FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20459
[X] QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 30, 2004
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 1-8254
THACKERAY CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 04-2446697
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
350 Fifth Avenue
Suite 2723
New York, New York 10118
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(Address of principal executive offices) (Zip Code)
(212) 564-3393
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(Registrant's telephone number, including area code)
Unchanged
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,107,401 shares of common
stock, $.10 par value, as of November 1, 2004.
THACKERAY CORPORATION AND SUBSIDIARY
- INDEX -
PAGE(S)
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PART I: FINANCIAL INFORMATION:
Item 1 - Consolidated Financial Statements
Condensed Balance Sheets - September 30, 2004 (unaudited) and
December 31, 2003 3
Condensed Statements of Operations - Three and Nine Months Ended
September 30, 2004 and 2003 (unaudited) 4
Condensed Statements of Cash Flows - Nine Months Ended September
30, 2004 and 2003 (unaudited) 5
Notes to Interim Condensed Financial Statements 6 -7
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations 8
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 9
Item 4 - Controls and Procedures 9
PART II. OTHER INFORMATION 9-10
SIGNATURE 11
EXHIBITS
2
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THACKERAY CORPORATION AND SUBSIDIARY
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CONSOLIDATED CONDENSED BALANCE SHEETS
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SEPTEMBER 30, 2004 December 31, 2003
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(UNAUDITED)
ASSETS:
Cash and cash equivalents $ 703,000 $ 1,298,000
Investment in land 1,951,000 1,951,000
Investment in real estate partnership - -
Other assets 74,000 61,000
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TOTAL ASSETS $ 2,728,000 $ 3,310,000
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses $ 127,000 $ 24,000
Other liabilities 60,000 60,000
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TOTAL LIABILITIES 187,000 84,000
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value; 20,000,000 shares
authorized; 5,107,401 shares issued and
outstanding 511,000 511,000
Capital in excess of par value 43,542,000 43,542,000
Accumulated deficit (41,512,000) (40,827,000)
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TOTAL STOCKHOLDERS' EQUITY 2,541,000 3,226,000
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,728,000 $ 3,310,000
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THACKERAY CORPORATION AND SUBSIDIARY
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
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(UNAUDITED)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
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2004 2003 2004 2003
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REVENUES FROM REAL ESTATE $ - $ - $ - $ -
EXPENSES OF REAL ESTATE:
Equity in net loss from real estate partnership - - - -
---------------- ---------------- ---------------- ---------------
LOSS FROM REAL ESTATE - - - -
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OTHER EXPENSES (INCOME):
General and administrative expense 349,000 166,000 691,000 496,000
Interest income (2,000) (2,000) (6,000) (12,000)
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347,000 164,000 685,000 484,000
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LOSS BEFORE INCOME TAXES (347,000) (164,000) (685,000) (484,000)
Income tax benefit - - - -
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NET LOSS $ (347,000) $ (164,000) $ (685,000) $ (484,000)
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LOSS PER SHARE $ (.07) $ (.03) $ (.13) $ (.09)
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NUMBER OF SHARES 5,107,401 5,107,401 5,107,401 5,107,401
========= ========= ========= =========
4
THACKERAY CORPORATION AND SUBSIDIARY
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
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FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
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(UNAUDITED)
2004 2003
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (685,000) $ (484,000)
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable and accrued liabilities 103,000 (101,000)
(Increase) in other assets, net (13,000) -
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NET CASH USED IN OPERATING ACTIVITIES (595,000) (585,000)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (595,000) (585,000)
Cash and cash equivalents - beginning of period 1,298,000 1,983,000
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CASH AND CASH EQUIVALENTS - END OF PERIOD $ 703,000 $ 1,398,000
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SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ -
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Taxes $ - $ -
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THACKERAY CORPORATION AND SUBSIDIARY
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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SEPTEMBER 30, 2004 AND 2003
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(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION:
The significant accounting policies followed by the Company in the
preparation of these unaudited interim condensed financial statements
are consistent with the accounting policies followed in the audited
annual financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.
Certain information and footnote disclosures included in the audited
financial statements have been omitted. For additional information,
reference is made to the financial statements and notes thereto
included in the Company's Annual Report to Stockholders for the year
ended December 3l, 2003.
The net loss applicable to common stock for the three and nine months
ended September 30, 2004 and 2003 was divided by the number of shares
outstanding during the period to determine per share data.
NOTE 2. REAL ESTATE PARTNERSHIP:
In October 2001, the Company's real estate partnership
("Partnership") with Belz Enterprises received equity and debt
funding in excess of $120 million for the Partnership's planned
925,000 sq. ft. Festival Bay, Orlando, Florida retail/entertainment
center. Thackeray contributed $1,750,000 to the equity portion of the
funding.
The Partnership has incurred net losses and negative operating cash
flows since inception of operations in 1999, as the project was being
developed and has experienced limited operating activity. Because of
its share of the cumulative losses of the Partnership, Thackeray's
balance of its investment in and advances to the Partnership was
reduced to zero as of March 31, 2002.
The following are the condensed statements of operations of the
Partnership (000's omitted) for the first nine months of 2004 and
2003:
For the Nine Months Ended
September 30,
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2004 2003
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Rental revenue $ 4,852 $ 2,796
Operating expenses (6,081) (3,789)
Interest expense (7,257) (3,900)
Depreciation and amortization expense (3,519) (3,599)
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Net loss $ (12,005) $ (8,492)
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The first nine months 2004 vs. 2003 revenue increase is attributable
to additional stores in operation in the 2004 period.
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THACKERAY CORPORATION AND SUBSIDIARY
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
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SEPTEMBER 30, 2004 AND 2003
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(UNAUDITED)
NOTE 2. REAL ESTATE PARTNERSHIP (CONTINUED):
The increase in interest expense results primarily from higher debt
levels in the first nine months of 2004 compared with 2003.
Operating expenses increased in the first nine months of 2004
compared with the first half 2003 due to the increased level of
operation in the 2004 period.
The Partnership was in default of provisions of its credit agreement
as amended which required certain annualized operating income and
small store lease levels be achieved by October 2003. The lenders
under the credit agreement and the mezzanine lender waived such
defaults and an amendment to such provisions was agreed to in January
2004. The amendment extends the maturity date of the credit agreement
and that of the mezzanine loan from October 1, 2004 to January 2,
2005, but provides for an additional extension of 1 year to January
2, 2006 if, by November 30, 2004, the Partnership is receiving
monthly base rent from signed leases of $800,000 and has achieved an
80% occupancy rate from tenants open for business. It has become
clear that the Partnership will be unable to satisfy either of the
November 30, 2004 requirements.
Leasing efforts for the project are ongoing; however, the project
continues to experience sluggish leasing activity.
The realization of the Company's real estate assets related to the
Partnership is dependent upon the Partnership's meeting the required
loan provisions discussed above, the availability of additional
funding from the partners to fund any remaining construction cost
overruns and any operating deficits and the successful future
development, leasing and operation of the real estate project.
NOTE 3. INCOME TAXES:
The Company anticipates it will generate a taxable loss for the year
ending December 31, 2004, and therefore it expects that no Federal or
State income taxes will be payable for the year ending December 31,
2004. For the year ended December 31, 2003 the Company reported a
taxable loss. In addition, for both periods, given the uncertainty
over whether the Company will realize benefits from such losses
against future taxable income, no net deferred income tax assets have
been recorded. Accordingly, in the aggregate, no Federal or State
income tax provisions or benefits have been recorded for the nine
month periods ended September 30, 2004 and 2003.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(1) Forward Looking Information
This report contains "forward looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward
looking statements are based upon management's expectations,
estimates, projections and assumptions. Words such as "expects",
"anticipates", "intends", "plans", "believes", "estimates", and
variations of such words and similar expressions are intended to
identify such forward looking statements which include, but are not
limited to, projections of capital expenditures, earnings, income
taxes payable, financing and capital infusions. These forward looking
statements are subject to risks and uncertainties which could cause
the Company's actual results or performance to differ materially from
those expressed or implied in such statements. These risks and
uncertainties include, but are not limited to the following: obtaining
additional financing to fund future operating requirements, the
ability of the Company to consummate the sale of its assets, general
risks affecting the real estate industry, including the need to enter
into new leases or renew leases on favorable terms to generate rental
revenues, competition for tenants from other owners of retail
properties, competition from other retailers, successful operations by
and the financial condition of tenants, particularly major tenants,
adverse changes in Orlando, Florida and national economic and market
conditions, ability to achieve financial requirements necessary for
extension of the Partnership's credit agreement beyond January 2, 2005
and access to and adequacy of financing to complete the Company's
Festival Bay project in Orlando, Florida. Any further terrorist
attacks or armed conflicts may directly impact the Company's
properties or such attacks or conflicts may cause consumer spending to
decrease or result in increased volatility in the United States
financial markets. Any of these occurrences could have a material
adverse impact on the Company.
(2) Material Changes in Financial Condition
The Company believes that its current cash balance will be sufficient
to fund its requirements for the balance of 2004. Unless the Company
is able to obtain a cash infusion through the sale of assets or third
party debt or equity financing, however, most, if not all, of the
Company's cash balance will be depleted in early 2005. The information
in "Item 5. Other Information" is incorporated herein by reference.
At September 30, 2004 there were no commitments for capital
expenditures.
(3) Material Changes in Results of Operations
Since the Company's investment in the Partnership was written down to
zero in 2002, there is no recognition by the Company of any share of
the Partnership's first nine months of 2004 losses.
General and administrative expenses for the first nine months of 2004
were $195,000 higher when compared to the similar period in 2003,
principally due to increased professional fees relating to the
Company's July 2004 agreement for the sale of its assets as well as to
increased insurance expense.
Interest income for the nine months ended September 30, 2004 was
$6,000 versus $12,000 for the comparable period in 2003. The decrease
results from the Company's maintaining lower cash investment balances
as well as receiving lower interest rates on invested cash.
8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
(a) The Company's management evaluated, with the participation of the
Company's principal executive and principal financial officers, the
effectiveness of the Company's disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), as of September 30,
2004. Based on their evaluation, the Company's principal executive and
principal financial officers concluded that the Company's disclosure
controls and procedures were effective as of September 30, 2004.
(b) There has been no change in the Company's internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act) that occurred during the Company's fiscal quarter
ended September 30, 2004, that has materially affected, or is
reasonably likely to materially affect, the Company's internal control
over financial reporting.
ITEM 5. OTHER INFORMATION
On July 23, 2004, the Company announced the execution of an agreement
for the sale of its partnership interest in Festival Bay and
approximately 78 acres of undeveloped land adjacent to Festival Bay -
captioned as "investment in land" on the Company's balance sheet - for
a total cash price of $6,250,000, subject to the existing mortgages on
such land. The agreement contains customary closing conditions,
including the receipt of a fairness opinion by the Company's board of
directors, which was received on October 13, 2004, the approval of the
agreement by the Company's shareholders, the approval of the
transactions and releases by the parties to the Partnership Agreement
and the receipt of requisite lender approvals. If the transactions
contemplated by the agreement are consummated, the Company intends to
liquidate its assets and dissolve. Shareholders owning more than 50%
of the issued and outstanding shares of Thackeray have indicated their
intention to vote in favor of this transaction. By reason of the
purchaser's termination right and the other conditions to closing,
there can be no assurance that the sale transaction will be
consummated.
ITEM 6. EXHIBITS:
(a) Exhibits
31.1 Certification of Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THACKERAY CORPORATION
By: /s/ Jules Ross
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Jules Ross
Vice President, Finance,
(Principal Financial Officer)
Date: November 1, 2004
10
EXHIBIT INDEX
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TO
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THACKERAY CORPORATION
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QUARTERLY REPORT ON FORM 10-Q
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FOR PERIOD ENDED SEPTEMBER 30, 2004
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Exhibit No. Description of Document
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31.1 Certification of Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
11