UNITED STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C.
20549





FORM 10-Q





(Mark
One)





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





For the
quarterly period ended September 30,
2009




or





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





For the
transition period from 
to





Commission File Number:
1-10104





UNITED CAPITAL
      CORP.(Exact
      name of registrant as specified in its
charter)





Delaware
                04-2294493(State
      or other jurisdiction of incorporation or organization)
                (I.R.S.
      Employer Identification
No.)




9
      Park Place, Great Neck, NY
            11021(Address
      of principal executive offices)
            (Zip
      Code)




516-466-6464(Registrant’s
      telephone number, including area code)N/A(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 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 (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).    
Yes o    
No o


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 the definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
(Check one):




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 o    No
x
  The
registrant had 9,102,930 shares of common stock, $.10 par value, outstanding as
of November 11, 2009.


Index




United
Capital Corp. and Subsidiaries
  Index
 
 PagePART I – FINANCIAL INFORMATIONITEM 1.
              FINANCIAL STATEMENTSCondensed Consolidated Balance Sheets as of
      September 30, 2009 (Unaudited) and December 31, 2008
              3Condensed Consolidated Statements of Operations
      for the Three and Nine Months Ended September 30, 2009 and 2008
      (Unaudited)
              4Condensed Consolidated Statements of Cash Flows for the
      Nine Months Ended September 30, 2009 and 2008
    (Unaudited)
              5Notes to Condensed Consolidated Financial Statements
      (Unaudited)
              6-13ITEM 2.
              MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS
              13-19ITEM 3.
              QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
              20ITEM 4T.
              CONTROLS AND PROCEDURES
              20PART II – OTHER INFORMATIONITEM 1.
              LEGAL PROCEEDINGS
              20
      - 21ITEM 1A.
              RISK FACTORS
              21ITEM 2.
              UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
              22ITEM 6.
              EXHIBITS
              22SIGNATURES
              
              22




2
 Index


PARTI – FINANCIAL INFORMATION






ITEM1.                 FINANCIAL
STATEMENTS


UnitedCapital Corp. and Subsidiaries
 Condensed
Consolidated Balance Sheets
 (In
thousands, except per share data)
 
 September
      30,
                  2009
              
              
              December
      31, 2008(Unaudited)AssetCurrent
      assets:Cash
      and cash equivalents
              
              $
              126,182
              
              
              $
              138,142Marketable
      securities
              
              
              21,346
              
              
              
              9,178Notes
      and accounts receivable, net
              
              
              7,433
              
              
              
              7,427Income
      taxes receivable
              
              
              —
              
              
              
              4,163Inventories
              
              
              3,707
              
              
              
              5,624Prepaid
      expenses and other current assets
              
              
              1,871
              
              
              
              1,732Deferred
      income taxes
              
              
              1,212
              
              
              
              4,011Total
      current assets
              
              
              161,751
              
              
              
              170,277Property,
      plant and equipment, net
              
              
              8,106
              
              
              
              5,591Real
      property held for rental, net
              
              
              86,631
              
              
              
              73,060Investment
      in joint venture
              
              
              4,857
              
              
              
              5,440Noncurrent
      notes receivable
              
              
              9,699
              
              
              
              1,058Other
      assets
              
              
              3,657
              
              
              
              3,317Noncurrent
      assets of discontinued operations
              
              
              —
              
              
              
              4,142Total
      assets
              
              $
              274,701
              
              
              $
              262,885Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Current
      maturities of long-term debt
              
              $
              1,279
              
              
              $
              2,717Accounts
      payable and accrued liabilities
              
              
              10,225
              
              
              
              10,036Income
      taxes payable
              
              
              4,064
              
              
              
              3,629Total
      current liabilities
              
              
              15,568
              
              
              
              16,382Long-term
      debt
              
              
              29,119
              
              
              
              30,146Other
      long-term liabilities
              
              
              18,120
              
              
              
              18,076Deferred
      income taxes
              
              
              7,928
              
              
              
              8,314Total
      liabilities
              
              
              70,735
              
              
              
              72,918Commitments
      and contingenciesStockholders’
      equity:Common
      stock, $.10 par value, authorized 17,500 shares; issued and
      outstanding 9,107 and 8,483 shares, respectively
              
              
              911
              
              
              
              848Retained
      earnings
              
              
              205,827
              
              
              
              197,056Accumulated
      other comprehensive loss, net of tax
              
              
              (2,772
              )
              
              
              (7,937
              )Total
      stockholders’ equity
              
              
              203,966
              
              
              
              189,967Total
      liabilities and stockholders’ equity
              
              $
              274,701
              
              
              $
              262,885
  
 The
accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
  3
 Index




UnitedCapital Corp. and Subsidiaries
 Condensed
Consolidated Statements of Operations
 (Unaudited)
 (In
thousands, except per share data)
 
 Three
      Months Ended
                  September
      30,
              
              
              Nine
      Months Ended
                  September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Revenues:Revenues from real estate
      operations
              
              $
              9,075
              
              
              $
              9,436
              
              
              $
              25,524
              
              
              $
              27,366Net sales
              
              
              5,659
              
              
              
              9,109
              
              
              
              16,644
              
              
              
              28,628Total revenues
              
              
              14,734
              
              
              
              18,545
              
              
              
              42,168
              
              
              
              55,994Costs
      and expenses:Cost of sales
              
              
              4,358
              
              
              
              7,201
              
              
              
              13,160
              
              
              
              22,382Real estate
      operations:Mortgage interest
      expense
              
              
              510
              
              
              
              538
              
              
              
              1,562
              
              
              
              1,588Depreciation
      expense
              
              
              1,002
              
              
              
              877
              
              
              
              2,902
              
              
              
              2,688Other operating
      expenses
              
              
              4,625
              
              
              
              4,474
              
              
              
              12,401
              
              
              
              13,064General and administrative
      expenses
              
              
              1,812
              
              
              
              1,655
              
              
              
              5,274
              
              
              
              5,067Selling
expenses
              
              
              764
              
              
              
              986
              
              
              
              2,325
              
              
              
              2,910Total costs and
      expenses
              
              
              13,071
              
              
              
              15,731
              
              
              
              37,624
              
              
              
              47,699Operating
income
              
              
              1,663
              
              
              
              2,814
              
              
              
              4,544
              
              
              
              8,295Other
      income (expense):Interest and dividend
      income
              
              
              999
              
              
              
              1,341
              
              
              
              2,661
              
              
              
              4,156Other income and (expense),
      net
              
              
              (9
              )
              
              
              (14,982
              )
              
              
              6
              
              
              
              (15,193
              )Total other income
      (expense)
              
              
              990
              
              
              
              (13,641
              )
              
              
              2,667
              
              
              
              (11,037
              )Income
      (loss) from continuing operations before income taxes
              
              
              2,653
              
              
              
              (10,827
              )
              
              
              7,211
              
              
              
              (2,742
              )Provision
      (benefit) for income taxes
              
              
              1,027
              
              
              
              (3,883
              )
              
              
              2,708
              
              
              
              (895
              )Income
      (loss) from continuing operations
              
              
              1,626
              
              
              
              (6,944
              )
              
              
              4,503
              
              
              
              (1,847
              )Discontinued
      operations:(Loss)
      income from discontinued operations, net of tax (benefit) provision of
      ($7), ($60), ($96) and $9, respectively
              
              
              (9
              )
              
              
              (89
              )
              
              
              (143
              )
              
              
              14Net
      loss on disposal of discontinued operations, net of tax benefit of $16 and
      $276, respectively
              
              
              (24
              )
              
              
              —
              
              
              
              (414
              )
              
              
              —(Loss)
      income from discontinued operations
              
              
              (33
              )
              
              
              (89
              )
              
              
              (557
              )
              
              
              14Net
      income (loss)
              
              $
              1,593
              
              
              $
              (7,033
              )
              
              $
              3,946
              
              
              $
              (1,833
              )Basic
      earnings (loss) per share:Income (loss) from continuing
      operations
              
              $
              .18
              
              
              $
              (.82
              )
              
              $
              .50
              
              
              $
              (.22
              )Loss from discontinued
      operations
              
              
              —
              
              
              
              (.01
              )
              
              
              (.06
              )
              
              
              —Net income (loss) per
      share
              
              $
              .18
              
              
              $
              (.83
              )
              
              $
              .44
              
              
              $
              (.22
              )Diluted
      earnings (loss) per share:Income (loss) from continuing
      operations
              
              $
              .16
              
              
              $
              (.82
              )
              
              $
              .46
              
              
              $
              (.22
              )Loss from discontinued
      operations
              
              
              —
              
              
              
              (.01
              )
              
              
              (.06
              )
              
              
              —Net income (loss) per share
      assuming dilution
              
              $
              .16
              
              
              $
              (.83
              )
              
              $
              .40
              
              
              $
              (.22
              )
 
 The
accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
  4
 Index




UnitedCapital Corp. and Subsidiaries
 Condensed
Consolidated Statements of Cash Flows
 (Unaudited)
 (In
thousands)
 Nine
      Months Ended
                  September
      30,2009
              
              
              2008Cash
      flows from operating activities:Net income (loss)
              
              $
              3,946
              
              
              $
              (1,833
              )Adjustments to reconcile net
      income to net cash provided by operating activities:Depreciation
      and amortization
              
              
              3,189
              
              
              
              3,029Loss
      on disposal of discontinued operations, net of tax
              
              
              414
              
              
              
              —Net
      loss on available-for-sale securities
              
              
              104
              
              
              
              16,088Net
      realized and unrealized gains on derivative instruments
              
              
              (139
              )
              
              
              (438
              )Litigation
      award from prior condemnation
              
              
              —
              
              
              
              (457
              )Deferred
      income taxes
              
              
              (367
              )
              
              
              (3,170
              )Other,
      net
              
              
              (971
              )
              
              
              (222
              )Changes
      in assets and liabilities, net of effect of business
      acquisition:Notes
      and accounts receivable, net
              
              
              885
              
              
              
              (454
              )Inventories
              
              
              1,917
              
              
              
              301Prepaid
      expenses and other current assets
              
              
              388
              
              
              
              (2
              )Accounts
      payable and accrued liabilities
              
              
              (74
              )
              
              
              121Income
      taxes payable
              
              
              4,874
              
              
              
              (3,367
              )Other
      long-term liabilities
              
              
              (357
              )
              
              
              (101
              )Net
      cash provided by operating activities of continuing
    operations
              
              
              13,809
              
              
              
              9,495Operating
      activities of discontinued operations
              
              
              194
              
              
              
              191Net
      cash provided by operating activities
              
              
              14,003
              
              
              
              9,686Cash
      flows from investing activities:Purchase
      of available-for-sale securities
              
              
              (3,939
              )
              
              
              (27,145
              )Proceeds/maturities
      from sale of available-for-sale securities
              
              
              622
              
              
              
              1,352Proceeds
      from sale of real estate assets
              
              
              3,258
              
              
              
              —Escrowed
      proceeds from sale of real estate assets
              
              
              —
              
              
              
              15,000Net
      proceeds from litigation award from prior condemnation
              
              
              —
              
              
              
              457Proceeds
      from sale of derivative instruments
              
              
              135
              
              
              
              1,070Purchase
      of notes receivable
              
              
              (9,428
              )
              
              
              —Principal
      payments on notes receivable
              
              
              33
              
              
              
              35Acquisition
      of property, plant and equipment
              
              
              (476
              )
              
              
              (528
              )Acquisition
      of/additions to real estate assets
              
              
              (2,093
              )
              
              
              (14,917
              )Business
      acquisition, net of cash acquired
              
              
              (17,081
              )
              
              
              —Distributions
      from joint venture
              
              
              583
              
              
              
              585Net
      cash used in investing activities of continuing operations
              
              
              (28,386
              )
              
              
              (24,091
              )Investing activities of
      discontinued operations
              
              
              —
              
              
              
              122Net cash used in investing
      activities
              
              
              (28,386
              )
              
              
              (23,969
              )Cash
      flows from financing activities:Proceeds
      from mortgage obligations
              
              
              —
              
              
              
              500Principal
      payments on mortgage obligations
              
              
              (2,465
              )
              
              
              (734
              )Purchase
      and retirement of common stock
              
              
              (2,553
              )
              
              
              (13,325
              )Proceeds
      from exercise of stock options
              
              
              5,344
              
              
              
              9,224Tax
      benefit from exercise of stock options
              
              
              2,097
              
              
              
              2,830Net
      cash provided by (used in) financing activities
              
              
              2,423
              
              
              
              (1,505
              )Net
      decrease in cash and cash equivalents
              
              
              (11,960
              )
              
              
              (15,788
              )Cash
      and cash equivalents, beginning of period
              
              
              138,142
              
              
              
              129,003Cash
      and cash equivalents, end of period
              
              $
              126,182
              
              
              $
              113,215Supplemental
      disclosures of cash flow information:Cash paid during the period
      for:Interest
              
              $
              1,539
              
              
              $
              1,585Taxes
              
              $
              762
              
              
              $
              2,754
  
 The
accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
  5
 Index




United
Capital Corp. and Subsidiaries
 Notesto Condensed Consolidated Financial Statements
 (In
thousands, except per share data)
 (Unaudited)
 
 1.Basis of Presentation
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) for interim financial information and with the
instructions to Form 10-Q and Article 8 of Regulation S-X, as promulgated by the
Securities and Exchange Commission (“SEC”).  Accordingly, they do not
include all information and footnotes required by GAAP for complete financial
statements.
 
 In the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the interim
periods presented have been recorded.  These financial statements have
been prepared in conformity with the accounting principles, and methods of
applying those accounting principles, as reflected in the audited financial
statements and notes thereto included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2008 and should be read in conjunction
therewith.  The results of operations for the periods presented are
not necessarily indicative of the results to be expected for the full
year.  The Company has evaluated subsequent events through November
11, 2009, the date the financial statements were issued.
 
 2.Stockholders’ Equity
 
 Previous
purchases of the Company’s common stock have reduced the Company’s additional
paid-in-capital to zero and have also reduced retained earnings by amounts in
excess of par value.  Any future purchases in excess of par value will
also reduce retained earnings.
 
 Repurchases
of the Company’s common stock may be made from time to time in the open market
at prevailing market prices and may be made in privately negotiated
transactions, subject to available resources.  Future proceeds from
the issuance of common stock in excess of par value will be credited to retained
earnings until such time that previously recorded reductions have been
recovered.  During the nine months ended September 30, 2009 and 2008,
the Company received proceeds of $5,344 and $9,224 from the exercise of 760 and
804 stock options, respectively.  During the nine months ended
September 30, 2009 and 2008, the Company recorded a tax benefit of $2,097 and
$2,830 to retained earnings related to the exercise of stock
options.
 
 During
the nine months ended September 30, 2009 and 2008, the Company purchased and
retired 136 and 607 shares of common stock for an aggregate purchase price of
$2,553 and $13,325, respectively.
 
 3.Earnings (loss) Per Share
 
 The
following table sets forth the computation of basic and diluted earnings per
share from continuing operations:
 
 Three
      Months EndedSeptember
      30,
              
              
              Nine
      Months Ended September 30,2009
              
              
              2008
              
              
              2009
              
              
              2008Numerator:Income (loss) from continuing
      operations
              
              $
              1,626
              
              
              $
              (6,944
              )
              
              $
              4,503
              
              
              $
              (1,847
              )Denominator:Basic – weighted-average shares
      outstanding
              
              
              9,106
              
              
              
              8,502
              
              
              
              8,954
              
              
              
              8,396Dilutive effect of employee
      stock options
              
              
              869
              
              
              
              —
              
              
              
              799
              
              
              
              —Diluted – weighted-average
      shares outstanding
              
              
              9,975
              
              
              
              8,502
              
              
              
              9,753
              
              
              
              8,396Basic
      earnings per share – continuing operations
              
              $
              .18
              
              
              $
              (.82
              )
              
              $
              .50
              
              
              $
              (.22
              )Diluted
      earnings per share – continuing operations
              
              $
              .16
              
              
              $
              (.82
              )
              
              $
              .46
              
              
              $
              (.22
              )
 
 Potentially
dilutive common shares, related to outstanding employee stock options, amounting
to 740 shares for the nine months ended September 30, 2009 and 1,307 and 1,351
shares for the three and nine months ended September 30, 2008, respectively,
were not included in the computation of diluted earnings per share because their
effect would have been anti-dilutive.
  6
 Index
 
 4.Stock-Based Compensation
 
 The
Company has two stock option plans, the Incentive and Non-Qualified Stock Option
Plan and the 1988 Joint Incentive and Non-Qualified Stock Option Plan, under
which qualified and non-qualified options may be granted to key employees to
purchase the Company’s common stock at the fair market value on the date of
grant.  Under both plans, the options typically become exercisable in
three equal installments, beginning one year from the date of
grant.  Stock options generally expire ten years from the date of
grant.  Currently, there are no options available for grant under
these plans.
 
 As of
September 30, 2009 and December 31, 2008, the Company had outstanding options to
purchase 3,185 and 3,945 shares with a weighted-average exercise price of $13.18
and $11.99 per share, respectively.  As of September 30, 2009, these
options had a weighted-average remaining contractual term of 2.2 years and an
aggregate intrinsic value of $31,664.  The aggregate intrinsic value
represents the difference between the Company’s closing stock price on September
30, 2009 ($23.12) and the exercise price of each option, multiplied by the
number of “in-the-money” options.  This amount changes based upon the
fair market value of the Company’s common stock.  During the nine
months ended September 30, 2009, options to purchase 760 shares were exercised
which had a weighted-average exercise price of $7.03 per share.
 
 5.Marketable Securities
 
 The cost,
gross unrealized gains, gross unrealized losses and fair market value of
available-for-sale securities are as follows:
 Cost
              
              
              Gross
                Unrealized
                Gains
              
              
              Gross
                Unrealized
                Losses
              
              
              Fair
                Market
                ValueSeptember
      30, 2009:Equity
    securities
              
              $
              21,367
              
              
              $
              980
              
              
              $
              (1,331
              )
              
              $
              21,016Bonds
              
              
              327
              
              
              
              8
              
              
              
              (5
              )
              
              
              330$
              21,694
              
              
              $
              988
              
              
              $
              (1,336
              )
              
              $
              21,346December
      31, 2008:Equity
    securities
              
              $
              16,440
              
              
              $
              1,050
              
              
              $
              (9,184
              )
              
              $
              8,306Bonds
              
              
              1,031
              
              
              
              4
              
              
              
              (163
              )
              
              
              872$
              17,471
              
              
              $
              1,054
              
              
              $
              (9,347
              )
              
              $
              9,178
 
 Proceeds/maturities
from the sale of available-for-sale securities as well as the gains and losses
recognized in earnings on available-for-sale securities included in the
determination of net income (loss) are as follows:
 
 Nine
      Months Ended
                  September
      30,2009
              
              
              2008Proceeds/maturities
              
              $
              622
              
              
              $
              1,352Gains
      recognized in earnings
              
              $
              —
              
              
              $
              138Losses
      recognized in earnings
              
              $
              (104
              )
              
              $
              (16,226
              )
 
 Included
in the results of the nine months ended September 30, 2008 was $16,226 in
impairment charges on the Company’s marketable security portfolio resulting from
the sudden decline in the stock market and collapse of certain financial
institutions in which the Company held an interest which are included as a
component of other income and (expense), net in the Condensed Consolidated
Statements of Operations.
  7
 Index
 
 6.Inventories
 
 The
components of inventories are as follows:
 September
      30,
                  2009
              
              
              December
      31,
                  2008Raw
      materials
              
              $
              1,902
              
              
              $
              2,607Work
      in process
              
              
              309
              
              
              
              458Finished
      goods
              
              
              1,496
              
              
              
              2,559$
              3,707
              
              
              $
              5,624
 
 7.Business Acquisition
 
 In July
2009, the Company purchased a non-performing mortgage note encumbering a hotel
located in Miami, Florida (the “Miami Hotel”).  The Company took title
to the Miami Hotel in mid-August and has undertaken operation of the
hotel.  The Company anticipates investing up to $10,000 in renovations
and improvements to this property over the next few quarters.  The
purchase price, which approximates fair value and includes certain assumed
liabilities, was allocated as follows:
 Real
      property
                
                $
                13,684Furniture,
      fixtures and equipment
                
                
                3,000Current
      assets
                
                
                763Current
      liabilities assumed
                
                
                (366
                )Cash
      paid for business
      acquisition, net of cash acquired
                
                $
                17,081
 The
estimates of fair value are preliminary and subject to adjustment for a period
of up to one year from the date of acquisition.
 
 Included
in the Condensed Consolidated Statements of Operations for the three and nine
months ended September 30, 2009, are revenues of $302 and a net operating loss
of ($266) from the operations of the Miami Hotel since the date of the
acquisition.
 
 The
following represents the unaudited condensed pro forma financial results of the
Company as if the acquisition of the Miami Hotel had occurred as of the
beginning of the annual period presented.  Unaudited condensed pro
forma results are based upon accounting estimates and judgments that the Company
believes are reasonable.  The unaudited condensed pro forma results
also include adjustments to depreciation on acquired real property and
furniture, fixtures and equipment, adjustments to interest expense and the
related tax effects.  The condensed pro forma results are not
necessarily indicative of the actual results of operations of the Company had
the acquisition occurred at the beginning of the years presented, nor does it
purport to represent the results of operations for future periods.
 
 Three
      Months Ended
                  September
      30,
              
              
              Nine
      Months Ended
                  September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Total
      revenues
              
              $
              16,221
              
              
              $
              20,683
              
              
              $
              50,549
              
              
              $
              68,135Net
      income (loss)
              
              $
              1,075
              
              
              $
              (7,814
              )
              
              $
              3,168
              
              
              $
              (2,162
              )
 
 8.Real Estate
 
 Property
      Acquisitions
 
 During
January 2008, the Company purchased two commercial properties located in
Michigan for approximately $13,600.  These properties were purchased
using funds available from a property sold during 2007 in connection with a
Section 1031 tax-deferred exchange.  In addition, during July 2008,
the Company purchased a commercial property located in Connecticut for
approximately $700.  This purchase was partially financed by a $500
mortgage which bears interest at 6.73% per annum, is payable monthly based on a
25-year amortization and matures in July 2013.
  8
 Index
 
 Property
sales
 
 During
the nine months ended September 30, 2009, the Company divested itself of one
commercial property and one of its shopping centers and retail outlets which had
a net book value of $3,948 from its real estate investment and management
segment.  The aggregate proceeds from these transactions were $3,258
resulting in a net loss of $414, on a net of tax basis.
 
 The
results of operations of properties sold prior to September 30, 2009 have been
reclassified to discontinued operations, on a net of tax basis, for the three
and nine months ended September 30, 2009 and 2008.  Summarized
financial information of these properties is as follows:
 
 Three
      Months Ended
                September
      30,
              
              
              Nine
      Months Ended
                September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Revenues
              
              $
              29
              
              
              $
              70
              
              
              $
              152
              
              
              $
              650Depreciation
      expense
              
              
              —
              
              
              
              80
              
              
              
              194
              
              
              
              191Other
      operating expenses
              
              
              45
              
              
              
              139
              
              
              
              197
              
              
              
              436(Loss)
      income from operations
              
              $
              (16
              )
              
              $
              (149
              )
              
              $
              (239
              )
              
              $
              23
 
 Properties
held for sale
 
 As of
September 30, 2009, there were no properties considered by the Company to be
held for sale.
 
 9.Derivative Financial
Instruments
 
 Management
maintains a diversified portfolio of cash equivalents and investments in a
variety of securities, primarily U.S. investments in common and preferred equity
issues, as well as corporate bonds, and participates on a limited basis in
transactions involving derivative financial instruments, including short stock
sales and put and/or call options.  At December 31, 2008, the fair
value of such derivatives was ($5), which is recorded as a component of accounts
payable and accrued liabilities in the Condensed Consolidated Balance
Sheet.  These instruments do not qualify for hedge accounting and
therefore changes in the derivatives’ fair value are recognized in
earnings.  The Company recognized $139 and $438 in net realized and
unrealized gains on derivative instruments for the nine months ended September
30, 2009 and 2008, respectively, which are included in other income and
(expense), net in the Condensed Consolidated Statements of
Operations.  The Company held no such derivatives at September 30,
2009.
 
 10.Fair Value Measurements
 
 The
following table sets forth the Company’s financial assets and liabilities that
were measured at fair value on a recurring basis, by level, within the fair
value hierarchy:
 
 Fair
      Value Measurements at Reporting Date UsingTotal
                  Fair
      Value
              
              
              Quoted
      Prices in Active Markets for Identical Assets
                  (Level
      1)
              
              
              Significant
      Other Observable Inputs
                  (Level
      2)
              
              
              Significant
      Unobservable Inputs
                  (Level
      3)September
      30, 2009:Marketable
      securities
              
              $
              21,346
              
              
              $
              21,341
              
              
              $
              5
              
              
              $
              —December
      31, 2008:Marketable
      securities
              
              $
              9,178
              
              
              $
              9,144
              
              
              $
              34
              
              
              $
              —Derivative financial
      instruments
              
              $
              (5
              )
              
              $
              (5
              )
              
              $
              —
              
              
              $
              —
 
 9
 Index
  The
carrying amounts of financial instruments such as cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities approximate their
fair value due to the short-term maturity of such items.  The
estimated fair values of the Company’s other financial assets and liabilities
not measured at fair value on a recurring basis at September 30, 2009 and
December 31, 2008 are as follows:
  September
      30, 2009
              
              
              December
      31, 2008Carrying
              
              
              Fair
              
              
              Carrying
              
              
              FairAmount
              
              
              Value
              
              
              Amount
              
              
              ValueNotes
      receivable
              
              $
              5,068
              
              
              $
              6,130
              
              
              $
              1,101
              
              
              $
              1,169Note
      receivable – non-performing
              
              $
              5,428
              
              
              $
              5,428
              
              
              $
              —
              
              
              $
              —Long-term
      debt, including current portion
              
              $
              30,398
              
              
              $
              27,640
              
              
              $
              32,863
              
              
              $
              29,435
 
 The fair
value of notes receivable is estimated using discounted cash flow analyses, with
interest rates comparable to loans with similar terms and borrowers of similar
credit quality.  In May 2009, the Company purchased a non-performing
mortgage note for $5,428 encumbering a property located in Jericho, New York
which is subject to a pending foreclosure action.  Management believes
that the fair value of the note approximates its carrying
amount.  Upon foreclosure, such amounts will be reclassified to real
property held for rental.  The fair value of long-term debt is
estimated based on interest rates available for debt with terms and due dates
similar to the Company’s existing debt arrangements.
 
 In
February 2008, the Financial Accounting Standards Board (“FASB”) issued
authoritative guidance which delayed the effective date of fair value
measurements for all nonfinancial assets and liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis, for one year.  The Company adopted the provisions of this
guidance as they relate to long-lived assets effective January 1, 2009 and it
did not have a material impact on the Company’s financial
statements.
 
 11.Transactions with Related
Parties
 
 During
July 2009, the Company purchased a $5,000 participation in a note secured by a
warehouse located in New York of which Mrs. Petrocelli (the wife of Mr.
Petrocelli, the Company’s Board Chairman) holds a 20% interest.  The
participation, which matures in July 2012, bears interest at 18% per annum
payable monthly.  The participants also received a commitment fee of
1% in connection with the note.
 
 12.Pension Plan
 
 The
Company has a noncontributory defined benefit pension plan that covers
substantially all full-time employees of the engineered products and real estate
investment and management segments.  The plan, which provides defined
benefits based on years of service and compensation level, was frozen in
September 2009, ceasing the accrual of further benefits.
 
 Net
periodic pension cost consists of the following:
 Three
      Months Ended
                  September
      30,
              
              
              Nine
      Months Ended
                  September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Service
      cost
              
              $
              (61
              )
              
              $
              (75
              )
              
              $
              (202
              )
              
              $
              (225
              )Interest
      cost
              
              
              (189
              )
              
              
              (180
              )
              
              
              (568
              )
              
              
              (530
              )Expected
      return on plan assets
              
              
              131
              
              
              
              196
              
              
              
              403
              
              
              
              601Amortization
      of net loss
              
              
              (62
              )
              
              
              —
              
              
              
              (184
              )
              
              
              —Net
      periodic pension cost
              
              $
              (181
              )
              
              $
              (59
              )
              
              $
              (551
              )
              
              $
              (154
              )
 
 During
the third quarter of 2009, the Company contributed $150 to the pension plan and
anticipates that it will make an additional contribution of approximately $650
by the first quarter of 2010.
  10
 Index
 
 13.Comprehensive Income
(Loss)
 
 The
components of comprehensive income (loss) are as follows:
 Three
      Months Ended
                  September
      30,
              
              
              Nine
      Months Ended
                  September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Net
      income (loss)
              
              $
              1,593
              
              
              $
              (7,033
              )
              
              $
              3,946
              
              
              $
              (1,833
              )Other
      comprehensive income (loss), net of tax:Change
      in net unrealized gain (loss) on available-for-sale securities, net of tax
                effect
      of ($1,378), $5,306, ($2,744) and $5,489, respectively
              
              
              2,561
              
              
              
              (9,852
              )
              
              
              5,097
              
              
              
              (10,193
              )Reclassification
      adjustment for net losses realized in net income (loss), net of tax
                effect
      of ($5,278), ($36) and ($1,954), respectively
              
              
              —
              
              
              
              9,802
              
              
              
              68
              
              
              
              3,628Comprehensive
      income (loss)
              
              $
              4,154
              
              
              $
              (7,083
              )
              
              $
              9,111
              
              
              $
              (8,398
              )
 
 The
components of accumulated other comprehensive loss, net of tax are as
follows:
 September
      30,
                  2009
              
              
              December
      31,
                  2008Net
      unrealized loss on available-for-sale securities, net of tax effect of
      $122 and $2,902, respectively
              
              $
              (226
              )
              
              $
              (5,391
              )Unrecognized
      net gains from pension plan, net of tax effect of $1,371
              
              
              (2,546
              )
              
              
              (2,546
              )Accumulated
      other comprehensive loss, net of tax
              
              $
              (2,772
              )
              
              $
              (7,937
              )
 
 14.Business Segments
 
 The
Company operates through three business segments: real estate investment and
management, hotel operations and engineered products.  The real estate
investment and management segment is engaged in the business of investing in and
managing real estate properties located throughout the United
States.  The hotel operations segment owns and operates four hotels
located in the United States.  Engineered products are manufactured
through wholly-owned subsidiaries of the Company and primarily consist of
knitted wire products and components and transformer products sold
worldwide.
 
 The
accounting policies of the Company’s segments are the same as those described in
the Summary of Significant Accounting Policies included in the Notes to
Consolidated Financial Statements in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2008.
 
 Operating
results of the Company's business segments are as follows:
 Three
      Months Ended
                  September
      30,
              
              
              Nine
      Months Ended
                  September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Net
      revenues and sales:Real estate investment and
      management
              
              $
              4,959
              
              
              $
              4,953
              
              
              $
              14,863
              
              
              $
              14,973Hotel
operations
              
              
              4,116
              
              
              
              4,483
              
              
              
              10,661
              
              
              
              12,393Engineered
    products
              
              
              5,659
              
              
              
              9,109
              
              
              
              16,644
              
              
              
              28,628$
              14,734
              
              
              $
              18,545
              
              
              $
              42,168
              
              
              $
              55,994Operating
      income (loss):Real estate investment and
      management
              
              $
              3,012
              
              
              $
              2,886
              
              
              $
              9,148
              
              
              $
              9,154Hotel
operations
              
              
              (74
              )
              
              
              661
              
              
              
              (489
              )
              
              
              872Engineered
    products
              
              
              (173
              )
              
              
              69
              
              
              
              (1,047
              )
              
              
              802General corporate
      expenses
              
              
              (1,102
              )
              
              
              (802
              )
              
              
              (3,068
              )
              
              
              (2,533
              )1,663
              
              
              
              2,814
              
              
              
              4,544
              
              
              
              8,295Other
      income (expense), net
              
              
              990
              
              
              
              (13,641
              )
              
              
              2,667
              
              
              
              (11,037
              )Income
      (loss) from continuing operations before income taxes
              
              $
              2,653
              
              
              $
              (10,827
              )
              
              $
              7,211
              
              
              $
              (2,742
              )
  11
 Index
 
 15.Commitments and
Contingencies
 
 The
Company has undertaken the completion of environmental studies and/or remedial
action at its two New Jersey facilities and has recorded a liability for the
estimated investigation, remediation and administrative costs associated
therewith.
 
 The
process of remediation has begun at one facility pursuant to a plan filed with
the New Jersey Department of Environmental Protection
(“NJDEP”).  Management’s assessment, based on estimates from
environmental contractors, is that under the most probable scenario, the
remediation of this site is anticipated to require initial expenditures of $860,
including the cost of capital equipment, and $86 in annual operating and
maintenance costs over a 15 year period.
 
 Environmental
studies at the second facility indicate that remediation may be
necessary.  Based upon the facts presently available, management’s
assessment, based on estimates from environmental contractors, is that under the
most probable remediation scenario, the estimated cost to remediate this site is
anticipated to require $2,300 in initial costs, including capital equipment
expenditures, and $258 in annual operating and maintenance costs over a 10 year
period.  These estimated costs of future expenses for environmental
remediation obligations are not discounted to their present
value.  The Company may revise such estimates in the future due to the
uncertainty regarding the nature, timing and extent of any remediation efforts
that may be required at this site, should an appropriate regulatory agency deem
such efforts to be necessary.
 
 The
foregoing estimates may also be revised by the Company as new or additional
information in these matters become available or should the NJDEP or other
regulatory agencies require additional or alternative remediation efforts in the
future.  Although such events are not expected to change these
estimates, adverse decisions or events, particularly as to the merits of the
Company’s factual and legal basis, could cause the Company to change its
estimate of liability with respect to such matters in the future.  The
Company had approximately $8,900 and $9,300 recorded in accounts payable and
accrued liabilities and other long-term liabilities at September 30, 2009 and
December 31, 2008, respectively, to cover such matters.
 
 The
Company has an employment agreement with its Chairman, President and Chief
Executive Officer (the “Officer”) which provides for a base salary of $800 per
annum plus a discretionary bonus as determined by the Compensation and Stock
Option Committee of the Board of Directors.  In the event of
termination or a change in control, as defined in the employment agreement, the
Company is required to pay the Officer a lump sum severance payment equal to
three years salary and purchase outstanding options.  The employment
agreement contains non-competition, non-solicitation and confidentiality
provisions which apply for one year after cessation of employment and also
provides for successive one-year terms, unless either the Company or the Officer
gives the other written notice that the employment agreement is terminated, and
also provides a death benefit which the Company secures through an insurance
policy.
 
 The
Company is subject to various other litigation, legal and regulatory matters
that arise in the ordinary course of business activities.  When
management believes it is probable that a liability has been incurred and such
amounts are reasonably estimable, the Company provides for amounts that include
judgments and penalties that may be assessed.  These liabilities are
usually included in accounts payable and accrued liabilities or other long-term
liabilities in the Condensed Consolidated Financial Statements, depending on the
anticipated payment date.  Based on the facts presently available, the
Company does not believe that the disposition of matters that are pending or
asserted will have a material adverse effect on the Company’s consolidated
financial position or results of operations.  However, new or
additional facts or an adverse judgment by a court, arbitrator or a settlement
could adversely impact the Company’s results of operations in any given
period.
 
 16.           Recent
Accounting Pronouncements
 
 In July
2009, the FASB issued authoritative guidance to establish the FASB Accounting
Standards Codification (“Codification”) as the single source of authoritative
accounting and reporting standards applicable for all nongovernmental entities,
with the exception of guidance issued by the SEC.  The Codification
does not change current GAAP, but changes the referencing of financial
standards, and is intended to simplify user access to authoritative GAAP by
providing all authoritative literature related to a particular topic in one
place. The Codification is effective for the Company’s interim reporting period
which ended on September 30, 2009.  As the Codification is not
intended to change or alter existing GAAP, it did not have any impact on the
Company’s consolidated financial condition or results of
operations.
  12
 Index
 
 In May
2009, the FASB issued authoritative guidance which provides guidance to
establish general standards of accounting for and disclosures of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued.  This guidance also requires entities to
disclose the date through which subsequent events were evaluated as well as the
rationale for why that date was selected.  This guidance is effective
for interim and annual periods ending after June 15,
2009.  Accordingly, the Company has adopted the provisions of this
guidance and the adoption has not had a material impact on the Company’s
financial condition, results of operations or disclosures.
 
 In
December 2008, the FASB issued authoritative guidance that requires an employer
to provide certain disclosures about plan assets of its defined benefit pension
or other postretirement plans.  The disclosures required include the
investment policies and strategies of the plans, the fair value of the major
categories of plan assets, the inputs and valuation techniques used to develop
fair value measurements and a description of significant concentrations of risk
in plan assets.  This guidance, which only provides for enhanced
annual disclosures and does not require additional interim disclosures, will be
effective for the Company’s current fiscal year ending December 31,
2009.  The Company does not expect the adoption of this guidance will
have a material impact on its financial condition or results of
operations.
 
 In April
2009, the FASB issued authoritative guidance to address concerns about measuring
the fair value of financial instruments when the markets become inactive and
quoted prices may reflect distressed transactions, recording impairment charges
on investments in debt instruments and requiring the disclosure of fair value of
certain financial instruments in interim financial statements.  The
guidance provides additional guidance to highlight and expand the factors that
should be considered in estimating fair value when there has been a significant
decrease in market activity for a financial asset.  The guidance also
changes the method for determining whether an other-than-temporary impairment
exists for debt securities and the amount of an impairment charge to be recorded
in earnings.  In addition, the guidance increases the frequency of
fair value disclosures from annual, to quarterly.  This guidance is
effective for interim periods ending after June 15, 2009, with the option for
early adoption in interim periods ending after March 15, 2009.  The
Company adopted this guidance effective April 1, 2009 which did not have a
material impact on its financial statements.  See Note 10 for the
additional required interim disclosures.
 
 17.Use of Estimates
 
 The
preparation of consolidated financial statements in conformity with GAAP
requires management to use judgment in making estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses and
related disclosure of contingent assets and liabilities.  Certain of
the estimates and assumptions required to be made relate to matters that are
inherently uncertain as they pertain to future events.  While
management believes that the estimates and assumptions used were the most
appropriate, actual results could differ significantly from those estimates
under different assumptions and conditions.
 
 18.Reclassifications
 
 Certain
prior year amounts have been reclassified to present them on a basis consistent
with the current year.
  ITEM2.
                MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF
FINANCIAL
 CONDITION
      AND RESULTS OF OPERATIONS
 (In
      thousands, except per share data or as otherwise
  noted)
 The
following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements of United Capital Corp. (the “Company”) and
related notes thereto.
 
 Results
of Operations:  Three and Nine Months Ended September 30, 2009 and
2008
 
 Total
revenues for the third quarter of 2009 were $14,734, a decrease of $3,811 or
20.6% from the comparable 2008 period, reflecting the impact the weakened
economy has had on the Company’s engineered products and hotel operations
segments.  The decline in total revenues was the main driver in the
decrease in operating income which decreased $1,151 for the current
quarter.  Net income for the three months ended September 30, 2009 was
$1,593 or $.18 per basic share compared to a net loss of ($7,033) or ($.83) per
basic share for the comparative quarter of 2008.
  13
 Index
 
 For the
nine month period ended September 30, 2009, total revenues were $42,168,
compared to $55,944 for the same period of 2008.  Operating income for
the first nine months of 2009 was $4,544, a decrease of $3,751 compared to the
corresponding 2008 period.  Net income for the nine months ended
September 30, 2009 was $3,946 or $.44 per basic share compared to a net loss of
($1,833) or ($.22) per basic share for the comparative 2008 period.
 
 The 2008
results include impairment charges of $15,777 and $16,226 for the three and nine
month periods, respectively, on the Company’s marketable security portfolio
resulting from the sudden decline in the stock market and collapse of certain
financial institutions in which the Company held an interest.  These
impairment charges are included as a component of other income and (expense),
net in the Condensed Consolidated Statements of Operations.
 
 The
continued weakness in the economy has affected profitability of the Company’s
engineered products and hotel operations segments.  These factors are
expected to continue to impact the Company for the remainder of the
year.
 
 Real
Estate Operations
 
 The
Company’s real estate operations consist of the real estate investment and
management and hotel operations segments.  The operating results for
these segments are as follows:
 
 Three
      Months Ended
                  September
      30, 2009
              
              
              Nine
      Months Ended
                  September
      30, 2009Real
                  Estate
              
              
              Hotel
                  Operations
              
              
              Total
              
              
              Real
                  Estate
              
              
              Hotel
                  Operations
              
              
              TotalRevenues
              
              $
              4,959
              
              
              $
              4,116
              
              
              $
              9,075
              
              
              $
              14,863
              
              
              $
              10,661
              
              
              $
              25,524Mortgage
      interest expense
              
              
              36
              
              
              
              474
              
              
              
              510
              
              
              
              133
              
              
              
              1,429
              
              
              
              1,562Depreciation
      expense
              
              
              578
              
              
              
              424
              
              
              
              1,002
              
              
              
              1,703
              
              
              
              1,199
              
              
              
              2,902Other
      operating expenses
              
              
              1,333
              
              
              
              3,292
              
              
              
              4,625
              
              
              
              3,879
              
              
              
              8,522
              
              
              
              12,401Income
      (loss) from operations
              
              $
              3,012
              
              
              $
              (74
              )
              
              $
              2,938
              
              
              $
              9,148
              
              
              $
              (489
              )
              
              $
              8,659
 
 Three
      Months Ended
                  September
      30, 2008
              
              
              Nine
      Months Ended
                  September
      30, 2008Real
                  Estate
              
              
              Hotel
                  Operations
              
              
              Total
              
              
              Real
                  Estate
              
              
              Hotel
                  Operations
              
              
              TotalRevenues
              
              $
              4,953
              
              
              $
              4,483
              
              
              $
              9,436
              
              
              $
              14,973
              
              
              $
              12,393
              
              
              $
              27,366Mortgage
      interest expense
              
              
              63
              
              
              
              475
              
              
              
              538
              
              
              
              178
              
              
              
              1,410
              
              
              
              1,588Depreciation
      expense
              
              
              547
              
              
              
              330
              
              
              
              877
              
              
              
              1,629
              
              
              
              1,059
              
              
              
              2,688Other
      operating expenses
              
              
              1,457
              
              
              
              3,017
              
              
              
              4,474
              
              
              
              4,012
              
              
              
              9,052
              
              
              
              13,064Income
      from operations
              
              $
              2,886
              
              
              $
              661
              
              
              $
              3,547
              
              
              $
              9,154
              
              
              $
              872
              
              
              $
              10,026
 
 Real
Estate Investment and Management
 
 Revenues
from the real estate investment and management segment varied by less than 1%
for the three and nine months ended September 30, 2009, compared to the
corresponding periods of 2008.  Revenues from the Company’s real
estate portfolio are generally derived from properties with single tenant,
long-term leases.  Therefore, rental revenues recognized under GAAP do
not fluctuate significantly, but are affected by lease renewals, terminations
and the purchase or sale of additional properties.
 
 Mortgage
interest expense decreased $27 or 42.9% for the third quarter and $45 or 25.3%
for the first nine months of 2009, compared to the corresponding 2008
periods.  These decreases are primarily the result of continuing
mortgage amortization, partially offset by an increase in mortgage interest due
to a mortgage obtained in connection with the purchase of a commercial property
in the second quarter of 2008.  Based on scheduled amortizations,
mortgage interest expense on existing obligations of the Company’s real estate
investment and management segment will continue to decline.  At
September 30, 2009, the outstanding mortgage balance on the Company’s three real
estate investment properties which are currently encumbered is approximately
$2,100.
  14
 Index
 
 Depreciation
expense associated with real properties held for rental increased $31 for the
quarter and $74 for the nine months ended September 30, 2009, compared to the
corresponding periods of 2008.  These increases are primarily
attributable to depreciation expense ($78 and $29 for the three and nine month
periods, respectively) related to additions to real estate assets over the past
twelve months.  As a result of the purchase of commercial properties
during the prior year and other expenditures for capital improvements incurred
during the current and prior year, the Company expects that depreciation expense
on the Company’s properties for the fourth quarter and full year of 2009 should
be higher than that reported in the corresponding 2008 periods.
 
 Other
operating expenses associated with the management of real properties decreased
$124 for the quarter and $133 for the nine month period ended September 30,
2009, compared to the corresponding periods of 2008.  The decrease for
the quarterly period primarily relates to a decrease in property maintenance
($116) which is the result of the timing of certain repairs and
renovations.  The decrease for the nine month period primarily relates
to decreases in professional fees ($80), related to the timing of lease renewals
and other property related transactions, and the cost of utilities
($57).  Due to the extent of property age, location and vacancies,
certain operating expenses could fluctuate in the future from those previously
incurred.
 
 Hotel
Operations
 
 Hotel
revenues decreased $367 or 8.2% to $4,116 for the quarter ended September 30,
2009 and $1,732 or 14.0% to $10,661 for the first nine months of 2009, compared
to the corresponding 2008 periods.  These decreases are primarily
related to the overall weakness in the U.S. economy which has resulted in a
reduction in both consumer and business travel.  Partially offsetting
these decreases are additional revenues recognized ($302) in the current year
periods from the August 2009 acquisition of a hotel located in Miami, Florida
(the “Miami Hotel”).  The Company does not expect lodging demand to
improve through the remainder of the year, and therefore, with the exception of
additional revenue from the Miami Hotel, the Company’s hotels will likely report
lower revenues in the fourth quarter and full year of 2009, compared to the same
periods of 2008.
 
 Mortgage
interest expense related to the Company’s hotel properties decreased slightly
for the third quarter and increased $19 for the nine months ended September 30,
2009, compared to the corresponding periods of 2008.  The increase for
the nine month period is primarily the result of a mortgage obtained on one of
the Company’s hotels in the prior year.  The Company expects that
mortgage interest expense on existing obligations related to the Company’s hotel
properties for the full year of 2009 should be similar to that reported in
2008.
 
 Depreciation
expense associated with the Company’s hotel operations increased $94 for the
three months and $140 for the nine months ended September 30, 2009, compared to
the corresponding periods of 2008, primarily attributable to additional
depreciation expense ($37 and $96 for the three and nine month periods,
respectively) on renovations and improvements added during the past twelve
months at two of the Company’s hotels.  In addition, the Company
incurred additional depreciation expense ($32) during the current quarter and
nine month period as a result of the acquisition of the Miami
Hotel.  Depreciation expense on the Company’s hotel properties for the
full year of 2009 should be higher than that reported in 2008 due to the Miami
Hotel acquisition and from the renovations and improvements at two of the
Company’s hotels.
 
 Other
operating expenses related to the management of the Company’s hotels increased
$275 to $3,292 for the third quarter and decreased $530 to $8,522 for the first
nine months of 2009, compared to the corresponding 2008 periods.  The
Company incurred additional operating expenses ($536) during the current quarter
and nine month period due to the acquisition of the Miami
Hotel.  Operating expenses at the Company’s other hotels continue to
decrease in both the quarter and nine month period, primarily as a result of the
lower revenues, noted above.  The growing weakness in the economy has
pressured results in the Company’s hotel operations.   This
condition is expected to continue to impact this segment for the remainder of
2009.  The Company is continuously working to streamline operations,
control expenses and maximize cash flow from operations.  The success
of these efforts and the depth and duration of the current negative economic
environment and its impact on future hotel operations remain
uncertain.
  15
 Index
 
 Engineered
Products
 
 The
operating results of the engineered products segment are as
follows:
 
 Three
      Months Ended September 30,
              
              
              Nine
      Months Ended September 30,2009
              
              
              2008
              
              
              2009
              
              
              2008Net
      sales
              
              $
              5,659
              
              
              $
              9,109
              
              
              $
              16,644
              
              
              $
              28,628Cost
      of sales
              
              
              4,358
              
              
              
              7,201
              
              
              
              13,160
              
              
              
              22,382Selling,
      general and administrative expenses
              
              
              1,474
              
              
              
              1,839
              
              
              
              4,531
              
              
              
              5,444Operating
      (loss) income
              
              $
              (173
              )
              
              $
              69
              
              
              $
              (1,047
              )
              
              $
              802
 
 Net sales
of the engineered products segment decreased $3,450 or 37.9% for the three
months and $11,984 or 41.9% for the nine months ended September 30, 2009,
compared with the results of the corresponding periods of 2008.  The
decrease for the three month period is primarily related to decreased demand in
the Company’s engineered and transformer product lines which were brought about
by a general decrease in capital spending related to the current economic
environment.  The decrease for the nine month period is primarily
related to decreased demand in the Company’s automotive, engineered and
transformer product lines.  The automotive product line, which is down
approximately 40% from the prior year-to-date period, has shown improvements in
the current quarter as a result of the re-opening of certain plants which
experienced extended shut-downs during the first half of 2009.  The
automotive declines are the result of a significant reduction in North American
automotive production, especially from General Motors, our largest customer, and
the general slowdown in the global vehicle market.  Although the
Company has experienced improvements in its automotive sales from the prior
quarter, the Company expects continued declines in net sales of its engineered
products segment during the remainder of the year.
 
 Cost of
sales as a percentage of net sales decreased 2.0% for the quarter ended
September 30, 2009 and increased less than 1.0% in the nine months ended
September 30, 2009, compared to the corresponding 2008 periods.  These
fluctuations are primarily attributable to the reduction in material costs as a
percentage of net sales (5.3% and 4.3% for the three and nine month periods,
respectively), which reflects reductions in the cost of raw materials and
changes in the mix of products sold.  These fluctuations are also
attributable to the significant reduction in net sales, noted above, which led
to lower absorption of incurred manufacturing costs.  During each of
these periods, labor and overhead costs as a percentage of net sales increased
(3.2% and 5.0% for the three and nine month periods,
respectively).  Although the Company’s automotive product line has
started to show improvements during the quarter, management is still carefully
monitoring its operating costs and only increasing its workforce as
needed.
 
 Selling,
general and administrative expenses of the engineered products segment decreased
$365 or 19.8% for the third quarter and $913 or 16.8% for the nine months ended
September 30, 2009, compared to the corresponding periods of
2008.  These decreases are the result of cost containment efforts
which include reductions in payroll and payroll related expenses ($163 and $481
for the three and nine month period, respectively), freight charges ($47 and
$158 for the three and nine month period, respectively) and professional fees
($28 and $145 for the three and nine month period,
respectively).  These reductions are part of the Company’s efforts to
streamline operations, control expenses and maximize cash flow in light of the
significant decline in sales.
 
 General
and Administrative Expenses
 
 General
and administrative expenses not associated with the manufacturing operations
increased $300 for the third quarter and $535 for the first nine months of 2009,
compared to such expenses incurred in the comparable 2008
periods.  These increases are primarily attributable to the increase
in net periodic pension expense ($122 and $397 for the three and nine month
periods, respectively), which results from the significant decline in the fair
value of the Company’s pension assets in 2008, and an increase in professional
fees ($202 and $302 for the three and nine month periods, respectively),
primarily as a result of acquisition costs which are not
capitalizable.
  16
 Index
 
 Other
Income and Expense, Net
 
 The
components of other income and (expense), net in the Condensed Consolidated
Statements of Operations are as follows:
  Three
      Months Ended
                  September
      30,
              
              
              Nine
      Months Ended
                  September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008Net
      realized and unrealized gains on derivative instruments
              
              $
              —
              
              
              $
              216
              
              
              $
              139
              
              
              $
              438Net
      loss on available-for-sale securities
              
              
              —
              
              
              
              (15,671
              )
              
              
              (104
              )
              
              
              (16,088
              )Litigation
      award from prior condemnation
              
              
              —
              
              
              
              457
              
              
              
              —
              
              
              
              457Other,
      net
              
              
              (9
              )
              
              
              16
              
              
              
              (29
              )
              
              
              —$
              (9
              )
              
              $
              (14,982
              )
              
              $
              6
              
              
              $
              (15,193
              )
 
 Included
in the results for the three and nine months ended September 30, 2008 are
$15,777 and $16,226, respectively, in impairment charges on the Company’s
marketable security portfolio resulting from the sudden decline in the stock
market and collapse of certain financial institutions in which the Company held
an interest which are included in net loss on available-for-sale securities,
above.
 
 Included
in other income and expense, net for the 2008 periods are amounts received in
connection with a litigation award from a property condemned by the City of New
York in 2001.
 
 Discontinued
Operations
 
 Loss from
operations on properties sold and accounted for as discontinued operations was
($9), on a net of tax basis, for the third quarter of 2009, compared to loss
from operations on properties sold of ($89), on a net of tax basis, for the
corresponding quarter of 2008.  For the nine months ended September
30, 2009, the loss from operations on properties sold and accounted for as
discontinued operations was ($143), on a net of tax basis, compared to income
from operations on properties sold of $14, on a net of tax basis, for the
corresponding period in 2008.  Net loss on the disposal of real estate
assets accounted for as discontinued operations were ($24) and ($414), on a net
of tax basis, for the three and nine months ended September 30, 2009,
respectively.  No properties were sold during the nine months ended
September 30, 2008.  Prior year amounts have been reclassified to
reflect results of operations of real properties sold during 2009 and 2008 as
discontinued operations.  As of September 30, 2009, the Company did
not consider any of its properties to be held for sale.
 
 Liquidity
and Capital Resources
 
 Net cash
provided by operating activities was $14,003 and $9,686 for the nine months
ended September 30, 2009 and 2008, respectively.  This increase in
operating cash flows results primarily from the receipt of tax refunds ($4,163)
and reductions in inventories and notes and accounts receivable, net ($1,616 and
$1,339, respectfully), offset by lower operating income before depreciation
($3,591).
 
 Net cash
used in investing activities was $28,386 and $23,969 for the nine months ended
September 30, 2009 and 2008, respectively.  This change primarily
results from cash used in a business acquisition, net of cash acquired, in
August 2009 ($17,081) and from the purchase of notes receivable ($9,428) during
the current year offset by decreases in the purchase of available-for-sale
securities ($23,206) and acquisition of/additions to real estate assets
($12,824), less the release of proceeds held in escrow on the sale of real
estate in 2008 ($15,000).
 
 Net cash
provided by financing activities was $2,423 for the nine months ended September
30, 2009, compared to net cash used in financing activities of $1,505 for the
same period of 2008.  This change results from a decrease in the
purchase and retirement of common stock ($10,772) during the current year, as
compared to 2008, offset by a reduction in proceeds from the exercise of stock
options ($3,880), an increase in principal payments on mortgage obligations
($1,731), a reduction in the tax benefits related to the exercise of stock
options ($733) and proceeds received from a mortgage obtained during 2008
($500).
 
 Previous
purchases of the Company’s common stock have reduced the Company’s additional
paid-in capital to zero and have also reduced retained earnings by amounts in
excess of par value.  Any future purchases in excess of par value will
also reduce retained earnings.  Repurchases of the Company’s common
stock may be made from time to time in the open market at prevailing market
prices and may be made in privately negotiated transactions, subject to
available resources.  Future proceeds from the issuance of common
stock in excess of par value will be credited to retained earnings until such
time that previously recorded reductions have been recovered.
  17
 Index
 
 At
September 30, 2009, the Company’s cash and marketable securities totaled $147.5
million and working capital was $145.9 million compared to cash and marketable
securities of $147.3 million and working capital of $153.9 million at December
31, 2008.  While there has been a decline in the value of certain real
estate properties in the United States, the recession could cause real estate
prices to drop even further.  Management has limited acquisitions to
those select properties that meet the Company's stringent financial
requirements.  Management believes that opportunities to acquire
additional properties at favorable prices may soon be available and the
Company’s available working capital provides a considerable advantage to fund
acquisitions and grow its portfolio, if and when attractive long-term
opportunities become available.  The tightened credit market however,
could limit the Company’s ability to leverage future acquisitions.
 
 In July
2009, the Company purchased a non-performing mortgage note encumbering a hotel
located in Miami, Florida (the “Miami Hotel”).  The Company took title
to the Miami Hotel in mid-August and has undertaken operation of the
hotel.  The Company anticipates investing up to $10,000 in renovations
and improvements to this property over the next few quarters.
 
 The
equity method of accounting is used for investments in 20% to 50% owned joint
ventures in which the Company has the ability to exercise significant influence,
but not control.  These investments are recorded initially at cost and
subsequently adjusted for equity in earnings and cash contributions and
distributions.  The debt of the joint venture in which the Company
currently has an ownership interest is a non-recourse obligation and is
collateralized by the entity’s real property.  The Company believes
that the value of the underlying property and its operating cash flows are
sufficient to satisfy its obligations.  The Company isnot obligated for the
debts of the joint venture, but could decide to satisfy them in order to protect
its investment.  In such event, the Company’s capital resources and
financial condition would be reduced and, in certain instances, the carrying
value of the Company’s investment and its results of operations would be
negatively impacted.
 
 The cash
needs of the Company have been satisfied from funds generated by current
operations.  It is expected that future operational cash needs will
also be satisfied from existing cash balances, marketable securities, ongoing
operations or borrowings.  The primary source of capital to fund
additional real estate acquisitions and to make additional high-yield mortgage
loans may come from existing funds, the sale, financing and refinancing of the
Company’s properties and from third party mortgages and purchase money notes
obtained in connection with specific acquisitions.
 
 In
addition to the acquisition of properties for consideration consisting of cash
and mortgage financing proceeds, the Company may acquire real properties in
exchange for the issuance of the Company’s equity securities.  The
Company may also finance acquisitions of other companies in the future with
borrowings from institutional lenders and/or the public or private offerings of
debt or equity securities.  The Company currently has no agreements,
commitments or understandings with respect to the acquisition of real properties
or other companies in exchange for its equity or debt securities.
 
 Funds of
the Company in excess of that needed for working capital, purchasing real estate
and arranging financing for real estate acquisitions are invested by the Company
in corporate equity securities, corporate notes, certificates of deposit,
government securities and other financial instruments.  Although these
excess funds are invested in investment grade securities, they are subject to
significant fluctuations in fair value due to the volatility of the stock market
and changes in general economic conditions.  Changes in U.S. interest
rates affect the interest earned on the Company’s cash and cash equivalent
balances and other interest bearing investments.  Given the level of
cash and other interest bearing investments held by the Company, declines in
U.S. interest rates have adversely impacted the Company’s earnings in
2009.
 
 In
strategies designed to hedge overall market risk, the Company may sell common
stock short and participate in put and/or call options.  These
instruments do not qualify for hedge accounting and therefore changes in such
derivatives fair value are recognized in earnings.  These derivatives,
as of December 31, 2008, were recorded as a component of accounts payable and
accrued liabilities in the Condensed Consolidated Balance Sheet.  The
Company held no such derivatives at September 30, 2009.
  18
 Index
 
 Globally,
automakers and their suppliers continue to experience significant difficulties
from a weakened economy and tightened credit market.  Although the
automotive industry has shown improvements in the current quarter as the result
of the re-opening of certain plants which experienced extended shut-downs during
the first half of 2009, continued adverse developments in the automotive
industry, including but not limited to continued share declines in demand,
customer bankruptcies and increased demands on the Company for pricing
decreases, have had, and will continue to have, a significant adverse affect on
our engineered products segment.
 
 The
Company manufactures its products in the United States and Mexico and sells its
products in those markets as well as in Europe, South America and
Asia.  As a result, the Company’s operating results could be affected
by factors such as changes in foreign currency exchange rates or weak economic
conditions in the foreign markets in which the Company distributes its
products.  Most of the Company’s sales are denominated in U.S.
dollars.  Net sales of the Company’s engineered products segment
denominated in Euros were 11.3% and 10.7% for the three and nine months ended
September 30, 2009 and 7.9% and 8.7% for the three and nine months ended
September 30, 2008, respectively.  As such, a portion of the Company’s
receivables are exposed to fluctuations with the U.S.
dollar.  However, the Company does not believe this risk to be
material to its overall financial position as the Company’s historical results
have not been significantly impacted by foreign exchange gains or
losses.  Accordingly, the Company has not entered into forward
exchange contracts to hedge this exposure.  If such exposure increased
in the future, the Company may reexamine this practice to minimize the
associated risks.
 
 The
continued weakness in the economy has pressured results of the Company’s
engineered products and hotel segments.  These factors are expected to
continue to impact the Company for the remainder of the year.  The
Company continues to work to streamline operations, control expenses and
maximize cash flow from operations.  While the depth and duration of
the current negative economic environment and its impact on the Company are
uncertain, management believes the Company’s strong balance sheet together with
the significant cash flow generated from its core real estate portfolio, should
allow the company to weather this downturn.
 
 The
Company has undertaken the completion of environmental studies and/or remedial
action at the Company’s two New Jersey facilities and has recorded a liability
for the estimated investigation, remediation and administrative costs associated
therewith.  See Note 15 of Notes to Condensed Consolidated Financial
Statements for further discussion of this matter.
 
 The
Company is subject to various other litigation, legal, regulatory and tax
matters that arise in the ordinary course of business
activities.  When management believes it is probable that liabilities
have been incurred and such amounts are reasonably estimable, the Company
provides for amounts that include judgments and penalties that may be
assessed.  These liabilities are usually included in accounts payable
and accrued liabilities or other long-term liabilities in the Condensed
Consolidated Financial Statements, depending on the anticipated payment
date.  Based on the facts presently available, the Company does not
believe that the disposition of matters that are pending or asserted will have a
material adverse effect on the Company’s consolidated financial position or
results of operations.  However, new or additional facts or an adverse
judgment by a court, arbitrator or a settlement could adversely impact the
Company’s results of operations in any given period.
 
 Critical
Accounting Policies and Management Estimates
 
 The
preparation of consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to use judgment in making estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities.  Certain of the
estimates and assumptions required to be made relate to matters that are
inherently uncertain as they pertain to future events.  While
management believes that the estimates and assumptions used were the most
appropriate, actual results could differ significantly from those estimates
under different assumptions and conditions.
 
 Refer to
the Company’s 2008 Annual Report on Form 10-K for a discussion of the Company’s
critical accounting policies, which include revenue recognition and accounts
receivable, marketable securities, inventories, real estate, discontinued
operations, long-lived assets and pension plans.  There were no
material changes to the Company’s critical accounting policies during the nine
months ended September 30, 2009.
  19
 Index
 
 
 ITEM3.                 QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 Not
applicable, as the Company is a smaller reporting company.
 
 
 ITEM4T.              CONTROLS
AND PROCEDURES
 
 As of the
end of the period covered by this report, the Company carried out an evaluation,
under the supervision and with the participation of the Company’s management,
including the Company’s Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of the Company’s disclosure
controls and procedures pursuant to Exchange Act Rule 13a-15(e) and
15d-15(e).  Based upon that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company’s disclosure controls and
procedures are effective as of the end of the period covered by this
report.
 
 The
Company’s internal control over financial reporting is a process designed by, or
under the supervision of, the Chief Executive Officer and Chief Financial
Officer and effected by the Company’s Board of Directors, management and other
personnel, to provide reasonable assurance regarding the reliability of the
Company’s financial reporting and the preparation of the Company’s financial
statements for external purposes in accordance with generally accepted
accounting principles (United States).  Internal control over
financial reporting includes policies and procedures that pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the Company’s assets, provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
the Company’s financial statements in accordance with generally accepted
accounting principles (United States), and that the Company’s receipts and
expenditures are being made only in accordance with the authorization of the
Company’s Board of Directors and management, and provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the
Company’s financial statements.
 
 There
have been no changes in the Company’s internal controls over financial reporting
during the quarter ended September 30, 2009 that have materially affected, or
are reasonably likely to materially affect, the Company’s internal controls over
financial reporting.
 
 PARTII – OTHER INFORMATION
 
 ITEM1.                 LEGAL
PROCEEDINGS
 
 In May
2008, an insurance company for one of the Company’s subsidiaries, purchased as
part of a bankruptcy reorganization, filed suit in Supreme Court of the State of
New York against such entity’s other insurance companies seeking, among other
things, contribution for insurance settlements from carriers, some of which now
claim to be exhausted.  The complaint also names the Company’s
subsidiary and several underlying claimants with whom such settlements were
reached.  The action challenges the exhaustion of the underlying
policies and seeks contribution as well as a declaration of the rights, duties
and liabilities of the parties under the insurance policies.  In June
2008, the Company removed the action to the U.S. Court for the Southern District
of New York.  Plaintiffs and certain defendants contested the
removal.  In October 2008, a stipulation was reached to remand certain
issues to State Court while staying the remaining issues in Federal
Court.  Plaintiffs have also agreed to dismiss the underlying
claimants.  In February 2009, the Company succeeded on a motion for
summary judgment against one of the primary insurance companies who claimed
exhaustion.  The insurance company was ordered to defend the
underlying actions and reimburse certain costs to the other
carriers.  This decision was appealed by the carrier in April
2009.  In July 2009, the Company asked the lower court for leave to
amend its complaint to correct a procedural deficiency.  The lower
court granted such leave, but withdrew its earlier summary judgment motion,
pending a rehearing of the matter, rendering the appeal moot.  The
lower court, however, stayed the defense obligations, pending a decision based
on a new hearing held in September 2009.  The Company intends to
vigorously defend this matter.  The Company is subject to various
other litigation, legal and regulatory matters that arise in the ordinary course
of business activities.  When management believes it is probable that
a liability has been incurred and such amounts are reasonably estimable, the
Company provides for amounts that include judgments and penalties that may be
assessed.  These liabilities are usually included in accounts payable
and accrued liabilities or other long-term liabilities in the Condensed
Consolidated Financial Statements, depending on the anticipated payment
date.  Based on the facts presently available, the Company does not
believe that the disposition of matters that are pending or asserted will have a
material adverse effect on the Company’s consolidated financial position or
results of operations.  However, new or additional facts or an adverse
judgment by a court, arbitrator or a settlement could adversely impact the
Company’s results of operations in any given period.
  20
 Index
  ITEM1A.              RISK
FACTORS
 
 The
significant factors known to the Company that could materially effect the
Company’s business, financial position or results of operations are set forth
under Item 1A of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008, which are incorporated herein by reference.  The
information presented below updates and should be read in conjunction with the
risk factors and information disclosed in our Form 10-K for the fiscal year
ended December 31, 2008.
 
 Our
engineered products segment has been, and may continue to be, adversely affected
by current conditions in the automotive industry.
 Globally,
automakers and their suppliers continue to experience significant difficulties
from a weakened economy and tightened credit market.  Although the
automotive industry has shown improvements in the current quarter as the result
of the re-opening of certain plants which experienced extended shut-downs during
the first half of 2009, continued adverse developments in the automotive
industry, including but not limited to continued share declines in demand,
customer bankruptcies and increased demands on the Company for price decreases,
have had, and will continue to have, a significant adverse affect on our
engineered products segment.
 
 Our
Company is a controlled company pursuant to NYSE Amex rules and, therefore, is
not required to comply with certain governance requirements.
 The
Company has elected to be a controlled company pursuant to NYSE Amex
rules.  The Company is eligible to make this election because A.F.
Petrocelli, the Company’s Chairman of the Board, President and Chief Executive
Officer beneficially owns more than 50% of the Company’s outstanding
stock.  As a result of being a controlled company, the Company is not
required to comply with the following corporate governance requirements of the
NYSE Amex:  (i) majority of independent directors, (ii) fully
independent nominating committee and (iii) fully independent compensation
committee.  While the Company currently has a fully independent
compensation committee, it does not have a majority of independent directors or
a fully independent nominating committee.  As a result, the quality of
Board oversight may be reduced as compared with companies which have a fully
independent nominating committee and a majority of independent directors and the
Company has a greater risk of conflicts of interest without these
safeguards.  In addition, the lack of an independent nominating
committee increases the possibility that the Company will not have independent
directors serving on the Board of Directors.
 
 Forward-Looking
Statements
 
 Certain
statements in this Report on Form 10-Q and other statements made by the Company
or its representatives that are not strictly historical facts are
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995 that should be considered as subject to the many
risks and uncertainties that exist in the Company's operations and business
environment.  The forward-looking statements are based on current
expectations and involve a number of known and unknown risks and uncertainties
that could cause the actual results, performance and/or achievements of the
Company to differ materially from any future results, performance or
achievements, expressed or implied, by the forward-looking
statements.  Readers are cautioned not to place undue reliance on
these forward-looking statements, and that in light of the significant
uncertainties inherent in forward-looking statements, the inclusion of such
statements should not be regarded as a representation by the Company or any
other person that the objectives or plans of the Company will be
achieved.  The Company also assumes no obligation to publicly update
or revise its forward-looking statements or to advise of changes in the
assumptions and factors on which they are based.  See the Company’s
2008 Annual Report on Form 10-K and other portions of this Form 10-Q for a
discussion of risk factors that could impact the Company’s future financial
performance and/or cause actual results to differ significantly from those
expressed or implied by such statements.
  21
 Index
  ITEM2.                 UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
 The
following table details the Company’s repurchases of common stock during the
three months ended September 30, 2009:
  Issuer
Purchases of Equity Securities
 
 Period
                
                Total
      Number of Shares Purchased
                
                
                Average
      Price Paid per Share
                
                
                Total
      Number of Shares Purchased as Part of Publicly Announced Plans or
      Programs
                
                
                Maximum
      Number of Shares that May Yet Be Purchased Under the Plans or
      ProgramsJuly
      1, 2009 – July 31, 2009
                
                
                125,000
                
                
                $
                18.99
                
                
                
                125,000
                
                
                
                352,072
 As
previously announced, the Board of Directors have approved repurchase plans for
the Company’s common stock, which may be made from time to time in the open
market at prevailing market prices or in privately negotiated
transactions.  At September 30, 2009, 352,072 shares remain to be
purchased under such plans.  These authorizations are ongoing and have
no expiration date.
 
 ITEM6.                 EXHIBITS
 
 31.1
              Certification
      of the Chief Executive Officer pursuant to Rule 13a-15(e) and
      15d-15(e).
 31.2
              Certification
      of the Chief Financial Officer pursuant  to Rule 13a-15(e) and
      15d-15(e).
 32.1
              Certification
      of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.
 32.2
              Certification
      of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.
 
 
 SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 UNITED
      CAPITAL CORP.Date:  November
      11, 2009By:
                /s/
      Anthony J. MiceliAnthony
      J. MiceliVice
      President, Chief Financial Officerand
      Secretary of the Company
 
 22