UNITED STATES
 SECURITIES AND EXCHANGE
COMMISSION
 Washington, D.C.
20549
 
 FORM 10-Q
  COMMISSION FILE
NUMBER:  1-10104
 
 (Mark
One)
 
 oQUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the
quarterly period ended March 31,
2009
  or
 
  ̈TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the
transition period from 
to
 
 Commission File Number:
xxx
 
 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
 ̈
 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 9,072,423 shares of common stock, $.10 par value, outstanding as
of May 7, 2009.


United
Capital Corp. and Subsidiaries
 
 Index
 
 
 
 PagePART I – FINANCIAL INFORMATIONITEM 1.
                FINANCIAL STATEMENTSCondensed Consolidated Balance Sheets as of March 31, 2009
      (Unaudited) and December 31, 2008
                3Condensed Consolidated Statements of Income for the Three
      Months Ended March 31, 2009 and 2008 (Unaudited)
                4Condensed Consolidated Statements of Cash Flows for the Three
      Months Ended March 31, 2009 and 2008 (Unaudited)
                5Notes to Condensed Consolidated Financial Statements
      (Unaudited)
                6-11ITEM 2.
                MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS
                12-17ITEM 3.
                QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
                17ITEM 4.
                CONTROLS AND PROCEDURES
                17PART II – OTHER INFORMATIONITEM 1.
                LEGAL PROCEEDINGS
                17-18ITEM 1A.
                RISK FACTORS
                18ITEM 2.
                UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
                19ITEM 6.
                EXHIBITS
                19SIGNATURES
                19
  2
 INDEX
 PART I – FINANCIAL INFORMATION
  ITEM 1.
                FINANCIAL
      STATEMENTS
  United
Capital Corp. and Subsidiaries
 Condensed Consolidated Balance Sheets
 (In
thousands, except per share data)
 
 March
      31,
                    2009
                
                
                December
      31, 2008(Unaudited)AssetCurrent
      assets:Cash
      and cash equivalents
                
                $
                138,887
                
                
                $
                138,142Marketable
      securities
                
                
                11,264
                
                
                
                9,178Notes
      and accounts receivable, net
                
                
                6,164
                
                
                
                7,427Income
      taxes receivable
                
                
                4,163
                
                
                
                4,163Inventories
                
                
                4,816
                
                
                
                5,624Prepaid
      expenses and other current assets
                
                
                1,425
                
                
                
                1,732Deferred
      income taxes
                
                
                4,553
                
                
                
                4,011Total
      current assets
                
                
                171,272
                
                
                
                170,277Property,
      plant and equipment, net
                
                
                5,494
                
                
                
                5,591Real
      property held for rental, net
                
                
                77,218
                
                
                
                77,202Investment
      in joint venture
                
                
                5,246
                
                
                
                5,440Noncurrent
      notes receivable
                
                
                1,046
                
                
                
                1,058Other
      assets
                
                
                3,331
                
                
                
                3,317Total
      assets
                
                $
                263,607
                
                
                $
                262,885Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Current
      maturities of long-term debt
                
                $
                1,064
                
                
                $
                2,717Accounts
      payable and accrued liabilities
                
                
                7,909
                
                
                
                10,036Income
      taxes payable
                
                
                2,662
                
                
                
                3,629Total
      current liabilities
                
                
                11,635
                
                
                
                16,382Long-term
      debt
                
                
                29,826
                
                
                
                30,146Other
      long-term liabilities
                
                
                18,145
                
                
                
                18,076Deferred
      income taxes
                
                
                8,232
                
                
                
                8,314Total
      liabilities
                
                
                67,838
                
                
                
                72,918Commitments
      and contingenciesStockholders’
      equity:Common
      stock, $.10 par value, authorized 17,500 shares;issued
      and outstanding 9,078 and 8,483 shares, respectively
                
                
                908
                
                
                
                848Retained
      earnings
                
                
                203,705
                
                
                
                197,056Accumulated
      other comprehensive loss, net of tax
                
                
                (8,844
                )
                
                
                (7,937
                )Total
      stockholders’ equity
                
                
                195,769
                
                
                
                189,967Total
      liabilities and stockholders’ equity
                
                $
                263,607
                
                
                $
                262,885
 
 
 
 The
accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
  3
 INDEX
 United
Capital Corp. and Subsidiaries
 Condensed Consolidated Statements of Income
 (Unaudited)
 (In
thousands, except per share data)
 
 Three
      Months Ended
                    March
      31,2009
                
                
                2008Revenues:Net sales
                
                $
                5,784
                
                
                $
                9,899Revenues from real estate
      operations
                
                
                8,016
                
                
                
                8,777Total revenues
                
                
                13,800
                
                
                
                18,676Costs
      and expenses:Cost of sales
                
                
                4,512
                
                
                
                7,534Real estate
      operations:Mortgage interest
      expense
                
                
                532
                
                
                
                514Depreciation
      expense
                
                
                1,037
                
                
                
                936Other operating
      expenses
                
                
                4,079
                
                
                
                4,366General and administrative
      expenses
                
                
                1,790
                
                
                
                1,790Selling
expenses
                
                
                818
                
                
                
                934Total costs and
      expenses
                
                
                12,768
                
                
                
                16,074Operating
income
                
                
                1,032
                
                
                
                2,602Other
      income (expense):Interest and dividend
      income
                
                
                835
                
                
                
                1,554Other income and (expense),
      net
                
                
                (109
                )
                
                
                23Total other income
      (expense)
                
                
                726
                
                
                
                1,577Income
      from continuing operations before income taxes
                
                
                1,758
                
                
                
                4,179Provision
      for income taxes
                
                
                641
                
                
                
                1,523Income
      from continuing operations
                
                
                1,117
                
                
                
                2,656Discontinued
      operations:Income
      from discontinued operations, net of tax provision of $22
                
                
                —
                
                
                
                32Income
      from discontinued operations
                
                
                —
                
                
                
                32Net
      income
                
                $
                1,117
                
                
                $
                2,688Basic
      earnings per share:Income from continuing
      operations
                
                $
                .13
                
                
                $
                .32Income from discontinued
      operations
                
                
                —
                
                
                
                —Net income per
      share
                
                $
                .13
                
                
                $
                .32Diluted
      earnings per share:Income from continuing
      operations
                
                $
                .12
                
                
                $
                .27Income from discontinued
      operations
                
                
                —
                
                
                
                —Net income per share assuming
      dilution
                
                $
                .12
                
                
                $
                .27
 
 
  
 
 The accompanying Notes to Condensed
Consolidated Financial Statements are an integral part of these
statements.
  4
 INDEX
  United
Capital Corp. and Subsidiaries
 Condensed Consolidated Statements of Cash Flows
 (Unaudited)
 (In
thousands)
  Three
      Months Ended
                        March
      31,2009
                    
                    
                    2008Cash flows from operating
      activities:Net income
                    
                    $
                    1,117
                    
                    
                    $
                    2,688Adjustments to reconcile net
      income to net cash provided by operating activities:Depreciation
      and amortization
                    
                    
                    1,132
                    
                    
                    
                    1,051Net
      loss on available-for-sale securities
                    
                    
                    104
                    
                    
                    
                    —Net
      realized and unrealized gains on derivative instruments
                    
                    
                    (5
                    )
                    
                    
                    (30
                    )Income
      from equity investment
                    
                    
                    —
                    
                    
                    
                    (22
                    )Deferred
      income taxes
                    
                    
                    (135
                    )
                    
                    
                    (48
                    )Other,
      net
                    
                    
                    164
                    
                    
                    
                    24Changes
      in assets and liabilities:Notes
      and accounts receivable, net
                    
                    
                    1,264
                    
                    
                    
                    (629
                    )Inventories
                    
                    
                    808
                    
                    
                    
                    425Prepaid
      expenses and other current assets
                    
                    
                    307
                    
                    
                    
                    120Accounts
      payable and accrued liabilities
                    
                    
                    (2,122
                    )
                    
                    
                    (44
                    )Income
      taxes payable
                    
                    
                    (967
                    )
                    
                    
                    885Other
      long-term liabilities
                    
                    
                    (124
                    )
                    
                    
                    81Net
      cash provided by operating activities of continuing
    operations
                    
                    
                    1,543
                    
                    
                    
                    4,501Operating
      activities of discontinued operations
                    
                    
                    —
                    
                    
                    
                    12Net
      cash provided by operating activities
                    
                    
                    1,543
                    
                    
                    
                    4,513Cash flows from investing
      activities:Purchase
      of available-for-sale securities
                    
                    
                    (3,939
                    )
                    
                    
                    (9,564
                    )Proceeds/maturities
      from sale of available-for-sale securities
                    
                    
                    361
                    
                    
                    
                    754Escrowed
      proceeds from sale of real estate assets
                    
                    
                    —
                    
                    
                    
                    15,000Proceeds
      from sale of derivative instruments
                    
                    
                    —
                    
                    
                    
                    16Principal
      payments on notes receivable
                    
                    
                    11
                    
                    
                    
                    12Acquisition
      of property, plant and equipment
                    
                    
                    (214
                    )
                    
                    
                    (46
                    )Acquisition
      of/additions to real estate assets
                    
                    
                    (830
                    )
                    
                    
                    (14,135
                    )Distributions
      from joint venture
                    
                    
                    194
                    
                    
                    
                    195Net
      cash used in investing activities
                    
                    
                    (4,417
                    )
                    
                    
                    (7,768
                    )Cash flows from financing
      activities:Principal
      payments on mortgage obligations
                    
                    
                    (1,973
                    )
                    
                    
                    (237
                    )Purchase
      and retirement of common stock
                    
                    
                    (79
                    )
                    
                    
                    (389
                    )Proceeds
      from exercise of stock options
                    
                    
                    4,219
                    
                    
                    
                    —Tax
      benefit from exercise of stock options
                    
                    
                    1,452
                    
                    
                    
                    —Net
      cash provided by (used in) financing activities
                    
                    
                    3,619
                    
                    
                    
                    (626
                    )Net
      increase (decrease) in cash and cash equivalents
                    
                    
                    745
                    
                    
                    
                    (3,881
                    )Cash
      and cash equivalents, beginning of period
                    
                    
                    138,142
                    
                    
                    
                    129,003Cash
      and cash equivalents, end of period
                    
                    $
                    138,887
                    
                    
                    $
                    125,122Supplemental
      disclosures of cash flow information:Cash paid during the period
      for:Interest
                    
                    $
                    535
                    
                    
                    $
                    514Taxes
                    
                    $
                    279
                    
                    
                    $
                    589
  The
accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
  5
 INDEX
  United Capital Corp. and Subsidiaries
 Notes
to 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.
 
 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 three months ended March 31, 2009, the Company
received proceeds of $4,219 from the exercise of 600 stock
options.  During the three months ended March 31, 2009, the Company
recorded a tax benefit of $1,452 to retained earnings related to the exercise of
stock options.  No stock options were exercised during the three
months ended March 31, 2008.
 
 During
the three months ended March 31, 2009 and 2008, the Company purchased and
retired 5 and 16 shares of common stock for an aggregate purchase price of $79
and $389, respectively.
 
 3. Earnings Per
Share
 
 The
following table sets forth the computation of basic and diluted earnings per
share from continuing operations:
 
 Three
      Months Ended
                    March
      31,2009
                
                
                2008Numerator:Income from continuing
      operations
                
                $
                1,117
                
                
                $
                2,656Denominator:Basic – weighted-average shares
      outstanding
                
                
                8,675
                
                
                
                8,279Dilutive effect of employee
      stock options
                
                
                722
                
                
                
                1,536Diluted – weighted-average
      shares outstanding
                
                
                9,397
                
                
                
                9,815Basic
      earnings per share – continuing operations
                
                $
                .13
                
                
                $
                .32Diluted
      earnings per share – continuing operations
                
                $
                .12
                
                
                $
                .27
 
 Potentially
dilutive common shares, related to outstanding employee stock options, amounting
to 740 shares for the three months ended March 31, 2009, 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
March 31, 2009 and December 31, 2008, the Company had options to purchase 3,345
and 3,945 shares outstanding with a weighted-average exercise price of $12.88
and $11.99 per share, respectively.  As of March 31, 2009, these
options had a weighted-average remaining contractual term of 2.6 years and an
aggregate intrinsic value of $17,972.  The aggregate intrinsic value
represents the difference between the Company’s closing stock price on March 31,
2009 ($17.25) 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 three months
ended March 31, 2009, options to purchase 600 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
                    ValueMarch
      31, 2009:Equity
    securities
                  
                  $
                  20,379
                  
                  
                  $
                  1,053
                  
                  
                  $
                  (10,659
                  )
                  
                  $
                  10,773Bonds
                  
                  
                  574
                  
                  
                  
                  2
                  
                  
                  
                  (85
                  )
                  
                  
                  491$
                  20,953
                  
                  
                  $
                  1,055
                  
                  
                  $
                  (10,744
                  )
                  
                  $
                  11,264December
      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 losses recognized
in earnings on available-for-sale securities included in the determination of
net income are as follows:
 
 Three
      Months Ended
                    March
      31,2009
                
                
                2008Proceeds/maturities
                
                $
                361
                
                
                $
                754Losses
      recognized in earnings
                
                $
                (104
                )
                
                $
                —
 
 6. Inventories
 
 The
components of inventories are as follows:
 March
      31,
                    2009
                
                
                December
      31, 2008Raw
      materials
                
                $
                2,145
                
                
                $
                2,607Work
      in process
                
                
                356
                
                
                
                458Finished
      goods
                
                
                2,315
                
                
                
                2,559$
                4,816
                
                
                $
                5,624
  7
 INDEX
  7. 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.
 
 Property sales
 
 The
results of operations of properties sold prior to March 31, 2009, consisting
primarily of $66 of revenues and $12 of depreciation expense, have been
reclassified to discontinued operations, on a net of tax basis, for the three
months ended March 31, 2008.
 
 Properties held for sale
 
 At March
31, 2009, there were no properties considered by the Company to be held for
sale.
 
 8. 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 $5 and $30 in net realized and
unrealized gains on derivative instruments for the three months ended March 31,
2009 and 2008, respectively, which are included in other income and (expense),
net in the Condensed Consolidated Statements of Income.  The Company
held no such derivatives at March 31, 2009.
 
 9. 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 in accordance with Statement of Financial Accounting Standards
No. 157, “Fair Value Measurements”:
 
 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)March
      31, 2009:Marketable
      securities
                
                $
                11,264
                
                
                $
                11,234
                
                
                $
                30
                
                
                $
                —December
      31, 2008:Marketable
      securities
                
                $
                9,178
                
                
                $
                9,144
                
                
                $
                34
                
                
                $
                —Derivative financial
      instruments
                
                $
                (5
                )
                
                $
                (5
                )
                
                $
                —
                
                
                $
                —
 
 In
February 2008, the Financial Accounting Standards Board (“FASB”) issued Staff
Position No. 157-2, which delayed the effective date of SFAS 157 for one year
for all nonfinancial assets and liabilities, except those that are recognized or
disclosed at fair value in the financial statements on a recurring
basis.  The Company adopted the provisions of SFAS 157 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.
  8
 INDEX
 
 10.         
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 provides defined
benefits based on years of service and compensation level.
 
 Net
periodic pension cost consists of the following:
  Three
      Months Ended
                    March
      31,2009
                
                
                2008Service
      cost
                
                $
                (80
                )
                
                $
                (75
                )Interest
      cost
                
                
                (190
                )
                
                
                (170
                )Expected
      return on plan assets
                
                
                138
                
                
                
                204Amortization
      of net loss
                
                
                (61
                )
                
                
                —Net
      periodic pension cost
                
                $
                (193
                )
                
                $
                (41
                )
 
 11.         
Comprehensive Income (Loss)
 
 The
components of comprehensive income (loss) are as follows:
 Three
      Months Ended
                    March
      31,2009
                
                
                2008Net
      income
                
                $
                1,117
                
                
                $
                2,688Other
      comprehensive income (loss), net of tax:Change
      in net unrealized loss on available-for-sale securities, net of tax effect
      of $525 and $1,474, respectively
                
                
                (975
                )
                
                
                (2,738
                )Reclassification
      adjustment for net losses realized in net income, net of tax effect of
      $36
                
                
                68
                
                
                
                —Comprehensive
      income (loss)
                
                $
                210
                
                
                $
                (50
                )
 
 The
components of accumulated other comprehensive loss, net of tax are as
follows:
 
 March
      31,
                    2009
                
                
                December
      31,
                    2008Net
      unrealized loss on available-for-sale securities, net of tax effect of
      $3,391 and $2,902, respectively
                
                $
                (6,298
                )
                
                $
                (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
                
                $
                (8,844
                )
                
                $
                (7,937
                )
 
 12.         
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 three 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.
  9
 INDEX
 
 Operating
results of the Company's business segments are as follows:
 Three
      Months Ended
                    March
      31,2009
                
                
                2008Net
      revenues and sales:Real estate investment and
      management
                
                $
                4,900
                
                
                $
                5,107Hotel
operations
                
                
                3,116
                
                
                
                3,670Engineered
    products
                
                
                5,784
                
                
                
                9,899$
                13,800
                
                
                $
                18,676Operating
      income (loss):Real estate investment and
      management
                
                $
                2,796
                
                
                $
                3,065Hotel
operations
                
                
                (428
                )
                
                
                (104
                )Engineered
    products
                
                
                (319
                )
                
                
                549General corporate
      expenses
                
                
                (1,017
                )
                
                
                (908
                )1,032
                
                
                
                2,602Other
      income (expense), net
                
                
                726
                
                
                
                1,577Income
      from continuing operations before income taxes
                
                $
                1,758
                
                
                $
                4,179
 
 13.         
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”).  Environmental experts engaged by the Company estimate 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, environmental
experts have advised the Company 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 $9,200 and $9,300 recorded in accounts payable and
accrued liabilities and other long-term liabilities at March 31, 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 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.
  10
 INDEX
 
 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.
 
 14.         
Recent Accounting Pronouncements
 
 In
December 2008, the FASB issued FASB Staff Positions (“FSP”) FSP FAS 132(R)-1,
“Employers’ Disclosures about Postretirement Benefit Plan
Assets.”  This FSP 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 FSP, which only provides for enhanced annual disclosures
and does not require additional interim disclosures, is effective for fiscal
years ending after December 15, 2009.
 
 In April
2009, the FASB issued three FSPs 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
first Staff Position, FSP FAS 157-4, “Determining Whether a Market is Not Active
and a Transaction is Not Distressed,” provides additional guidance to highlight
and expand on 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 second Staff Position, FSP FAS 115-2 and FAS 124-2,
“Recognition and Presentation of Other-Than-Temporary Impairments,” 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.  The third Staff Position, FSP FAS 107-1 and APB 28-1,
“Interim Disclosures about Fair Value of Financial Instruments” increases the
frequency of fair value disclosures from annual, to quarterly.  All
three FSPs are 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 did not choose to adopt early and does not expect
that the adoption of the FSPs will have a material impact on its financial
statements.
 
 15.         
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.
 
 16.         
Reclassifications
 
 Certain
prior year amounts have been reclassified to present them on a basis consistent
with the current year.
 
 11
 INDEX
  ITEM
      2.
                MANAGEMENT’S DISCUSSION AND
      ANALYSIS OF FINANCIALCONDITION
      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 Months Ended March 31, 2009 and
2008
 
 Total
revenues for the three months ended March 31, 2009 were $13,800, compared to
$18,676 for the three months ended March 31, 2008.  Operating income
for the current quarter dropped $1,570 to $1,032 primarily as a result of the
weakened economy and its consequences on the Company’s engineered products and
hotel operations segments.  Net income for the quarter ended March 31,
2009 was $1,117 or $.13 per basic share, compared to net income of $2,688 or
$.32 per basic share for the corresponding period of 2008.
 
 The
ongoing weakness in the economy continues to impact the results 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 March 31, 2009
                
                
                Three
      Months Ended March 31, 2008Real
                    Estate
                
                
                Hotel
                    Operations
                
                
                Total
                
                
                Real
                    Estate
                
                
                Hotel
                    Operations
                
                
                TotalRevenues
                
                $
                4,900
                
                
                $
                3,116
                
                
                $
                8,016
                
                
                $
                5,107
                
                
                $
                3,670
                
                
                $
                8,777Mortgage
      interest expense
                
                
                60
                
                
                
                472
                
                
                
                532
                
                
                
                59
                
                
                
                455
                
                
                
                514Depreciation
      expense
                
                
                652
                
                
                
                385
                
                
                
                1,037
                
                
                
                578
                
                
                
                358
                
                
                
                936Other
      operating expenses
                
                
                1,392
                
                
                
                2,687
                
                
                
                4,079
                
                
                
                1,405
                
                
                
                2,961
                
                
                
                4,366Income
      (loss) from operations
                
                $
                2,796
                
                
                $
                (428
                )
                
                $
                2,368
                
                
                $
                3,065
                
                
                $
                (104
                )
                
                $
                2,961
 
 Real
Estate Investment and Management
 
 Revenues
from the real estate investment and management segment were $4,900 for the three
months ended March 31, 2009, a decrease $207 or 4.1%, compared to $5,107 for the
corresponding 2008 period.  The decrease was primarily the result of
two vacancies in our retail portfolio ($210), the result of the weakened
economy.  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 increased slightly in the first quarter of 2009, as compared to
that reported in the first quarter of 2008, due to a mortgage obtained in
connection with the purchase of a commercial property in the second quarter of
2008, partially offset by continued mortgage amortization.  Mortgage
interest expense on existing obligations of the Company’s real estate investment
and management segment will continue to decline with scheduled principal
reductions.  At March 31, 2009, the outstanding mortgage balance on
the Company’s three real estate investment properties which are currently
encumbered is below $2,300.
 
 Depreciation
expense associated with real properties held for rental increased $74 for the
quarter ended March 31, 2009, compared to the corresponding 2008 quarter,
primarily attributable to depreciation expense ($85) related to additions to
real estate assets over the past twelve months.  As the result of the
purchase of a commercial property and certain capital improvements during 2008,
the Company expects that depreciation expense on the Company’s properties for
each of the quarters and full year of 2009 should be higher than that reported
in the corresponding 2008 periods.
  12
 INDEX
 
 Other
operating expenses associated with the management of real properties decreased
less than 1% for the quarter ended March 31, 2009, compared to the corresponding
2008 period.  Fluctuations within this category did occur however, a
decline in the cost of utilities ($43) was the most significant contributor to
the decline.  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 $554 or 15.1% to $3,116 for the three months ended March 31,
2009, compared to the corresponding 2008 period, primarily related to the
overall weakness in the U.S. economy which has resulted in a reduction in both
consumer and business travel.  As a result, the Company expects
lodging demand to continue to decline through the remainder of 2009, which will
likely result in lower reported revenues from this segment for the balance of
the year.
 
 Mortgage
interest expense related to the Company’s hotel properties increased $17 for the
first quarter of 2009, compared to the corresponding quarter of 2008, as a
result of a mortgage obtained on one of the Company’s hotels in the prior year
period.  Mortgage interest expense related to the Company’s other two
hotel properties decreased due to continued mortgage
amortization.  Mortgage interest expense related to the Company’s
hotel operations should decline for the full year of 2009 with scheduled
principal reductions.
 
 Depreciation
expense associated with the Company’s hotel operations increased $27 for the
three months ended March 31, 2009, compared to the corresponding 2008 period,
primarily attributable to additional depreciation expenses ($39) related to
renovations and improvements during the past twelve months at two of the
Company’s hotels.  As a result of these renovations and improvements,
and additional renovations and improvements currently occurring at one of the
hotels, depreciation expense for each of the quarters and the full year of 2009
should be higher than that reported in the corresponding 2008
periods.
 
 Other
operating expenses related to the management of the Company’s hotels decreased
$274 to $2,687 for the 2009 quarter, compared to the corresponding 2008 quarter,
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 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.
 
 Engineered
Products
 
 The
operating results of the engineered products segment are as
follows:
 
 Three
      Months Ended
                    March
      31,2009
                
                
                2008Net
      sales
                
                $
                5,784
                
                
                $
                9,899Cost
      of sales
                
                
                4,512
                
                
                
                7,534Selling,
      general and administrative expenses
                
                
                1,591
                
                
                
                1,816Operating
      (loss) income
                
                $
                (319
                )
                
                $
                549
 
 Net sales
of the engineered products segment decreased $4,115 or 41.6% for the three
months ended March 31, 2009, compared with the results of the corresponding 2008
period.  Sales of the Company’s automotive product line declined over
50% in the quarter.  These 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.  Announced plant closings by the automotive companies, the
bankruptcy filing of Chrysler and the uncertainty regarding the future of
General Motors has had, and will continue to have, a significant adverse affect
on our engineered products segment.
 
 Cost of
sales as a percentage of net sales increased 1.9% in the three months ended
March 31, 2009, compared to the corresponding 2008 period.  This
increase is primarily attributable to the significant reduction in net sales, as
noted above, which led to lower absorption of incurred manufacturing
costs.  The increase in costs of sales as a percentage of net sales
was partially offset by a reduction in the cost of raw materials (3.7% as a
percentage of net sales).  As a result of the significant decline in
sales and ongoing uncertainty, the Company has taken significant steps to reduce
its operating costs, including the reduction of over 25% of its direct and
indirect positions since the beginning of the year.  To minimize the
consequences from dramatically lower sales forecasted for the remainder of 2009,
management is carefully monitoring this situation and will continue to work to
reduce costs in-line with any further reductions in sales.
  13
 INDEX
 
 Selling,
general and administrative expenses of the engineered products segment decreased
$225 or 12.4% for the three month period ended March 31, 2009, compared to the
corresponding 2008 period.  This decrease was primarily related to
decreases in payroll and payroll related expenses ($120), professional fees
($62) and freight charges ($54).  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 $109 for the first quarter of 2009, compared to such expenses incurred
in the comparable 2008 period.  This is attributable to the increase
in net periodic pension expense ($152) which results from the significant
decline in the fair value of the Company’s pension plan assets in
2008.
 
 Other
Income and Expense, Net
 
 The
components of other income and (expense), net in the Condensed Consolidated
Statements of Income are as follows:
  Three
      Months Ended
                    March
      31,2009
                
                
                2008Net
      loss on available-for-sale securities
                
                $
                (104
                )
                
                $
                —Net
      realized and unrealized gains on derivative instruments
                
                
                5
                
                
                
                30Other,
      net
                
                
                (10
                )
                
                
                (7
                )$
                (109
                )
                
                $
                23
 
 Discontinued
Operations
 
 Income
from operations on properties sold and accounted for as discontinued operations
was $32, on a net of tax basis, for the three months ended March 31,
2008.  Such amounts have been reclassified to reflect results of
operations of real properties sold during 2008 as discontinued
operations.  The Company did not consider any of its properties to be
held for sale as of March 31, 2009 and no properties have been sold during the
three months ended March 31, 2009.
 
 Liquidity
and Capital Resources
 
 Net cash
provided by operating activities declined $2,970 in the three months ended March
31, 2009 ($1,543) from that provided in the first quarter of 2008
($4,513).  This reduction in cash is primarily the result of lower
operating income before depreciation of $1,489 and interest and dividend income
($719) in the current year period than realized in the prior
year.  Other changes in working capital, including a reduction in
accounts payable and accrued liabilities also contributed to the
decline.
 
 Net cash
used in investing activities was $4,417 and $7,768 for the three months ended
March 31, 2009 and 2008, respectively.  This change primarily results
from decreases in the acquisition of/additions to real estate assets ($13,305)
and purchase of available-for-sale securities ($5,625), partially offset by the
release of proceeds held in escrow on the sale of real estate in 2008
($15,000).
 
 Net cash
provided by financing activities was $3,619 for the three months ended March 31,
2009, compared to net cash used in financing activities of $626 for the same
period of 2008.  This change primarily results from proceeds from the
exercise of stock options ($4,219) and the tax benefits related to such exercise
($1,452) in the current year, offset by an increase in principal payments on
mortgage obligations ($1,736) in the current year.
  14
 INDEX
 
 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.
 
 At March
31, 2009, the Company’s cash and marketable securities totaled $150.2 million
and working capital was $159.6 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.
 
 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
are recorded as a component of accounts payable and accrued liabilities in the
Condensed Consolidated Balance Sheets.
  15
 INDEX
 
 Globally,
automakers and their suppliers continue to experience significant difficulties
from a weakened economy and tightening credit markets. General Motors, Chrysler
and several Tier 1 suppliers sought government sponsored financial assistance to
avoid bankruptcy proceedings.  The U.S. government auto task force
rejected General Motors and Chrysler’s restructuring plans and provided them
with limited additional time to determine an acceptable restructuring plan to
justify continued emergency loan funding requests.  Subsequently, on
April 30, 2009, Chrysler filed for bankruptcy protection under Title 11 of the
United States Code.  General Motors, the largest customer of the
engineered products segment, could still face possible
bankruptcy.  This could have a significant adverse affect on the
realization of certain of the segment’s assets, especially accounts receivable
and inventory, as well as future sales and operating
results.  Announced plant closings by the automotive companies, the
bankruptcy filing of Chrysler and the uncertainty regarding the future of
General Motors has had, and will continue to have, a significant adverse affect
on our engineered products segment.
 
 The U.S.
Department of Treasury recently announced the Auto Supplier Support Program (the
“Program”).  The intent of the Program is to provide suppliers to the
U.S. automotive industry with access to government-backed protection, ensuring
that money owed to the suppliers for products sold to participating U.S.
automotive companies will be paid even in the event of a
bankruptcy.  Suppliers that agree to maintain qualifying commercial
terms will have the opportunity to request this government-backed protection
relating to sales made after being accepted into the Program.  If
granted, the supplier would pay a small fee for the right to participate in the
Program.  The U.S. Treasury Department has made available up to $5
billion in financing under the Program.  The Company has completed the
necessary documentation to request participation in the Program with General
Motors which will be effective in May 2009.  This Program covers only
receivables pertaining to shipments to General Motors’ U.S. assembly
plants.  The Company will still be at risk for any other accounts
receivable from General Motors, including those incurred prior to acceptance
into the Program.
 
 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 8.4% and 9.3% for the three months ended March 31,
2009 and 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
growing weakness in the economy, exacerbated by recent credit market turmoil,
together with higher year-over-year raw material, energy, freight and other
costs, has pressured results of the Company’s engineered products and hotel
segments.   These factors are expected to continue to impact the
Company throughout the year.  The Company is working to further
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 13 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.
  16
 INDEX
 
 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 three
months ended March 31, 2009.
   ITEM
      3.
                  QUANTITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET
RISK
 Not
applicable, as the Company is a smaller reporting company.
  ITEM
      4.
                    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 in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries) required to be
included in the Company’s periodic reports.
 
 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 significant changes in the Company’s internal controls over
financial reporting or in other factors that could significantly affect these
controls subsequent to the date of their evaluation.
 
 
 PART II – OTHER INFORMATION
 
 ITEM
      1.
                      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 and
is currently pending.  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.
 
 17
 INDEX
  ITEM
      1A.
                      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 tightening credit markets. General Motors, Chrysler
and several Tier 1 suppliers sought government sponsored financial assistance to
avoid bankruptcy proceedings.  The U.S. government auto task force
rejected General Motors and Chrysler’s restructuring plans and provided them
with limited additional time to determine an acceptable restructuring plan to
justify continued emergency loan funding requests.  Subsequently, on
April 30, 2009, Chrysler filed for bankruptcy protection under Title 11 of the
United States Code.  General Motors, the largest customer of the
engineered products segment, could still face possible
bankruptcy.  This could have a significant adverse affect on the
realization of certain of the segment’s assets, especially accounts receivable
and inventory, as well as future sales and operating
results.  Announced plant closings by the automotive companies, the
bankruptcy filing of Chrysler and the uncertainty regarding the future of
General Motors has had, and will continue to have, a significant adverse affect
on our engineered products segment.
 
 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 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.
 
 18
 INDEX
  ITEM
      2.
                      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 March 31, 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
      ProgramsFebruary
      1, 2009 – February 28, 2009
                
                
                960
                
                
                $
                16.09
                
                
                
                960
                
                
                
                486,713March
      1, 2009 – March 31, 2009
                
                
                4,100
                
                
                $
                15.43
                
                
                
                4,100
                
                
                
                482,613Total
                
                
                5,060
                
                
                $
                15.55
                
                
                
                5,060
 
 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 March 31, 2009, 482,613 shares remain to be
purchased under such plans.  These authorizations are ongoing and have
no expiration date.
 
 
 ITEM
      6.
                      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:  May
      7, 2009By:
                /s/
      Anthony J. MiceliAnthony
      J. Miceli
                  Vice
      President, Chief Financial Officer
                  and
      Secretary of the Company
 
 19