10-Q 1 b327911_10q.txt QUARTERLY AND TRANSITIONAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q /x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 / / 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 000-23463 Philips International Realty Corp. (Exact name of registrant as specified in its charter) Maryland 13-3963667 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No) 417 Fifth Avenue, New York, NY 10016 (Address of principal executive offices - Zip Code) (212) 545-1100 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / / Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes / / No /x/ Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 7,340,474 shares outstanding as of October 31, 2003. PHILIPS INTERNATIONAL REALTY CORP. FORM 10-Q INDEX Page ---- Part I FINANCIAL INFORMATION 3 Item 1. Financial Statements: 3 Condensed Consolidated Balance Sheets as of September 30, 2003 and 3 December 31, 2002 Condensed Consolidated Statements of Income for the Three and Nine 4 Months Ended September 30, 2003 and 2002 Condensed Consolidated Statements of Shareholders' Equity for the 5 Nine Months Ended September 30, 2003 and 2002 Condensed Consolidated Statements of Cash Flows for the Nine 6 Months Ended September 30, 2003 and 2002 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and 15 Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk 17 Item 4. Controls and Procedures 18 Part II OTHER INFORMATION 19 Item 1. Legal Proceedings 19 Item 2. Changes in Securities and Use of Proceeds 20 Item 3. Defaults Upon Senior Securities 20 Item 4. Submission of Matters to a Vote of Security Holders 20 Item 5. Other Information 20 Item 6. Exhibits and Reports on Form 8-K 21 Signatures 26 2 PART I - FINANCIAL INFORMATION 1. Financial Statements. PHILIPS INTERNATIONAL REALTY CORP. CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes. 3 PHILIPS INTERNATIONAL REALTY CORP. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

See accompanying notes. 4 PHILIPS INTERNATIONAL REALTY CORP. CONDENSED CONSOLIDATED STATEMENTS OF SHARHOLDERS' EQUITY For the Nine Months Ended September 30, 2003 and 2002 (Unaudited)

See accompanying notes. 5 PHILIPS INTERNATIONAL REALTY CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2003 and 2002 (Unaudited)

See accompanying notes. 6 PHILIPS INTERNATIONAL REALTY CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2003 1. Interim Financial Statements The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany accounts and balances have been eliminated in consolidation. The information furnished is unaudited and reflects all adjustments which are, in the opinion of management, necessary to reflect a fair presentation of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002. The Condensed Consolidated Balance Sheet at December 31, 2002, has been derived from the audited financial statements at that date but does not include all of the information and footnote disclosure required by generally accepted accounting principles for complete financial statements. 2. Income per Common Share Basic and diluted net income per common share in the accompanying Condensed Consolidated Statements of Income are based upon weighted average numbers of 7,340,474 shares of common stock outstanding for the three and nine months ended September 30, 2003 and 2002. 3. Segment Information Management considers the Company's various operating, investing and financing activities to comprise a single business segment and evaluates real estate performance and allocates resources based on net income. As a result of the plan of liquidation, the Company's operations are presented as discontinued operations. On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No.144, "Accounting for the Impairment or Disposal of Long Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. Impaired assets are required to be reported at the lower of cost or fair value. Assets to be disposed of are required to be reported at the lower of cost or fair value less cost to sell. The adoption did not have a material impact on the Company's results of operations or financial position. 7 4. Plan of Liquidation On October 13, 1999, the Board of Directors of the Company announced that it had retained a financial advisor to assist the Company in examining strategic alternatives to maximize shareholder value. The Board believed that the Company's then current stock price did not reflect the underlying value of its assets. Given the changing dynamics of the REIT market place and consistent with its commitment to realize shareholder value for all investors, the Board believed that it was prudent to explore the strategic alternatives for the Company. At a Special Meeting of Stockholders held on October 10, 2000, approximately 80% of the Company's 7,340,474 common shares outstanding were voted with 99.7% of these votes cast in favor of a plan of liquidation. On October 11, 2000, the Company announced that its stockholders had approved a plan of liquidation for the Company, pursuant to which the Company planned to (a) transfer its interests in affiliated entities that owned eight shopping centers to Kimco Income Operating Partnership, L.P. for cash and the assumption of indebtedness, (b) transfer its interests in entities that owned four shopping centers and two redevelopment properties, subject to certain indebtedness, to Philip Pilevsky, the chief executive officer, and certain of his affiliates and family members (the "Related Limited Partners") in exchange for cash and the redemption of units in the Company's operating partnership, (c) sell its remaining assets for cash, (d) pay or provide for its liabilities and expenses, (e) distribute the net cash proceeds of the liquidation, then estimated at $18.25 per share of common stock, to the stockholders in two or more liquidating distributions, and (f) wind up operations and dissolve. On December 22, 2000, the Company paid the initial liquidating distribution of $13 per share of common stock upon substantial completion of the transactions referenced in (a) and (b) above. Subsequent liquidating distributions of $1.00, $.75, $.50, $.50, $.50, and $1.00 per share (bringing the total paid to date to $17.25 per share) were paid on July 9, 2001, September 24, 2001, November 19, 2001, October 22, 2002, March 18, 2003 (unaudited) and September 16, 2003 (unaudited), respectively, following sales of the Company's shopping center properties located in Lake Worth, Florida, Alexandria, Minnesota, Port Angeles, Washington, McHenry, Illinois, Sacramento, California, Reedley, California, and Atwater, California. The Company's one remaining shopping center is currently being offered for sale. See Note 5. On January 29, 2002, the Company announced that Kmart Corporation's ("Kmart") Chapter 11 bankruptcy filing was likely to delay the sales of the Company's then five remaining properties pursuant to the Company's plan of liquidation, and may result in a reduction of the remaining projected liquidating distributions of $3.00 per common share. Further, the Company reported that Kmart leased a significant portion of the space in each of the Company's then five remaining shopping center properties, of which four stores were currently operating and one Kmart store in Reedley, California was closed. While operating in bankruptcy, Kmart announced that it would seek immediate cancellation of leases at closed locations. As a result of the uncertainty pertaining to the ultimate status of the Kmart leases, the Company expected a delay in the completion of its plan of liquidation. Also, the potential impact on the proceeds from sales of the then remaining five properties could not then be evaluated. 8 On February 19, 2002, the Company announced that the New York Stock Exchange (NYSE) had advised the Company that it may be subject to NYSE trading suspension and delisting if the Company's average market capitalization fell below $15 million ($2.05 per common share) over a 30-day trading period. On March 13, 2002, the Company announced that its four properties with operating Kmart stores (Sacramento, CA, Atwater, CA, McHenry, IL and Hopkinsville, KY) were not affected by Kmart's recent announcement of store closings. Kmart has been operating under the protection of Chapter 11 of the Bankruptcy Code, and the Court approved the cancellation of the Kmart lease at the Company's then fifth remaining property, located in Reedley, California, in January. Although none of the Company's remaining Kmart stores were targeted for closure at such time, there can be no assurance that Kmart will not seek to cancel additional leases while it is in bankruptcy. Further, the Company objected to Kmart's request for an extension of the 60-day period in which the debtor must assume or reject the Company's leases under the Bankruptcy Code. Kmart was seeking an extension on all remaining leases through July 2003, and the Courts generally grant such significant extensions. As to the Company's Kmart leases, the Court approved an agreement with Kmart whereby all leases which had not been assumed or rejected on or before September 30, 2002 would be subject to certain protections from October 1, 2002 through January 15, 2003 which, among other things, precluded store closings during this period. In addition, the Court set March 31, 2003 as the deadline for Kmart to assume or reject the Company's leases without prejudice to Kmart's right to seek further extension. On October 8, 2002, the Company announced management's expectation that the New York Stock Exchange would commence action to suspend trading and apply to delist the Company's shares of common stock on the NYSE concurrent with payment of the fifth liquidating distribution scheduled to be paid on October 22, 2002. If the Company's shares ceased to be traded on the NYSE, the Company indicated it believed that an alternative trading venue may be available; however, there could be no assurance that such an alternative market would develop. If the Company was delisted from the NYSE, the Company further noted that it had no current intention to seek listing of its common shares on any other securities exchange or on NASDAQ. On October 28, 2002, the Company reported that the NYSE had delivered notice to the Company and issued a press release to advise that it had determined the common stock of the Company, trading symbol PHR, should be removed from the list of companies traded on the NYSE. This decision was reached in view of the fact that the Company had fallen below the NYSE's continued listing standards as its average global market capitalization over a consecutive 30 day period was less than $15,000,000. Furthermore, the NYSE noted that the Company has been operating pursuant to a plan of liquidation approved by its shareholders on October 10, 2000 and has made four liquidating distributions totaling $15.25 as of such date, with a fifth liquidating distribution of $0.50 to be paid on October 22, 2002. The NYSE indicated it intended to ( and did, in fact) suspend trading in the Company's common stock prior to the opening on October 23, 2002 in connection with this distribution. Action by the NYSE with the Securities and Exchange Commission delisting the Company's shares followed the completion of applicable procedures. The Company did not request a review of this NYSE determination. The Company has no current intention to seek listing of its common shares on any other securities exchange or on NASDAQ. However the Company believes that alternative trading venues, such as the "Pink Sheets" and the "OTC Bulletin Board," will continue to be available to its shareholders. While the Company may seek sponsorship by market makers with such quotation services in the future, there can be no assurance that any such alternative markets will remain active . Upon the completion of all prescribed delisting procedures, the Company automatically became a Section 12(g) reporting company, pursuant to the Securities and Exchange Act, and was no longer a Section 12(b) reporting company. 9 On January 24, 2003, Kmart filed a plan of reorganization and related disclosure statement with the bankruptcy court. Confirmation hearings were scheduled for April 14 and 15, 2003. Assuming the court approved the disclosure statement and the plan was confirmed, Kmart's filings indicated it would emerge from Chapter 11 on or about April 30, 2003. In connection therewith, Kmart filed a motion dated February 5, 2003 with the court seeking to extend the deadline by which it must assume or reject certain "go-forward" leases of real property from March 31, 2003 to the effective date of a plan reorganization, but no later than May 31, 2003. The Company did not object to this motion as it pertained to its leases with Kmart at its Atwater, California and Hopkinsville, Kentucky shopping centers. On April 22, 2003, Kmart announced that the bankruptcy court had approved its plan of reorganization. Kmart subsequently emerged from Chapter 11 on May 6, 2003. The Company's leases with Kmart at its then two remaining shopping centers, Atwater, California and Hopkinsville, Kentucky were assumed in connection with this restructuring. As a result of the uncertainty that continues to surround Kmart's long-term viability as a retailer, the Company expects a continued delay in the completion of its plan of liquidation. Also, the potential impact on the proceeds from the sale of the Company's now one remaining property, and the Company's target of approximately $18.25 per share of aggregate liquidating distributions to shareholders, cannot be currently evaluated. The Company's ability to achieve a prompt sale of its remaining asset at an acceptable price remains uncertain. 5. Property Dispositions Pursuant to its plan of liquidation, on June 14, 2001, the Company completed the sale of its redevelopment site located in Lake Worth, Florida (the "Lake Worth Property") to the Related Limited Partners, for approximately $7.6 million in cash, pursuant to an Amended and Restated Purchase and Sale Agreement dated as of June 20, 2000 (the "Lake Worth Agreement"). The sale of this property resulted in a gain of approximately $300,000. 10 The purchase price paid by the Related Limited Partners under the Lake Worth Agreement will be adjusted so that the aggregate value per Unit received by them in connection with the November 2000 distribution to the Related Limited Partners of the Company's four (4) shopping center properties located in Hialeah, Florida and the sale to the Related Limited Partners in December 2000 of the Company's redevelopment property located on Third Avenue in New York, New York ($18.25 per Unit), and the total per share value received by the Company's stockholders in the liquidation will be the same. On August 31, 2001, the Company completed the sale of its North Star Shopping Center in Alexandria, Minnesota for approximately $4.5 million in cash, pursuant to the Sale and Purchase Agreement dated July 16, 2001 by Philips Shopping Center Fund L.P., a Delaware limited partnership, and Repco LLP, as successor to Kordel, Inc., a Minnesota corporation. The sale resulted in a gain of approximately $4,000. On October 31, 2001, the Company completed the sale of its Highway 101 Shopping Center in Port Angeles, Washington for approximately $4.5 million in cash, pursuant to the Sale and Purchase Agreement dated June 14, 2001 by Philips Shopping Center Fund L.P, a Delaware limited partnership, and BDG LLC, as successor to 3 Puyallup Associates, LLC., a Washington limited liability company. This transaction resulted in a gain of approximately $39,000. On April 16, 2002, the Company completed the sale of its McHenry Commons shopping center property in McHenry, Illinois for approximately $3.9 million in cash, pursuant to a Sale and Purchase Agreement dated November 29, 2001 by and between Philips Shopping Center Fund L.P., a Delaware limited partnership, as Seller, and GK Development, Inc., an Illinois corporation, and Star Realty Investors, LLC, an Illinois limited liability company, jointly and severally as Purchaser. This sale resulted in a gain of approximately $102,000. On June 28, 2002, the Company entered into a settlement agreement with the New York City Department of Finance (the "NYCDOF") pursuant to which the Company paid $903,943, including principal of $650,000 and interest of $253,943, in full satisfaction of all real property transfer taxes, interest and penalties assessed by the NYCDOF in May 2002 in connection with the Company's 1997 Formation Transactions and 1998 initial public stock offering. The shopping center properties relating to the subject tax assessments have been previously disposed in connection with the plan of liquidation. Accordingly, the principal and interest components of the settlement payment have been charged to Gain (loss) on sale of shopping center properties and Other income (expense), respectively, in the accompanying Condensed Consolidated Statement of Income for the nine months ended September 30, 2002. 11 On October 3, 2002, the Company completed the sale of its Kmart Shopping Center in Sacramento, California for approximately $5.9 million in cash, pursuant to a Purchase and Sale Agreement dated September 24, 2002 by and between Philips Shopping Center Fund, L.P., a Delaware limited partnership, as Seller, and M&A Gabaee L.P., a California limited partnership, Mirasa L.L.C., a California limited liability company, and Corsair L.L.C., a Nevada limited liability company, jointly and severally as Buyer. This transaction resulted in a gain of approximately $118,000. On February 28, 2003, the Company completed the sale of its shopping center property in Reedley, California for approximately $2.6 million in cash, pursuant to a Purchase and Sale Agreement dated January 29, 2003 by and between Philips Shopping Center Fund L.P., a Delaware limited partnership, as Seller, and D&L Lowe, L.P., a California limited partnership, as Buyer. This transaction resulted in a gain of approximately $133,000. On August 26, 2003, the Company completed the sale of its shopping center on Bellevue Road in Atwater, California for the price of $6.0 million in cash, pursuant to a Purchase and Sale Agreement dated June 23, 2003 by and between Philips Shopping Center Fund, L.P., a Delaware limited partnership, as Seller, and Nationwide Properties, LLC, a California limited liability company, as Buyer. This transaction resulted in a gain of approximately $549,000. 6. Commitments and Contingencies Legal Proceedings On October 2, 2000, a class action was filed in the United States District Court for the Southern District of New York against the Company and its directors. The complaint alleged a number of improprieties concerning the pending plan of liquidation of the Company. The Company believes that the asserted claims are without merit, and will defend such action vigorously. On November 9, 2000, the Court, ruling from the bench, denied the plaintiff's motion for a preliminary injunction. This bench ruling was followed by a written order dated November 30, 2000 wherein the Court concluded that the plaintiff had failed to demonstrate either that it was likely to succeed on the merits of its case or that there were sufficiently serious questions going to the merits of its case to make it fair ground for litigation. On February 19, 2002, the Company announced that on February 5, 2002, the Court denied the plaintiff's motion for class action certification. The plaintiff may elect to proceed with its claims on its own now that class certification has been denied. The plaintiff also has asserted derivative claims for alleged breaches of fiduciary duty by the directors of the Company. The Company believes such derivative claims are deficient for, among other reasons, the grounds upon which class certification was denied. The Company believes that all of the asserted claims are without merit, and will defend such action vigorously. 12 On February 28, 2002, the Company announced that the plaintiff had sought permission from the Court of Appeals for the Second Circuit to appeal the denial of class certification discussed above. In order for plaintiff to have obtained permission to appeal, it had to demonstrate that the denial of class certification effectively terminated the litigation and that the District Court's decision was an abuse of its discretion. The Company opposed plaintiff's application. If the Court of Appeals granted plaintiff's request, plaintiff would then have been able to appeal the District Court's denial of class certification. On May 28, 2002, the United States Court of Appeals for the Second Circuit ordered that the plaintiff's petition to appeal the District Court's denial of class certification also be denied. The Company has incurred significant costs in connection with the defense of this litigation, which it believes are covered under the Company's directors and officers' insurance policy and included in Other assets in the accompanying Condensed Consolidated Balance Sheets. However, there can be no assurance that the carrier will not seek to disqualify certain of such costs. The Company is also subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are generally covered by insurance. Management believes that the final outcome of such matters will not have a material adverse effect on the financial position, results of operations or liquidity of the Company. Other Matters In March and August 2003, the NYCDOF and the New York State Department of Taxation and Finance ("NYSDOF") issued preliminary Notices of Tax Due with regard to the Company's December 2000 transfer of its New York shopping center properties to Kimco. These agencies are seeking to impose interest and penalty charges only relating to the late filing of the subject transfer tax returns. The Company does not expect to incur any material liability in connection with such notices. On June 5, 2003, the Company entered into a settlement agreement with the NYSDOF pursuant to which the Company paid $147,963.28, in full satisfaction of all real property transfer taxes assessed by the NYSDOF in connection with the Company's 1997 Formation Transactions and 1998 initial public offering. In conjunction with the Company's adoption of its plan of liquidation and the disposal of substantially all of its shopping center properties, options previously outstanding at December 31, 2000 under the Company's stock option plan (approximately 705,000 shares at a weighted average exercise price per share of $17.43) became fully vested and replaced one-foe-one by a contractual right (a "Contract Right") to receive a cash distribution on the same basis and at the same time as liquidating distributions are made to shareholders. The total amount to be paid on each Contract Right will equal the total per share proceeds distributed to shareholders less the original stock option exercise price. Contract Rights are retained after termination of employment. The Company believes it has adequately accrued for amounts which may become due and payable pursuant to such Contract Rights. 13 7. Shopping Center Portfolio As a consequence of the transactions completed to date pursuant to the plan of liquidation, the Company's remaining shopping center portfolio comprises a single property located in Hopkinsville, Kentucky. This shopping center represents 90,000 square feet of gross leasable area. As of September 30, 2003, this property was 93% leased to 9 tenants. The Company is actively marketing this property for sale. Although the Company will endeavor to consummate a sale transaction, there can be no assurance that a sale will be completed on satisfactory terms, if at all. 14 PART I FINANCIAL INFORMATION (Continued) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto, and the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002. These unaudited financial statements include all adjustments which are, in the opinion of management, necessary to reflect a fair presentation of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. When used in this Quarterly Report on Form 10-Q, the words "may", "will", "expect", "anticipate", "continue", "estimate", "project", "intend" and similar expressions are intended to identify forward-looking statements regarding events, conditions and financial trends that may affect the Company's future plans of operations, business strategy, results of operations and financial position. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially from those included within the forward-looking statements as a result of various factors. Results of Operations The Company has continued to divest portions of its shopping center portfolio pursuant to a plan of liquidation approved by shareholders on October 10, 2000. See Notes 5 and 7 of the accompanying Notes to Condensed Consolidated Financial Statements. The disposition of these properties gives rise to significant changes when comparing the Company's results of operations for the three and nine months ended September 30, 2003 and 2002. Comparison of Three Months Ended September 30, 2003 and 2002 Revenues from rental property were $311,000 for the quarter ended September 30, 2003 compared to $674,000 for the comparable period in 2002. Expenses in the third quarter of 2003 totaled $747,000, compared to $474,000 for the comparable period in 2002. These changes result primarily from the disposition of shopping center properties pursuant to the plan of liquidation, and the provision during 2003 for amounts which may become due and payable pursuant to the Company's Contract Rights Agreements outstanding. See Notes 5 and 6 of the accompanying Notes to Condensed Consolidated Financial Statements. 15 Comparison of Nine Months Ended September 30, 2003 and 2002 Revenues from rental property were $1,093,000 for the nine months ended September 30, 2003 compared to $2,297,000 for the comparable period in 2002. Expenses in the first nine months of 2003 totaled $1,369,000, compared to $1,423,000 for the comparable period in 2002. These changes result primarily from the disposition of shopping center properties pursuant to the plan of liquidation, and the provision during 2003 for amounts which may become due and payable pursuant to the Company's Contract Rights Agreements outstanding. See Notes 5 and 6 of the accompanying Notes to Condensed Consolidated Financial Statements. Other income (expense), net and Gain (loss) on sale of shopping center properties for the nine months ended September 30, 2002, include charges relating to the settlement of real property transfer tax obligations. See Note 5 of the accompanying Notes to Condensed Consolidated Financial Statements. Liquidity and Capital Resources The Company expects to invest temporarily available cash in short-term, investment-grade interest bearing securities, such as securities of the United States government or its agencies, high-grade commercial paper and bank deposits. The Company believes that the net cash flow provided by the operation of its one remaining shopping center property, together with cash provided by property dispositions pursuant to the plan of liquidation, will be sufficient to allow the Company to make distributions necessary to continue to qualify as a REIT. However, the rental income generated by the Company's one remaining shopping center property is not expected to be sufficient to fund the operating expenses of this property and those of the Company. The Company is actively seeking to divest its remaining property and complete its plan of liquidation as soon as practicable. There can be no assurance, however, that the Company will be able to dispose of this property in the near future or at a price sufficient to support the estimated $18.25 total per share liquidating distributions to the shareholders of the Company, given the uncertainties relating to Kmart's long term viability as a retailer. Pending the sale of its remaining shopping center property, the Company will continue to utilize its long-standing asset and property management practices to maximize cash flow from this property and endeavor to enhance its value through its knowledge of the shopping center industry. Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements. 16 Cash Flows Cash flows used in operating activities was $33,000 and $454,000 for the nine months ended September 30, 2003 and 2002, respectively. This change reflects the above mentioned disposition of shopping center properties pursuant to the plan of liquidation, the timing of payments for certain insurance policy premiums between periods and the settlement of real property transfer tax obligations relating to the Company's 1997 Formation Transactions and 1998 initial public stock offering during 2002. Cash flows provided by investing activities during the nine months ended September 30, 2003 and 2002 was $8,200,000 and $3,657,000, respectively. See Note 5 of the accompanying Notes to Consolidated Financial Statements for information related to the sales of shopping center properties during the respective periods. Cash flows used in financing activities during the nine months ended September 30, 2003 was $11,049,000. The Company paid liquidating distributions of $.50 per share on March 18, 2003 (unaudited) and $1.00 per share on September 16, 2003 (unaudited). Inflation Substantially all of the Company's leases contain provisions designed to mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive percentage rentals based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. Such escalation clauses are often related to increases in the consumer price index or similar inflation indices. In addition, many of the Company's leases are for terms of less than 10 years, which permits the Company to seek to increase rents upon re-rental at market rates. Most of the Company's leases require the tenant to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing the Company's exposure to increase in costs and operating expenses resulting from inflation. Item 3. Quantitative and Qualitative Disclosures About Market Risk. None. 17 Item 4. Controls and Procedures. Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and principal financial officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and principal financial officer has concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act. Internal Controls Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 18 PART II OTHER INFORMATION Item 1. Legal Proceedings. On October 2, 2000, a class action was filed in the United States District Court for the Southern District of New York against the Company and its directors. The complaint alleged a number of improprieties concerning the pending plan of liquidation of the Company. The Company believes that the asserted claims are without merit, and will defend such action vigorously. On November 9, 2000, the Court, ruling from the bench, denied the plaintiff's motion for a preliminary injunction. This bench ruling was followed by a written order dated November 30, 2000 wherein the Court concluded that the plaintiff had failed to demonstrate either that it was likely to succeed on the merits of its case or that there were sufficiently serious questions going to the merits of its case to make it fair ground for litigation. On February 19, 2002, the Company announced that on February 5, 2002, the Court denied the plaintiff's motion for class action certification. The plaintiff may elect to proceed with that claim on its own now that class certification has been denied. The plaintiff also has asserted derivative claims for alleged breaches of fiduciary duty by the directors of the Company. The Company believes that such derivative claims are deficient for, among other reasons, the grounds upon which class certification was denied. The Company believes that all of the asserted claims are without merit, and will defend such action vigorously. On February 28, 2002, the Company announced that the plaintiff had sought permission from the Court of Appeals for the Second Circuit to appeal the denial of class certification discussed above. In order for plaintiff to have obtained permission to appeal, it had to demonstrate that the denial of class certification effectively terminated the litigation and that the District Court's decision was an abuse of its discretion. The Company opposed plaintiff's application. If the Court of Appeals granted plaintiff's request, plaintiff would have been able to appeal the District Court's denial of class certification. On May 28, 2002, the United States Court of Appeals for the Second Circuit ordered that the plaintiff's petition to appeal the District Court's denial of class certification also be denied. The Company has incurred significant costs in connection with the defense of this litigation, which it believes are covered under the Company's directors and officer's insurance policy and included in Other assets in the accompanying Condensed Consolidated Balance Sheets. However, there can be no assurance that the carrier will not seek to disqualify certain of such costs. 19 Except as noted above, the Company is not presently involved in any litigation nor to its knowledge is any litigation threatened against the Company or its subsidiaries that, in management's opinion, would result in any material adverse effect on the Company's ownership, management or operation of its properties, or which is not covered by the Company's liability insurance. Item 2. Changes in Securities and Use of Proceeds. None. Item 3. Defaults upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. 20 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed: Exhibit Exhibit Title Number ------- --------------------------------------------------------------------- 2.1 Plan of Liquidation and Dissolution of the Company (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 3.1 Amended and Restated Articles of Incorporation of the Company (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated December 31,1997, and incorporated herein by reference). 3.2 Articles Supplementary of Series A Preferred Stock (filed as Exhibit 3.2 to the Company's Current Report on Form 8-K dated December 31, 1997 and incorporated herein by reference). 3.3 Articles Supplementary dated July 27, 1999 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated July 15, 1999, and incorporated herein by reference). 3.4 Third Amended and Restated By-Laws of the Company dated July 27, 1999 (filed as Exhibit 3.2 to the Company's Current Report on Form 8-K dated July 15, 1999, and incorporated herein by reference). 3.5 Form of Certificate of Common Stock (filed as Exhibit 3.4 to the Company's Registration Statement on Form S-11, Registration No. 333-47975, and incorporated herein by reference). 4.1 Shareholder Rights Agreement, dated as of March 31, 1999, between the Company and BankBoston, N.A. (filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, and incorporated herein by reference). 4.2 Amendment No. 1, dated July 27, 1999, to Shareholder Rights Agreement dated as of March 31, 1999, between the Company and Bank Boston N.A., as Rights Agent (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated July 15, 1999, and incorporated herein by reference). 21 4.3 Articles Supplementary for Series A Junior Participating Preferred Stock (filed as Exhibit 4.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, and incorporated herein by reference). 10.1 Amended and Restated Agreement of Limited Partnership of the Operating Partnership (filed as Exhibit 10.1 to the Company's Registration Statement on Form S-11, Registration No. 333- 47975, and incorporated herein by reference). 10.2 First Amendment to the Amended and Restated Agreement of Limited Partnership of the Operating Partnership (filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, and incorporated herein by reference). 10.3 Form of 1997 Stock Option and Long-Term Incentive Plan of the Company (filed as Exhibit 10.2 to the Company's Registration Statement on Form S-4, Registration No. 333-41431, and incorporated herein by reference). 10.4 Contribution and Exchange Agreement, dated August 11, 1997, among National Properties Investment Trust, the Board of Trustees, the Company, the Operating Partnership and certain contributing partnerships or limited liability companies associated with a private real estate firm controlled by Philip Pilevsky and certain partners and members thereof (filed as Exhibit 10.6 to the Company's Registration Statement on Form S-4, Registration No. 333-41431, and incorporated herein by reference). 10.5 Amended and Restated Management Agreement, dated as of March 30, 1998, among the Company, the Operating Partnership and Philips International Management Corp. (filed as Exhibit 10.8 to the Company's Form 10-K for the year ended December 31, 1997, and incorporated herein by reference). 10.6 Amended and Restated Non-Competition Agreement, dated as of March 30, 1998, among the Company, the Operating Partnership, Philip Pilevsky and Sheila Levine (filed as Exhibit 10.9 to the Company's Form 10-K for the year ended December 31, 1997, and incorporated herein by reference). 10.7 Amendment No. 1 to Contribution and Exchange Agreement, dated as of December 29, 1997 (filed as Exhibit 10.13 to the Company's Current Report on Form 8-K dated December 31, 1997, and incorporated herein by reference). 10.8 Employment Agreement between the Company and Louis J. Petra (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 31, 1997, and incorporated herein by reference). 10.9 Employment Agreement between the Company and Sheila Levine (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated December 31, 1997, and incorporated herein by reference). 22 10.10 Employment Agreement between the Company and Carl Kraus (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated July 15, 1999, and incorporated herein by reference). 10.11 Credit Agreement among the Operating Partnership and Prudential Securities Credit Corporation (filed as Exhibit 10.18 to the Company's Report on Form 10-Q for the period ended March 31, 1998, and incorporated herein by reference). 10.12 Purchase and Sale Agreement dated as of April 28, 2000, by and among Munsey Park Associates, LLC, a New York limited liability company, North Shore Triangle, LLC, a New York limited liability company, Philips Yonkers, LLC, a New York limited liability company, Philips Henry, LLC, a New York limited liability company, Philips Shopping Center Fund, L.P., a Delaware limited partnership, and Philips Lake Mary Associates, L.P., a Delaware limited partnership, and Kimco Income Operating Partnership, L.P., a Delaware limited partnership (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.13 Redemption Agreement dated as of April 27, 2000, by and among the Operating Partnership and Philip Pilevsky (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.14 Asset Contribution, Purchase and Sale Agreement dated as of April 28, 2000, by and among the Company, the Operating Partnership, Certain Affiliated Parties signatory thereto, KIR Acquisition, LLC, a Delaware limited liability company and Kimco Income Operating Partnership, L.P., a Delaware limited partnership (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.15 Amended and Restated Redemption Agreement dated as of April 27, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, and Philip Pilevsky (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.16 Redemption Agreement dated as of April 28, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, and Allen Pilevsky (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.17 Redemption Agreement dated as of April 28, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, and Fred Pilevsky (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.18 Redemption Agreement dated as of April 28, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, and SL Florida LLC, a Delaware limited liability company (filed as Exhibit 10.4 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 23 10.19 First Amendment to Asset Contribution, Purchase and Sale Agreement dated as of May 31, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, the Company, certain Affiliated Parties signatory thereto, KIR Acquisition, LLC, a Delaware limited liability company, and Kimco Income Operating Partnership, L.P., a Delaware limited partnership (filed as Exhibit 10.5 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.20 Second Amendment to Asset Contribution, Purchase and Sale Agreement dated as of June 15, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, the Company, certain Affiliated Parties signatory thereto, KIR Acquisition, LLC, a Delaware limited liability company, and Kimco Income Operating Partnership, L.P., a Delaware limited partnership (filed as Exhibit 10.6 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.21 Third Amendment to Asset Contribution, Purchase and Sale Agreement dated as of June 20, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, the Company, certain Affiliated Parties signatory thereto, KIR Acquisition, LLC, a Delaware limited liability company, and Kimco Income Operating Partnership, L.P., a Delaware limited partnership (filed as Exhibit 10.7 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.22 Amended and Restated Purchase and Sale Agreement dated as of June 20, 2000, by 1517-25 Third, L.P., a New York limited partnership, Philip Pilevsky, SL Florida LLC, a Delaware limited liability company, Allen Pilevsky and Fred Pilevsky (filed as Exhibit 10.8 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.23 Amended and Restated Purchase and Sale Agreement dated as of June 20, 2000, by Philips International Realty, L.P., a Delaware limited partnership, Philips Lake Worth Corp., a New York corporation, and Philip Pilevsky (filed as Exhibit 10.9 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.24 Amendment to Amended and Restated Purchase and Sale Agreement dated as of April 4, 2001, by and between the Company, Philips Lake Worth Corp., a New York corporation, and Philip Pilevsky (filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K dated April 17, 2001, and incorporated herein by reference). 24 31.1* Certification of the Company's Chief Executive Officer and principal financial officer, Philip Pilevsky, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of the Company's Chief Executive Officer and principal financial officer, Philip Pilevsky, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. -------------- * filed herewith (b) Report on Form 8-K On September 3, 2003, the Company filed a Current Report on Form 8-K dated August 26, 2003 to disclose, and furnish certain pro forma financial information related to, the sale of its shopping center property on Bellevue Road in Atwater, California to Nationwide Properties, LLC, a California limited liability company, for the price of $6.0 million. 25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PHILIPS INTERNATIONAL REALTY CORP. Date: November 6, 2003 By: /s/ PHILIP PILEVSKY ------------------- Philip Pilevsky Chairman of the Board and Chief Executive Officer 26 Exhibit Index Exhibit Exhibit Title Number ------- --------------------------------------------------------------------- 2.1 Plan of Liquidation and Dissolution of the Company (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 3.1 Amended and Restated Articles of Incorporation of the Company (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated December 31,1997, and incorporated herein by reference). 3.2 Articles Supplementary of Series A Preferred Stock (filed as Exhibit 3.2 to the Company's Current Report on Form 8-K dated December 31, 1997 and incorporated herein by reference). 3.3 Articles Supplementary dated July 27, 1999 (filed as Exhibit 3.1 to the Company's Current Report on Form 8-K dated July 15, 1999, and incorporated herein by reference). 3.4 Third Amended and Restated By-Laws of the Company dated July 27, 1999 (filed as Exhibit 3.2 to the Company's Current Report on Form 8-K dated July 15, 1999, and incorporated herein by reference). 3.5 Form of Certificate of Common Stock (filed as Exhibit 3.4 to the Company's Registration Statement on Form S-11, Registration No. 333-47975, and incorporated herein by reference). 4.1 Shareholder Rights Agreement, dated as of March 31, 1999, between the Company and BankBoston, N.A. (filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, and incorporated herein by reference). 4.2 Amendment No. 1, dated July 27, 1999, to Shareholder Rights Agreement dated as of March 31, 1999, between the Company and Bank Boston N.A., as Rights Agent (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated July 15, 1999, and incorporated herein by reference). 4.3 Articles Supplementary for Series A Junior Participating Preferred Stock (filed as Exhibit 4.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, and incorporated herein by reference). 10.1 Amended and Restated Agreement of Limited Partnership of the Operating Partnership (filed as Exhibit 10.1 to the Company's Registration Statement on Form S-11, Registration No. 333- 47975, and incorporated herein by reference). 10.2 First Amendment to the Amended and Restated Agreement of Limited Partnership of the Operating Partnership (filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, and incorporated herein by reference). 10.3 Form of 1997 Stock Option and Long-Term Incentive Plan of the Company (filed as Exhibit 10.2 to the Company's Registration Statement on Form S-4, Registration No. 333-41431, and incorporated herein by reference). 10.4 Contribution and Exchange Agreement, dated August 11, 1997, among National Properties Investment Trust, the Board of Trustees, the Company, the Operating Partnership and certain contributing partnerships or limited liability companies associated with a private real estate firm controlled by Philip Pilevsky and certain partners and members thereof (filed as Exhibit 10.6 to the Company's Registration Statement on Form S-4, Registration No. 333-41431, and incorporated herein by reference). 10.5 Amended and Restated Management Agreement, dated as of March 30, 1998, among the Company, the Operating Partnership and Philips International Management Corp. (filed as Exhibit 10.8 to the Company's Form 10-K for the year ended December 31, 1997, and incorporated herein by reference). 10.6 Amended and Restated Non-Competition Agreement, dated as of March 30, 1998, among the Company, the Operating Partnership, Philip Pilevsky and Sheila Levine (filed as Exhibit 10.9 to the Company's Form 10-K for the year ended December 31, 1997, and incorporated herein by reference). 10.7 Amendment No. 1 to Contribution and Exchange Agreement, dated as of December 29, 1997 (filed as Exhibit 10.13 to the Company's Current Report on Form 8-K dated December 31, 1997, and incorporated herein by reference). 10.8 Employment Agreement between the Company and Louis J. Petra (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 31, 1997, and incorporated herein by reference). 10.9 Employment Agreement between the Company and Sheila Levine (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated December 31, 1997, and incorporated herein by reference). 10.10 Employment Agreement between the Company and Carl Kraus (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated July 15, 1999, and incorporated herein by reference). 10.11 Credit Agreement among the Operating Partnership and Prudential Securities Credit Corporation (filed as Exhibit 10.18 to the Company's Report on Form 10-Q for the period ended March 31, 1998, and incorporated herein by reference). 10.12 Purchase and Sale Agreement dated as of April 28, 2000, by and among Munsey Park Associates, LLC, a New York limited liability company, North Shore Triangle, LLC, a New York limited liability company, Philips Yonkers, LLC, a New York limited liability company, Philips Henry, LLC, a New York limited liability company, Philips Shopping Center Fund, L.P., a Delaware limited partnership, and Philips Lake Mary Associates, L.P., a Delaware limited partnership, and Kimco Income Operating Partnership, L.P., a Delaware limited partnership (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.13 Redemption Agreement dated as of April 27, 2000, by and among the Operating Partnership and Philip Pilevsky (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.14 Asset Contribution, Purchase and Sale Agreement dated as of April 28, 2000, by and among the Company, the Operating Partnership, Certain Affiliated Parties signatory thereto, KIR Acquisition, LLC, a Delaware limited liability company and Kimco Income Operating Partnership, L.P., a Delaware limited partnership (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.15 Amended and Restated Redemption Agreement dated as of April 27, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, and Philip Pilevsky (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.16 Redemption Agreement dated as of April 28, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, and Allen Pilevsky (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.17 Redemption Agreement dated as of April 28, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, and Fred Pilevsky (filed as Exhibit 10.3 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.18 Redemption Agreement dated as of April 28, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, and SL Florida LLC, a Delaware limited liability company (filed as Exhibit 10.4 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.19 First Amendment to Asset Contribution, Purchase and Sale Agreement dated as of May 31, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, the Company, certain Affiliated Parties signatory thereto, KIR Acquisition, LLC, a Delaware limited liability company, and Kimco Income Operating Partnership, L.P., a Delaware limited partnership (filed as Exhibit 10.5 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.20 Second Amendment to Asset Contribution, Purchase and Sale Agreement dated as of June 15, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, the Company, certain Affiliated Parties signatory thereto, KIR Acquisition, LLC, a Delaware limited liability company, and Kimco Income Operating Partnership, L.P., a Delaware limited partnership (filed as Exhibit 10.6 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.21 Third Amendment to Asset Contribution, Purchase and Sale Agreement dated as of June 20, 2000, by and among Philips International Realty, L.P., a Delaware limited partnership, the Company, certain Affiliated Parties signatory thereto, KIR Acquisition, LLC, a Delaware limited liability company, and Kimco Income Operating Partnership, L.P., a Delaware limited partnership (filed as Exhibit 10.7 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.22 Amended and Restated Purchase and Sale Agreement dated as of June 20, 2000, by 1517-25 Third, L.P., a New York limited partnership, Philip Pilevsky, SL Florida LLC, a Delaware limited liability company, Allen Pilevsky and Fred Pilevsky (filed as Exhibit 10.8 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.23 Amended and Restated Purchase and Sale Agreement dated as of June 20, 2000, by Philips International Realty, L.P., a Delaware limited partnership, Philips Lake Worth Corp., a New York corporation, and Philip Pilevsky (filed as Exhibit 10.9 to the Company's Current Report on Form 8-K dated April 28, 2000, and incorporated herein by reference). 10.24 Amendment to Amended and Restated Purchase and Sale Agreement dated as of April 4, 2001, by and between the Company, Philips Lake Worth Corp., a New York corporation, and Philip Pilevsky (filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K dated April 17, 2001, and incorporated herein by reference). 31.1* Certification of the Company's Chief Executive Officer and principal financial officer, Philip Pilevsky, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of the Company's Chief Executive Officer and principal financial officer, Philip Pilevsky, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. -------------- * filed herewith

PHILIPS INTERNATIONAL REALTY CORP 10-Q