-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Js3HFaDdAIL/0iCKAyXNBIFmBDQpd0/kpbz0sTdWfUpKDzkTuqsQtaTIU7JsTFfe 77AaElj07AqOpU2oOr3DHw== 0000912057-97-026234.txt : 19970807 0000912057-97-026234.hdr.sgml : 19970807 ACCESSION NUMBER: 0000912057-97-026234 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970806 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: P&F INDUSTRIES INC CENTRAL INDEX KEY: 0000075340 STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540] IRS NUMBER: 221657413 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15573 FILM NUMBER: 97652463 BUSINESS ADDRESS: STREET 1: 300 SMITH ST CITY: FARMINGDALE STATE: NY ZIP: 11735 BUSINESS PHONE: 5166941800 FORMER COMPANY: FORMER CONFORMED NAME: PLASTICS & FIBERS INC DATE OF NAME CHANGE: 19671225 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 10-Q ------------------ [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1 - 5332 P & F INDUSTRIES, INC. (Exact name of Registrant as specified in its charter) DELAWARE 22-1657413 (State of incorporation) (I.R.S. Employer Identification Number) 300 SMITH STREET, FARMINGDALE, NEW YORK 11735 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 694-1800 ------------------------------ 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, and (2) has been subject to such filing requirements for the past 90 days. YES ( X ) NO ( ) As of July 31, 1997, there were outstanding 2,978,867 shares of the Registrant's Class A Common Stock, par value $1.00 per share. P & F INDUSTRIES, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997 TABLE OF CONTENTS PAGE PART I ---- Item 1. Financial Statements Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996 1 - 2 Consolidated Statements of Income for the six months ended June 30, 1997 and 1996 3 Consolidated Statements of Cash Flows for the six months ended June 30, 1997 and 1996 4 - 5 Notes to Consolidated Financial Statements 6 - 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 10 PART II Item 1. Legal Proceedings 11 Item 2. Changes in Securities 11 Item 3. Defaults Upon Senior Securities 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS P & F INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) ======================================= JUNE 30, DECEMBER 31, 1997 1996 -------- ------------ ASSETS ------------ CURRENT: Cash $ 834,115 $ 4,558,135 Accounts receivable, less allowance for possible losses of $389,786 in 1997 and $370,410 in 1996 6,162,219 6,113,259 Inventories 14,262,995 11,119,850 Note receivable from officer -- 40,000 Deferred income taxes 211,000 211,000 Prepaid expenses and other assets 156,468 300,850 ------------ ------------ TOTAL CURRENT ASSETS 21,626,797 22,343,094 ------------ ------------ PROPERTY AND EQUIPMENT: Land 993,020 993,020 Buildings and improvements 4,505,889 4,505,889 Machinery and equipment 5,441,423 5,246,699 ------------ ------------ 10,940,332 10,745,608 Less accumulated depreciation and amortization 5,316,691 4,965,956 ------------ ------------ NET PROPERTY AND EQUIPMENT 5,623,641 5,779,652 ------------ ------------ DEFERRED INCOME TAXES 175,000 175,000 GOODWILL, net of accumulated amortization of $976,528 in 1997 and $927,334 in 1996 2,837,239 2,886,433 OTHER ASSETS, net of accumulated amortization of $42,663 in 1997 and $34,659 in 1996 139,460 147,464 ------------ ------------ TOTAL ASSETS $ 30,402,137 $ 31,331,643 ------------ ------------ ------------ ------------ 1 P & F INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (CONTINUED) ========================================== JUNE 30, DECEMBER 31, 1997 1996 -------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Short-term borrowings $ -- $ -- Accounts payable 3,887,809 2,661,589 Accruals and other liabilities 1,750,015 2,082,031 Current maturities of long-term debt 1,903,902 1,917,691 ------------ ------------ TOTAL CURRENT LIABILITIES 7,541,726 6,661,311 LONG-TERM DEBT, less current maturities 3,841,244 3,919,370 SUBORDINATED DEBENTURES 1,369,200 1,369,200 ------------ ------------ 12,752,170 11,949,881 ------------ ------------ SHAREHOLDERS' EQUITY: Preferred stock, $10 par, cumulative; shares authorized 2,000,000; -- 2,633,450 Common stock: Class A - $1 par; shares authorized 7,000,000; outstanding 2,978,867 and 2,928,867; reserved for options - 727,000 shares; reserved for warrants - 70,000 shares 2,978,867 2,928,867 Class B - $1 par; shares authorized 2,000,000 -- -- Additional paid-in capital 7,632,614 7,607,614 Retained earnings 7,038,486 6,211,831 ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 17,649,967 19,381,762 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 30,402,137 $ 31,331,643 ------------ ------------ ------------ ------------ 2 P & F INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ======================================
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------ ------------------ 1997 1996 1997 1996 ---- ---- ---- ---- REVENUES: Net sales $ 10,533,536 $ 9,593,600 $ 19,722,224 $ 18,927,735 Other 109,787 97,610 138,907 139,900 ------------ ------------ ------------ ------------ 10,643,323 9,691,210 19,861,131 19,067,635 ------------ ------------ ------------ ------------ COSTS AND EXPENSES: Cost of sales 6,768,469 6,329,359 12,602,683 12,472,364 Selling, administrative and general 2,759,245 2,443,414 5,238,760 4,716,751 Interest - net 152,803 201,369 293,641 432,885 Depreciation 169,768 135,272 339,535 303,546 ------------ ------------ ------------ ------------ 9,850,285 9,109,414 18,474,619 17,925,546 ------------ ------------ ------------ ------------ INCOME BEFORE TAXES ON INCOME 793,038 581,796 1,386,512 1,142,089 TAXES ON INCOME 306,000 226,000 538,000 436,000 ------------ ------------ ------------ ------------ NET INCOME $ 487,038 $ 355,796 $ 848,512 $ 706,089 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Preferred dividends $ -- $ 65,837 $ 21,857 $ 131,673 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Net income attributable to common stock $ 487,038 $ 289,959 $ 826,655 $ 574,416 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Average number of common shares and common share equivalents - primary 3,472,197 3,215,884 3,473,183 3,188,124 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ - fully diluted 3,472,197 3,268,415 3,473,183 3,269,371 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Earnings per share of common stock - primary and fully diluted $ .14 $ .09 $ .24 $ .18 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
3 P & F INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ======================================= SIX MONTHS ENDED JUNE 30, --------------------- 1997 1996 --------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 848,512 $ 706,089 ------------ ------------ Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 414,533 394,160 Deferred income taxes -- -- Provision for losses on accounts receivable 41,391 54,486 Decrease (increase): Accounts receivable (90,351) 2,750,026 Inventories (3,143,145) (41,293) Note receivable from officer 40,000 25,000 Prepaid expenses and other assets 137,782 108,740 Other assets -- 3,200 Increase (decrease): Accounts payable 1,226,220 (1,191,769) Accruals and other (332,016) (1,017,247) ------------ ------------ Total adjustments (1,705,586) 1,085,303 ------------ ------------ Net cash (used in) provided by operating activities (857,074) 1,791,392 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (194,724) (122,851) ------------ ------------ Net cash used in investing activities (194,724) (122,851) ------------ ------------ 4 P & F INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED) ======================================== SIX MONTHS ENDED JUNE 30, --------------------- 1997 1996 --------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term borrowings 6,609,726 7,635,754 Repayments of short-term borrowings (6,609,726) (9,341,961) Principal payments on long-term debt (91,915) (2,338,097) Proceeds from exercise of stock options 75,000 -- Dividends paid on preferred stock (21,857) (131,673) Redemption of preferred stock (2,633,450) -- Proceeds from mortgage refinancing -- 2,062,500 ------------ ------------ Net cash used in financing activities (2,672,222) (2,113,477) ------------ ------------ NET (DECREASE) INCREASE IN CASH (3,724,020) (444,936) CASH AT BEGINNING OF PERIOD 4,558,135 1,224,603 ------------ ------------ CASH AT END OF PERIOD $ 834,115 $ 779,667 ------------ ------------ ------------ ------------ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Income taxes $ 594,908 $ 600,449 ------------ ------------ ------------ ------------ Interest $ 384,902 $ 575,683 ------------ ------------ ------------ ------------ 5 P & F INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS ======================================= NOTE 1 - SUMMARY OF ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements contained herein include the accounts of P & F Industries, Inc. and its subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated. The consolidated financial statements for the periods ended June 30, 1997 and 1996 are presented as unaudited but, in the opinion of the Company, they include all adjustments necessary for a fair statement of the results of operations for those periods. All such adjustments are of a normal recurring nature. The consolidated balance sheet information for December 31, 1996 was derived from audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. These interim financial statements should be read in conjunction with that report. Results for interim periods are not necessarily indicative of results to be expected for a full year, since the operations of some of the Company's subsidiaries are seasonal in nature. The Company conducts its business operations through two wholly-owned subsidiaries. Florida Pneumatic Manufacturing Corporation ("Florida Pneumatic") is engaged in the importation, manufacture and sale of pneumatic hand tools for the industrial, retail and automotive markets and air filters. Florida Pneumatic also markets, through its Berkley Tool Division ("Berkley"), a line of pipe cutting and threading tools, wrenches and replacement electrical components for a widely used brand of pipe cutting and threading machines. Embassy Industries, Inc. ("Embassy") is engaged in the manufacture and sale of baseboard and radiant hot-water heating products. Embassy also imports, assembles and packages a line of small hardware items through its Franklin Hardware division ("Franklin"). BASIS OF FINANCIAL STATEMENT PRESENTATION In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 6 P & F INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (CONTINUED) ======================================= NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED) EARNINGS PER SHARE Primary and fully diluted earnings per share are computed using the treasury stock method, modified for stock options and warrants outstanding in excess of 20% of the total outstanding shares of common stock. Under this method, the aggregate number of shares outstanding reflects the assumed use of proceeds from the hypothetical exercise of the outstanding options and warrants, unless the effect on earnings per share is antidilutive. The assumed proceeds are used to repurchase shares of common stock, to a maximum of 20% of the shares outstanding. The balance of the proceeds, if any, are used to reduce outstanding debt. Fully diluted earnings per share also reflects the assumed use of proceeds from the hypothetical exercise of contingent issuances if such contingent issuances have a reasonable possibility of occurring. In calculating the purchase price of common stock, the average market value for the period is used for primary earnings per share and the greater of the average or ending market value for the period is used for fully diluted earnings per share. Net income or loss is adjusted for preferred dividends in computing the net income or loss attributable to the common stock. NOTE 2 - INVENTORIES Major classes of inventory were as follows: JUNE 30, DECEMBER 31, 1997 1996 ------------ ------------ Finished goods $ 10,344,264 $ 7,661,749 Work in process 1,159,852 735,792 Raw materials and supplies 2,758,879 2,722,309 ------------ ------------ $ 14,262,995 $ 11,119,850 ------------ ------------ ------------ ------------ 7 P & F INDUSTRIES, INC. AND SUBSIDIARIES ======================================= ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SECOND QUARTER ENDED JUNE 30, 1997 COMPARED WITH FIRST QUARTER ENDED JUNE 30, 1996 Consolidated revenues increased 9.8%, from $9,691,210 to $10,643,323. Revenues from pneumatic tools and related equipment increased 10.6%, from $7,140,977 to $7,894,762. Selling prices of pneumatic tools and related equipment were virtually unchanged from the prior year. Revenues from heating equipment increased 10.4%, from $1,546,595 to $1,707,685. Revenues from hardware increased 3.7%, from $1,003,051 to $1,040,454. Selling prices of both heating equipment and hardware were unchanged from the prior year. Consolidated gross profit, as a percentage of revenues, rose from 34.7% to 36.4%. Gross profit from pneumatic tools and related equipment rose from 35.5% to 37.5%, due to a more profitable product mix and an increase in the value of the U.S. dollar as compared to the Japanese yen, which lowered the cost of imported product. Gross profit from heating equipment rose from 33.2% to 33.7% and gross profit from hardware rose from 27.8% to 28.9%, both due to a more profitable product mix. Consolidated selling, general and administrative expenses increased 12.9%, from $2,443,414 to $2,759,245, primarily due to increases in advertising, commissions and salaries. Interest expense fell sharply, from $201,369 to $152,803, as a result of lower average short-term borrowings in 1997. SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1996 Consolidated revenues increased 4.2%, from $19,067,635 to $19,861,131. Revenues from pneumatic tools and related equipment increased 4.1%, from $13,925,344 to $14,489,677. Selling prices of pneumatic tools and related equipment were virtually unchanged from the prior year. Revenues from heating equipment increased 5.8%, from $3,183,256 to $3,368,627. Revenues from hardware increased 2.2%, from $1,958,088 to $2,001,653. Selling prices of both heating equipment and hardware were unchanged from the prior year. 8 P & F INDUSTRIES, INC. AND SUBSIDIARIES ======================================= SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1996 (CONTINUED) Consolidated gross profit, as a percentage of revenues, rose from 34.6% to 36.6%. Gross profit from pneumatic tools and related equipment rose from 35.6% to 37.9%, due to a more profitable product mix and an increase in the value of the U.S. dollar as compared to the Japanese yen, which lowered the cost of imported product. Gross profit from heating equipment rose from 33.2% to 34.0% and gross profit from hardware rose from 25.9% to 26.9%, both due to a more profitable product mix. Consolidated selling, general and administrative expenses increased 11.1%, from $4,716,751 to $5,238,760, primarily due to increases in advertising, commissions and salaries. Interest expense fell sharply, from $432,885 to $293,641, as a result of lower average short-term borrowings in 1997. LIQUIDITY AND CAPITAL RESOURCES The Company gauges its liquidity and financial stability by the measurements shown in the following table (dollar amounts in thousands): JUNE 30, DECEMBER 31, JUNE 30, 1997 1996 1996 --------- ------------ -------- Working Capital $ 14,085 $ 15,682 $ 16,491 Current Ratio 2.87 to 1 3.35 to 1 3.62 to 1 Shareholders' Equity $ 17,650 $ 19,382 $ 18,266 During the six months ended June 30, 1997, accounts receivable decreased by approximately $90,000. Inventories increased approximately $3,143,000, to a level more suitable to the needs of the customers in the current mix of sales. Accounts payable increased approximately $1,226,000 as a result of the increase in inventories. On January 30, 1997, the Company redeemed all of its outstanding preferred stock, at the par value of $10 per share, for a total of $2,633,450. This redemption was funded by working capital and resulted in the decreases in the Company's working capital, current ratio and shareholders' equity shown above. Capital spending for the six months ended June 30, 1997 was approximately $195,000. The total amount was provided from working capital. Capital expenditures for the rest of 1997 are expected to total approximately $640,000, some of which may be financed. Included in the expected total for 1997 are capital expenditures relating to new products, expansion of existing product lines and replacement of old equipment. 9 P & F INDUSTRIES, INC. AND SUBSIDIARIES ======================================= LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) The Company's credit facility provides a line of credit totalling $18,000,000. Of this amount, $14,000,000 is available for direct loans, letters of credit and bankers' acceptances. At June 30, 1997, there were no loans outstanding against this line of credit. There was a commitment at June 30, 1997 of approximately $3,900,000 for open letters of credit. In addition, at June 30, 1997, approximately $1,570,000 of the Company's credit facility was used to secure accounts payable. The total line of credit also includes $4,000,000 earmarked for acquisitions subject to the lending bank's approval. The Company's credit facility also provides the availability of up to $10,000,000 in foreign currency forward contracts. These contracts fix the exchange rate on future purchases of Japanese yen needed for payments to foreign suppliers. The total amount of foreign currency forward contracts outstanding at June 30, 1997 was approximately $1,685,000. The Company's credit facility agreement is subject to annual review by the lending bank. Under this agreement, the Company is required to adhere to certain financial covenants. At June 30, 1997, and for the six months then ended, the Company satisfied all of these covenants. The Company continues to conduct an extensive acquisition search. The funds for an acquisition will be provided by working capital and existing credit facilities, including the $4,000,000 credit facility earmarked for acquisitions referred to above. The total funds available, including cash derived from operations, will be approximately $9,000,000. The Company, through Florida Pneumatic, imports a significant amount of its purchases from Japan, with payment due in Japanese yen. As a result, the Company is subject to the effects of foreign currency exchange fluctuations. The Company uses a variety of techniques to protect itself from any adverse effects from these fluctuations, including increasing its selling prices, obtaining price reductions from its overseas suppliers, using alternative supplier sources and entering into foreign currency forward contracts. Because of these steps taken by the Company, foreign currency exchange rate fluctuations have not had a significant negative effect on the Company's results of operations or its financial position. Any future weakness of the dollar would again, however, present a problem and there can be no certainty that the Company will continue to be successful in its efforts to counter this problem. 10 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES 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. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following exhibits have been filed as part of this report: Exhibit 4 - Amendment to Rights Agreement, dated April 11, 1997, between the Registrant and American Stock Transfer & Trust Company. Exhibit 11 - Schedule of Computation of Earnings Per Common Share. Exhibit 27 - Financial Data Schedules (submitted to the Securities and Exchange Commission in electronic format). (b) Reports on Form 8-K A report on Form 8-K was filed by the Registrant regarding an amendment to the Rights Agreement between the Registrant and American Stock Transfer & Trust Company. The date of the report was April 11, 1997. 11 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. P & F INDUSTRIES, INC. (Registrant) By /s/ Leon D. Feldman ------------------------------ Leon D. Feldman Executive Vice President Dated: July 31, 1997 (Principal Financial Officer) 12 EX-4 2 AMENDMENT TO RIGHTS AGREEMENT Exhibit 4 P & F INDUSTRIES, INC. AND SUBSIDIARIES EXHIBIT 4 AMENDMENT TO RIGHTS AGREEMENT WITH AMERICAN STOCK TRANSFER & TRUST COMPANY ======================================= AMENDMENT, dated as of April 11, 1997, by and between P&F Industries, Inc., a Delaware corporation (the "Company"), and American Stock Transfer & Trust Company, a New York corporation (the "Rights Agent"). W I T N E S S E T H WHEREAS, the Company and the Rights Agent are parties to a Rights Agreement dated as of August 23, 1994 (the "Rights Agreement"); WHEREAS, pursuant to Section 26 of the Rights Agreement, the Board of Directors of the Company has determined that an amendment to the Rights Agreement as set forth herein is necessary and desirable and the Company and the Rights Agent desire to evidence such amendment in writing. NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: 1. Amendment of Section l(a). Section l(a) of the Rights Agreement is amended and restated to read as follows: (a) "Acquiring Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of Common Stock then outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of the Company or of any Subsidiary of the Company, (iv) any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan, (v) Sidney Horowitz and his Associates and Affiliates and (vi) Richard A. Horowitz and his Associates and Affiliates (each of (i) through (vi), an "Exempted Person"); provided, however, that (i) if Sidney Horowitz or his Associates (other than Richard A. Horowitz) or Affiliates shall become the Beneficial Owner of 10% or more of the shares of Common Stock then outstanding, each of them shall be then deemed to be an "Acquiring Person" and (ii) if Richard A. Horowitz or his Associates (including Sidney Horowitz) or Affiliates shall become the Beneficial Owner of 46% or more of the shares of Common Stock then outstanding (the "RAH Trigger Amount"), then each of them shall be deemed to be an "Acquiring Person", except that Richard A. Horowitz and his Associates (other than Sidney Horowitz) and Affiliates shall not be deemed to be an "Acquiring Person" as a result of being the Beneficial Owner of shares of Common Stock in excess of the RAH Trigger Amount solely because Sidney Horowitz or his Associates (other than Richard A. Horowitz) or Affiliates are deemed to be an Acquiring Person. Notwithstanding the foregoing, (i) no Person shall become an "Acquiring Person" as a result of an acquisition of Common Stock by the Company which, by reducing the number of such shares then outstanding, increases P & F INDUSTRIES, INC. AND SUBSIDIARIES EXHIBIT 4 (CONTINUED) AMENDMENT TO RIGHTS AGREEMENT WITH AMERICAN STOCK TRANSFER & TRUST COMPANY ======================================= the proportionate number of shares beneficially owned by such Person to 15% (or in the case of Sidney Horowitz 10%, or in the case of Richard A. Horowitz the RAH Trigger Amount) or more of the outstanding Common Stock, except that if such Person, after such share purchases by the Company, becomes the Beneficial Owner of any additional shares of Common Stock, such Person shall be deemed to be an "Acquiring Person;" and (ii) if the Board of Directors of the Company determines in good faith that a Person who would otherwise be an "Acquiring Person" has become such inadvertently, and such Person divests as promptly as practicable a sufficient number of Common Stock so that such Person would no longer be an Acquiring Person then such Person shall not be deemed to be an "Acquiring Person." The term "outstanding," when used with reference to a Person's Beneficial Ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then issued and outstanding which such Person would be deemed to beneficially own hereunder. 2. Effectiveness. This Amendment shall be deemed effective as of April 11, 1997 as if executed on such date. Except as amended hereby, the Rights Agreement shall remain in full force and effect in accordance with its terms and shall be otherwise unaffected hereby. 3. Miscellaneous. This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made and performed entirely within such state. This Amendment may be executed in any number of counterparts, each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. If any provision, covenant or restriction of this Amendment is held by a court of competent jurisdiction or other authority to be invalid, illegal or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment shall remain in full force and effect and shall in no way be effected, impaired or invalidated. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. P&F INDUSTRIES, INC. AMERICAN STOCK TRANSFER & TRUST COMPANY as Rights Agent By: /s/ Richard Horowitz By: /s/ Herbert J. Lemmer Name: Richard Horowitz Name: Herbert J. Lemmer Title: President Title: Vice President EX-11 3 COMP. OF EARNINGS Exhibit 11 P & F INDUSTRIES, INC. AND SUBSIDIARIES EXHIBIT 11 SCHEDULE OF COMPUTATION OF EARNINGS PER COMMON SHARE QUARTER ENDED JUNE 30, 1997 ===================================================== FULLY PRIMARY DILUTED ------- ------- Net income $ 487 038 $ 487 038 Dividends on preferred stock -- -- ---------- ---------- Net income for earnings per common share $ 487 038 $ 487 038 ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding during the year 2 979 991 2 979 991 Common share equivalents - shares issuable upon exercise of stock options 492 206 492 206 ---------- ---------- Weighted average number of common shares and common share equivalents used in calculation of earnings per common share 3 472 197 3 472 197 ---------- ---------- ---------- ---------- Earnings per common share $ .14 $ .14 ----- ----- ----- ----- P & F INDUSTRIES, INC. AND SUBSIDIARIES EXHIBIT 11 (CONTINUED) SCHEDULE OF COMPUTATION OF EARNINGS PER COMMON SHARE QUARTER ENDED JUNE 30, 1996 ==================================================== FULLY PRIMARY DILUTED ------- ------- Net income $ 355 796 $ 355 796 Dividends on preferred stock (65 837) (65 837) ---------- ---------- Net income for earnings per common share $ 289 959 $ 289 959 ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding during the year 2 929 991 2 929 991 Common share equivalents - shares issuable upon exercise of stock options 285 893 338 424 ---------- ---------- Weighted average number of common shares and common share equivalents used in calculation of earnings per common share 3 215 884 3 268 415 ---------- ---------- ---------- ---------- Earnings per common share $ .09 $ .09 ----- ----- ----- ----- P & F INDUSTRIES, INC. AND SUBSIDIARIES EXHIBIT 11 (CONTINUED) SCHEDULE OF COMPUTATION OF EARNINGS PER COMMON SHARE SIX MONTHS ENDED JUNE 30, 1997 ==================================================== FULLY PRIMARY DILUTED ------- ------- Net income $ 848 512 $ 848 512 Dividends on preferred stock (21 857) (21 857) ---------- ---------- Net income for earnings per common share $ 826 655 $ 826 655 ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding during the year 2 968 113 2 968 113 Common share equivalents - shares issuable upon exercise of stock options 505 070 505 070 ---------- ---------- Weighted average number of common shares and common share equivalents used in calculation of earnings per common share 3 473 183 3 473 183 ---------- ---------- ---------- ---------- Earnings per common share $ .24 $ .24 ----- ----- ----- ----- P & F INDUSTRIES, INC. AND SUBSIDIARIES EXHIBIT 11 (CONTINUED) SCHEDULE OF COMPUTATION OF EARNINGS PER COMMON SHARE SIX MONTHS ENDED JUNE 30, 1996 ==================================================== FULLY PRIMARY DILUTED ------- ------- Net income $ 706 089 $ 706 089 Dividends on preferred stock (131 673) (131 673) ---------- ---------- 574 416 574 416 ---------- ---------- ---------- ---------- Addback to net income of decrease in interest expense resulting from assumed use of proceeds from exercise of options to reduce outstanding debt 450 -- ---------- ---------- Net income for earnings per common share $ 574 866 $ 574 866 ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding during the year 2 929 991 2 929 991 Common share equivalents - shares issuable upon exercise of stock options 258 133 339 380 ---------- ---------- Weighted average number of common shares and common share equivalents used in calculation of earnings per common share 3 188 124 3 269 371 ---------- ---------- ---------- ---------- Earnings per common share $ .18 $ .18 ----- ----- ----- ----- EX-27 4 FINANCIAL DATA SCHEDULE
5 1 6-MOS DEC-31-1997 JUN-30-1997 834,115 0 6,162,219 0 14,262,995 21,626,797 10,940,332 5,316,691 30,402,137 7,541,726 5,210,444 2,978,867 0 0 14,671,100 30,402,137 19,722,224 19,861,131 12,602,683 12,602,683 0 0 293,641 1,386,512 538,000 848,512 0 0 0 848,512 .24 .24
-----END PRIVACY-ENHANCED MESSAGE-----