Company Quick10K Filing
First Hartford
Price2.45 EPS3
Shares2 P/E1
MCap6 P/FCF-13
Net Debt-9 EBIT18
TEV-3 TEV/EBIT-0
TTM 2018-07-31, in MM, except price, ratios
10-Q 2018-07-31 Filed 2018-09-28
10-K 2018-04-30 Filed 2018-07-30
10-Q 2018-01-31 Filed 2018-03-29
10-Q 2017-10-31 Filed 2017-12-28
10-Q 2017-07-31 Filed 2017-10-10
10-K 2017-04-30 Filed 2017-07-31
10-Q 2017-01-31 Filed 2017-04-24
10-Q 2016-10-31 Filed 2017-01-17
10-Q 2016-07-31 Filed 2016-10-07
10-K 2016-04-30 Filed 2016-08-05
10-Q 2016-01-31 Filed 2016-04-05
10-Q 2015-10-31 Filed 2015-12-28
10-Q 2015-07-31 Filed 2015-09-29
10-K 2015-04-30 Filed 2015-08-05
10-Q 2015-01-31 Filed 2015-04-15
10-Q 2014-10-31 Filed 2015-02-04
10-Q 2014-07-31 Filed 2014-12-12
10-K 2014-04-30 Filed 2014-10-27
10-Q 2014-01-31 Filed 2014-08-07
10-Q 2013-10-31 Filed 2014-06-10
10-Q 2013-07-31 Filed 2014-05-09
10-K 2013-04-30 Filed 2014-03-25
10-Q 2013-01-31 Filed 2013-03-29
10-Q 2012-10-31 Filed 2012-12-19
10-Q 2012-07-31 Filed 2012-10-05
10-K 2012-04-30 Filed 2012-09-06
10-Q 2012-01-31 Filed 2012-04-20
10-Q 2011-10-31 Filed 2012-01-27
10-Q 2011-07-31 Filed 2011-12-14
10-K 2011-04-30 Filed 2011-11-02
10-Q 2011-01-31 Filed 2011-03-31
10-Q 2010-10-31 Filed 2011-01-11
10-Q 2010-07-31 Filed 2010-10-06
10-K 2010-04-30 Filed 2010-08-05
10-Q 2010-01-31 Filed 2010-03-26
10-Q 2009-10-31 Filed 2010-01-13
8-K 2018-10-19

FHRT 10Q Quarterly Report

Item 2. Management's Discussion and Analysis of Financial
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Removed and Reserved
Item 5. Other Information
Item 6. Exhibits
EX-31 ex31-1.htm
EX-31 ex31-2.htm
EX-32 ex32-1.htm
EX-32 ex32-2.htm

First Hartford Earnings 2011-10-31

Balance SheetIncome StatementCash Flow
2501951408530-252013201520172019
Assets, Equity
352719113-42013201520172019
Rev, G Profit, Net Income
1593-3-9-152013201520172019
Ops, Inv, Fin

10-Q 1 fh10q.htm First Hartford Form 10-Q

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

(Mark One)

 

[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended October 31, 2011.

 

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from_________ to ___________________________________

 

 

Commission File Number: _________________0-8862___________________________

 

First Hartford Corporation

(Exact name of registrant as specified in its charter)

 

 

Maine 

01-0185800 

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

149 Colonial Road    Manchester, CT

06042 

(Address of principal executive offices) 

(Zip Code)

 

 

860-646-6555

 (Registrant’s telephone number, including area code)

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by 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.                                                                                                                                                                                                            X Yes    No   

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

                                                                                                                                                            X Yes    No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer     

Accelerated filer 

 

 

Non-accelerated filer    (Do not check if a smaller reporting company)     

Smaller reporting company X

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

                                                                                                                                                 Yes   X No

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

2,423,202 as of January 23, 2012

 

1


 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

 

INDEX

 

PART I.

FINANCIAL INFORMATION 

PAGE
 

 

 
Item 1.

Financial Statements (Unaudited)

 
 

 

 
 

Condensed Consolidated Balance Sheets -

 
 

             October 31, 2011 and April 30, 2011  

3 - 4
 

 

 
 

Condensed Consolidated Statements of Operations for the

 
 

            Three and Six Months Ended October 31, 2011 and 2010 

5
 

 

 
 

Condensed Consolidated Statements of Cash Flows for the

 
 

            Six Months Ended October 31, 2011 and 2010 

6 - 7
 

 

 
 

Notes to Condensed Consolidated Financial Statements 

8 - 11
 

 

 
Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations  

11 - 12
 

 

 
Item 3.

Quantitative and Qualitative Disclosures About Market Risk   

12
 

 

 
Item 4.

Controls and Procedures   

13
 

 

 
PART II

OTHER INFORMATION

 
 

 

 
Item 1.

Legal Proceedings

13
 

 

 
Item 1A.

Risk Factors  

13
 

 

 
Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds    

13
 

 

 
Item 3.

Defaults Upon Senior Securities  

13
 

 

 
Item 4.

Removed and Reserved    

13
 

 

 
Item 5.

Other Information   

14
 

 

 
Item 6.

Exhibits           

14
 

 

 
  Signatures 15
     
  Exhibits 16 - 19
 

 

 
 

 

 
 

 

 

 

 

 

 

 

 

2


 


 


FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

ASSETS

 

 

 

 

 

 

October 31, 2011

 

 

April 30, 2011

 

 

 

 

 

 

 

Real estate and equipment:

 

 

 

 

 

 

 

   Developed properties (including $68,293,934 in October 2011 for VIEs)

 

 

 

$136,402,926

 

 

$136,321,737

   Equipment and tenant improvements  (including  $1,832,532 in October 2011 for VIEs)

 

2,506,528

 

2,434,052

 

 

138,909,454

 

138,755,789

 

 

 

 

 

   Less accumulated depreciation and amortization (including $4,650,099 in October

 

 

 

 

        2011 for VIEs)

 

13,313,186

 

11,546,363

 

 

 

125,596,268

 

127,209,426

         
   Property under construction (including $2,065,695 in October 2011 for VIEs)  

2,863,613

 

1,125,437

   

128,459,881

 

128,334,863

 

 

 

 

 

 

Cash and cash equivalents (including $476,522 in October 2011 for VIEs)

 

 

853,826

 

858,175

 

 

 

 

 

 

Cash and cash equivalents – restricted

 

536,392

 

 

618,086

 

 

 

 

 

Marketable securities  (including $151,136 in October 2011 for VIEs)

 

164,572

 

13,436

 

 

 

 

 

Accounts and notes receivable, less allowance for doubtful accounts of $192,500

 

 

 

 

   and $205,700 as of October 31, 2011 and April 30, 2011, respectively

 

 

 

 

   (including $158,836 in October 2011 for VIEs)

 

2,076,805

 

3,004,800

 

 

 

Other receivables

 

12,295,477

 

 

12,187,535

 

 

 

 

 

Deposits, escrows, prepaid and deferred expenses, net (including $7,427,119 in

 

 

 

   October 2011 for VIEs)

9,656,669

 

11,220,354

 

 

 

 

 

Investments in affiliates

 

 

 

9,665

 

 

9,665

 

 

 

 

 

 

Due from related parties and affiliates

 

 

 

501,697

 

484,888

 

 

 

 

 

Deferred income tax assets, net

 

 

843,000

 

1,238,000

 

 

 

 

 

Total Assets

 

$155,397,984

 

$157,969,802

 

 

 

 

 

See accompanying notes.

3


 


 


 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

(Unaudited)

 

 

LIABILITIES AND DEFICIENCY

 

 

 

 

 

 

 

 

 

 

 

 

 

October 31, 2011

 

April 30, 2011

Liabilities:

 

 

 

 

 

   Mortgages and notes payable:

 

 

 

 

   Construction loans payable  (including $26,334,614 in October 2011 for VIEs)

 

$74,611,990

 

$72,478,683

   Mortgages payable (including $34,136,455 in October 2011 for VIEs)

 

64,814,785

 

65,360,424

   Notes payable (including $2,004,697 in October 2011 for VIEs)  

4,405,194

 

4,618,135

 

 

143,831,969

 

142,457,242

 

 

 

 

 

Accounts payable (including $919,061 in October 2011 for VIEs)

 

2,024,478

 

3,297,878

Other payables

 

5,556,296

 

5,218,947

Accrued liabilities (including $2,422,452 in October 2011 for VIEs)

 

3,996,237

 

6,930,289

Deferred income (including $217,012 in October 2011 for VIEs)

 

679,013

 

665,549

Other liabilities

 

4,054,850

 

4,387,981

Due to related parties and affiliates

 

102,752

 

102,752

Total Liabilities

 

160,245,595

 

163,060,638

 

 

 

 

 

 

 

Deficiency:

 

 

 

 

First Hartford Corporation:

 

Preferred stock, $1 par value; $.50 cumulative and convertible;

 

  authorized 4,000,000 shares; no shares issued and outstanding

 

-0-

 

-0-

Common stock, $1 par value; authorized 6,000,000 shares;

 

 

 

  issued 3,298,609 shares

3,298,609

 

3,298,609

Capital in excess of par

 

5,198,928

 

5,198,928

Accumulated deficit

 

(16,769,905)

 

(17,503,081)

Accumulated other comprehensive income

 

64,210

 

64,210

Treasury stock, at cost, 861,898 shares as of October 31, 2011 and

 

 

 

 

   April 30, 2011

 

(4,923,836)

 

(4,923,836)

Total First Hartford Corporation  

(13,131,994)

 

(13,865,170)

Non-controlling interests  

8,284,383

 

8,774,334

         
Total Deficiency  

(4,847,611)

 

(5,090,836)

         
Total Liabilities and Deficiency  

$155,397,984

 

$157,969,802

 

 

 

 

 

 

 

See accompanying notes.

4


 


 


 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

Oct. 31, 2011

 

Oct. 31, 2010

 

Oct. 31, 2011

 

Oct. 31, 2010

 

 

 

 

 

 

 

 

Operating revenues:

 

 

 

 

 

 

 

     Rental income

$4,374,374

 

$4,153,543

 

$8,795,081

 

$8,352,020

     Service income

2,533,124

 

908,390

 

3,443,366

 

1,676,229

     Sales of real estate

1,559,658

 

-0-

 

1,559,658

 

-0-

     Other income (expense)

6,637

 

(84,521)

 

7,801

 

791

 

8,473,793

 

4,977,412

 

13,805,906

 

10,029,040

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

     Rental expenses

3,461,833

 

3,409,805

 

6,622,769

 

6,558,256

     Services expenses

657,997

 

713,355

 

1,290,388

 

1,346,751

     Cost of real estate sales

968,061

 

-0-

 

968,061

 

-0-

     Selling, general and administrative

1,007,127

 

965,069

 

1,738,675

 

1,737,667

 

6,095,018

 

5,088,229

 

10,619,893

 

9,642,674

 

 

 

 

 

 

 

 

Income (loss) from operations

2,378,775

 

(110,817)

 

3,186,013

 

386,366

 

 

 

 

 

 

 

 

Non-operating income (expense):

 

 

 

 

 

 

 

     Interest expense

(1,928,549)

 

(1,714,919)

 

(3,841,315)

 

(3,405,114)

     Other income

74,770

 

142,104

 

149,538

 

142,104

     Equity in earnings of unconsolidated subsidiaries

352,126

 

280,834

 

1,143,883

 

496,271

 

(1,501,653)

 

(1,291,981)

 

(2,547,894)

 

(2,766,739)

 

 

 

 

 

 

 

 

Income (loss) before income taxes

877,122

 

(1,402,798)

 

638,119

 

(2,380,373)

 

 

 

 

 

 

 

 

Income taxes

395,018

 

-0-

 

394,893

 

2,350

 

 

 

 

 

 

 

 

Net income (loss)

482,104

 

(1,402,798)

 

243,226

 

(2,382,723)

 

 

 

 

 

 

 

 

Net loss attributable to noncontrolling interests

224,126

 

454,215

 

489,952

 

423,223

 

 

 

 

 

 

 

 

Net income (loss) attributable to First Hartford Corporation

$706,230

 

$(948,583)

 

$733,178

 

$(1,959,500)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share - basic

$0.29

 

$(0.31)

 

$0.30

 

$(0.65)

 

 

 

 

 

 

 

 

Net income (loss) per share - diluted

$0.28

 

$(0.31)

 

$0.29

 

$(0.65)

 

 

 

 

 

 

 

 

Shares used in basic per share computation

2,436,711

 

3,027,965

 

2,436,711

 

3,027,965

 

 

 

 

 

 

 

 

Shares used in diluted per share computation

2,509,292

 

3,027,965

 

2,529,569

 

3,027,965

 

 

 

 

 

 

 

 

See accompanying notes.

 

 

5


 


 


FIRST HARTFORD CORPORATION AND SUBSIDIARIES

(Unaudited)

 

 

 

 

 

 

Six Months Ended

 

October 31, 2011

 

October 31, 2010

Operating activities:

 

 

 

  Net income (loss)   

$243,226

 

$(2,382,723)

  Adjustments to reconcile net income (loss)  

 

 

 

     to net cash used by operating activities:

 

 

 

  Equity in earnings of unconsolidated subsidiaries, net of   
     distributions of  $610,751 in 2011

(533,132)

 

 

(496,271)

  Gain on sale of real estate

(591,597)

 

-0-

  Deferred income taxes

395,000

 

-0-

  Depreciation

1,764,694

 

1,694,031

  Amortization

178,643

 

142,475

 

 

 

 

 

  Changes in operating assets and liabilities:

 

 

 

  Accounts, notes and other receivables

820,053

 

4,919,999

  Deposits, escrows, prepaid and deferred expenses

1,385,042

 

(417,013)

  Cash and cash equivalents – restricted

81,694

 

181,750

  Accrued liabilities

(2,934,052)

 

(409,222)

  Deferred income

13,464

 

49,707

  Accounts and other payables

(936,051)

 

(4,987,275)

 

 

 

 

Net cash used by operating activities

(113,016)

 

(1,704,542)

 

 

 

 

Investing activities:

 

 

 

  Distributions from affiliates

200,000

 

353,132

  Purchase of marketable securities

(151,136)

 

(160,000)

  Purchase of equipment and tenant improvements

(72,476)

 

(114,236)

  Proceeds from sale of real estate

1,559,658

 

-0-

  Deconsolidation of CP Associates, LLC

-0-

 

(1,891,798)

  Additions to developed properties and properties under    
    construction

(2,785,296)

 

(10,790,989)

Net cash used by investing activities

(1,249,250)

 

(12,603,891)

 

 

 

 

 

 

 

See accompanying notes.

6


 


 


FIRST HARTFORD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

 

 

 

Six Months Ended

 

 

October 31, 2011

 

 

October 31, 2010

 

 

 

 

Financing activities:

 

 

 

  Limited partners investment in consolidated joint ventures

$-0-

 

$936,401

  Proceeds from:

 

 

 

     Construction loans payable

2,310,618

 

12,779,943

     Mortgage loans payable

550,000

 

-0-

     Notes payable

25,000

 

-0-

  Principal payments on:

 

 

 

     Construction loans payable

(177,312)

 

-0-

     Mortgage loans payable

(1,095,639)

 

(534,263)

     Notes payable

(237,941)

 

(483,062)

  Advances to related parties and affiliates, net

(16,809)

 

(6,901)

Net cash provided by financing activities

1,357,917

 

12,692,118

 

 

 

 

 

Net change in cash and cash equivalents

(4,349)

 

(1,616,315)

 

 

 

 

Cash and cash equivalents, beginning of period

858,175

 

5,179,164

 

 

 

 

Cash and cash equivalents, end of period

$853,826

 

$3,562,849

 

 

 

 

$3,007,214

 

$3,118,097

Cash paid during the period for income taxes

$13,114

 

$35,791

 

 


See accompanying notes.

 

 

7


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.            Business and Significant Accounting Policies:

 

Description of Business

 

First Hartford Corporation was incorporated in Maine in 1909 and is engaged in the purchase, development, ownership, management and sale of real estate.

 

Principles of Consolidation

 

The accompanying condensed consolidated financial statements include the accounts of First Hartford Corporation (the “Company”), its wholly owned subsidiaries, and all other entities in which the Company has a controlling interest, including those where the Company has been determined to be a primary beneficiary of a variable interest entity or meets certain criteria as a sole general partner or managing member in accordance with the consolidation guidance of the Financial Accounting Standards Board Accounting Standards Codification. As such, included in the consolidated financial statements are the accounts of Rockland Place Apartments Limited Partnership and Clarendon Hill Somerville Limited Partnership. The Company’s ownership percentage in these variable interest entity partnerships is nominal.  All significant intercompany balances and transactions have been eliminated. 

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments to previously established loss provisions) considered necessary for a fair presentation have been included.  Operating results for the interim periods are not necessarily indicative of the results that may be expected for the entire year. The condensed consolidated balance sheet as of April 30, 2011 was derived from the audited financial statements for the year then ended. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended April 30, 2011.

           

Because the Company is engaged in the development and sale of real estate at various stages of construction, the operating cycle may extend beyond one year. Accordingly, following the usual practice of the real estate industry, the accompanying condensed consolidated balance sheets are unclassified.

 

Change in Accounting Policy

 

The Company adopted, as required, Accounting Standards Update (“ASU”) 2009-17 Consolidations (Topic 810):  Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities effective May 1, 2010.  Under this ASU, the identification of a primary beneficiary of a variable interest entity (“VIE”) is defined as the enterprise that has both of the following characteristics:  a) the power to direct the activities of a VIE that most significantly impacts the VIE’s economic performance, and b) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.  Based on this updated guidance, the Company determined that it is no longer considered to be the primary beneficiary of CP Associates, LLC (“CP Associates”).  As a result of the initial application of this updated guidance, the Company deconsolidated CP Associates as of May 1, 2010 and has measured its 50% retained interest in CP Associates at the carrying amount of the Company’s retained interest had this updated guidance been effective when CP Associates was initially formed. 

 

8


 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.            Business and Significant Accounting Policies (concluded):

 

Change in Accounting Policy (concluded):

 

The difference between the net amount derecognized from the Company’s balance sheet and the amount of the Company’s 50% retained interest in CP Associates has been recognized as a cumulative effect adjustment to the Company’s equity as of May 1, 2010.

 

Currently, there are no ASUs that the Company is required to adopt which are likely to have a material effect on its financial statements.

 

Net Income (Loss) Per Common Share

 

Basic net income (loss) per share amounts are determined using the weighted average number of shares of common stock outstanding during the reporting period. Diluted earnings (loss) per share amounts include the weighted average outstanding common shares as well as dilutive common stock options of 72,581 and 92,858 shares for the three and six month periods ended October 31, 2011. Common stock options of 103,724 and 116,505 for three and six month periods ended October 31, 2010 were anti-dilutive.

 

Financial Instruments and Fair Value

 

The Company’s financial instruments include cash and cash equivalents, accounts receivable, marketable securities, accounts payable, accrued expenses, and debt. The fair values of accounts receivable, accounts payable and accrued expenses are estimated to approximate their carrying amounts because of their relative short-term nature. In general, the carrying amount of variable rate debt approximates its fair value. Further, the carrying amount of fixed rate debt approximates fair value since the interest rates on the debt approximates the Company’s current incremental borrowing rate. Marketable securities consist of equity securities and are stated at fair value based on the last sale of the period obtained from recognized stock exchanges (i.e. Level 1). There were no significant gross unrealized gains or temporary losses on such securities as of either October 31, 2011 or April 30, 2011.  Net unrealized gains of $64,210 are included in accumulated-other comprehensive income.

 

2.             Consolidated Variable Interest Entities and Investments in Affiliated Partnerships:

 

The Company has consolidated both Rockland and Clarendon based on the express legal rights and obligations provided to it by the underlying partnership agreements and its control of their business activity. The assets of these partnerships can only be used to settle their obligations and their liabilities for which creditors (or beneficial interest holders) do not have recourse to the general credit of the Company are shown parenthetically in the line items of the consolidated balance sheets.  A summary of the assets and liabilities of Rockland and Clarendon included in the Company’s consolidated balance sheets follows:

 

 

 

 

October 31

 

April 30

 

2011

 

2011

Real estate and equipment, net

$70,628,253 

 

$68,919,929 

Other assets

8,213,613 

 

8,761,962 

Total assets

78,841,866 

 

77,681,891 

Intercompany profit elimination

 (3,086,191)

 

(3,140,022)

Total assets

$75,755,675 

 

$74,541,869 

 

 

 

 

Mortgages and other notes payable

$62,475,766 

 

$60,640,156 

Other liabilities

3,762,699 

 

3,380,712 

Total liabilities

$66,238,465 

 

$64,020,868 

 

9

 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

2.            Consolidated Variable Interest Entities and Investments in Affiliated Partnerships (concluded):

 

The Company accounts for its 50% ownership interest in CP Associates, LLC, Cranston Parkade, LLC and Dover Parkade, LLC under the equity method of accounting.  A summary of the operating results for these entities follows:

 

 

Three Months Ended

Six Months Ended

 

June 30, 2011

 

June 30, 2010

 

June 30, 2011

 

June 30, 2010

CP Associates, LLC

 

 

 

 

 

 

 

     Revenues

$782,153 

 

$776,155 

 

$1,559,139 

 

$1,556,710 

     Expenses

598,477 

 

630,492 

 

1,185,622 

 

1,257,789 

     Loss on derivatives

(367,144)

 

(261,205)

 

(36,757)

 

(1,347,209)

Net income (loss)

($183,468)

 

($115,542)

 

$336,760 

 

($1,048,288)

 

 

 

 

 

 

 

 

 

June 30, 2011

 

June 30, 2010

 

June 30, 2011

 

June 30, 2010

Cranston Parkade, LLC

 

 

 

 

 

 

 

     Revenue

$1,269,142 

 

$1,198,379 

 

$2,493,257 

 

$2,492,136 

     Expenses

1,003,614 

 

 1,024,621 

 

2,016,795 

 

2,018,455 

Net income

$265,528 

 

$173,758 

 

$476,462 

 

$473,681 

 

 

 

 

 

 

 

 

 

October 31, 2011

 

October 31, 2010

 

October 31, 2011

 

October 31, 2010

Dover Parkade, LLC

 

 

 

 

 

 

 

     Revenue

$662,606 

 

$609,879 

 

$1,261,366 

 

$1,282,552 

     Expenses

523,616 

 

  516,494 

 

1,008,327 

 

1,063,573 

Net income

$138,990 

 

$93,385 

 

$253,039 

 

$218,979 

 

For the years prior to May 1, 2009, the Company was committed to provide funding to CP Associates, LLC, Cranston Parkade LLC and Dover Parkade LLC. Although the Company no longer considers itself liable for their obligations it had not previously discontinued applying the equity method on these investments since the Company had previously considered itself to be committed to providing financial support to them. The Company’s investment in them was recorded at cost and subsequently adjusted for their gains, losses and distributions. The resulting carrying value of these investments is ($4,054,850) as of October 31, 2011 and ($4,387,981) as of April 30, 2011 is included in other liabilities.

 

3.            Income Taxes:

 

As of October 31, 2011, the Company has concluded that it is more likely than not that it will realize $843,000 in deferred income tax assets. The effective income tax rate for the three and six months ended October 31, 2011 differs from the customary expected Federal statutory rate primarily because the Company does not obtain any income tax benefit for the losses attributable to the noncontrolling interests in Rockland and Clarendon.

 

4.            Litigation:

           

In connection with a court order, on November 29, 2010, the Company purchased 591,254 shares of common stock beneficially owned by Richard E. Kaplan.  Under the terms set by the court, the Company made a cash payment of $500,000 and issued a secured note for $2,879,407.  The note is payable in quarterly installments of  $118,970 plus interest through November 1, 2015.  The accrual for this matter was recorded prior to May 1, 2009.  In addition, the Company was also required to pay “pre-judgment interest” from September 13, 2005 through November 29, 2010 of approximately $790,000 which is due November 1, 2015. 

10


 


 


 

 

 

 

FIRST HARTFORD CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

4.            Litigation (concluded):

 

Such interest has been accrued as the litigation proceeded.  The Company has pledged the aforementioned 591,254 shares of repurchased common stock and a security interest in certain of the Company’s other assets as collateral. On December 14, 2010, the Company filed an appeal with the United States Court of Appeal for the First Circuit, but the Court’s verdict was affirmed.  The Company has filed an appeal for rehearing which was denied. On December 16, 2011, Kaplan filed a suit to recover approximately $140,000 in legal fees. The Company does not believe it will ultimately be liable to Kaplan for these fees.

 

5.            Subsequent Events:

On January 6, 2012, Protective Life Insurance Company (the lender for the Edinburg shopping center) received $4,403,382 from the proceeds of the public infrastructure bonds. Of that amount, $3,600,000 was applied as a principal payment of the outstanding loan and $803,382 was deposited into a special escrow account to meet any shortfall amounts of the shopping center.

 

The remaining balance of the receivable of $7,316,917 will be paid via sales tax or additional funding from bonds.

 

Item 2.                    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

 

The financial and business analysis below provides information which the Company believes is relevant to an assessment and understanding of the Company’s financial position and results of operations.  This financial and business analysis should be read in conjunction with the condensed consolidated financial statements and related notes.

 

The following discussion and certain other sections of this Report on Form 10-Q contain statements reflecting the Company’s views about its future performance and constitutes “forward-looking statements” under the Private Securities Litigation Reform Act of 1995.  These views may involve risks and uncertainties that are difficult to predict and may cause the Company’s actual results to differ materially from the results discussed in such forward-looking statements.  Readers should consider how various factors including changes in general economic conditions, cost of materials, interest rates and availability of funds, and the nature of competition and relationships with key customers may affect the Company’s performance.  The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or other.

 

Critical Accounting Policies

 

There have been no significant changes in the Company’s critical accounting policies from those included in Item 7 of its Annual Report on Form 10-K for the year ended April 30, 2011 under the subheading "Critical Accounting Policies and Estimates". Significant judgment was required to estimate the cost of real estate sold. Based upon the lot sold and negotiations with possible purchasers and/or tenants, management determined by best estimates the cost allocation of the lots.

 

Results of Operations

 

Rental Income

 

Rental income increased approximately $220,000 and $443,000 for the three and six month periods ended October 31, 2011 compared to the three and six periods ended October 31, 2010.  The increase is mainly from Clarendon Towers as a result of having fewer apartments unoccupied for renovations.

11


 


 


 

 

 

 

 

Item 2.                   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued):

 

Service Income

 

Service income increased approximately $1,625,000 and $1,767,000 for the three and six month periods ended October 31, 2011 as compared to the same periods in 2010. Of the increase, $1,530,000 was due to a development fee received by Connolly and Partners, LLC (a 75% owned subsidiary of the Company). The fee is related to arranging a purchase, financing and renovation for a partnership in which a subsidiary of the Company has a nominal, non-controlling interest as a limited partner.

 

Real Estate Transactions

 

On October 5, 2011, the Company purchased an 18.46 acre parcel of land in Del Valle, Texas for $2,412,875 and immediately sold a 2.26 acre parcel for approximately $1,560,000. The three and six month periods ended October 31, 2010 did not have any sales of real estate. The Company realized a gain of $591,597 on the sale.

 

Interest Expense

 

Increases in interest expense for the three and six month periods ended October 31, 2011, as compared to the three and six month periods ended October 31, 2010, are due to additions to the mortgage in finishing the Clarendon project. 

 

Equity in Earnings of Unconsolidated Subsidiaries.

 

The equity in earnings of unconsolidated subsidiaries increased approximately $71,000 and $648,000 for the three and six month periods ended October 31, 2011 compared to the periods ended October 31, 2010.  Included in the increases are income from operations of approximately $175,000 and $111,000, respectively. The larger variances are due to additional changes in derivatives compared to prior periods, as well as certain distributions.

 

Capital Resource and Liquidity

 

The Company ended the period with approximately $854,000 of unrestricted cash and cash equivalents.  The unrestricted cash and cash equivalent including approximately $476,000 belonging to less than wholly owned consolidated partnerships (Rockland Place, LP - $160,000 and Clarendon Hill Somerville, LP - $316,000).  Funds received from CVS Pharmacy, which are to be paid out in connection with CVS developments amounted to approximately $536,000 and is included in restricted cash and cash equivalents.

 

In the April 30, 2011 10-K the Company recited a list of items that supports the Company’s contention that it believes that it has sufficient liquidity without any need to borrow funds to fund operations.

 

As of October 31, 2011, the Company has $143,831,969 of mortgages and notes payable outstanding.  Maturities thereon which require cash payments over the next twelve months approximate those as of April 30, 2011.  Expenditures for renovation construction projects during that same time frame will continue to be funded from proceeds under existing borrowing arrangements and from capital contribution commitments from limited partners in the Company’s VIEs.  Further, the Company expects that cash provided by operating activities along with its available cash resources as of October 31, 2011 will be sufficient to fund other activities.

 

Item 3.             QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Smaller reporting companies are not required to provide the information required by this item.

 

 

 

 

12


 


 


 

Item 4.           CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our President and Treasurer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our President and Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15b of the Exchange Act. Based on this Evaluation, our President and Treasurer concluded that because of weaknesses in our control environment, our Disclosure Controls were not effective as of the end of the period covered by this report. Notwithstanding weaknesses in our control environment, as of October 31, 2011, we believe that the condensed consolidated financial statements contained in this report present fairly the Company’s financial condition, results of operations and cash flows for the periods presented.

 

Changes in Internal Control Over Financial Reporting

 

As of the end of the period covered by this report, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period covered by this report, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II           OTHER INFORMATION

 

Item 1.             LEGAL PROCEEDINGS

 

In connection with a court order, on November 29, 2010, the Company purchased 591,254 shares of common stock beneficially owned by Richard E. Kaplan.  Under the terms set by the court, the Company made a cash payment of $500,000 and issued a secured note for $2,879,407.  The note is payable in quarterly installments of $118,970 plus interest through November 1, 2015.  The accrual for this matter was recorded prior to May 1, 2009.  In addition, the Company was also required to pay “pre-judgment interest” from September 13, 2005 through November 29, 2010 of approximately $790,000 which is due November 1, 2015.  Such interest has been accrued as the litigation proceeded.  The Company has pledged the aforementioned 591,254 shares of repurchased common stock and a security interest in certain of the Company’s other assets as collateral.  On December 14, 2010, the Company filed an appeal with the United States Court of Appeal for the First Circuit, but the Court’s verdict was affirmed.  The Company has filed an appeal for rehearing which was denied. On December 16, 2011, Kaplan filed a suit to recover approximately $140,000 in legal fees. The Company does not believe it will ultimately be liable to Kaplan for these fees.

 

Item 1A.           RISK FACTORS

 

                        Smaller reporting companies are not required to provide the information required by this item.

 

Item 2.             UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

                        None

 

Item 3.             DEFAULTS UPON SENIOR SECURITIES

 

                        None

 

Item 4.             REMOVED AND RESERVED

13


 


 


 

 

 

 

 

Item 5.             OTHER INFORMATION

 

                        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     

(a)

The annual meeting of the Company was held on November 30, 2011.

   
(b) Elected as Directors: Neil H. Ellis, David Harding and Stuart Greenwald
   
(c)

Director

Votes For

Votes Withheld

Abstention

 

Ellis

1,972,514

1,807

None

 

Harding

1,972,514

1,807

None

 

Greenwald

1,972,514

1,807

None

 

 

 

 

 

 

 

 

 

Item 6.             EXHIBITS

 

a)             Exhibits:

 

Exhibit 31.1       Certification of Chief Executive Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934.

 

Exhibit 31.2       Certification of Chief Financial Officer, pursuant to Rule 13a-14(c) under the Securities Exchange Act of 1934.

 

Exhibit 32.1       Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350.

 

Exhibit 32.2       Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350.

14


 


 


 

 

 

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.

 

 

First Hartford Corporation

 

(Registrant)

 

 

 

     /s/ Neil H. Ellis

January 27. 2012  

______________________________

Date

     Neil H. Ellis B President and

 

     Chief Executive Officer

 

 

January 27.  2012  

     /s/ Stuart I. Greenwald

Date

______________________________

 

     Stuart I. Greenwald B Treasurer

 

     and Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15