March 31, 2000 and 1999 4
Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 2000 and 1999 5 - 6
Notes to Consolidated Financial Statements 7 - 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10 - 15
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 15
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UNITED CAPITAL CORP. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
AS OF MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999
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(In Thousands)
--------------
2000 1999
------ -------
Assets
Current assets:
Cash and cash equivalents $ 10,977 $ 13,575
Marketable securities 29,418 27,296
Notes and accounts receivable, net 10,548 5,626
Inventories 4,001 4,207
Prepaid expenses and other current assets 456 254
Deferred income taxes 72 0
-------- --------
Total current assets 55,472 50,958
-------- --------
Property, plant and equipment, net 4,911 5,077
Real property held for rental, net 64,195 66,939
Noncurrent notes receivable 262 270
Other assets 11,075 10,488
-------- --------
Total assets $135,915 $133,732
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 5,888 $ 5,990
Borrowings under credit facilities 700 700
Accounts payable and accrued liabilities 9,031 9,835
Income taxes payable 7,160 5,000
Deferred income taxes 0 1,019
-------- --------
Total current liabilities 22,779 22,544
-------- --------
Borrowings under credit facilities 1,050 1,225
Long-term debt 25,912 27,316
Other long-term liabilities 24,609 22,917
Deferred income taxes 768 674
-------- --------
Total liabilities 75,118 74,676
-------- --------
Commitments and contingencies
Stockholders' equity:
Common stock 474 474
Retained earnings 58,352 54,671
Accumulated other comprehensive income, net of tax 1,971 3,911
-------- --------
Total stockholders' equity 60,797 59,056
-------- --------
Total liabilities and stockholders' equity $135,915 $133,732
======== ========
The accompanying Notes to Consolidated Financial Statements
are an integral part of these balance sheets.
Page 3 of 15
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UNITED CAPITAL CORP. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
--------------------------------------------------
(UNAUDITED)
-----------
(In Thousands, Except Per Share Data)
-------------------------------------
2000 1999
-------- --------
Revenues:
Net sales $ 8,197 $ 7,653
Rental revenues from real estate operations 6,901 6,522
-------- --------
Total revenues 15,098 14,175
-------- --------
Costs and expenses:
Cost of sales 6,007 5,660
Real estate operations:
Mortgage interest expense 595 603
Depreciation expense 1,298 1,367
Other operating expenses 1,720 2,008
General and administrative expenses 1,356 1,538
Selling expenses 973 991
-------- --------
Total costs and expenses 11,949 12,167
-------- --------
Operating income 3,149 2,008
-------- --------
Other income (expense):
Interest income 584 310
Interest expense (179) (163)
Other income and expense, net 2,682 4,001
-------- --------
Total other income 3,087 4,148
-------- --------
Income before income taxes 6,236 6,156
Provision for income taxes 2,555 2,570
-------- --------
Net income $ 3,681 $ 3,586
======== ========
Earnings per share:
Basic $ .78 $ .70
======== ========
Diluted $ .77 $ .70
======== ========
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
Page 4 of 15
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UNITED CAPITAL CORP. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
--------------------------------------------------
(UNAUDITED)
-----------
(In Thousands)
--------------
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,681 $ 3,586
-------- --------
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 1,602 1,664
Gain on sale of real estate assets (2,666) (3,122)
Gain on sale of available-for-sale securities (24) 0
Gain from equity investments (248) (1,052)
Changes in assets and liabilities (A) (2,311) 3,341
-------- --------
Total adjustments (3,647) 831
-------- --------
Net cash provided by operating activities 34 4,417
-------- --------
Cash flows from investing activities:
Acquisition of real estate assets (252) (154)
Proceeds from sale of real estate assets 4,365 4,553
Purchase of available-for-sale securities (5,204) 0
Proceeds from sale of available-for-sale securities 74 0
Acquisition of property, plant and equipment (119) (479)
Investments in and advances to affiliates 185 185
Proceeds from sale of equity investments 0 1,300
-------- --------
Net cash (used in) provided by investing activities (951) 5,405
-------- --------
Cash flows from financing activities:
Principal payments on mortgage commitments, notes
and loans (1,506) (1,657)
Proceeds from mortgage commitments, notes and loans 0 3,100
Net repayments under credit facilities (175) (350)
Purchase and retirement of common shares 0 (2,298)
-------- --------
Net cash used in financing activities (1,681) (1,205)
-------- --------
Net (decrease) increase in cash and cash equivalents (2,598) 8,617
Cash and cash equivalents, beginning of period 13,575 8,154
-------- --------
Cash and cash equivalents, end of period $ 10,977 $ 16,771
======== ========
</TABLE>
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UNITED CAPITAL CORP. AND SUBSIDIARIES
-------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (CONTINUED)
--------------------------------------------------------------
(UNAUDITED)
-----------
(A)Changes in assets and liabilities for the three months ended
March 31, 2000 and 1999 are as follows:
2000 1999
------- -------
Notes and accounts receivable, net ($4,922) $ 564
Inventories 206 (151)
Prepaid expenses and other current assets (202) (106)
Deferred income taxes 95 170
Noncurrent notes receivable 8 4
Other assets (544) 2,333
Accounts payable and accrued liabilities (804) (122)
Income taxes payable 2,160 649
Other long-term liabilities 1,692 0
------- -------
Total ($2,311) $ 3,341
======= =======
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
Page 6 of 15
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UNITED CAPITAL CORP. AND SUBSIDIARIES
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(In Thousands, Except Share And Per Share Data)
-----------------------------------------------
(UNAUDITED)
-----------
BASIS OF PRESENTATION
- ---------------------
The accompanying unaudited Consolidated Financial Statements
have been prepared in accordance with the instructions to Form 10-Q used for
quarterly reports under Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, and therefore, do not include all information and footnotes
necessary for a fair presentation of financial position, results of operations
and cash flows in conformity with generally accepted accounting principles.
The consolidated financial information included in this report
has been prepared in conformity with the accounting principles and methods of
applying those accounting principles, reflected in the Consolidated Financial
Statements included in the Annual Report on Form 10-K filed with the Securities
and Exchange Commission for the year ended December 31, 1999.
All adjustments necessary for a fair statement of the results
for the interim periods presented have been recorded.
The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full year.
MARKETABLE SECURITIES
- ---------------------
The aggregate market value of marketable securities, which are
all classified as available-for-sale, was $29,418 and $27,296 at March 31, 2000
and December 31, 1999, respectively, while accumulated unrealized holding gains
were $1,971 and $3,911 on a net of tax basis, respectively. Marketable
securities consist of the following:
March 31, 2000 December 31, 1999
-------------- -----------------
Available-For-Sale Securities:
Corporate equities $23,845 $21,685
Corporate debts 5,573 5,611
------- -------
$29,418 $27,296
======= =======
Corporate debt securities have contractual maturities ranging
from approximately one to eight years, with the majority of the maturities being
five years or less.
INVENTORIES
- -----------
The components of inventory are as follows:
March 31, 2000 December 31, 1999
-------------- -----------------
Raw materials $2,234 $2,369
Work in process 495 334
Finished goods 1,272 1,504
------ ------
$4,001 $4,207
====== ======
Page 7 of 15
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CONTINGENCIES
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The Company has undertaken the completion of environmental
studies and/or remedial action at Metex' two New Jersey facilities. The Company
has recorded a liability in the Consolidated Financial Statements for the
estimated potential remediation costs at these facilities.
The process of remediation has begun at one facility pursuant
to a plan filed with the New Jersey Department of Environmental Protection
("NJDEP"). Environmental experts engaged by the Company estimate that under the
most probable remediation scenario the remediation of this site is anticipated
to require initial expenditures of $860 including the cost of capital equipment,
and $86 in annual operating and maintenance costs over a 15 year period.
Environmental studies at the second facility indicate that
remediation may be necessary. Based upon the facts presently available,
environmental experts have advised the Company that under the most probable
remediation scenario, the estimated cost to remediate this site is anticipated
to require $2,300 in initial costs, including capital equipment expenditures,
and $258 in annual operating and maintenance costs over a 10 year period. These
estimated costs of future expenses for environmental remediation obligations are
not discounted to their present value. The Company may revise such estimates in
the future due to the uncertainty regarding the nature, timing and extent of any
remediation efforts that may be required at this site, should an appropriate
regulatory agency deem such efforts to be necessary.
The foregoing estimates may also be revised by the Company as
new or additional information in these matters becomes available or should the
NJDEP or other regulatory agencies require additional or alternative remediation
efforts in the future. It is not currently possible to estimate the range or
amount of any such liability.
Although the Company believed that it was entitled to full
defense and indemnification with respect to environmental investigation and
remediation costs under its insurance policies, the Company's insurers denied
such coverage. Accordingly, the Company filed an action against certain
insurance carriers seeking defense and indemnification with respect to all prior
and future costs incurred in the investigation and remediation of these sites.
Settlements have been reached with all carriers in this matter.
In the opinion of management, amounts recovered from its
insurance carriers should be sufficient to address these matters and amounts
needed in excess, if any, will be paid gradually over a period of years.
Accordingly, they should not have a material adverse effect upon the business,
liquidity or financial position of the Company. However, adverse decisions or
events, particularly as to the merits of the Company's factual and legal basis
could cause the Company to change its estimate of liability with respect to such
matters in the future.
The Company is involved in various other litigation and legal
matters which are being defended and handled in the ordinary course of business.
None of these matters are expected to result in a judgment having a material
adverse effect on the Company's consolidated financial position or results of
operations.
Page 8 of 15
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EARNINGS PER SHARE
- ------------------
The following table sets forth the computation of basic and diluted
earnings per share:
Three Months Ended March 31,
----------------------------
2000 1999
------ -------
Numerator:
Net income $3,681 $3,586
------ ------
Denominator:
Denominator for basic earnings per
share--weighted-average shares 4,736 5,096
Effect of dilutive securities:
Employee stock options 38 44
------ ------
Denominator for diluted earnings per
share--adjusted weighted-average shares
and assumed conversions 4,774 5,140
------ ------
Basic earnings per share $ .78 $ .70
====== ======
Diluted earnings per share $ .77 $ .70
====== ======
COMPREHENSIVE INCOME
- --------------------
The Company's comprehensive income consists of net income and
decreases in net unrealized gains from investments in available-for-sale
securities. The components of comprehensive income are as follows:
Three Months Ended March 31,
----------------------------
2000 1999
------- -------
Net income $ 3,681 $ 3,586
Other comprehensive income, net of tax:
Change in net unrealized gain on
available-for-sale securities, net of tax
benefits of $1,091 and $411, respectively (1,940) (797)
------- -------
Comprehensive income $ 1,741 $ 2,789
======= =======
BUSINESS SEGMENTS
- -----------------
The Company operates through two business segments: real
estate investment and management and engineered products. The real estate
investment and management segment is engaged in the business of investing in and
managing real estate properties and the making of high-yield, short-term loans
secured by desirable properties. Engineered products are manufactured through
wholly-owned subsidiaries of the Company and primarily consist of knitted wire
products and components and transformer products.
Page 9 of 15
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Operating results of the Company's business segments are as
follows:
Three Months Ended March 31,
----------------------------
2000 1999
---------- ----------
Net revenues and sales:
Real estate investment and management $ 6,901 $ 6,522
Engineered products 8,197 7,653
-------- --------
$ 15,098 $ 14,175
======== ========
Operating income:
Real estate investment and management $ 3,288 $ 2,544
Engineered products 443 287
-------- --------
3,731 2,831
General corporate expenses (582) (823)
Other income, net 3,087 4,148
-------- --------
Income before income taxes $ 6,236 $ 6,156
======== ========
USE OF ESTIMATES
- ----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
- -----------------
Certain amounts have been reclassified in the prior year
Consolidated Financial Statements to present them on a basis consistent with the
current year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
- ------------------------------------------
Revenues for the three month period ended March 31, 2000 were
$15.1 million, an increase of $923,000 or 6.5% from comparable 1999 revenues.
Operating income during this period was $3.1 million versus $2.0 for the
comparable period in 1999, a 56.8% increase. Net income for the first quarter
was $3.7 million or $.78 per basic share compared to net income of $3.6 million
or $.70 per basic share for the same period in 1999. This represents an 11.4%
increase in earnings per basic share.
Page 10 of 15
<PAGE>
REAL ESTATE OPERATIONS
- ----------------------
Rental revenues from real estate operations increased by
$379,000 or 5.8% for the three months ended March 31, 2000 compared to the same
period in 1999. This increase is primarily attributable to increased percentage
rent revenues, additional rents associated with new leases and the renewal of
existing leases at higher rents.
Mortgage interest expense decreased 1.3% for the three months
ended March 31, 2000, compared to the corresponding 1999 period, due to
continuing mortgage amortization which approximated $4.2 million during the last
12 months.
Depreciation expense associated with rental properties
decreased $69,000 for the three months ended March 31, 2000 compared to the same
period in 1999. This decrease is primarily due to reduced depreciation expense
associated with properties sold in 2000 and 1999.
Operating expenses associated with the management of real
properties decreased $288,000 for the three months ended March 31, 2000 compared
to the corresponding period in 1999, principally due to increased expenses in
1999 associated with the maintenance of properties acquired in 1998.
ENGINEERED PRODUCTS
- -------------------
The Company's engineered products segment includes Metex Mfg.
Corporation ("Metex") and AFP Transformers, LLC ("AFP Transformers"). The
operating results of the engineered products segment are as follows:
(In Thousands) Three Months Ended March 31,
- -------------- ----------------------------
2000 1999
------- ------
Net Sales $ 8,197 $7,653
======= ======
Cost of Sales $ 6,007 $5,660
======= ======
Selling, General and Administrative Expenses $ 1,747 $1,706
======= ======
Income from Operations $ 443 $ 287
======= ======
Net sales of the engineered products segment increased
$544,000 or 7.1% for the three month period ended March 31, 2000 compared to the
same period in 1999. This increase is primarily the result of higher sales in
the engineered products, European and domestic automotive markets at Metex'
Technical Products Division and higher sales generated by AFP Transformers.
Cost of sales as a percentage of sales was virtually unchanged
for the three months ended March 31, 2000 compared to the corresponding period
in 1999.
Selling, general and administrative expenses of the engineered
products segment increased $41,000 or 2.4% during the three months ended March
31, 2000 versus the comparable 1999 period. This increase is primarily due to
additional selling costs associated with the higher sales volume noted above.
Page 11 of 15
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES
- -----------------------------------
General and administrative expenses not associated with the
manufacturing operations decreased by $241,000 for the three month period ended
March 31, 2000, versus the same period in 1999, principally due to a reduction
in professional fees.
OTHER INCOME AND EXPENSE, NET
- -----------------------------
The components of other income and expense, net in the
accompanying Consolidated Statements of Income are as follows:
<TABLE>
<CAPTION>
(In Thousands) Three Months Ended March 31,
-------------- ----------------------------
2000 1999
---------- --------
<S> <C> <C>
Gain on sale of real estate assets $2,666 $3,122
Gain from equity investments 0 838
Gain on sale of available-for-sale securities 24 0
Other (8) 41
---------- --------
$2,682 $4,001
========== ========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At March 31, 2000, the Company's cash and marketable
securities were $40.4 million and working capital was approximately $32.7
million. Management continues to believe the real estate market is overvalued
and accordingly recent acquisitions have been limited to those select properties
that meet the Company's stringent financial requirements. Management believes
the available working capital along with the $60.0 million of availability on
the revolving credit facility discussed below, puts it in an opportune position
to fund acquisitions and grow the portfolio as attractive long-term
opportunities become available. The current liabilities of the Company have
historically exceeded its current assets principally due to the financing of the
purchase of long-term assets utilizing short-term borrowings and from the
classification of current mortgage obligations without the corresponding current
asset for such properties. Future financial statements may reflect current
liabilities in excess of current assets. Management is confident that through
cash flow generated from operations, together with borrowings available under
the revolving credit facility and the sale of select assets, all obligations
will be satisfied as they come due.
The Company's portfolio of available-for-sale securities had a
fair market value of approximately $29.4 million at March 31, 2000, reflecting
pretax unrealized holding gains of approximately $3.0 million. Included in
marketable securities at March 31, 2000 was $9.1 million of common stock in a
publicly traded company which represents approximately 2.6% of such company's
outstanding shares. The Company's Chairman of the Board, Chief Executive Officer
and President is Chairman, President and a director of this company and another
Director of the Company is a director of this company. Subsequent to March 31,
2000, the Company purchased an additional 1,245,000 shares of this company's
common stock.
Pagd 12 of 15
<PAGE>
Effective December 31, 1999, the Company entered into a credit
agreement with three banks which provides for both a $60.0 million revolving
credit facility ("Revolver") and a $1.9 million term loan ("Term Loan"). Each of
the three banks participates in the Revolver while only one of the banks
participates in the Term Loan.
Under the Revolver, the Company will be provided with
eligibility based upon the sum of (i) 60.0% of the aggregate annualized and
normalized year-to-date net operating income of unencumbered eligible
properties, as defined, capitalized at 10.5%, (ii) the lesser of $6.0 million or
60.0% of the aggregate annualized and normalized year-to-date net operating
income of unencumbered eligible hotel properties, as defined, capitalized at
10.5% (iii) the lesser of $10.0 million or 50.0% of the aggregate annualized and
normalized year-to-date net operating income of encumbered eligible properties,
as defined, capitalized at 12.0% and (iv) the lesser of $10.0 million or the sum
of 75.0% of eligible accounts receivable and 50.0% of eligible inventory, as
defined. At March 31, 2000, eligibility under the Revolver was $60.0 million,
based upon the above terms. The credit agreement contains certain financial and
restrictive covenants, including minimum consolidated equity, interest coverage,
debt service coverage and capital expenditures (other than for real estate). The
Company was in compliance with all covenants at March 31, 2000. The credit
agreement also contains provisions, which allow the banks to perfect a security
interest in certain operating and real estate assets in the event of default, as
defined in the credit agreement. Borrowings under the Revolver, at the Company's
option, bear interest at the bank's prime lending rate or at the London
Interbank Offered Rate ("LIBOR") plus 2.0%. The Revolver expires on December 31,
2002. At March 31, 2000, there were no amounts outstanding under the Revolver.
The Term Loan bears interest at 90 day LIBOR plus 1.4% and is
payable in quarterly principal installments of $175,000, with the final payment
due on September 30, 2002. At March 31, 2000, there was approximately $1.8
million outstanding on the Term Loan.
The Company has an interest-rate swap agreement (the "Swap")
to effectively convert its floating rate Term Loan to a fixed rate basis, thus
reducing the impact of interest rate changes on future expense. Under the Swap,
the Company agreed to exchange with the counterparty (a commercial bank) the
difference between the fixed and floating rate interest amounts. The
differential to be paid or received on the Swap is recognized over the term of
the agreement as an adjustment to interest expense. The fair value of the Swap
is not recognized in the financial statements.
The Company has undertaken the completion of environmental
studies and/or remedial action at Metex' two New Jersey facilities and had filed
an action against certain insurance carriers seeking recovery of costs incurred
and to be incurred in these matters. Settlements have been reached with all
carriers in this matter. See Notes to Consolidated Financial Statements for
further discussion on this matter.
In October 1999, the Company purchased and retired
approximately 278,000 shares in connection with its "Dutch Auction" self-tender
offer. As a result of this repurchase the Company's additional paid-in capital
was reduced to zero and the Company's retained earnings was reduced by
approximately $4.1 million. Future repurchases of the Company's common stock
will also reduce retained earnings by amounts in excess of the par value.
The cash needs of the Company have been satisfied from funds
generated by current operations and additional borrowings. It is expected that
future operational cash needs and the cash required to repurchase the Company's
common stock will also be satisfied from existing cash balances, ongoing
operations and borrowings under the Revolver. The primary source of capital to
fund additional real estate acquisitions and to make additional high-yield
Page 13 of 15
<PAGE>
mortgage loans will come from existing funds, borrowings under the Revolver, the
sale, financing and refinancing of the Company's properties and from third party
mortgages and purchase money notes obtained in connection with specific
acquisitions.
In addition to the acquisition of properties for consideration
consisting of cash and mortgage financing proceeds, the Company may acquire real
properties in exchange for the issuance of the Company's equity securities. The
Company may also finance acquisitions of other companies in the future with
borrowings from institutional lenders and/or the public or private offerings of
debt or equity securities.
Repurchases of the Company's common stock will be made from
time to time in the open market at prevailing market prices and may be made in
privately negotiated transactions, subject to available resources. Funds of the
Company in excess of that needed for working capital, purchasing real estate and
arranging financing for real estate acquisitions are invested by the Company in
corporate equity securities, corporate notes, certificates of deposit,
government securities and other financial instruments.
BUSINESS TRENDS
- ---------------
Total revenues of the Company were $15.1 million for the first
quarter of 2000, an increase of $923,000 or 6.5% from the comparable 1999 period
principally due to an increase in rental revenues of $379,000 from real estate
operations and a $544,000 increase in net sales from the engineered products
segment. Net income during this period was $3.7 million or $.78 per basic share
as compared to net income of $3.6 million or $.70 per basic share for the same
period in 1999.
The results of the Company's real estate operations reflect a
5.8% increase in revenues for the first three months of 2000, primarily due to
revenues generated from increased percentage rent revenues, additional rents
associated with new leases and the renewal of existing leases at higher rents.
Operating income from this segment increased $744,000 over the prior year period
principally due to the increase in rental revenues discussed above and a
reduction in real estate operating expenses. Lower depreciation expense
associated with properties sold in 1999 also contributed favorably to this
segment's operating results.
Operating profit from the engineered products segment
increased $156,000 or 54.4% compared to the corresponding 1999 period primarily
due to a 7.1% increase in net sales. This increase is the result of increased
sales in the domestic and European automotive markets at Metex' Technical
Products Division as well as higher sales generated by AFP Transformers.
Management remains committed to growing these businesses and has continued to
aggressively pursue new sales opportunities, including new geographical markets
for its existing products and new applications for its core technologies.
FORWARD-LOOKING STATEMENTS
- --------------------------
This Form 10-Q contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created thereby. All forward-looking
statements involve risks and uncertainties, including without limitation,
general economic conditions, interest rates, competition, potential technology
changes and potential changes in customer spending and purchasing policies and
procedures. Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
Page 14 of 15
<PAGE>
the forward-looking statements included in this Form 10-Q will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K. None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
UNITED CAPITAL CORP.
Dated: May 10, 2000 By: /s/Anthony J. Miceli
------------------------------
Anthony J. Miceli
Vice President, Chief Financial Officer
and Secretary of the Company
Page 15 of 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNITED
CAPITAL CORP.'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES, THERETO.
</LEGEND>
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