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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1995
Commission File No. 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, New York 10001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(212) 279-6100
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock Par Value $1 per share
(Title of Class)
Indicate by check mark whether Registrant (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 and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
As of September 15, 1995, 673,217 common shares were outstanding,
and the aggregate market value of common shares held by
nonaffiliates of Registrant was approximately $1,872,000 (based
upon the price paid by Registrant for shares).
Documents Incorporated by Reference
See Item 14(c)
The First Republic Corporation of America
10-K Contents
Page
PART I
Item 1. Business 1
Item 2. Properties 5
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters 11
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 8. Financial Statements and Supplementary Data 16
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 52
PART III
Item 10. Directors and Executive Officers of the Registrant 53
Item 11. Executive Compensation 55
Item 12. Security Ownership of Certain Beneficial Owners and
Management 57
Item 13. Certain Relationships and Related Transactions 59
PART IV
Item 14. Exhibits, Financial Statements, Schedules and
Reports on Form 8-K 62
Signatures 64
PART I
ITEM 1. BUSINESS
a. General Development of Business
The First Republic Corporation of America (the "Company") was
incorporated in the State of Delaware in February 1961, and is
presently engaged, either directly or through its
subsidiaries, in the real estate, hotel, seafood, textile, and
health care businesses. See Item 1(c) for a description of
the business engaged in by the Company and its subsidiaries.
During the 1995 fiscal year, the Company obtained a $3,500,000
mortgage loan on the Jefferson National Bank Building it owns
in Miami Beach, Florida, which loan bears interest at the rate
of 1% in excess of the lenders prime rate per annum, provides
for 78 payments of $29,167, plus interest, commencing January
1, 1995 and expiring June 1, 2001 when the remaining balance
of $1,225,000 will become due.
b. Financial Information about Industry Segments
The sales and operating profit (loss) from operations and the
identifiable assets attributable to each industry segment for
the three years ended June 30, 1995 are set forth in Note 2
(Industry Segments) of the Notes to Consolidated Financial
Statements, which are incorporated herein by reference to Item
8. hereof.
c. Narrative Description of Business
Real Estate
The Company owns various loft buildings, office buildings,
industrial buildings, shopping centers, residential and other
properties, situated along the East Coast of the United States
in Massachusetts, Rhode Island, New York, New Jersey,
Pennsylvania, Virginia, North Carolina and Florida. A general
description of these properties is provided in Item 2. below.
Real estate revenues accounted for 34%, 32% and 32% of
consolidated revenues from operations for the fiscal years
ended June 30, 1995, 1994 and 1993, respectively.
Hotel
The Company owns and operates a 288 room hotel and convention
center known as the Sheraton Inn-Syracuse, located in Liverpool,
New York. There are approximately 20 facilities in the
Liverpool/Syracuse area with which the hotel competes. Currently,
the Company believes it is the third largest hotel in terms of
revenues in the area.
Hotel revenues accounted for 11% of consolidated revenues from
operations for each of the fiscal years ended June 30, 1995, 1994
and 1993.
Seafood
The Company's 80.2% owned subsidiary, Bluepoints Company Inc.
("Bluepoints"), holds title to approximately 13,000 acres of land
under the water of the Great South Bay between Fire Island and Long
Island's South Shore in New York State. Bluepoints harvests hard-
shell clams on this property. Bluepoints competes with others on
the basis of quality of product and reliability of delivery.
Although once a substantial factor in the market, a significant
decrease in clam production at Bluepoints over the past several
years, combined with some substantial new production by competitors
harvesting clams in other areas along the Eastern Seaboard, has
resulted in a diminished role for Bluepoints in the hard-shell clam
market. The aggregate number of bushels of clams increased 1% as
compared with the fiscal year ended June 30, 1994. The aggregate
number of bushels of clams harvested during the fiscal year ended
June 30, 1994 decreased 6% compared with the prior fiscal year.
For the period July 1, 1995 through August 31, 1995, the aggregate
number of clams harvested decreased 42% compared with the same
period in the prior year. This was due to a temporary condition
commonly known as Brown Tide, which adversely affects the
harvesting of clams.
Bluepoints has expanded its hatchery facilities in an effort to
increase inventory. However, climate and other environmental
factors beyond the control of Bluepoints affect the propagation and
growth of clams. New York State environmental authorities are
continually monitoring the harvesting area for pollution. From time
to time, and at present, certain small areas of Bluepoints'
property exceed the maximum coliform count set by Federal law, and
shellfish located in such areas may not be harvested. At the
present time, State authorities have closed other portions of the
Great South Bay to clamming operations because the coliform count
exceeds Federal standards.
Bluepoints, through foreign subsidiaries, operates a shrimp farm
and is a 62.5% owner of a shrimp hatchery, which are both located
in Ecuador. Sales of shrimp from the foregoing operations
approximated $1,495,000 and $671,000 for the fiscal years ended
June 30, 1995 and 1994, respectively. In addition, Bluepoints also
owns a 38% interest in another Ecuadorian shrimp farming operation.
See Item 12 and 13 below for information relating to shares of
stock of Bluepoints and these foreign subsidiaries owned by certain
affiliates of the Company.
The Company also owns a 50% interest in Lambert Seafood Company, a
scallop operation in Cape Canaveral, Florida. In the current
fiscal year, there was an increased scallop harvest as compared to
last year; however, there can be no assurance that extensive beds
of scallops will be found in the future. Lambert's revenues for
scallop operations increased from $3,702,000 in the prior year to
$4,217,000 in the current fiscal year.
Seafood revenues accounted for 15%, 13% and 15% of consolidated
revenues from operations for the fiscal years ended June 30, 1995,
1994 and 1993, respectively.
Textile
Hanora Spinning, Inc. ("Hanora"), a wholly-owned subsidiary of the
Company, operates a yarn spinning plant in Woonsocket, Rhode
Island. Hanora, which is not a significant factor in the market it
serves, competes with a number of other yarn spinning plants on the
basis of quality of product and price. During the fiscal year
ended June 30, 1995, Hanora purchased approximately $387,000 of
additional equipment. The backlog of yarn sales on August 31, 1995
was approximately $7,400,000 as compared to $5,500,000 a year ago.
Approximately 80% of the current backlog is expected to be shipped
in the fiscal year ending June 30, 1996. One customer accounted
for approximately 16% of Hanora's total sales during the 1995
fiscal year. The loss of this customer would not have a material
adverse effect on the Company and its subsidiaries taken as a
whole.
Hanora South, Inc. ("Hanora South"), a wholly-owned subsidiary of
the Company, operates a yarn spinning plant in Lake City, South
Carolina which produces craft, sweater, hosiery, upholstery and
industrial yarns as a commission spinner for Hanora. J&M, Dyers,
Inc. ("J & M"), another wholly-owned subsidiary of the Company,
which operates a yarn dyeing plant in Sumter, South Carolina, is a
commission dyer for rawstock, package, ombre and skein dyeing.
Neither of these subsidiaries is a significant factor in the
markets they serve and each competes with a number of other firms
that are substantially larger; at the present time, neither has a
significant backlog of orders.
Whitlock Combing Co. Inc. ("Whitlock"), a wholly-owned subsidiary
owned a wool combing plant in Allendale, South Carolina. In June
1992, Whitlock sold substantially all of the assets of its wool
combing business and ceased all of its remaining operations.
Pursuant to a Consent Order entered into in 1985 with the South
Carolina Department of Health and Environmental Control ("DHEC"),
Whitlock recognized approximately $-0- and $119,000 of costs during
the fiscal years ended June 30, 1995 and 1994, respectively, to
clean up the property on which the wool combing plant was located
and to implement a groundwater monitoring program. It is estimated
that the anticipated remaining cost of completing all remedial
action will not be significant.
Textile revenues accounted for 38%, 37% and 39% of consolidated
revenues from operations for the fiscal years ended June 30, 1995,
1994 and 1993, respectively.
Health Care
The Company owns a 49.9% partnership interest in two nursing homes
located in Jersey City, New Jersey (the "Jersey City Facility") and
Rochelle Park, New Jersey (the "Rochelle Park Facility"). The
Jersey City and Rochelle Park Facilities (see Item 2-Health Care
Segment below) contain 180 beds and 240 beds, respectively, and
each facility provides skilled and intermediate nursing care to
both private and Medicaid residents. The Rochelle Park Facility
also includes a 121-unit senior citizen residence and an adult day
care center. Skilled and intermediate care facilities provide
nursing services through the use of professional and
nonprofessional employees. The nursing homes attempt to obtain
residents through referrals from acute care hospitals, physicians,
residential care facilities, church groups and other service
organizations in the communities in which the facilities are
located. There are competing facilities in these communities. In
competing for residents, the reputation of the Company's facilities
in the community and their physical appearance are important
factors, since members of the resident's family generally
participate to a greater extent in selecting skilled and
intermediate nursing facilities than in selecting an acute care
hospital. The Company's facilities also experience competition in
employing and retaining high quality professionals and
nonprofessional employees, including nurses, technicians, aides and
others. The Company also owns a 49.9% partnership interest in a
nursing home in Whiting, New Jersey. This facility is net leased
to the operator of the facility under a lease which expires on
December 31, 2011.
ITEM 2. PROPERTIES
Location General Character (1)
Real Estate Segment
Video Film Center 10-story office building;
315-329 W. 44th Street 165,000 rentable square feet;
New York, New York 90% rented.
Junior Coat Building 18-story office, showroom and
250 W. 39th Street manufacturing facility;
New York, New York 182,000 rentable square feet;
80% rented.
Jefferson National Bank Building 6-story office building;
4100 Pinetree Drive 39,300 rentable square feet;
Miami Beach, Florida 100% rented.
First Republic Office Park Two, two-story office
Thruway and Electronics Parkway buildings with 49,000 and
Liverpool, New York 35,000 rentable square feet;
14 acres of land; 80% rented.
Waltham Engineering Center 17 multi-story industrial
Waltham, Massachusetts buildings; in excess of
380,000 rentable square feet;
parking facilities; 93%
rented.
East Newark Industrial Center 30 multi-story industrial
East Newark, New Jersey buildings; in excess of
1,000,000 rentable square
feet; parking facilities; 85%
rented; second mortgage held
by Bluepoints in the amount of
$310,744 at September 1, 1995.
Nyanza Building Four-story and basement
Woonsocket, Rhode Island industrial building; 300,000
rentable square feet; used by
Company as spinning plant
(100,000 sq. ft.) and balance
rented to others; 58% rented.
Greensboro North Shopping Center Approximately 13.5 acres of
Greensboro, North Carolina land and 128,000 square feet
of space in buildings located
thereon; 70% rented.
Greensboro South Shopping Center Approximately 13 acres of land
Greensboro, North Carolina and 141,000 square feet of
space in buildings located
thereon; 95% rented.
Shopping Center Approximately 13.5 acres of
Richmond, Virginia land and 130,000 square feet
of space in buildings
located thereon; 100% rented.
London Bridge Shopping Center Approximately 10.2 acres of
Virginia Beach, Virginia land and 100,000 square feet
of space in buildings located
thereon; 98% rented.
Vacant land Approximately 21 acres;
Melbourne, Florida suitable for development as a
shopping center.
Sunscape Apartments 167-unit residential garden
Orlando, Florida apartments located on
approximately 12 acres of
land; 90% rented. (Company
owns 50% of Sunscape
Associates, a partnership
which owns the apartments).
Shopping Center Approximately 22.7 acres of
Brookhaven, Pennsylvania land and 196,000 square feet
of space in buildings located
thereon; 88% rented.
Newburyport, Massachusetts 4-story building; 168,000
rentable square feet of space;
presently vacant.
3-story building, 13,800
rentable square feet of space;
100% rented.
Two-story building and
warehouse; 5,000 square feet,
presently vacant.
Hotel Segment
Sheraton Inn-Syracuse 288-room motor hotel and
Thruway and Electronics Parkway convention center; indoor
Liverpool, New York pool; operated under Sheraton
franchise.
Seafood Segment (2)
West Sayville, New York Approximately 13,000 acres of
underwater land in the Great
South Bay of Long Island;
approximately 5 acres of
upland and 22,500 square feet
of space in two buildings
located thereon; used for
unloading product, storage,
inspection, shipping, shop
maintenance, hatchery and
administration.
Mattituck, New York Approximately 1 acre of land
in Long Island; used as a grow
out pond for the clam
hatchery.
Crisfield, Maryland Approximately .78 acres of
land and 33,625 square feet of
space in three buildings
located thereon; previously
used to receive, process,
store and ship soft-shell
crabs, presently vacant.
Englishman Island Approximately 600 acres of
Guayaquil County, Ecuador land including 288 acres owned
and the balance held under a
10-year concession, expiring
April 2004, containing shrimp
ponds and drainage canals.
Vacant Land Bluepoints has a 62.5%
Guayaquil, Ecuador interest in a company that
owns approximately 100,000
square feet of riverfront
land.
Ayangue Bluepoints has a 62.5%
Guayas Province, Ecuador interest in a company that
owns approximately 56 acres of
land used for a shrimp
hatchery.
Cape Canaveral, Florida Various leaseholds
(approximately 11 acres) used
by scallop operation for
offloading, processing,
packaging, warehouse and
office. (Company owns 50% of
Lambert International
Fisheries Inc. and Cape King
Associates which hold
leaseholds.)
Textile Segment
Allendale, South Carolina Approximately 195 acres of
land, on which a plant
containing one building with
approximately 156,000 square
feet and comprising
approximately 20 acres is
located, presently vacant.
Pageland, South Carolina Approximately 10 acres of land
and 36,125 square foot
building located thereon;
previously used as bulking and
twisting plant, warehouse and
office, presently being
rented.
Lake City, South Carolina Approximately 21.5 acres of
land and 95,000 square feet of
space in two buildings located
thereon; used for a yarn
spinning plant, warehouse and
administration.
Sumter, South Carolina Approximately 10.5 acres of
land and 61,000 square foot
building located thereon; used
as yarn dyeing plant,
warehouse and office.
Health Care Segment
Rochelle Park, New Jersey 240-bed nursing home; owned by
partnership in which the
Company has a 49.9%
partnership interest.
121-unit senior citizen
residence; owned by
partnership in which the
Company has a 49.9%
partnership interest.
Jersey City, New Jersey 180-bed nursing home; owned by
partnership in which the
Company has a 49.9%
partnership interest.
Whiting, New Jersey 180-bed nursing home; leased
to tenant by partnership in
which the Company has a 49.9%
partnership interest.
Corporate Office
302 Fifth Avenue 5,400 square feet of executive
New York, New York offices; month-to-month tenant
at a rent of $8,050 per month.
See Item 13 below.
(1)-Reference is made to Schedule III for information with respect
to mortgages encumbering certain properties listed in the table.
(2)-Except as otherwise noted, the properties listed in the Seafood
Segment are owned by Bluepoints Company, Inc., an 80.2% owned
subsidiary of the Company.
ITEM 3. LEGAL PROCEEDINGS
See Item 1(c) for information with respect to environmental matters
relating to the property owned by Whitlock Combing Co.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SECURITY HOLDER MATTERS
a. The Company's common stock is traded in the over-the-counter
market.
There have not been any quotations for the Company's common
stock in the National Daily Quotation Service for the past
several years. During the two most recent fiscal years, the
Company has purchased shares at prices ranging from a high of
$48.00 in July 1993 to a low of $30.00 in May 1995.
Due to the absence of quotations it may be deemed that there
is no established public trading market for the Company's
common stock.
b. As of September 15, 1995, there were 850 holders of record of
the Company's common stock.
c. No dividends have been paid during the two years ended June
30, 1995. The Company has no intention of paying dividends in
the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
Fiscal year ended June 30
1995 1994 1993 1992 1991
(In thousands except per share amounts)
Revenues $48,216 $48,119 $47,036 $49,152 $53,811
Income before interest
and income taxes $ 4,450 $ 3,308 $ 743 $ 3,062 $ 1,692
Interest costs $ 2,993 $ 2,166 $ 2,239 $ 2,636 $ 2,929
Income (loss) from
continuing operations
before extraordinary
income and cumulative
effect of accounting
change $ 1,010 $ 88 $(1,369) $ 84 $ (436)
Net income (loss) per share
of common stock from
continuing operations $ 1.50 $ .13 $ (2.00) $ .12 $ (.63)
Total assets $82,740 $80,164 $79,106 $79,705 $84,124
Long-term debt $25,540 $23,870 $22,234 $21,598 $16,049
Stockholders' equity $43,254 $42,264 $40,872 $42,732 $42,705
Cash dividends per
common share NONE NONE NONE NONE NONE
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Working capital at June 30, 1995 increased by approximately
$428,000 as compared to the prior year.
Net cash provided by operating activities was approximately
$3,453,000 during the 1995 fiscal year. Net cash provided by
financing activities was approximately $2,607,000. Net cash of
approximately $6,081,000 was used for investing activities. The
Company has a $3,000,000 revolving line of credit, renewable
annually, with its principal lender with interest at one
percent over the lender's prime rate. At June 30, 1995, $2,400,000
was outstanding under the line.
During the three years ended June 30, 1995, the Company incurred
capital expenditures of approximately $10,929,000. In addition,
approximately $4,285,000 was expended for tenants' improvements
during this three year period.
Results of Operations
Real Estate
In fiscal 1995 real estate operating profits increased $844,000 on
a revenue increase of $1,099,000 as compared to the prior year.
The increase in revenues was primarily attributable to increased
occupancy at substantially all of the Company's real estate
properties. The new mortgage on the Jefferson Bank Building in
Miami Beach, Florida and a full years' expense on the Greensboro
South Shopping Center mortgage obtained last year, increased
interest expense by $346,000. The Company's real estate operating
profits decreased $70,000 in fiscal 1994 as compared with the prior
year, while revenues increased $72,000 over the same period. The
decrease in operating profits was primarily attributable to $
100,000 of interest expense on the new mortgage obtained on the
Greensboro South Shopping Center.
Hotel
Operating profits for the Sheraton Inn-Syracuse for fiscal 1995
increased approximately $52,000 on an approximately $123,000
decrease in revenues from the prior year, due to lower operating
costs. Operating profits for fiscal 1994 decreased approximately
$244,000 on an approximately $15,000 decrease in revenues from the
prior year. This was due primarily to $160,000 of additional fees
paid to the management company that oversees the operations of the
hotel and other small increases in operating costs.
Seafood
Overall, revenues for the seafood division increased by 18% as
compared to the prior year. Losses from operations (including
equity share of losses in affiliated entities) in fiscal 1995 were
$1,756,000 as compared to a loss of $2,170,000 last year. The
increase in revenues was attributable to importation of shrimp from
Costa Rica. Ecuadorian operations sustained a loss of $1,684,000
as compared to last year's loss of $1,848,000. Losses continued
during fiscal 1995 due to limits on shrimp production caused by
poor water quality in the Company's shrimp ponds. The Company
believes that the steps it has now implemented have improved the
water quality and that shrimp production should increase in the
current fiscal year. The Company received a $450,000 distribution
from its scallop investment, but incurred a $54,000 loss from
operations. Bluepoints' Long Island operations had income of
$170,000. There was a loss of $188,000 from the discontinued soft
shell crab operation, whose assets have been put up for sale. The
fiscal 1994 revenues for the seafood division decreased by 15% as
compared to the prior year. Losses from operations in fiscal 1994
(including equity share of losses in affiliated entities) were
$2,170,000 as compared to a loss of $847,000 in fiscal 1993. The
reduction in revenues was attributable to declining shrimp sales
from Ecuador, which were partially offset by the importation of
shrimp from Costa Rica. Due to the lower revenues, Ecuadorian
operations sustained a loss of $1,848,000. Although the Company
received a $190,000 distribution from its scallop investment, it
incurred a $492,000 loss due substantially to write down of
leasehold carrying costs and depreciation expense on remaining
assets. Bluepoints' Long Island operations had income of $282,000,
significantly lower than the prior year due to reduced profits from
sale of shrimp imported from Ecuador and higher operating costs in
the clam operations. There was a loss of $112,000 from the
discontinued soft shell crab operation.
Textile
Revenues for the textile division increased by 2% over last year,
and earnings increased $984,000. Hanora Spinning's earnings
increased $120,000 to $1,258,000 due substantially to lower
operating costs. Hanora South and J & M incurred a combined profit
of $200,000 as compared to last year's loss of $490,000 due to
higher revenues and gross profits earned at J & M as a result of a
substantial contract received from a new customer that expired in
December 1994. Whitlock incurred expenses of $389,000 (including
depreciation of $91,000) relating to its property in South Carolina
which is being offered for sale. During the three years ended June
30, 1995, the Company purchased approximately $1,719,000 of
machinery and equipment for the textile operations. In fiscal
1994, revenues for the textile division were approximately the same
as fiscal 1993, but earnings increased $1,885,000. Hanora
Spinning's earnings increased $494,000 to $1,138,000 due
substantially to higher operating margins. Hanora South and J & M
incurred combined losses of $490,000 as compared to losses of
$758,000 in fiscal 1993. Whitlock incurred a loss of $563,000
which included costs to clean up the property on which its wool
combing plant was located, and has put up the property for sale.
Health Care
In fiscal 1995, the Company recognized income of $639,000 from its
investment in health care operations. In fiscal 1994, the Company
recognized income of $713,000 from this investment. In fiscal
1993, the Company recognized income of $755,000.
Corporate/Other
Corporate interest and expenses for the last three years was
$4,852,000, $4,826,000 and $4,925,000, respectively. Corporate and
other revenues for the last three years was $813,000, $3,213,000
and $951,000, respectively. Other revenues includes the operations
of Merrimac Corporation other than those related to the ownership
of real estate which are included in the real estate operations.
The increase in other revenues in fiscal 1994 was due to $1,322,000
of income resulting from the termination of a royalty agreement
with the purchaser of the Merrimac Silversmith assets, a $446,000
reduction in the Merrimac pension obligation pursuant to
curtailment of a pension plan, and $500,000 received from the
settlement of a lawsuit. Aside from the foregoing, all corporate
expenses, including interest on the Company's term loan and
revolving line of credit, have remained relatively constant for the
last three years.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Auditors
Board of Directors and Stockholders
The First Republic Corporation of America
We have audited the accompanying consolidated balance sheets of The
First Republic Corporation of America (the "Company") and
subsidiaries as of June 30, 1995 and 1994, and the related
consolidated statements of income, retained earnings, and cash
flows for each of three years in the period ended June 30, 1995.
Our audits also included the financial statement schedules listed
in the accompanying index to financial statements (Item 14.a.).
These financial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our
audits. We did not audit the financial statements of (a) Marchelot
S.A. and its subsidiaries and the hotel division, which statements
reflect total assets constituting 15% in 1995 and 14% in 1994, and
total revenues constituting 15% in 1995, 13% in 1994 and 12% in
1993, of the related consolidated totals, (b) the Mondragon
Companies, accounted for on the equity method, and (c) certain
health care entities (Bristol Manor Health Care Center, Inc., The
Whitehall Residence, Inc., Logan Manor Corp., Harbor View Health
Care Center, Inc.), accounted for on the equity method. Those
statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to the
amounts included for such entities, is based solely on the reports
of the other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and
the reports of the other auditors provide a reasonable basis for
our opinion.
In our opinion, based on our audits and the reports of the other
auditors, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of The First Republic Corporation of America and
subsidiaries at June 30, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended June 30, 1995, in conformity with
generally accepted accounting principles. Also, in our opinion, the
related financial statement schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
As discussed in Note 1 to the consolidated financial statements, in
1994, the Company changed its method of accounting for income taxes
in accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes".
ERNST & YOUNG LLP
New York, New York
September 29, 1995
BDO BDO Stern Cia. Ltda. Ax. Amazonas 540 y Carrion
Auditores Edificio Londres, 6to. piso
Telfs.: 544024-544263-552271
Telefax: 593-2 544263
P.O. Box 17-11-5058 CC1 Quito-
Ecuador
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Marchelot S. A. and Subsidiaries
New York, U.S.A.
We have audited the consolidated balance sheet of Marchelot S.A. (a
wholly-owned subsidiary of Bluepoints of Bermuda) and its subsid-
iaries Emporsa, Empacadora y Exportadora S.A., Larfico, Larvas del
Pacifico S.A. and Comercorp S.A. as of June 30, 1995 and 1994, and
the related consolidated statements of operations and deficit, and
of cash flows for each of the years ended June 30, 1995, 1994 and
1993. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Marchelot S.A. and Subsidiaries as of June 30, 1995 and 1994 and
the results of their operations and their cash flow for each of the
years ended June 30, 1995, 1994 and 1993, in conformity with
generally accepted accounting principles prevailing in the United
States of America.
BDO
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note Q to the financial statements, the Company has incurred
recurring operating losses and has a net working capital deficien-
cy, as of June 30, 1995 which establishes a significant doubt on
its capacity to continue as a going concern. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
BDO STERN
August 11, 1995
Guayaquil, Ecuador
DB&B
Dermody, Burke & Brown
Certified Public Accountants, P.C.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
FIRST REPUBLIC CORPORATION OF AMERICA
SHERATON INN - SYRACUSE
We have audited the accompanying balance sheets of FIRST REPUBLIC
CORPORATION OF AMERICA, SHERATON INN - SYRACUSE as of June 30, 1995
and 1994, and the related statements of income and division control
and cash flows for the years ended June 30, 1995, 1994 and 1993.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
The Sheraton Inn - Syracuse is owned and operated by First Republic
Corporation of America and its affiliated company, First Republic
Building Corporation. The accounting records maintained in
Syracuse relate only to the transactions incurred in the daily
operation of the Hotel. Transactions involving debt financing, tax
escrow payments, corporate income taxes and property accounts are
not reflected on the Hotel's books but are the accounting responsi-
bility of First Republic and its affiliate. These financial
statements are issued for inclusion in the financial statements of
First Republic Corporation of America and should not be considered
separately in determining the financial position and results of
operations of the Sheraton Inn - Syracuse.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the
operations of FIRST REPUBLIC CORPORATION OF AMERICA, SHERATON INN -
SYRACUSE at June 30, 1995 and 1994 and the results of its opera-
tions and its cash flows for the years ended June 30, 1995, 1994
and 1993, in conformity with generally accepted accounting
principles.
DERMODY, BURKE AND BROWN
Certified Public Accountants, P. C.
Syracuse, New York
August 16, 1995
LOEB & TROPER
655 THIRD AVENUE, 12TH FLOOR, NEW YORK, NY 10017
TEL: (212) 867-4000
FAX: (212) 867-9810
Independent Auditor's Report
Board of Directors
Bristol Manor Health Care Center, Inc.
We have audited the accompanying balance sheet of Bristol
Manor Health Care Center, Inc. as of June 30, 1995 and 1994, and
the related statements of operations and cash flows for the six
months then ended. These financial statements are the responsibil-
ity of the Center's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Bristol Manor Health Care Center, Inc. as of June 30, 1995 and
1994, and the results of its operations and its cash flows for the
six months then ended in conformity with generally accepted
accounting principles.
Bristol Manor Health Care Center, Inc. is a member of a group
of affiliated entities and, as disclosed in the financial state-
ments, has significant transactions with members of the group,
including borrowings and the rental of the facility. Because of
these relationships, it is possible that the terms of these
transactions are not the same as those which would result from
transactions among wholly unrelated parties.
LOEB & TROPER
August 16, 1995
LOEB & TROPER
655 THIRD AVENUE, 12TH FLOOR, NEW YORK, NY 10017
TEL: (212) 867-4000
FAX: (212) 867-9810
Independent Auditor's Report
Board of Directors
Bristol Manor Health Care Center, Inc.
We have audited the accompanying balance sheet of Bristol
Manor Health Care Center, Inc. as of December 31, 1994 and 1993,
and the related statements of operations and cash flows for the
years then ended. These financial statements are the responsibili-
ty of the organization's management. Our responsibility is to
express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Bristol Manor Health Care Center, Inc. as of December 31, 1994 and
1993, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting
principles.
Bristol Manor Health Care Center, Inc. is a member of a group
of affiliated entities and, as disclosed in the financial state-
ments, has significant transactions with members of the group,
including borrowings and the rental of the facility. Because of
these relationships, it is possible that the terms of these
transactions are not the same as those which would result from
transactions among wholly unrelated parties.
LOEB & TROPER
February 28, 1995
LOEB & TROPER
655 THIRD AVENUE, 12TH FLOOR, NEW YORK, NY 10017
TEL: (212) 867-4000
FAX: (212) 867-9810
Independent Auditor's Report
Board of Directors
The Whitehall Residence, Inc.
We have audited the accompanying balance sheet of The
Whitehall Residence, Inc. as of June 30, 1995 and 1994, and the
related statements of operations and cash flows for the six months
then ended. These financial statements are the responsibility of
the Corporation's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
The Whitehall Residence, Inc. as of June 30, 1995 and 1994, and the
results of its operations and its cash flows for the six months
then ended in conformity with generally accepted accounting
principles.
The Whitehall Residence, Inc. is a member of a group of
affiliated entities and, as disclosed in the financial statements,
has significant transactions with members of the group, including
borrowings and the rental of the facility. Because of these
relationships, it is possible that the terms of these transactions
are not the same as those which would result from transactions
among wholly unrelated parties.
The accompanying financial statements have been prepared
assuming that The Whitehall Residence, Inc. will continue as a
going concern. As discussed in Note H to the financial statements,
the Corporation has suffered recurring losses from operations and
has a retained earnings deficit that raise substantial doubt about
its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note H. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
LOEB & TROPER
August 16, 1995
LOEB & TROPER
655 THIRD AVENUE, 12TH FLOOR, NEW YORK, NY 10017
TEL: (212) 867-4000
FAX: (212) 867-9810
Independent Auditor's Report
Board of Directors
The Whitehall Residence, Inc.
We have audited the accompanying balance sheet of The
Whitehall Residence, Inc. as of December 31, 1994 and 1993, and the
related statements of operations and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
The Whitehall Residence, Inc. as of December 31, 1994 and 1993, and
the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
The Whitehall Residence, Inc. is a member of a group of
affiliated entities and, as disclosed in the financial statements,
has significant transactions with members of the group, including
borrowings and the rental of the facility. Because of these
relationships, it is possible that the terms of these transactions
are not the same as those which would result from transactions
among wholly unrelated parties.
The accompanying financial statements have been prepared
assuming that The Whitehall Residence, Inc. will continue as a
going concern. As discussed in Note H to the financial statements,
the Corporation has suffered recurring losses from operations and
has a retained earnings deficit that raise substantial doubt about
its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note H. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
LOEB & TROPER
February 28, 1995
LOEB & TROPER
655 THIRD AVENUE, 12TH FLOOR, NEW YORK, NY 10017
TEL: (212) 867-4000
FAX: (212) 867-9810
Independent Auditor's Report
Board of Directors
Logan Manor Corp.
We have audited the accompanying balance sheet of Logan Manor
Corp. as of June 30, 1995 and 1994, and the related statements of
operations and cash flows for the six months then ended. These
financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Logan Manor Corp. as of June 30, 1995 and 1994, and the results of
its operations and its cash flows for the six months then ended in
conformity with generally accepted accounting principles.
Logan Manor Cob. is a member of a group of affiliated entities
and, as disclosed in the financial statements, has significant
transactions with members of the group, including significant
borrowings. Because of these relationships, it is possible that
the terms of these transactions are not the same as those which
would result from transactions among wholly unrelated parties.
The accompanying financial statements have been prepared
assuming that Logan Manor Corp. will continue as a going concern.
As discussed in Note E to the financial statements, the corporation
has suffered recurring losses from operations and has a retained
earnings deficit that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these
matters are also described in Note E. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
LOEB & TROPER
August 16, 1995
LOEB & TROPER
655 THIRD AVENUE, 12TH FLOOR, NEW YORK, NY 10017
TEL: (212) 867-4000
FAX: (212) 867-9810
Independent Auditor's Report
Board of Directors
Logan Manor Corp.
We have audited the accompanying balance sheet of Logan Manor
Corp. as of December 31, 1994 and 1993, and the related statements
of operations and cash flows for the years then ended. These
financial statements are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Logan Manor Corp. as of December 31, 1994 and 1993, and the results
of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
Logan Manor Corp. is a member of a group of affiliated
entities and, as disclosed in the financial statements, has
significant transactions with members of the group, including
significant borrowings. Because of these relationships, it is
possible that the terms of these transactions are not the same as
those which would result from transactions among wholly unrelated
parties.
LOEB & TROPER
February 28, 1995
LOEB & TROPER
655 THIRD AVENUE, 12TH FLOOR, NEW YORK, NY 10017
TEL: (212) 867-4000
FAX: (212) 867-9810
Independent Auditor's Report
Board of Directors
Harbor View Health Care Center, Inc.
We have audited the accompanying balance sheet of Harbor View
Health Care Center, Inc. as of June 30, 1995 and 1994, and the
related statements of operations and cash flows for the six months
then ended. These financial statements are the responsibility of
the Center's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Harbor View Health Care Center, Inc. as of June 30, 1995 and 1994,
and the results of its operations and its cash flows for the six
months then ended in conformity with generally accepted accounting
principles.
Harbor View Health Care Center, Inc. is a member of a group of
affiliated entities and, as disclosed in the financial statements,
has significant transactions with members of the group, including
borrowings and the rental of the facility. Because of these
relationships, it is possible that the terms of these transactions
are not the same as those which would result from transactions
among wholly unrelated parties.
LOEB & TROPER
August 16, 1995
LOEB & TROPER
655 THIRD AVENUE, 12TH FLOOR, NEW YORK, NY 10017
TEL: (212) 867-4000
FAX: (212) 867-9810
Independent Auditor's Report
Board of Directors
Harbor View Health Care Center, Inc.
We have audited the accompanying balance sheet of Harbor View
Health Care Center, Inc. as of December 31, 1994 and 1993, and the
related statements of operations and cash flows for the years then
ended. These financial statements are the responsibility of the
organization's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Harbor View Health Care Center, Inc. as of December 31, 1994 and
1993, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting
principles.
Harbor View Health Care Center, Inc. is a member of a group of
affiliated entities and as disclosed in the financial statements,
has significant transactions with members of the group, including
borrowings and the rental of the facility. Because of these
relationships, it is possible that the terms of these transactions
are not the same as those which would result from transactions
among wholly unrelated parties.
LOEB & TROPER
February 28, 1995
The First Republic Corporation of America and Subsidiaries
Consolidated Balance Sheets
June 30
1995 1994
Assets
Current assets:
Cash and cash equivalents $ 1,294,475 $ 1,316,144
Accounts and rents receivable, net of
allowances of $253,679 and $153,180 5,285,331 5,493,910
Mortgages receivable-current portion (Note 3) 1,061,079 737,971
Other receivables 253,200 426,530
Inventories (Note 1) 5,472,000 4,731,545
Prepaid expenses and other assets 1,158,828 1,269,255
Total current assets 14,524,913 13,975,355
Real estate held for rental and hotel,
at cost (Notes 5 and 8):
Land 8,399,740 8,358,240
Building and improvements 41,850,660 39,492,580
Construction-in-progress -- 625,844
50,250,400 48,476,664
Less accumulated depreciation 22,675,090 21,969,591
27,575,310 26,507,073
Other property, plant and equipment,
at cost (Note 1):
Land 1,530,849 1,530,849
Buildings and improvements 5,337,730 4,928,878
Leaseholds and improvements 1,182,233 1,182,233
Machinery, equipment, parts and vehicles 12,079,826 11,763,504
Furniture and furnishings 382,762 391,337
Construction-in-progress 924,371 1,157,723
21,437,771 20,954,524
Less accumulated depreciation and
amortization 7,964,051 7,306,962
13,473,720 13,647,562
Mortgages receivable-net of current
portion (Note 3) 671,420 2,902,044
Investments in and advances to affiliated
entities (Notes 1 and 4) 13,670,921 12,165,501
Tenant improvements, net of accumulated
amortization of $1,858,234 and $1,361,068 5,637,979 4,002,081
Unamortized leasing, financing and other
deferred costs 1,864,174 2,105,782
Other assets:
Cash and securities in trust for tenants'
security deposits 1,485,400 1,529,315
Mortgage escrow funds and security deposits 187,572 218,376
Assets held for sale (Note 11) 1,718,111 1,983,300
Due from related parties (Note 10) 1,578,886 745,000
Other 351,324 382,239
5,321,293 4,858,230
Total assets $82,739,730 $80,163,628
See notes to consolidated financial statements.
The First Republic Corporation of America and Subsidiaries
Consolidated Balance Sheets (continued)
June 30
1995 1994
Liabilities and stockholders' equity
Current liabilities:
Notes payable, banks (Note 5) $ 3,134,759 $ 2,568,016
Notes payable, related party (Note 10) 640,000 640,000
Current portion of long-term debt (Note 5) 1,658,075 1,312,114
Accounts payable 1,372,861 2,111,893
Accrued expenses and taxes payable 1,744,319 1,356,246
Due to related parties (Notes 5 and 10) 893,373 1,328,000
Other liabilities 90,984 96,005
Total current liabilities 9,534,371 9,412,274
Long-term debt (Note 5) 25,539,845 23,870,298
Deferred income tax (Note 6) 637,926 673,926
Other liabilities:
Tenants' security deposits payable 1,485,400 1,529,315
Accrued pension (Note 7) 1,215,840 1,235,000
2,701,240 2,764,315
Minority interests 688,360 775,372
Deferred income (Note 3) 383,878 403,727
Total liabilities 39,485,620 37,899,912
Stockholders' equity:
Common stock, $ 1 par value:
Authorized, 2,400,000 shares;
Issued, 1,175,261 shares 1,175,261 1,175,261
Additional paid-in capital 15,000,753 15,000,753
Retained earnings 31,440,094 30,429,660
47,616,108 46,605,674
Less treasury stock, at cost-501,744 and
501,154 shares (Note 11) 4,361,998 4,341,958
Total stockholders' equity 43,254,110 42,263,716
Leases, commitments and contingencies
(Notes 8 and 9)
Total liabilities and stockholders' equity $82,739,730 $80,163,628
See notes to consolidated financial statements.
The First Republic Corporation of America and Subsidiaries
Consolidated Statements of Income
Year Ended June 30
1995 1994 1993
Revenues:
Sales-textiles and seafood $25,391,537 $23,717,207 $24,764,199
Rents and other revenues-real estate
and hotel operations 21,608,443 20,544,116 20,516,437
Other (including interest income
of approximately $106,000, $94,000
and $95,000, respectively)
(Notes 7 and 11) 1,215,623 3,857,729 1,755,494
Equity in loss of affiliated
entities (Note 4) (118,264) (1,416,679) (228,481)
48,097,339 46,702,373 46,807,649
Costs and expenses:
Cost of sales 21,674,192 20,704,424 22,272,121
Operating costs-real estate
and hotel operations 12,631,176 12,070,807 12,074,090
Depreciation and amortization 4,182,079 4,168,509 4,113,181
Interest 2,993,065 2,165,773 2,238,893
Selling, general and administrative 5,642,437 6,911,674 6,953,024
Writedown of property and equipment
(Note 11) 265,189 160,929 800,000
Minority interests (748,233) (622,413) (147,711)
46,639,905 45,559,703 48,303,598
Income (loss) before income taxes,
extraordinary item and cumulative
effect of change in accounting for
income taxes 1,457,434 1,142,670 (1,495,949)
Income tax (expense) benefit (Note 6) (447,000) (1,055,000) 127,000
Income (loss) before extraordinary
item and cumulative effect of
accounting change $1,010,434 87,670 (1,368,949)
Extraordinary income-share of gain on
extinguishment of debt by affiliated
entities, net of income taxes
of $120,000 (Note 4) -- 300,000 --
Cumulative effect as of July 1, 1993
of change in method of accounting
for income taxes (Note 1) -- 1,173,000 --
Net income (loss) $1,010,434 $ 1,560,670 $(1,368,949)
Per share of common stock (Note 1):
Income (loss) before extraordinary
item and cumulative effect of
accounting change $1.50 $ .13 $(2.00)
Extraordinary income -- .44 --
Cumulative effect of accounting change -- 1.74 --
Net income (loss) $1.50 $2.31 $(2.00)
See notes to consolidated financial statements.
The First Republic Corporation of America and Subsidiaries
Consolidated Statements of Retained Earnings
Year ended June 30
1995 1994 1993
Balance, beginning of
year $30,429,660 $28,868,990 $30,237,939
Net income (loss) for
the year 1,010,434 1,560,670 (1,368,949)
Balance, end of year $31,440,094 $30,429,660 $28,868,990
See notes to consolidated financial statements.
The First Republic Corporation of America and Subsidiaries
Consolidated Statements of Cash Flows
Year ended June 30
1995 1994 1993
Operating activities
Net income (loss) $1,010,434 $1,560,670 $(1,368,949)
Adjustments to reconcile
net income (loss) to net cash
provided by operating activities:
Depreciation and
amortization 4,182,079 4,168,509 4,113,181
Writedown of property and
equipment 265,189 160,929 800,000
Deferred income taxes (36,000) 150,000 --
Cumulative effect of change
in method of accounting for
income taxes -- (1,173,000) --
Equity in net (income) loss
of affiliated entities 118,264 996,679 228,481
Minority interests' share
of loss in subsidiaries (748,233) (622,413) (147,711)
Changes in operating assets
and liabilities:
Accounts, rents and other
receivables 381,909 966,548 (59,091)
Inventories (740,455) (950,302) (175,477)
Prepaid and other assets 110,427 1,217,218 (983,506)
Due from related parties (217,250) - (602,552)
Accounts payable (739,032) 412,968 (120,807)
Accrued and other current
liabilities 383,052 (740,483) (815,256)
Due to related parties (434,627) 573,000 (202,689)
Other liabilities (82,924) (530,532) (516,365)
Cash provided by operating
activities 3,452,833 6,189,791 149,259
Investing activities
Purchases of real estate
held for rental (2,815,491) (2,216,655) (855,696)
Purchases of other property
plant and equipment (1,340,667) (1,622,258) (2,078,539)
Additions to tenant
improvements (2,229,991) (698,933) (1,355,693)
Investment in affiliated
entities (2,440,294) (3,257,822) --
Distribution in excess of
equity in earnings from
affiliated entities 816,610 915,000 644,000
Proceeds from sale of
machinery and equipment 1,150,000
Payments received on
mortgages receivable 1,907,516 616,776 584,182
Other investing activities 21,020 (1,080,394) (406,305)
Net cash used in investing
activities (6,081,297) (7,344,286) (2,318,051)
The First Republic Corporation of America and Subsidiaries
Consolidated Statements of Cash Flows (continued)
Year ended June 30
1995 1994 1993
Financing activities
Proceeds from mortgage and
notes payable to banks $11,209,241 $ 11,705,000 $ 19,600,000
Payments on mortgages and
notes payable to banks (8,626,991) (10,372,203) (17,162,506)
Repayment of subordinated
debenture -- (469,336) --
Minority interests'
additional paid-in capital 44,585 271,567 235,463
Purchases of treasury stock (20,040) (169,188) (490,828)
Net cash provided by
financing activities 2,606,795 965,840 2,182,129
Net (decrease) increase in
cash and cash equivalents (21,669) (188,655) 13,337
Cash and cash equivalents
at the beginning of year 1,316,144 1,504,799 1,491,462
Cash and cash equivalents
at the end of year $ 1,294,475 $ 1,316,144 $ 1,504,799
Supplemental disclosure
Income taxes paid $ 582,005 $466,525 $ 1,349,811
Interest paid $ 2,943,574 $ 2,222,170 $ 2,192,493
See notes to consolidated financial statements.
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 1995
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of The
First Republic Corporation of America ("FRCA") and all majority
owned or controlled subsidiaries (the "Company"). All significant
intercompany accounts and transactions have been eliminated in
consolidation. The Company records its investment in partnerships
and corporations in which it owns interests ranging from 38% to 50%
in accordance with the equity method.
Certain amounts have been reclassified in the prior years'
financial statements to conform with the current year's presentation.
Inventories
Inventories are valued at the lower of cost or market with cost
being determined by specific identification.
Inventories are summarized as follows:
June 30
1995 1994
Work-in-process and raw materials $1,945,308 $1,978,575
Finished goods 3,526,692 2,752,970
$5,472,000 $4,731,545
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Depreciation and Amortization
Depreciation and amortization are provided by the straight-line
method over the following estimated useful lives:
Estimated
Classification Useful Life
Buildings and improvements 15 to 40 years
Leaseholds and improvements 3 to 31.5 years
Machinery, equipment, parts
and vehicles 5 to 10 years
Furniture and furnishings 5 years
Tenants' improvements and leasing commissions are amortized over
the term of the respective tenants' leases.
Financing costs are amortized over the term of the related debt.
Revenues
Sales of textiles and seafood are recognized when shipments are
made to customers. Rental revenue is recognized on an accrual
basis in accordance with the terms of the lease except that leases
with scheduled rent increases are recognized on a straight-line
basis over the life of the lease. Hotel revenues are recognized
when the related services are rendered.
Per Share Data
Per share amounts are based on 673,867 (1995), 675,635 (1994) and
683,625 (1993) weighted average shares of common stock outstanding.
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Change in Method of Accounting for Income Taxes
Effective July 1, 1993, the Company adopted Financial Accounting
Standards Board Statement No. 109, "Accounting for Income Taxes."
Under Statement 109, the liability method is used in accounting for
income taxes. Under this method, deferred tax assets and liabili-
ties are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when
the differences are expected to reverse. Prior to the adoption of
Statement 109, income tax expense was determined using the deferred
method. Deferred tax expense was based on items of income and
expense that were reported in different years in the financial
statements and tax returns and were measured at the tax rate in
effect in the year the difference originated.
As permitted by Statement 109, the Company has elected not to
restate the financial statements of any prior years. The change
had no effect on pretax income from operations for the year ended
June 30, 1994. The cumulative effect of the change increased net
income by $1,173,000 or $1.74 per share for the year ended June 30,
1994.
Foreign Operations
A subsidiary, together with certain entities in which the subsid-
iary owns a 38% interest, is engaged in shrimp farming operations
in Ecuador and all of such entities sell their products solely to
a domestic subsidiary of the Company engaged in seafood operations.
Financial statements of such foreign entities are translated using
the U.S. dollar as the functional currency. Through June 30, 1994,
Ecuador had a hyperinflationary currency. Operations include
exchange gains of $254,954 (1995) and $108,155 (1994) and an
exchange loss of $72,440 (1993) resulting from foreign currency
transactions and from translation of the foreign entities'
financial statements.
Cash Equivalents
The Company considers all highly liquid investments with maturities
of three months or less when purchased to be cash equivalents.
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Industry Segments and Foreign Operations
Following is information about the Company's industry segments for
each of the three years ended June 30:
1995 1994(a) 1993(a)
Revenues:
Real estate $16,436,969 $ 15,337,857 $ 15,266,117
Hotel 5,289,114 5,411,804 5,426,396
Seafood 7,296,381 6,186,843 7,256,340
Textile 18,379,894 17,969,256 18,136,265
Other - 2,147,968(e) 641,603
Corporate 813,245 1,065,324 309,409
$48,215,603 $48,119,052 $47,036,130
Operating profit
(loss) (b):
Real estate(c) $ 4,612,379 $ 3,768,768 $ 3,838,516
Hotel 295,461 243,369 487,045
Seafood (1,111,286) (547,904) 32,802
Textile(d) 1,069,602 85,467 (1,800,047)
Other - 2,147,968(e) 641,603
Total operating profit 4,866,156 5,697,668 3,199,919
Corporate expenses (3,802,300) (4,000,349) (4,067,362)
Corporate interest
expense (1,049,636) (825,707) (857,145)
Corporate revenue 813,245 1,065,324 309,409
Equity in loss of
affiliated entities(f) (118,264) (1,416,679) (228,481)
Minority interests 748,233 622,413 147,711
Income (loss) before
income taxes,
extraordinary item
and cumulative
effect of change
in accounting for
income taxes $1,457,434 $1,142,670 $(1,495,949)
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Industry Segments and Foreign Operations (continued)
1995 1994(a) 1993(a)
Identifiable assets:
Real estate $34,863,392 $34,914,215 $34,133,213
Hotel 3,026,711 3,301,524 3,754,476
Seafood 12,749,755 11,903,902 10,710,620
Textile 18,730,039 18,766,487 20,017,057
Corporate and other (g) 13,369,833 11,277,500 10,490,212
$82,739,730 $80,163,628 $79,105,578
Depreciation and amortization:
Real estate $ 2,035,785 $ 1,893,119 $ 1,598,018
Hotel 631,786 617,744 733,456
Seafood 218,794 263,399 268,348
Textile 1,181,073 1,184,057 1,273,683
Corporate and other 114,641 210,190 239,676
$ 4,182,079 $ 4,168,509 $ 4,113,181
Capital expenditures-net:
Real estate $ 4,531,561 $2,648,694 $2,092,488
Hotel 545,673 262,763 118,901
Seafood 483,927 1,323,087 473,651
Textile 592,475 240,715 886,166
Corporate and other 232,513 62,587 718,722
$6,386,149 $4,537,846 $4,289,928
(a)-Certain amounts have been reclassified to conform with 1995
presentation.
(b)-Operating profit (loss) does not include the Company's share of
results of affiliated entities. Amounts for 1994 and 1993 have
been reclassified from amounts previously reported to conform
with such presentation.
(c)-Reflects mortgage interest expenses of $1,564,524 (1995),
$1,230,545 (1994) and $1,114,454 (1993).
(d)-Includes losses from Whitlock (see Note 11b).
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. Industry Segments and Foreign Operations (continued)
(e)-Includes $1,321,775 for termination of royalty agreements and
$446,000 for curtailment of pension benefits (see Note 7).
(f)-See Note 4.
(g)-Consists principally of investments in and advances to affiliated
entities.
The Company's operations in the industry segments detailed above
consist of:
Real Estate-ownership of loft, office and industrial buildings,
shopping centers, residential property and vacant land.
Hotel-ownership and operation of a hotel in Liverpool, New York.
Seafood-harvesting and sale of hard-shell clams on property owned by
the Company, sales of shrimp imported from Ecuador (both grown in
Company owned ponds and purchased from a 38% owned investee and
other third-parties) and imported from Costa Rica.
Textile-operations of two yarn spinning plants and a dye house.
Foreign operations, consisting of the operation of a shrimp farm and
shrimp hatchery, were conducted in Ecuador through Marchelot S.A. and
its wholly-owned and 62.5% owned subsidiaries. For the years ended
June 30, 1995, 1994 and 1993, respectively, such entities had sales
of approximately $1,495,000, $671,000 and $1,198,000, all of which
were to the Company and eliminated in consolidation, and net losses
(including a share of net losses from the Mondragon Companies
accounted for by the equity method-see Note 4) of $1,549,000,
$1,687,000, and $472,000. As of June 30, 1995 and 1994, respective-
ly, such subsidiaries had total assets of approximately $9,211,000,
and $8,204,000, liabilities (excluding intercompany loans and
advances) of $3,121,000, and $2,871,000 and minority interests of
$688,000 and $775,000. In addition, Bluepoints Company Inc., a
domestic subsidiary, had outstanding advances to the Mondragon
Companies of $4,390,020 and $2,323,901 at June 30, 1995 and 1994,
respectively.
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
3. Mortgages Receivable
A summary of mortgages receivable is as follows:
Interest June 30
Description Rate Maturity Date 1995 1994
First lien on motel 8.0 December 1, 1996(1)$ 654,789 $ 688,903
First lien on condominiums 7.9-10.5 (2) 1,077,710 2,016,897
First lien on building 11.5 December 1, 1992(3) -- 934,215
1,732,499 3,640,015
Less payment due within one year
included in current assets 1,061,079 737,971
$ 671,420 $2,902,044
(1)-A gain of $786,230, which was realized on the sale of a motel during the
fiscal year ended June 30, 1977, has been treated in accordance with the
installment method which requires the recognition of gain as cash is
collected. The unrecognized portion of the gain of $383,878 and $403,727 is
classified in the accompanying balance sheets as deferred income at June 30,
1995 and 1994, respectively.
(2)-Payment terms of mortgages require monthly payments for seven years with
the remaining principal balance due at that time. The maturity dates range
from January 31, 1995 to December 1, 1998.
(3)-The note was paid in February 1995. The note had been classified as a
long-term receivable on the June 30, 1994 balance sheet.
Maturities are as follows:
Amount
Year ending June 30:
1995 (past due) $ 164,523
1996 896,556
1997 618,830
1998 605
1999 51,985
$1,732,499
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Affiliated Entities
The following table summarizes information with respect to the Company's
affiliated entities:
Company's Company's
Investments and Equity in Income
Advances (Loss)
Company's
Ownership June 30 Year ended June 30
Percentage 1995 1994 1995 1994 1993
(In Thousands)
Sunscape Associates 50.0% $ 354 $ 466 $ (112) $ (88) $(103)
Lambert Seafood Company 50.0% 1,395 1,899 (541) (492) (850)
Mondragon Companies 38.0% 5,794 3,945 (591) (1,130)(1) (30)
Health Care Entities(3) 49.9% 6,122 5,843 639 293 (2) 755
Other Various 6 13 - - -
$13,671 $12,166 $ (118) $(1,417) $ (228)
(1)-Includes approximately $600,000 of loss related to write-off of the
excess of the Company's cost of investment over net assets acquired,
as a result of continuing net losses incurred by the affiliate.
(2)-Excludes the Company's $420,000 proportionate share of extraordinary
gain on extinguishment of debt in June 1994.
(3)-Equity in income is net of amortization of the Company's cost of
investment which exceeded its underlying share of Partnerships'
deficiency at date of acquisition. Such excess, which amounted to
approximately $3,600,000 and $3,700,000 at June 30, 1995 and 1994,
respectively, is being amortized over forty years.
Real Estate
Sunscape Associates ("Sunscape") owns a 167 unit garden apartment
complex located in Orlando, Florida. The other 50% interest in Sunscape
is owned by corporate entities which in turn are owned by officers and
directors of the Company.
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Affiliated Entities (continued)
Seafood
Lambert Seafood Company ("Lambert"):
The Company owns a 50% interest in Lambert which is located in
Florida, and is engaged in the business of collecting, processing,
and selling scallops.
Condensed financial information of Lambert is as follows:
June 30
1995 1994
Assets
Cash $ 147,000 $ 144,000
Other current assets 105,000 384,000
Property and equipment, net
of accumulated depreciation 2,295,000 2,678,000
Other assets 732,000 838,000
Total assets $3,279,000 $4,044,000
Liabilities
Notes payable and other
current liabilities $ 593,000 $ 350,000
Loans payable-stockholders 2,626,000 3,525,000
Total liabilities 3,219,000 3,875,000
Stockholders' equity 60,000 169,000
Total liabilities and equity $3,279,000 $4,044,000
Year ended June 30
1995 1994 1993
Revenues $ 4,217,000 $ 3,702,000 $ 6,858,000
Costs and expenses (4,326,000) (4,232,000) (5,984,000)
Loss on disposal of assets - (481,000) (2,558,000)
Net loss $ (109,000) $(1,011,000) $(1,684,000)
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Affiliated Entities (continued)
Bluepoints Company Inc. ("Bluepoints"):
Bluepoints, an 80.2% owned subsidiary of the Company, owns
Marchelot S.A. which in turn owns a 38% interest in two Ecuadorian
corporations, Isca C.A. and Langomorro CIA. Ltda. (collectively,
the "Mondragon Companies"), engaged in shrimp farming operations in
Ecuador. The remaining 19.8% of Bluepoints is owned by certain
stockholders of the Company. For the year ended June 30, 1995,
1994 and 1993 Bluepoints purchased approximately $775,000,
$600,000, and $2,105,000, respectively, of shrimp from the
Mondragon Companies.
Condensed combined financial information of the Mondragon Companies
are as follows:
June 30
1995 1994
Assets
Current assets $1,746,000 $1,816,000
Property and equipment-net of
accumulated depreciation 7,257,000 3,320,000
Other assets 973,000 1,094,000
Total assets $9,976,000 $6,230,000
Liabilities
Notes payable-banks $1,455,000 $1,243,000
Due to Bluepoints and
other affiliates 4,516,000 2,741,000
Other current liabilities 525,000 219,000
Total current liabilities 6,496,000 4,203,000
Long-term debt 307,000 792,000
Total liabilities 6,803,000 4,995,000
Stockholders equity 3,173,000 1,235,000
Total liabilities and equity $9,976,000 $6,230,000
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Affiliated Entities (continued)
Year ended June 30
1995 1994 1993
Revenues (principally
sales to Bluepoints) $ 794,000 $ 677,000 $ 2,324,000
Costs and expenses (2,281,000) (2,008,000) 2,582,000
Net loss $(1,487,000) $(1,331,000) $ (258,000)
Health Care
The Company owns 49.9% interests in partnerships which own three
nursing homes and a senior citizen residence and adult day care
center located in Rochelle Park, Jersey City and Whiting, New
Jersey.
Condensed combined financial information of the 49.9% owned
partnerships is as follows:
June 30
1995 1994
Cash $ 1,333,000 $ 1,103,000
Accounts receivable, net 2,192,000 1,878,000
Other current assets 528,000 392,000
Other assets 758,000 905,000
Property and equipment,
net of accumulated depreciation 24,785,000 25,723,000
Total assets $29,596,000 $30,001,000
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. Affiliated Entities (continued)
June 30
1995 1994
Accounts payable $ 1,379,000 $ 1,271,000
Other current liabilities 1,204,000 1,226,000
Mortgages payable, current 1,280,000 1,230,000
Mortgages payable, noncurrent 27,280,000 28,592,000
Total liabilities 31,143,000 32,319,000
Partners' capital deficiency (1,547,000) (2,318,000)
Total liabilities and capital
deficiency $29,596,000 $30,001,000
Year ended June 30
1995 1994 1993
Revenues $21,927,000 $21,273,000 $20,561,000
Expenses 20,437,000 20,287,000 18,851,000
Income before
extraordinary item 1,490,000 986,000 1,710,000
Extraordinary income-
gain in connection with
with refinancing
mortgage debt - 840,000 -
Net income $ 1,490,000 $ 1,826,000 $ 1,710,000
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. Long-Term Debt and Credit Facilities
Long-term debt consists of the following:
June 30
1995 1994
Mortgages payable due 1995-2009
bearing interest at fixed rates
of 8.5% to 11% and variable rates
(10% at June 30, 1995) based on
prime (1), (3) and (4) $25,571,540 $23,189,684
Onondaga County Industrial
Development Agency Bonds
(1) and (2) 1,500,000 1,800,000
5.5%-9.85% notes to development
authorities due 1995-2000 (1) 126,380 192,728
Related party 50,000 50,000
27,247,920 25,232,412
Less payments due within one year:
Third parties 1,658,075 1,312,114
Related party 50,000 50,000
$25,539,845 $23,870,298
(1)-The net book value of real estate assets pledged as collateral
is approximately $21,400,000 and $14,600,000 at June 30, 1995 and
1994, respectively.
(2)-The Company entered into an agreement with the Onondaga County
Industrial Development Agency (the "Agency") to finance the
construction of two office buildings in Liverpool, New York. Under
the terms of the agreement, the Agency issued $4,000,000 of
industrial development revenue bonds. The financing was structured
in the form of a lease whereby the Company committed to pay $74,050
per quarter plus interest (payable monthly) through December 1999.
Interest is at a variable rate with a maximum of 9.5% per annum.
At the completion of the lease term, the property will be trans-
ferred to the Company for a nominal sum. This transaction has been
recorded as a purchase of the property.
The Company has provided a letter of credit in the amount of
$1,500,000 at June 30, 1995 as collateral for the foregoing
financing.
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. Long-Term Debt and Credit Facilities (continued)
(3)-In fiscal 1995, the Company obtained a $3,500,000 mortgage loan
collateralized by the Jefferson National Bank Building in Miami Beach,
Florida. This loan bears interest at 1% in excess of the lenders prime
rate and provides for monthly principal payments of $29,167 plus
interest commencing January 1, 1995 through June 1, 2001 when the
remaining unpaid balance of $1,225,000 will become due.
In fiscal 1994, the Company obtained a $3,000,000 mortgage loan
collateralized by the Greensboro South Shopping Center in Greensboro,
North Carolina. The self-liquidating loan bears interest at a fixed
rate of 8.5% per annum and provides for monthly payments of $29,543
including interest and principal commencing April 1, 1994 and expiring
March 1, 2009.
(4)-On July 15, 1992, the Company replaced its existing indebtedness
with its principal lender with a $10,000,000 term loan and a $3,000,000
revolving line of credit (the "Loan Agreement"), collateralized by a
mortgage on the East Newark Industrial Center. At June 30, 1995 and
1994, $2,400,000 and $2,100,000, respectively, is outstanding under the
line of credit and is included in "Notes payable banks." The term loan,
which has an outstanding balance of $8,111,130 at June 30, 1995 and
$8,777,790 at June 30, 1994, requires monthly principal payments of
$55,555 and matures on August 1, 1997 when the remaining unpaid
principal balance of $6,666,640 will become due. The revolving line,
which is renewable annually, is due in January 1996. The interest rate
on both facilities is one percent in excess of the lender's prime rate.
The Loan Agreement, as amended, requires the Company to maintain
stockholders' equity of at least $42,000,000 and working capital of at
least $2,500,000 and not to exceed a specified debt to equity ratio. In
addition, it places restrictions on the Company's ability to incur
additional indebtedness and on its capital expenditures.
Aggregate principal payments on long-term debt are as follows:
Amount
Year ending June 30:
1996 $ 1,708,075
1997 7,672,285
1998 9,201,594
1999 903,514
2000 622,079
Thereafter 7,140,373
$27,247,920
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Income Taxes
At June 30, 1995, the Company has net operating loss carryforwards of
approximately $68,900,000 for income tax purposes that expire in years
2000 through 2002. Those carryforwards, which resulted from the merger
of Merrimac Corporation into FRCA on June 30, 1993, are available to
reduce future taxable income, if any, of FRCA but not the taxable income
of any other member of the Company's group. Deferred tax assets and
liabilities reflect the net tax effects of net operating loss carryforw-
ards and temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used
for income tax purposes. For financial reporting purposes, a valuation
allowance has been recognized to offset a portion of the deferred tax
assets related to the carryforwards. Significant components of the
Company's deferred tax liabilities and assets are as follows:
June 30
1995 1994
Deferred tax liabilities:
Book basis of fixed assets
over tax basis $ 783,000 $ 981,000
Book basis of carrying value
of investee over tax basis 509,000 531,000
Gain recognized on installment
sale for tax purposes - 261,000
Total deferred tax liabilities 1,292,000 1,773,000
Deferred tax assets:
Net operating loss carryforwards 23,328,000 24,242,000
Miscellaneous 87,000 60,000
Total deferred tax assets 23,415,000 24,302,000
Valuation allowance 22,761,000 23,202,000
Net deferred tax assets 654,000 1,100,000
Net deferred tax liability $ 638,000 $ 673,000
The components of income/(loss) before income taxes, extraordinary item
and cumulative effect of accounting change follow:
Year ended June 30
1995 1994 1993
Domestic $ 2,702,378 $ 2,495,713 $(1,117,347)
Foreign (1,244,944) (1,353,043) (378,602)
$ 1,457,434 $ 1,142,670 $(1,495,949)
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Income Taxes (continued)
Significant components of the income tax expense (benefit) are as
follows:
Liability Deferred
Method Method
1995 1994 1993
Current:
Federal $182,000 $ 330,000 $(440,000)
State 301,000 575,000 313,000
Total current 483,000 905,000 (127,000)
Deferred:
Federal (32,000) 133,000 -
State (4,000) 17,000 -
Total deferred (36,000) 150,000 -
$447,000 $1,055,000 $(127,000)
The components of the provision (credit) for deferred income taxes for
the year ended June 30, 1993, are as follows:
Depreciation $(223,000)
Accrual for future services (136,000)
Partnership income 315,000
Other 44,000
Provision for deferred income taxes $ -
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. Income Taxes (continued)
The reconciliation of income tax expense (benefit) computed at the U.S.
federal statutory tax rates to income tax expense (benefit) follows:
Liability Method Deferred Method
1995 1994 1993
Amount Percent Amount Percent Amount Percent
Tax at U.S.
statutory rates $496,000 34.0% $389,000 34.0% $(509,000) (34.0)%
Increases
(reductions)
resulting from:
Alternative
minimum tax - - 130,000 11.4 - -
State taxes, net
of federal
tax benefit 196,000 13.5 391,000 34.2 207,000 13.8
Adjustment of
prior years
underaccrual
(overaccrual)
of income tax (76,000) (5.2) 200,000 17.5 (300,000) (20.1)
Loss from foreign
operations (not
subject to U.S.
federal income
taxes) reduced
by portion charged
to minority
interest for
which no tax
benefit is
recognized 423,000 29.0 460,000 40.2 129,000 8.6
Minority interest
in loss from
domestic
operations (105,000) (7.2) (43,000) (3.8) (5,000) (.3)
Equity in net
loss of investees
for which no
tax benefit is
recognized 18,000 1.2 167,000 14.6 289,000 19.3
Net operating
loss carry-
forwards (441,000) (30.2) (712,000) (62.2) - -
Other items (64,000) (4.4) 73,000 6.4 62,000 4.2
$447,000 30.7% $1,055,000 92.3% $(127,000) (8.5)%
7. Benefit Plans
FRCA and certain subsidiaries have profit-sharing plans covering substantial-
ly all nonunion employees. Contributions to one of the plans is discretion-
ary. Total plan costs were approximately $215,000, $205,000 and $205,000 for
the years ended June 30, 1995, 1994 and 1993, respectively.
Merrimac Corporation ("Merrimac"), which has been merged into FRCA had
noncontributory pension plans covering certain employees. All covered
employees participated in the basic pension plan with benefits based upon
years of service. In addition, Merrimac maintained a supplementary plan for
salaried employees covered by the basic pension plan. This supplementary
plan provided benefits based upon salary and years of credited service, with
deductions for employees' primary social security benefits and benefits
received under the basic plan. The funding policy is to contribute at least
the minimum amounts required by the Employee Retirement Income Security Act
of 1974 or additional amounts to assure that plan assets will be adequate to
provide retirement benefits.
The following table sets forth the funded status of the Merrimac pension
plans at June 30:
1995 1994
Accumulated Accumulated
Benefits Benefits
Exceed Assets Exceed Assets
Actuarial present value of benefit
obligations
Vested $5,226,000 $5,351,000
Projected benefit obligation 5,226,000 5,351,000
Plan assets (primarily short-term
money funds) at fair market value 4,447,000 4,491,000
Plan assets less than projected
benefit obligation 779,000 860,000
Unrecognized net gain 437,000 375,000
Net pension liability recognized
in the Consolidated Balance Sheet $1,216,000 $1,235,000
Since a significant part of Merrimac's operations have been discontinued,
substantially all employees included in the plan have been terminated and no
additional service benefits will accrue to such employees. Pursuant to such
benefit curtailment, the projected benefit obligation was reduced and the
resultant $446,000 reduction of the pension liability was included in other
revenue for the year ended June 30, 1994.
Net periodic pension cost included the following components:
1995 1994 1993
Interest cost on projected
benefit obligation $358,000 $372,000 $398,000
Actual return on assets (390,000) (24,000) (369,000)
Net amortization and deferral 58,000 (342,000) (62,000)
Total pension expense (benefit) $ 26,000 $ 6,000 $(33,000)
The discount rate used in determining the actuarial present value of the
projected benefit obligation was 7% at both June 30, 1995 and 1994. The
expected long-term rate of return on plan assets was 7% in each of the years
1993 through 1995.
8. Leases
The Company is the lessee under a noncancellable operating ground lease which
expires in 2065, provides for rentals of $8,952 per year and requires future
minimum rental payments aggregating $617,634 at June 30, 1995. Rent expense
includes real estate taxes, and in certain instances utilities and mainte-
nance costs, and rent for the corporate home office under a month-to-month
lease from a related party (see Note 10). Total rent expense for all
operating leases amounted to approximately $124,000, $120,000, and $122,000
for the years ended June 30, 1995, 1994 and 1993, respectively.
The Company owns various office buildings, industrial buildings and shopping
centers from which it earns rental income under leases with various tenants.
Generally leases provide for tenants to pay additional amounts based on real
estate taxes and operating expenses incurred to maintain and operate these
properties in excess of base year amounts. Lease terms for these properties
range from 1 to 20 years.
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
8. Leases (continued)
Future minimum rentals (excluding operating expenses and other items billable
to tenants which aggregated approximately $2,900,000, $2,700,000, and
$3,000,000 in the years ended June 30, 1995, 1994 and 1993, respectively) to
be received under the above-mentioned leases, all of which are classified and
accounted for as operating leases, are as follows:
Amount
Year ending June 30:
1996 $13,000,000
1997 10,800,000
1998 8,500,000
1999 6,400,000
2000 5,100,000
Thereafter 23,600,000
$67,400,000
9. Commitments and Contingencies
a. In 1985, a subsidiary, Whitlock Combing Company, Inc. ("Whitlock),
entered into a consent order with the South Carolina Department of
Health and Environmental Control in which it agreed to clean up the
property on which its plant is located and implement a groundwater
monitoring program. In December 1990, soil borings and groundwater
samples collected from the site revealed the presence of certain
substances reflecting the need to continue remediation. During the
fiscal years ended June 30, 1994 and 1993, Whitlock incurred costs of
approximately $519,000 and $35,000, respectively, to comply with the
consent order; $400,000 of such costs incurred during the year ended
June 30, 1994 had been accrued for at June 30, 1993 and charged to 1993
operations. Substantially all clean-up costs have been incurred.
b. The Company, together with the other partners of the health care
partnerships (see Note 4), have issued joint and several guarantees on
approximately $4,600,000 of the health care partnerships' mortgage loans
which are payable in monthly installments through June 1999.
c. A foreign subsidiary has issued a mortgage on its real estate to
collateralize bank debt of the Mondragon Companies (see Note 4) of which
$1,455,000 is outstanding at June 30, 1995.
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. Related Party Transactions
Certain stockholders, directors, officers or their relatives ("related
parties") own interests in certain investments of the Company as follows:
Percent Ownership by
Investment The Company Related Party
Bluepoints Company Inc.
("Bluepoints") 80.2% 19.8%(1)
Sunscape Associates 50.0% 50.0%
The Mondragon Companies 38.0% 50.0%(2)
Larfico Larvas Del Pacifico S.A. 62.5% 25.0%
Comercorp S.A. 62.5% 25.0%
(1)-At June 30, 1995 and 1994, the minority share of stockholders'
deficiency of Bluepoints amounted to $1,361,636 and $745,000, respectively.
Such deficiency results from losses which were funded by loans from the
Company on behalf of the minority shareholders. Repayment of the minority
interest deficiency has been jointly guaranteed by a major stockholder and
the Estate of A. A. Rosen. Accordingly, the minority interest share in the
deficiency of the subsidiary is shown as a receivable due from related
parties in the consolidated balance sheets.
(2)-Bluepoints has made advances to the Mondragon Companies amounting
to $4,390,020 and $2,323,901 at June 30, 1995 and 1994, respectively (see
Note 4). Repayment of 56.8% of any advances to the Mondragon Companies has
been guaranteed by the Estate of A.A. Rosen which owns 50% of the Mondragon
Companies.
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. Related Party Transactions (continued)
Certain transactions were entered into with the above-mentioned related
parties and companies in which they have an ownership interest as
follows:
Amount Related Party
Transactions 1995 1994 1993 Ownership
Insurance purchased in
participation with
the Rosen Group
Properties:
Premiums incurred $ 312,000 $ 310,000 $ 385,000 -
Administrative fee
received 75,000 75,000 75,000 -
Payable at June 30
to Rosen Group
Properties for
premiums above 312,000 310,000 276,000 -
Home office rent 95,000 95,000 96,000 100%
Interest on $640,000
note to the Estate
of A.A. Rosen 59,000 56,000 56,000 -
See Note 4 for other related party information.
11. Other Matters
a. Other revenue for the year ended June 30, 1994 includes
$1,321,775 received in full satisfaction of all remaining
royalty obligations pursuant to a royalty agreement which was
terminated.
The First Republic Corporation of America and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. Other Matters (continued)
b. In June 1992, Whitlock, which was in the wool-combining busi-
ness, sold substantially all of its assets for $3,650,000 and
substantially terminated all its remaining operations. A gain
of approximately $407,000 on the sale was classified as deferred
income, and upon satisfying certain conditions of the sale
contract in fiscal 1993, the gain was recognized in income. In
the fourth quarter of fiscal 1993 the remaining assets of
Whitlock, consisting of land and building which are being held
for sale, were written down by $800,000 to their estimated
realizable value of approximately $1,500,000. For the year
ended June 30, 1993, Whitlock had sales of approximately
$354,000 and losses of $1,686,000 (including the amounts
referred to above and $435,000 related to costs of the
remediation program referred to in Note 9a). During the years
ended June 30, 1994 and 1995, respectively, expenses of $563,000
and $389,000 incurred in connection with the land and building
held for sale were charged to operations.
c. Financial instruments which potentially subject the Company to
significant concentrations of credit risk consist principally of
cash and cash equivalents, mortgages receivable and accounts and
rents receivable. The Company maintains operating cash accounts
at financial institutions in many states along the Eastern
seaboard and, for its foreign subsidiaries, in Ecuador. Such
accounts are subject to risk to the extent that the balances
exceed the institutions' insurable limits. The Company's policy
is designed to limit exposure to any one institution. Mortgages
receivable are collateralized by real estate in Florida. The
Company's management has attempted to mitigate the risk of such
mortgages by evaluating the credit worthiness of the prospective
borrowers prior to acceptance. Concentrations of credit risk
with regard to accounts and rents receivable are limited due to
the large number of entities comprising the Company's customer
base and such base being dispersed over the industries in which
the Company operates.
Based on an analysis of the financial instruments which poten-
tially subject the Company to significant concentrations of
credit risk, the Company's management believes that there are no
significant concentrations of credit risk at June 30, 1995.
d. During the years ended June 30, 1995, 1994 and 1993, there were
590,3,656, and 9,644 shares of stock purchased for treasury at
a cost of $20,040, $169,188, and $490,828, respectively.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a. and b. Identification of directors and executive officers:
All Positions and
Name Age Offices with Registrant Served Since
Irving S. Bobrow 81 Director April 1983
Harry Bergman 53 Director October 1991
Treasurer June 1988
Secretary June 1988
Norman A. Halper 76 Director October 1969
President April 1983
Miriam N. Rosen 75 Director December 1994
Jonathan P. Rosen 51 Director February 1972
Vice President September 1978
Chairman of December 1994
the Board
William M.
Silverman 53 Director December 1981
Louis H. Nimkoff 33 Vice President June 1988
Robert Nimkoff 34 Director April 1991
Vice President June 1988
Jane G. Weiman 51 Director December 1991
The term of office for all directors and executive officers will
expire at the next annual meeting of stockholders, which is
anticipated to be held in December 1995, upon the election and
qualification of their successors.
c. Not applicable.
d. Family Relationships
Jonathan P. Rosen is the son of Miriam N. Rosen.
Louis H. Nimkoff and Robert Nimkoff are brothers and are the
cousins of Jonathan P. Rosen.
Jane G. Weiman is the sister-in-law of William M. Silverman and the
cousin of Jonathan P. Rosen.
e. Business Experience
Irving S. Bobrow is a member of the New York Bar. For more than
the past five years, Mr. Bobrow has been a member of the law
firm of Bobrow & Rosen in New York City and has engaged in real
estate investments for his own account.
Miriam N. Rosen is a member of the New York Bar. For more than
the past five years, Mrs. Rosen has been counsel to the law firm
of Bobrow & Rosen in New York City and has engaged in real
estate investments for her own account. Mrs. Rosen became a
director of the Company in December 1994.
William M. Silverman is a member of the New York Bar. For more
than the past five years, Mr. Silverman has been a member of the
law firm of Otterbourg, Steindler, Houston and Rosen P.C. in New
York City.
Jane G. Weiman has been a private investor for more than the
past five years. For the past several years Mrs. Weiman has
also been an officer of the Board of the Washington D.C. Urban
League and an advisor to Washington D.C. Counsel-Member-at-
Large, John Ray. Mrs. Weiman became a Director of the Company
in December 1991.
All other directors and executive officers have served as such
for more than the past five years.
f. Not applicable.
g. Not applicable.
The Company believes, based on written representations received by
it, that for the year ended June 30, 1995, all filing requirements
under Section 16(a) of the Securities Exchange Act of 1934
applicable to beneficial owners of the Company's securities and the
Company's officers and directors were complied with.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The chairman of the Company's Board of Directors has annually
reviewed and set the compensation of the Chief Executive Officer of
the Company who, in turn, has reviewed and set the compensation of
the other officers of the Company. All such compensation is
reviewed on or about April 1 of each year taking into consideration
(i) the Company's financial performance during the preceding year,
(ii) the performance of the employee during that year, and (iii)
the need to retain competent executive officers dedicated to the
enhancement of the Company's performance in future years by paying
salaries comparable to those being paid to such executive officers
by other companies involved in similar lines of business.
The following table sets forth all compensation paid or accrued by
the Company during the last three fiscal years for services in all
capacities to the Chief Executive Officer and each executive
officer of the Company whose cash compensation exceeds $100,000.
(a) (b) (c) (i)
Name and Annual Other
Principal Position Year Compensation Compensation (1)
Jonathan P. Rosen 6-30-95 $123,108 $ -
Chairman
A.A.Rosen 6-30-95 115,763 -
Chairman (deceased
11-9-94) 6-30-94 223,300 15,810
6-30-93 212,504 12,325
Norman A. Halper 6-30-95 238,871 13,690
President and Chief 6-30-94 223,300 15,810
Executive Officer 6-30-93 212,504 12,325
Harry Bergman 6-30-95 143,955 10,661
Secretary-Treasurer 6-30-94 137,717 10,359
6-30-93 128,693 10,873
Steven Bernstein 6-30-95 177,662 -
In-house Counsel
(1) The Company and certain of its subsidiaries maintain two
profit-sharing plans which cover a significant number of their
employees. Vesting begins at 20% after two years of service
with 100% vesting being reached after six years service.
Company contributions to one such plan is at the discretion of
the Board of Directors. The Company is required to make
minimum contributions to the second plan and, at the discre-
tion of the Board of Directors, may make additional contribu-
tions. The executive officers listed above are covered under
the second plan and the amount contributed by the Company to
such plan on behalf of each executive officer is set forth
under the heading "Other Compensation" in the Executive
Compensation Summary.
Compensation of Directors
Each director who is not an officer of the Company is paid $3,000
per quarter.
The following performance graph is a line graph comparing the
yearly change in the cumulative stockholder return on the Company's
Common Stock against the cumulative return of the Dow Jones Equity
Market Index and the Dow Jones Conglomerates Index for the five
fiscal years ended June 30, 1995. The stockholder return on the
Company's Common Stock has been determined solely based on the
price of the Common Stock since there have been no dividends
declared on the Common Stock. Since there has been only limited or
sporadic quotations for the Common Stock during the five year
period, the price of the Common Stock at the relevant dates has
been determined by utilizing the price at which the Company
purchased shares of Common Stock on the dates closest to each
measuring date.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Among the First Republic Corporation of America, Dow Jones Equity
Market Index and Dow Jones Independent - Conglomerates Index Fiscal
Year Ending June 30
1990 1991 1992 1993 1994 1995
The First Republic Corporation
of America 100 92 88 74 60 52
Dow Jones Equity Market Index 100 108 123 141 143 179
Dow Jones Independent -
Conglomerates 100 110 121 155 156 197
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
a. Security Ownership of Certain Beneficial Owners
The following table sets forth certain information with
respect to all persons who are known to the Company to be the
beneficial owner of more than 5% of its common stock as of
September 15, 1995:
Amount and Nature
Title of Name and Address of Beneficial Percent
Class of Beneficial Owner Ownership(1) of Class
Common Mary Nimkoff 107,207(2) 15.92%
26 Buttonball Lane
Weston, Connecticut
Common Jonathan P. Rosen 227,726(3) 33.83
40 East 69th St.
New York, New York
Common Lynn M. Silverman 113,350 16.84
911 Park Avenue
New York, New York
Common Jane G. Weiman 113,290 16.83
5610 Wisconsin Avenue
Chevy Chase, Maryland
(1)-Except as noted below in Notes (2) and (3), all shares are
owned directly by the parties listed in the table.
(2)-Includes 8,060 shares representing her proportionate interest
in 19,188 shares owned by Tranel, Inc. Tranel, Inc. is a corpora-
tion of which 42%, 15.2%, 34.8%, 4% and 4% of the shares of which
are owned by Mary Nimkoff, Jonathan P. Rosen, Miriam N. Rosen,
Louis H. Nimkoff and Robert Nimkoff, respectively.
(3)-Includes 2,917 shares representing his proportionate interest
in 19,188 shares owned by Tranel, Inc.
b. Security Ownership of Management
The following table sets forth as of September 15, 1995
certain information with respect to security holdings in the
Company and Bluepoints, an 80.2% owned subsidiary of the
Company, by directors of the Company and all officers and
directors as a group:
Common Stock
Common Stock of Bluepoints
Amount Percent Amount Percent
Name of Officer Beneficially of Beneficially of
or Director Owned(1) Class Owned Class
Irving S. Bobrow 200 .03%
Robert Nimkoff 1,317(2) .20
Lou Nimkoff 3,092(2) .46
Norman A. Halper 400 .06
Jonathan P. Rosen 227,726 33.83 $ 500(3) 4.95%
Miriam N. Rosen 31,759 4.72 500(3) 4.95
William M. Silverman 200(4) .03 (4)
Jane G. Weiman 113,290 16.83 500 4.95
All officers and
directors as a
group (8 persons) 377,984 56.15 1,500 14.85
(1)-Messrs. Bobrow, Halper, Silverman and Mrs. Weiman own their
shares directly. Jonathan P. Rosen owns 224,809 shares directly.
See Notes (2) and (3) of the preceding table.
(2)-Includes 767 shares representing his proportionate interest in
19,188 shares owned by Tranel, Inc.
(3)-Owned directly.
(4)-Does not include 113,350 shares of common stock and 500 shares
of Bluepoints owned by his wife (Lynn M. Silverman) directly. Mr.
Silverman disclaims beneficial ownership of such shares.
c. Changes in Control
The Company knows of no contractual arrangements which may at
a subsequent date result in a change in control of the
Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
a. Transactions with Management and Others
Lynn M. Silverman a principal stockholder of the Company, Jane
G. Weiman, a director and principal stockholder of the
Company, Jonathan P. Rosen, a director, vice president and
principal stockholder of the Company, and Miriam N. Rosen, a
director of the Company, own in the aggregate 19.8% of the
outstanding shares of Bluepoints. The remainder of the shares
of Bluepoints is owned by the Company. Lynn M. Silverman is
the wife of William M. Silverman, a director of the Company.
Bluepoints holds a second mortgage loan on the industrial
center owned by the Company in East Newark, New Jersey. From
July 1994 through September 1995, the Company made payments of
$149,850 with respect to such loan, $37,177 of which was
applied to the payment of interest and $112,673 to amortiza-
tion of principal. As of September 1, 1995, the outstanding
principal balance of the loan was $310,744. The loan bears
interest at the rate of 8% per annum, provides for monthly
payments of $9,990 and is self-liquidating over a period which
expires in July 1998.
The Company's corporate office is located in a building owned
by 302 Fifth Ave. Associates, a partnership owned 100% by The
Estate of A.A. Rosen, Miriam Rosen and Jonathan Rosen. The
Company is a month-to-month tenant, paying rent of $8,050 per
month as of June 30, 1995, which the Company believes is
comparable to other rentals in the areas. Jonathan P. Rosen
is the executor of the Estate of A.A. Rosen and Miriam Rosen
is the primary beneficiary of the Estate of A.A. Rosen.
The Estate of A.A. Rosen owns 50% of Isca C.A. and Langomorro
CIA, Ltda. (collectively referred to as "Mondragon"), two
Ecuadorian Corporations engaged in shrimp farming operations.
In the current fiscal year substantially all of Mondragon
shrimp production, approximately $775,000 was sold to Blue-
points. The Estate of A.A. Rosen also holds a $640,000 note
payable by Bluepoints which note was originally issued in May
1991 in connection with the acquisition by Bluepoints of a 38%
interest in Mondragon and an additional 12-1/2% interest in
Larfico Larvas Del Pacifico S.A., an Ecuadorian Corporation
which owns and operates a shrimp hatchery and Comercorp S.A.
which owns certain real property in Ecuador. From July 1, 1994
through August 21, 1995 The Estate of A.A. Rosen received
$59,000 in interest on the $640,000 note.
b. Certain Business Relationships
The Company and its subsidiaries purchase substantially all of
their property, casualty and liability insurance through
participation with a group of other entities controlled by The
Estate of A.A. Rosen and Jonathan P. Rosen (the "Rosen Group
Properties"). This procedure enables the group to obtain
negotiated insurance rates. During the fiscal years ended
June 30, 1995, 1994 and 1993, total premiums incurred by the
Company and its subsidiaries under this arrangement amounted
to approximately $312,000, $310,000, and $385,000, respective-
ly. The Company received fees of $75,000 in fiscal 1995, 1994
and 1993, representing charges to the group for administrative
services performed by Company personnel in connection with the
foregoing. At June 30, 1995 approximately $312,000 was
payable to Rosen Group Properties.
Tranel Inc. and Statecourt Enterprises, Inc. each owns a 25%
interest in 167-unit garden complex located in Orlando,
Florida in which the Company owns the remaining 50%. Tranel
Inc. is owned by Mary Nimkoff, Jonathan P. Rosen, Miriam N.
Rosen, Robert Nimkoff and Louis H. Nimkoff (see Item 12) and
Statecourt Enterprises, Inc. is owned 48% by The Estate of
A.A. Rosen, 20% by Jonathan P. Rosen and 32% by a trust for
Miriam N. Rosen.
c. Indebtedness of Management
The Estate of A.A. Rosen owns 25% of the outstanding stock of
Larfico, an Ecuadorian corporation that owns a hatchery that
produces post-larval shrimp and 50% of the outstanding stock
of Mondragon, an Ecuadorian company engaged in shrimp farming
operations. Bluepoints beneficially owns 62.5% of the
outstanding stock of Larfico and all of the outstanding stock
of Emporsa, an Ecuadorian corporation engaged in shrimp
farming operations. As of August 31, 1995, Larfico was
indebted to Bluepoints for $196,667 of loans made by Blue-
points to Larfico at various dates between November 8, 1985
and August 5, 1988 (the "Larfico Indebtedness.") Such loans
bear interest at 1% over the prime rate in effect at European
American Bank and are due August 1995. Since July 1, 1994,
the largest aggregate amount of outstanding indebtedness from
Larfico to Bluepoints was $196,667.
In addition, as of August 31, 1995, Mondragon was indebted to
Bluepoints for $4,390,000 of loans made by Bluepoints to
Mondragon on various dates between August 28, 1991 and June
28, 1995 (the "Mondragon Indebtedness"). Such loans bear
interest at 1% over the prime rate in effect at European
American Bank and have no fixed maturity. Since July 1, 1994
the largest aggregate amount of outstanding indebtedness from
Mondragon to Bluepoints was $4,390,000. The Estate of A.A.
Rosen has guaranteed the repayment of 25% of the Larfico
Indebtedness and 56.8% of the Mondragon Indebtedness.
Since July 1, 1994, the largest amount of outstanding indebt-
edness from Emporsa and Larfico to Mondragon was $1,074,000 of
loans. The balance at June 30, 1995 was $704,000. Such loans
bear no interest and have no fixed maturity. Since July 1,
1994, the largest amount of outstanding indebtedness from
Mondragon to Larfico and Emporsa was $176,000. The balance at
June 30, 1995 was $204,000. Said indebtedness has no fixed
maturity and is non-interest bearing.
As of June 30, 1995, Emporsa and Larfico were indebted to The
Estate of A.A. Rosen for $87,000 of loans. Such loans bear
interest at prime plus 1% and have no fixed maturity. Since
July 1, 1994, the largest amount of outstanding indebtedness
from Emporsa and Larfico to the Estate of A.A. Rosen was
$87,000.
As of August 31, 1995, Bluepoints was indebted to the Company
for $18,005,000 of loans made by the Company to Bluepoints at
various dates between November 8, 1985 and August 31, 1995.
Such loans bear interest at the rate of 1% over the prime rate
in effect at European American Bank and are due on demand or
at various dates through September 1996. Since July 1, 1994,
the largest aggregate amount of outstanding indebtedness from
Bluepoints to the Company was $18,005,000. A substantial
portion of the foregoing loans was used by Bluepoints to
acquire and fund the Ecuadorian shrimp operations.
The Estate of A.A. Rosen and Jonathan P. Rosen have jointly
provided a limited guarantee with respect to the repayment of
loans made by the Company to Bluepoints. Such guarantee is
limited to 19.8% of the deficiency in the shareholders equity
of Bluepoints. As of June 30, 1995 the amount of the guaran-
tee was $1,361,636.
d. Not applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES,
AND REPORTS ON FORM 8-K
a. 1. Financial Statements
The following financial statements of The First Republic
Corporation of America and Subsidiaries are included in Part
II, Item 8:
Reports of Independent Auditors
Consolidated Balance Sheets-June 30, 1995 and 1994
Consolidated Statements of Income-Years Ended
June 30, 1995, 1994 and 1993
Consolidated Statements of Retained Earnings-Years Ended
June 30, 1995, 1994 and 1993
Consolidated Statements of Cash Flows-Years Ended
June 30, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
a. 2. Financial Statement Schedules:
Schedule II-Valuation and Qualifying Accounts
Schedule III-Real Estate and Accumulated Depreciation
Schedule IV-Mortgage Loans on Real Estate
All other schedules have been omitted because they are
not applicable or the required information is shown in
the financial statements or the notes thereto.
b. Reports on Form 8-K
None
c. Exhibits
3 Articles of Incorporation and bylaws
(i) Articles of Incorporation are incorporated by reference
to Form 10-K for the fiscal year ended June 30, 1981.
(ii) Bylaws are incorporated by reference to Form 10-K for
the fiscal year ended June 30, 1992.
21 Subsidiaries of the Company
27 Financial Data Schedule
The First Republic Corporation of America and Subsidiaries
Schedule II-Valuation and Qualifying Accounts
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Charged to Balance at
Beginning of Costs and Other Accounts Deductions End of
Description Period expenses Describe Describe Period
Year ended June 30, 1995:
Allowance for doubtful accounts $153,180 $100,499$ - $253,679
Year ended June 30, 1994:
Allowance for doubtful accounts $158,213 $150,000 $155,033(a) $153,180
Year ended June 30, 1993:
Allowance for doubtful accounts $ 84,297 $ 73,916 $ - $158,213
(a) Amounts charged off and credits issued, net of recoveries on accounts
previously written off.
The First Republic Corporation of America and Subsidiaries
Schedule III--Real Estate and Accumulated Depreciation
Year ended June 30, 1995
Column A Column B Column C Column D Column E
Intial Cost Cost Capitalized Gross Amount at
to Company Subsequent to Carried at
Buildings and Acqusition of Close
Related Carrying Period (a)
Buildings and
Related
Description Encumberances Land Assets Additions Costs Land Assets
Richmond
Shopping Center
Richmond, Virgina
Shopping Center $293,814 $758,886 $217,995 $360,507 $910,148
First Repbulic Office Park
Liverpool, New York
Two, two-story office
buildings $1,500,000 (c) 351,600 4,124,256 1,171,199 351,600 5,295,725
Virginia Beach Shopping
Center
Virginia Beach,
Virgina $2,657,138 250,241 772,113 236,336 397,338 861,352
The First Republic Building Corp.
Liverpool, New York
Motor hotel (c) 413,779 5,681,562 413,779 5,681,562
Jefferson National Bank
Building-- Miami, Fla.
Six story
office building 3,325,000 2,044,409 5,543,015 2,044,409 5,643,015
Brookhaven Shooping Center
Brookhaven, Pennsylvania
Shopping Center 1,809,522 521,798 3,632,019 706,139 149,457 3,298,221
260 Memmrimac Street
Newburyport, Massachusetts
Three story office building 195,213 377,317 74,429 236,713 410,246
Melbourne, Florida
Vacant land 1,439,714 3,149 1,422,863 646,959
Totals $28,672,064 $8,226,475 $37,803,657 $4,220,268 $8,399,740 $41,850,660
[a]--Cost for Federal income tax purposes approximates amounts reflected in
Column E
[b]--A Mortgage is held by the bank who provides a line of credit to the Company
(See note 5 to the Consolidated Financial Statements.)
[c]--Assets of the First Republic Building Corp. are also pledged as collateral
for the Onodaga County Industrial Development Agency Bonds. (See Note
5 to the Consolidated Financial Statements).
CON'T.
Column F Column G Column H Column I
Life on which
Depreciation in
Latest Income
Accumalated Date Date Statements
Totals Depreciation Construction Acquired is Computed
$1,270,655 $ 461,910 3/15/76 25 years
5,647,325 1,017,332 10/1/85 5-40 years
1,258,690 565,404 3/30/76 25-31.5 years
6,095,341 5,448,927 9/21/62 10-25 years
7,687,424 1,283,856 4/27/88 31-1/2 years
3,447,678 1,987,814 12/16/76 5-33 years
646,959 121,880 11/25/87 10-25 years
1,442,863
$22,675,090
The First Republic Corporation of America and Subsidiaries
Schedule III--Real Estate and Accumulated Depreciation
Year ended June 30, 1995
Column A Column B Column C Column D Column E
Initial Cost to Cost Captialized Gross Amount
Company Subsequent to at which
Building and Acquisition Carried at
Related Carrying Close of Period
(a) Buildings and
Related
Description Encumbrances Land Assets Additions Costs Land Assets
250 W. 39th St.
Building
New York, New York
Eighteen story
office building $437,559 $1,155,129 $603,978 $437,559 551,151
Waltham Engineering
Center
Waltham, Masssachusetts
Seveenteen multi-story
Industrial bulidings 188,573 2,163,945 453,807 188,573 2,617,752
Sheraton Inn Motor Hotel
Syracuse, Liverpool,
New York
Hotel operations 1,651,923 4,516,118 6,168,041
Video Film Center
New York, New York
Ten story office
building $6,000,000 625,000 3,439,061 859,151 625,000 4,298,212
East Newar, New Jersey
Thirty Multi-story
Industrial
buildings 10,511,130(b) 605,089 4,068,693 2,961,266 605,089 1,107,427
Greensboro Plaza
Greensboro, North Carolina
Shopping
Center 379,947 1,696,953 657,421 379,947 2,734,321
Greensboro South
Greensboro North Carolina
Shopping
Center 2,869,244 419,739 1,350,376 1,412,736 706,906 2,475,945
Nyanza Building
Woonsocket Rhode Island
Four story industrial
building 60,000 1,288,139 1,110,650 60,000 177,489
The First Republic Corporation of America and Subsidiaries
Schedule III-Real Estate and Accumalated Depreciation (continued)
Column F Column G Column H Column I
Life on which
Depreciation in
Latest Income
Accumalated Date of Date Statements
Totals Depreciation Construction Acquired is Computed
$988,710 $125,002 5/19/67 5-15 years
2,806,325 698,063 7/1/62 10-20 years
6,168,041 4,441,455 3/17/69 5-15 years
4,923,212 2,988,168 10/4/68 33-1/3 years
1,712,516 272,655 3/11/63 21-1/3 years
2,734,321 1,663,071 12/1/74 21-1/3 years
3,182,851 1,561,231 12/1/74 21-1/3 years
237,489 38,322 11/1/68 10-20 years
The First Republic Corporation of America and Subsidiaries
Schedule III-Real Estate and Accumulated Depreciation (continued)
Year ended June 30,
1995 1994 1993
Real Estate Accumulated Real Estate Accumulated Real Estate Accumulated
Owned Depreciation Owned Depreciation Owned Depreciation
The following is a reconciliation of
the real estate owned and accumulated
depreciation, beginning and end of
the year:
Balance,
beginning
of year 48,476,664 21,969,591 47,118,995 21,230,995 47,348,779 20,372,773
Additions 2,815,491 1,747,254 2,216,655 1,597,582 855,696 1,943,702
Deductions:
Write-offs
of fully
depreciated
assets (1,041,755) (1,041,755) (858,986) (858,986) (1,085,480) (1,085,480)
Balance,
end of
year $50,250,400 $22,675,090 $48,476,664 $21,969,591 $47,118,995 $21,230,995
Note: Include assets used in the real estate and hotel operations.
The First Republic Corporation of America and Subsidiaries
The First Republic Corporation of America and Subsidiaries
Schedule IV-Mortgage Loans on Real Estate
Column A Column B Column C Column D Column E Column F Column G Column H
Principal
Amount
of Loans
Final Periodic Face Carry Subject
Description Interest Rate Maturity Payments Prior Amount Amount to
Date Terms Liens of of Deliquent
Mortgages Mortgages Principal
or
Interest
First lien
on motel-
Miami Beach,
Florida 8.00% 12/1/96 $ 7,338 None $ 654,789 $ 654,789 None
19 First
liens on
condominiums-
Orlando,Florida
(approximately
all had
outstanding
balances of
between
$55,000
to $65,000) 7.9-10.5 1/31/95 to
12/1/98 21,000(a) None 1,077,710 1,077,710 None
Totals $1,732,499 $1,732,499
(a)-Payment terms of mortgages are monthly payments for seven years
and remaining principal balance due at that time.
(b)-Cost for Federal income tax purposes approximates amounts
reflected in Column F.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE FIRST REPUBLIC CORPORATION OF AMERICA
By /s/ Norman A. Haiper
Norman A. Halper, Chief Executive and
Chief Operating Officer
By /s/ Harry Bergman
Harry Bergman, Chief Financial and
Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Date
/s/ Harry Bergman
Harry Bergman, Director
/s/ Irving S. Bobrow
Irving S. Bobrow, Director
/s/ Norman A. Haiper
Norman A. Halper, Director
/s/ Robert Nimkoff
Robert Nimkoff, Director
/s/ Miriam N. Rosen
Miram Rosen, Director
/s/ Jonathan P. Rosen
Jonathan P. Rosen, Director
LANGOMORRO, LANGOSTINERA
EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
Audit Report of the Consolidated
Financial Statements
On June 30, 1995 and 1994
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Langomorro, Langostinera El Morro Cia. Ltda. and Affiliated
Companies
New York, U.S.A.
We have audited the consolidated and combined balance sheets of
Langomorro, Langostinera El Morro Cia. Ltda. and Affiliated
Companies as of June 30, 1995 and the related consolidated and
combined statements of operations and deficit, and of cash flows,
for each of the years ended June 30, 1995, 1994 and 1993. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statements' presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Langomorro, Langostinera El Horro, Cia. Ltda. and affiliated
companies as of June 30, 1995 and 1994, and the results of their
operations and their cash flows for each of the years ended June
30, 1995, 1994 and 1993, in conformity with generally accepted
accounting principles prevailing in the United States of America.
BDO STERN
August 11, 1995
Guayaquil, Ecuador
LANGOMORRO CIA. LTDA. AND AFFILIATED COMPANIES
CONSOLIDATED AND COMBINED BALANCE SHEET
June 30
1995 1994
ASSETS
CURRENT ASSETS:
Cash in banks US$ 2,157 US$ 28,468
Accounts receivable (Note B) 44,609 54,807
Due from related parties
(Note C) 1,189,919 1,385,503
Inventories (Note D) 492,427 335,868
Prepaid expenses 15,243 8,713
Temporary investments 2,125 2,558
TOTAL CURRENT ASSETS 1,746,480 1,815,917
PROPERTY, MACHINERY AND
EQUIPMENT (Note E) 7,256,636 3,320,073
PERMANENT INVESTMENTS (Note F) 3,066 3,065
OTHER ASSETS (Note G) 970,119 1,091,023
US$ 9,976,301 US$ 6,230,078
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Bank overdraft US$ 365,409 US$ 30,634
Bank loans payable (Note H) 1,452,830 1,243,159
Notes and Accounts payable
(Note I) 89,276 106,509
Due to related parties (Note J) 2,533,828 1,528,699
Interest payable 60,773 62,396
Accrued expenses 11,853 19,440
Current maturities of long-term
debt (Note K) 1,982,000 1,212,000
TOTAL CURRENT LIABILITIES 6,495,969 4,202,837
LONG TERM DEBT. (Note K) 307,355 791,755
STOCKHOLDERS' EQUITY:
Common stock, S/.10,000 and
S/.5,000 par value per
share; 1,000 and S./73,118
shares authorized, issued,
and outstanding (Note L) 1,041,546 1,041,547
Additional paid-in capital
(Note M) 6,427,096 3,002,708
Accumulated deficit (Note N) (4,295,665) (2,808,769)
3,172,977 1,235,486
US$ 9,976,301 US$ 6,230,078
See notes to consolidated and combined financial statements.
LANGOMORO CIA. LTDA. AND AFFILIATED COMPANIES
CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS AND DEFICIT
Year ended June 30
1995 1994 1993
INCOME:
Net sales (Note P) US$ 775,404 US$ 617,044 US$ 2,212,574
Other income 18,150 28,713 31,143
Gain in translation 30,772 80,201
793,554 676,529 2,323,918
COST AND OPERATING EXPENSES:
Cost of products sold 800,488 990,877 2,018,968
Administrative expenses 311,667 195,168 143,674
Loss on translation 93,410
Amortization of facilities
costs 107,791
Interest expenses 950,308 815,437 402,412
Other expenses 16,786 6,268 16,765
2,280,450 2,007,750 2,581,819
NET LOSS (1,486,896) (1,331,221) (257,901)
DEFICIT (2,808,769) (1,477,548) (1,219,647)
ACCUMULATED DEFICIT
(Note N) US$(4,295,665) US$(2,808,769) US$ (1,477,548)
See notes to consolidated and combined financial statements.
LANGOMORO CIA. LTDA. AND AFFILIATED COMPANIES
STATEMENT OF CASH FLOWS - DIRECT METHOD
Year ended June 30
1995 1994 1993
CASH FLOWS FROM OPERATING
ACTIVITIES:
Cash received from
customers US$ US$ 867,766 US$ 2,981,687
Cash paid to suppliers
and employees (201,642) (1,119,356) (2,605,143)
Financial expenses (293,508) (812,114) (356,267)
Other income 2,639 23,673 8,022
Net cash (used) provided in
operating activities (492,511) (1,040,031) 28,299
CASH FLOWS FROM INVESTING
ACTIVITIES:
Temporary investments (2,690)
Additions and purchase of
property (4,018,932) (926,225) (759,263)
Additions to Facilities
Cost (918,796) (172,227)
Decrease to Facilities
Cost 13,113
Net cash used in
investing activities (4,005,819) (1,847,711) (931,490)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowing under
line-of-credit
agreements net
payments 943,169 (658,520) 749,829
Additional paid in
capital 3,547,738 2,643,411 79,977
Third party loans 929,123
Net cash provided by
financing activities 4,490,907 2,914,014 829,806
Effect due to variation
in cash exchange rate (18,888) 1,210 6,971
Net (decrease) increase
in cash (26,311) 27,482 (66,414)
Cash at beginning of the
period 28,468 987 67,401
Cash at end of the
period US$ 2,157 US$ 28,468 US$ 987
See notes to consolidated and combined financial statements.
LANGOMORO CIA. LTDA. AND AFFILIATED COMPANIES
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES
Year ended June 30
1995 1994 1993
NET LOSS US$(1,486,896) US$(1,331,221) US$ (257,901)
ADJUSTMENTS TO RECONCILE
NET LOSS TO NET CASH
USED IN OPERATING
ACTIVITIES:
Special tax 16,591
Depreciation 82,368 91,372 65,196
Loss on translation 93,410
Amortization of facilities
costs 107,791
Transactions with related
companies, net (23,135)
Gain in translation (30,772) (80,201)
CHANGES IN OPERATING ASSETS
AND LIABILITIES:
Increase in accounts receivable
and related parties (20,487) (1,094,480) (342,775)
(Increase) decrease in
inventories (157,059) 361,056 102,179
(Increase) decrease in prepaid
expenses (7,958) (7,896) 4,538
Decrease in accrued
expenses 176,932 12,993 6,036
Increase in interest payable 257,007 50,288
Increase in accounts payable
and due to related parties 701,910 487,483
Increase in accounts payable
and due to related
parties 719,388
NET CASH (USED) PROVIDED
IN OPERATING ACTIVITIES US$ (492,511) US$(1,040,031) US$ 28,299
See notes to consolidated and combined financial statements.
LANGOMORRO, LANGOSTINERA EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES:
Langomorro, Langostinera El Morro Cia. Ltda. was founded on
November 11, 1981 in Guayaquil, Ecuador, for the purpose of
carrying out fishing activities. The Company purchased 99.98% of
the capital stock of Camazul Cia. Ltda. and both maintain produc-
tion relationships with Isca, Isla Camaronera C.A. The affiliated
companies' activities, taken as a whole (the Company) are the
nursery and grow-out, harvest and export of shrimp.
On May 23, 1991, 38% of the total shares issued by Langomorro and
Camazul was acquired by Marchelot S.A., a wholly-owned subsidiary
of Bluepoints of Bermuda.
Principles of consolidation and combination. The consolidated
and combined financial statements include the accounts of Camazul
Cia. Ltda., and Isca, Isla Camaronera C.A. in conformity with
accounting principles generally accepted in the United States of
America (USA-GAAP). Investments and all transactions and balanc-
es between consolidated parties have been eliminated.
Operations. Since the beginning of operations in 1981 and until
June 30, 1995, the Company has had recurring losses of approxi-
mately US$4,152,012. The origins of these recurring losses are
principally the deficiencies in the effective exploitation and
productivity in prior years of the 488 hectares of land available
in the ponds and grow-out pools operations, in recent years also
adversely affected by the "Taura Syndrome" increasing larvae
mortality rates.
Accounting Principles. The Company maintains its accounting
records in Sucres (S/.) Financial statements are translated using
the U.S. Dollar as the functional currency, in accordance with
generally accepted accounting principles prevailing in the United
States of America.
Inventories. Finished goods and products in process (shrimp) are
stated at the lower of cost or market, and include the value of
larvae purchases plus transport, feed, fertilizer, fringe bene-
fits, and depreciation.
Permanent investments. Are stated at cost, adjusted for the
equity method.
LANGOMORO, LANGOSTINERA EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES: (CONTINUED)
Property, machinery and equipment. Are recorded at cost. Expen-
ditures for maintenance and repairs are charged to expense as
incurred, whereas major improvements are capitalized. The
depreciation was calculated using the straight-line method, based
on the following estimated useful lives of the related assets: 40
years for pools and structures, machinery and equipment, 20 years
for boats, 10 years for furniture, laboratory equipment, various;
and 5 years for vehicles.
Changes in the purchasing power of the local currency. The
purchasing power of the local currency measured by the Consumer
Price Index, calculated by the National Institute of Statistics
and Census, is as follows:
Year ended Annual
December 31 inflation
1991 49%
1992 61%
1993 31%
1994 25%
1995 (June, 30) 14%
Translation of foreign currency and exchange rates. The finan-
cial position, the results of operations and the cash flows of
the Company are expressed in Ecuadorian Sucres and translated
into U.S. Dollars as follows:
1. Current assets and current liabilities are translated at the
free market exchange rate in effect at the close of the
period, except for: inventories and prepaid expenses, which
are translated at the exchange rates in effect when acquired
or originally recorded.
2. Property, machinery and equipment (and their related accumu-
lated depreciation), investments, other assets, and stockho-
lders' equity accounts, are translated at the exchange rates
in effect when acquired or originally recorded.
3. Revenue and expense accounts are translated at the average
monthly free exchange rate in effect during the period,
except for depreciation of fixed assets referred to above.
The translation into U.S. Dollars should not be assumed as
representation that Sucres have been, could have been, or could
in the future be converted into U.S. Dollars at these or any
other exchange rates.
LANGOMORRO, LANGOSTINERA EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
B. ACCOUNTS RECEIVABLE:
June 30
1995 1994
Foreign suppliers US$ 29,064 US$ 26,638
Advances to contractors 2,238
Advances to suppliers 2,731
Employees 2,803 1,551
Others 12,742 21,649
US$ 44,609 US$ 54,807
C. DUE FROM RELATED PARTIES:
June 30
1995 1994
Larfico, Larvas del Pacifico
S.A. US$ 1,036,707 US$ 751,923
Emporsa, Empacadora y
Exportadora S.A. 474,187
Comercial Inmobiliaria
Golconsa S.A. 21,487 48,055
Comercorp S.A. 42,224
Marchelot 22,382 22,989
Neneta S.A. 18,834 7,039
Bunsen 64,598 5,309
Inmobiliaria Ma. Luciana 9,524 1,399
Ing. Carlos Perez 16,322 27,663
Other companies, individually
inmaterial 65 4,715
US$ 1,189,919 US$ 1,385,503
The accounts with related parties correspond to monies given as
loans by current accounts maintained with the Company, non-
interest bearing and without fixed maturity.
D. INVENTORIES:
June 30
1995 1994
Products in process US$ 339,895 US$ 134,573
Finished goods 106,072 184,253
Materials and supplies 46,460 17,042
US$ 492,427 US$ 335,868
LANGOMORRO, LANGOSTINERA EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
E. PROPERTY, MACHINERY AND EQUIPMENT.
June 30
1995 1994
At acquisition cost:
Vehicles US$ 189,254 US$ 154,708
Fishing boats 227,000 184,159
Machinery and equipment 758,093 564,103
Construction in progress 5,258,314 1,527,480
Furniture and office equipment 67,254 68,101
Various 39,857 31,171
Installations 8,377 5,153
Land 4,184 4,184
Pools and reservoirs 1,345,579 1,344,719
Sluices for channels 155,404 155,404
Tools and fishing tackle 2,585 4,030
Pumping station 485,698 469,883
Laboratory equipment 14,465 14,828
Housing for personnel 58,939 49,505
Other properties 12,981 42,951
Wall Repairs 51,175 48,801
Wharf 21,212 12,260
Offices in Guayaquil 76,840 76,840
8,777,211 4,758,280
Less accumulated
depreciation (1,520,575) (1,438,207)
US$ 7,256,636 US$ 3,320,073
As of June 30, 1995 and 1994, property, machinery and equipment
includes US$2,105,475 and US$570,837 respectively for wall
repairs and other work in the pools and reservoirs which were
executed by individual contractors.
Construction in Progress correspond principally to the Reservoir
Project for recirculation of water and construction of ozone
plant which include US$707,998 transferred to the facilities cost
to June 1995.
All these constructions are expected to be concluded during the
year 1995.
LANGOMORRO, LANGOSTINERA EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
F. PERMANENT INVESTMENTS:
Percentage of June 30
stock owned 1995 1994
Larvas del Pacifico
S.A. 0.06 US$ 307 US$ 307
Isca, Isla
Camaronera C.A. 0.06 2,759 2,758
US$ 3,066 US$ 3,065
G. OTHER ASSETS:
June 30
1995 1994
Langomorro and Camazul:
. Facilities costs US$ 721,471 US$ 734,091
Isca:
. Facilities costs 356,439 356,932
Subtotal 1,077,910 1,091,023
Amortization 107,791
US$ 970,119 US$ 1,091,023
This account will be amortized in five years, starting on January
1995.
H. BANK LOANS PAYABLE:
June 30
1995 1994
Pacific Bank:
Obligation in dollars due in
July and August, 1995 and
1994 with interest, 13% US$ 544,700 US$ 147,200
Obligation in sucres, due
in July and August, 1994
with interest at 49 - 54% 307,339
Advances on future export
loans at the free market
exchange rate 480,000 338,000
Subtotal:... US$ 1,024,700 US$ 792,539
LANGOMORRO, LANGOSTINERA EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
H. BANK LOANS PAYABLE: (Continued)
June 30
1995 1994
Subtotal:... US$ 1,024,700 US$ 792,539
Lloyds Bank:
Obligation in dollars,
due in August, 1994
with interest at 12% 45,000
Obligation in sucres,
due in July, 1995 with
interest at 48-50% 428,130 405,620
US$ 1,452,830 US$ 1,243,159
The obligations are guaranteed with the personal signature of
the Company President.
On July 17, 1992 an open mortgage was subscribed, covering
Larfico's land, buildings and construction, laboratory equip-
ment and machinery, for the amount of US$1.8 million with Banco
del Pacifico of Ecuador and/or Panama. This open mortgage will
cover the current and future obligations of Emporsa S A.,
Larfico S.A., Langomorro Cia. Ltda., Isca C.A. and Camazul Cia.
Ltda..
I. NOTES AND ACCOUNTS PAYABLE:
June 30
1995 1994
Suppliers:
Expalsa, Exportadora de
Alimentos S.A. US$ 1,516 US$ 78,727
Intendancy of Companies
(Special tax) 5,931 11,903
Others 81,829 15,879
US$ 89,276 US$ 106,509
The principal debts to suppliers correspond to Expalsa, corre-
sponds to services of co-packing (packing and packaging in the
export of shrimp of US$0.34 per pound exported).
LANGOMORRO, LANGOSTINERA EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
J. DUE TO RELATED PARTIES
June 30
1995 1994
Emporsa US$ 94,993 US$ 23,260
Comercorp 28,956 3,119
Camarecsa 102,129 126,231
Marchelot 159,212
Larfico 132,878
Bluepoints 2,141,052 1,232,701
Others 7,486 10,510
US$ 2,533,828 US$ 1,528,699
The accounts with related companies correspond to monies
received as loans by current accounts maintained with those
companies, non-interest bearing and without fixed maturity.
To June 30, 1995, Bluepoints includes US$1,052,229 for advances
on future export-loans.
K. LONG-TERM DEBT:
June 30
1995 1994
Bluepoints Co. Inc. US$ 1,577,000 US$ 807,000
Statecourt Enterprises 405,000 405,000
Pacific Bank 484,400
Marchelot 307,355 307,355
2,289,355 2,003,755
Less current maturities 1,982,000 1,212,000
US$ 307,355 US$ 719,755
These obligations with Bluepoints Co. Inc. and Statecourt
Enterprises due in December 1991, generate a prime interest
rate of 9% in 1995 and 7.5% in 1994 with future maturities,
recorded at the free market rate of exchange.
LANGMORRO, LANGOSTINERA EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
L. COMMON STOCK:
June 30
1995 1994
Langomorro, Langostinera
El Morro Cia. Ltda. US$ 171,573 US$ 171,573
Isca, Isla Camaronera C.A. 869,973 869,974
US$ 1,041,546 US$ 1,041,547
M. ADDITIONAL PAID-IN CAPITAL:
The movement of this account, is a follows:
1995 1994
Balance June 30, 1994 and
1993 US$ 3,002,708 US$ 359,297
To September, 1993,
Contributions 274,359
To December, 1993,
Contributions 695,685
To March, 1994,
Contributions 439,726
To June, 1994,
Contribution 1,233,641
July 1, 1994 To June 30,
1995, Contributions 3,424,388
US$ 6,427,096 US$ 3,002,708
N. ACCUMULATED DEFICIT:
To June 30, the Company maintains an accumulated deficit of
US$4,295,665 in 1995 and US$2,808,769 in 1994, its current
liabilities exceed total current assets by US$4,749,489 in 1995
and US$2,386,920 in 1994. The origins of these recurring losses
are principally the deficiencies in the effective exploitation
and productivity in prior years of the 716 hectares of land
available, of which 488 correspond to ponds and grow-out pools,
another 71 are used as service areas and 157 hectares are unused.
These elements show that the Company may be unable to continue
as a going concern. However, the continuity of the Company as
a going concern will depend, as much on additional financing
funds that could be obtained as well as on having profitable
operations.
LANGOMORRO, LANGOSTINERA EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
N. ACCUMULATED DEFICIT: (Continued)
According to article 211 of the Ecuadorian Companies' Law, when
losses reach 50% or more of the capital stock and reserves of
each individual Company (Langomorro, Isca, Camazul) they must be
placed into liquidation if the stockholders do not increase
capital by means of fresh capital additions, capitalizing or
compensating credits, and/or capitalizing fixed assets' revalua-
tions surplus. The Management of the Company estimates the
causes for liquidation will be solved and overcome, and both the
Company and the companies will continue to operate normally.
The current Internal Tax Law permits compensating the operational
losses against the results of operations of each individual
company during the following five years, not exceeding 25% of the
earnings generated in each of these years.
O. EXCHANGE RATES:
The free market exchange rate in effect on June 30, 1995 and 1994
were S/.2,588 and S/.2.180 to US$1.00 (S/.2.580 US$1.00 of August
11, 1995).
P. SALES:
The volumes sold by the individual companies were as follows:
Volume Year ended June 30
Company 1995 1994 1995 1994
Langomoro,
Langostine-
ra el Morro
Cia. Ltda. &
Camazul Cia.
Ltda. 152,235 158,326 US$496,787 US$437,542
Isca, Isla
Camaronera
C.A. 81,122 68,842 278,617 179,502
Total 233,357 277,168 US$775,404 US$617,044
In 1995 and 1994 the 152,235 and 158,326 pounds of shrimp sold by
Langomorro Cia. Ltda. were produced utilizing 393 hectares, resulting
in a productivity of 387 and 403 pounds per hectare respectively in
these years. The 81,122 and 68,842 pounds of shrimp sold by Isca C.A.
were produced utilizing their 149 hectares, resulting in a productivi-
ty of 544 and 462 pounds per hectare respectively in these years.
LANGOMORRO, LANGOSTINERA EL MORRO CIA. LTDA.
AND AFFILIATED COMPANIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
Q. RELATED COMPANIES' TRANSACTIONS:
The Company has bought US$251,000 of shrimp larvae from Larfico,
Larvas del Pacifico S.A. during the year ended June 30, 1994.
The Company has paid Empacadora y Exportadora S.A. "Emporsa",
Ramozzi and Comercial Inmobiliaria "Galconsa S.A." for technical
services, generating expenses of US$20,534, US$369,622 and US$4,9-
16, respectively to June 30, 1994.
The Company has paid Romozzi for technical services, generating
expenses of US$220,961, to June 30, 1995.
R. INCOME TAX RETURN:
The income tax returns of the Companies have been reviewed up to
different periods, without important observations from the tax
authorities, as is shown:
Companies Reviewed Period
Langostinera del Morro (Langomorro) 1991
Isla Camaronera (Isca) 1993
Camazul 1993
S. RECLASSIFICATIONS:
The amount corresponding to the year ended June 30, 1994 were
reclassified to make them consistent with 1995.