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Previous: TELEBYTE TECHNOLOGY INC, 10QSB, 1999-05-14 |
Next: FREEPORT MCMORAN OIL & GAS ROYALTY TRUST, 10-Q, 1999-05-14 |
<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
Commission file number 0-11777
---------------------------------------------------------
FIRST EQUITY PROPERTIES, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in the charter)
Nevada 95-6799846
- --------------------------------------------- ----------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
10670 N. Central Expressway, Suite 410, Dallas, Texas 75231
---------------------------------------------------------
(Address of principal executive offices)
214-750-5800
---------------------------------------------------------
(Registrant's telephone number, including area code)
---------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes . No
------ ------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS.
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X . No
------- -------
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of March 31, 1999, registrant had 10,570,944 shares of Common Stock
issued and outstanding.
<PAGE> 2
FIRST EQUITY PROPERTIES, INC. & SUBSIDIARIES
FORM 10-Q
March 31, 1999
INDEX
<TABLE>
<CAPTION>
Part I Financial Information: Page No.
Item 1. Financial Statements.
<S> <C>
Consolidated Balance Sheets
March 31, 1999 (Unaudited) and December 31, 1998.................................................3
Consolidated Statement of Earnings (Unaudited)
Three Months Ended March 31, 1999 and 1998.......................................................4
Consolidated Statement of Cash Flows (Unaudited)
Three Months Ended March 31, 1999 and 1998.......................................................5
Notes to Consolidated Financial Statements.........................................................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................................................8
Part II Other Information:
Item 6. Exhibits and Reports on Form 8-K..........................................................8
</TABLE>
2
<PAGE> 3
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, 1999 December 31,
(Unaudited) 1998
------------- ------------
<S> <C> <C>
Property and equipment, less accumulated
depreciation of $120,074 and
$105,074, respectively $ 220,452 $ 204,013
Cash and cash equivalents 181,932 325,699
Accounts receivable - trade 1,215,225 1,240,736
Accounts receivable - affiliates 6,802,504 3,020,755
Investments 40,573,000 40,573,000
Notes receivable 3,357,407 3,348,468
Other assets 2,969,036 2,986,120
------------- ------------
$ 55,319,556 $ 51,698,791
============= ============
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Notes payable $ 2,750,597 $ 2,776,336
Notes payable - affiliate 2,799,060 2,747,347
Accounts payable - trade 428,321 302,853
Accounts payable - affiliate 840,051 240,762
Accrued liabilities 517,487 806,683
Income taxes payable 1,178,500 238,500
------------- ------------
Total liabilities 8,514,016 7,112,481
Minority interest in limited partnership 9,324,108 8,916,712
Shareholders' Equity
Common stock, $0.01 par, 40,000,000 shares
authorized, 10,570,944 shares issued and outstanding 105,710 105,710
Capital in excess of par value 1,281,548 1,281,548
Retained earnings 36,094,174 34,282,340
------------- ------------
Total shareholders' equity 37,481,432 35,669,598
------------- ------------
$ 55,319,556 $ 51,698,791
============= ============
</TABLE>
3
<PAGE> 4
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Revenue
Commission income $ 2,218,837 $ 3,209,277
Management fee income 1,772,888 1,535,033
Consulting fee income 1,067,062 1,825,831
Other 402,862 421,015
Motel -- 425,109
------------ ------------
5,461,649 7,416,265
Operating expenses
Salaries and wages 1,341,741 1,388,568
Minority interest in limited partnership 407,393 572,149
General and administrative 386,859 216,360
Insurance and taxes 160,560 204,677
Other operating expenses 153,074 332,211
Legal and professional fees 89,185 76,347
Depreciation and amortization 33,969 84,749
Telephone and utilities 15,622 54,773
Repairs and maintenance 3,025 37,164
Advertising and promotion 1,414 41,864
Franchise fees -- 30,142
------------ ------------
Total operating expenses 2,592,842 3,039,004
------------ ------------
Earnings from operations 2,868,807 4,377,261
Other expenses
Interest expense (116,973) (101,162)
------------ ------------
Earnings before income taxes 2,751,834 4,276,099
Income tax benefit (expense)
Deferred -- (1,325,000)
Current (940,000) (254,870)
------------ ------------
(940,000) (1,579,870)
------------ ------------
NET EARNINGS $ 1,811,834 $ 2,696,229
============ ============
Earnings per share $ .17 $ .26
============ ============
Weighted average shares outstanding 10,570,944 10,570,944
============ ============
</TABLE>
4
<PAGE> 5
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 1,811,834 $ 2,696,229
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Deferred tax (benefit) expense -- 1,325,000
Depreciation and amortization 33,969 84,749
Minority interest in limited partnership 407,393 572,149
(Increase) decrease in
Accounts receivable - trade 25,511 99,185
Accounts receivable - affiliate (3,781,749) (5,480,487)
Notes receivable (8,939) --
Other assets (1,882) (7,420)
Increase (decrease) In
Accounts payable 125,468 53,375
Accrued expenses (289,196) (17,206)
Accounts payable - affiliate 599,289 453,093
Income taxes payable 940,000 254,870
----------- -----------
Net cash provided by (used for) operating activities (138,302) 33,537
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (31,439) (25,717)
Other -- 2,999
----------- -----------
Net cash used for investing activities (31,439) (22,718)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - related parties 51,713 41,854
Payments on long term debt (25,739) (28,070)
----------- -----------
Net cash provided by financing activities 25,974 13,784
----------- -----------
Net increase (decrease) in cash and cash equivalents (143,767) 24,603
Cash and cash equivalents at beginning of period 325,699 144,906
----------- -----------
Cash and cash equivalents at end of period $ 181,932 $ 169,509
=========== ===========
</TABLE>
5
<PAGE> 6
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
For the three months ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Redemption of preferred stock in exchange for
reduction of receivable from affiliate $ -- $5,000,000
Payment of dividend in exchange for reduction
of receivable from affiliate -- 450,000
</TABLE>
6
<PAGE> 7
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. Operating results for the interim period
presented are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999. For further
information, refer to the Company's annual report on Form 10-K for the
year ended December 31, 1998.
7
<PAGE> 8
FIRST EQUITY PROPERTIES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Three months ended March 31, 1999 compared to three months ended March 31, 1998
Revenues decreased to $5,461,649 versus prior year of $7,416,265. The decrease
was due to lower commission income, lower consulting fee income and lower motel
revenue. Total operating expenses decreased to $2,592,842 in 1999 from
$3,039,004 in 1998. The decrease was due to lower salaries and wages, reduced
minority interest and lower operating expenses.
The decrease in income tax expense to $940,000 was due to lower operating
income.
Financial Condition and Liquidity
At March 31, 1999, the Company had total assets of $55,319,556 compared to
$51,698,791 at December 31, 1998. Cash and cash equivalents were $181,932.
Total liabilities were $8,514,016 versus $7,112,481 at December 31, 1998.
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<S> <C>
Exhibit Number Description of Exhibit
-------------- ----------------------
27 Financial Data Schedules, filed herewith
</TABLE>
(b) Reports on Form 8-K - None
8
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to he signed on its behalf by the
undersigned thereunto duly authorized.
FIRST EQUITY PROPERTIES, INC.
May 14, 1999 /s/ F. Terry Shumate, Director,
Vice President, Secretary and Treasurer
9
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<S> <C>
Exhibit Number Description of Exhibit
-------------- ----------------------
27 Financial Data Schedules, filed herewith
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 181,932
<SECURITIES> 0
<RECEIVABLES> 1,215,225
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 340,526
<DEPRECIATION> 120,074
<TOTAL-ASSETS> 55,319,556
<CURRENT-LIABILITIES> 0
<BONDS> 5,549,657
0
0
<COMMON> 105,710
<OTHER-SE> 37,375,722
<TOTAL-LIABILITY-AND-EQUITY> 55,319,556
<SALES> 5,461,649
<TOTAL-REVENUES> 5,461,649
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,592,842
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 116,973
<INCOME-PRETAX> 2,751,834
<INCOME-TAX> 940,000
<INCOME-CONTINUING> 1,811,834
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,811,834
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
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