-----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, KNQBorENUjhoQVmUiATHgwOjAbk7gFWI88nafTh//pVjpQ0qF2xxZIn1jN9pXG2W IKfe9kUQVQ30qyyp//JDEw== 0000081050-97-000023.txt : 19970813 0000081050-97-000023.hdr.sgml : 19970813 ACCESSION NUMBER: 0000081050-97-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUBLICKER INDUSTRIES INC CENTRAL INDEX KEY: 0000081050 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 230991870 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03315 FILM NUMBER: 97657022 BUSINESS ADDRESS: STREET 1: 1445 E PUTNAM AVE CITY: OLD GREENWICH STATE: CT ZIP: 06870 BUSINESS PHONE: 2036374500 MAIL ADDRESS: STREET 1: 1445 EAST PUTNAM AVENUE CITY: OLD GREENWICH STATE: CT ZIP: 06870 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________ (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-3315 PUBLICKER INDUSTRIES INC. (Exact name of registrant as specified in its charter) Pennsylvania 23-0991870 (State of incorporation) (I.R.S. Employer Identification No.) One Post Road, Fairfield, Connecticut 06430 (Address of principal executive offices) (203) 254-3900 (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 . Number of shares of Common Stock outstanding as of June 30, 1997: 13,562,685 PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1997 AND DECEMBER 31, 1996 (in thousands of dollars) June 30, December 31, 1997 1996 (unaudited) ASSETS Current assets: Cash, including short-term investments of $12,713 in 1997 and $18,173 in 1996 $ 12,762 $18,318 Trade receivables, less allowance for doubtful accounts (1997 - $60; 1996 - $92) 4,324 3,008 Inventories 2,095 2,506 Other 564 667 Total current assets 19,745 24,499 Property, plant and equipment: Land 234 234 Buildings 2,326 2,326 Machinery and equipment 3,409 3,322 Less - accumulated depreciation (1,983) (1,778) 3,986 4,104 Goodwill 2,712 2,752 Other assets 1,654 1,740 $28,097 $33,095 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term obligations, including current maturities $ 123 $ 489 Trade accounts payable 1,370 1,564 Accrued liabilities 4,983 5,012 Total current liabilities 6,476 7,065 Long-term debt 1,213 1,273 Other non-current liabilities 9,868 10,761 Total liabilities 17,557 19,099 Shareholders' equity: Common shares, $0.10 par value, Authorized, 40,000,000 shares Issued - 16,058,937 shares in 1997 and 16,037,937 in 1996 1,606 1,604 Additional paid-in capital 48,263 48,240 Accumulated deficit (since January 1, 1984) (32,721) (31,737) Common shares held in treasury, at cost (6,608) (4,111) Total shareholders' equity 10,540 13,996 $28,097 $33,095 PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (in thousands of dollars except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 1997 1996* 1997 1996* Sales and revenues: Sales of goods $ 4,957 $ 3,742 $ 9,072 $ 7,478 Revenues from services 2,212 2,589 3,925 4,594 7,169 6,331 12,997 12,072 Costs and expenses: Cost of sales 3,476 2,755 6,365 6,263 Cost of services 1,414 1,593 2,659 3,123 General and administrative expenses 1,855 2,218 3,797 4,693 Selling expenses 296 292 596 560 Special charge - 637 - 1,632 7,041 7,495 13,417 16,271 Income (loss) from operations 128 (1,164) (420) (4,199) Other (income) expenses: Interest income (156) (160) (350) (170) Interest expense 92 240 200 594 Cost of pensions - nonoperating 199 186 425 370 Other costs 19 (115) 289 28 154 151 564 822 Income (loss) from continuing operations before income taxes (26) (1,315) (984) (5,021) Income tax benefit - 553 - 2,109 Income (loss) from continuing operations (26) (762) (984) (2,912) Discontinued operations: Income (loss) from discontinued operations- 403 - 1,288 Gain on sale of discontinued operations - - - 8,764 Net income (loss) $ (26) $ (359) $ (984) $ 7,140 Earnings (loss) per common share: Continuing operations $ - $ (.04) $ (.07) $ (.17) Discontinued operations - .02 - .61 $ - $(.02) $ (.07) $ .44 Common shares used in calculation of earnings per share 13,819,785 16,631,346 14,484,628 16,432,181 *Restated for discontinued operations PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 1997 (in thousands of dollars except share data) (unaudited) Accumulated Common Shares Additional Deficit Common Share- Shares Paid-in Since Treasury holders' Issued Amount Capital 1-1-84 Shares (1) Equity Balance - December 31, 1996 16,037,937 $1,604 $48,240 $(31,737) $(4,111) $13,996 Issuance of common shares 21,000 2 23 - - 25 Purchase of treasury shares - - - - (2,497) (2,497) Net loss - - - (984) - (984) Balance - June 30, 1997 16,058,937 $1,606 $48,263 $(32,721) $(6,608) $10,540 (1) Represents 2,496,252 and 678,352 of common shares held in treasury at June 30, 1997 and December 31, 1996, respectively. PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (in thousands of dollars) (unaudited) Six Months Ended June 30, 1997 1996* Cash flows from operating activities: Income (loss) from continuing operations $(984) $(2,912) Adjustments to reconcile income (loss) to net cash provided by (used in) continuing operations: Income tax benefit - (2,109) Depreciation and amortization 427 436 Changes in operating assets and liabilities: Restricted cash - 4,500 Trade receivables (1,316) (455) Inventories 411 667 Other current assets 103 186 Other assets (34) 175 Trade accounts payable (194) (198) Accrued liabilities (578) (8,699) Other non-current liabilities (893) (1,050) Net cash provided by (used in) continuing operations (3,058) (9,459) Income from discontinued operations - 10,052 Adjustments to reconcile income to net cash provided by (used in) discontinued operations: Gain on sale of discontinued operations - (13,658) Charge in lieu of income taxes - 5,827 Increase in net assets of discontinued operations (611) (3,328) Net cash provided by (used in) discontinued operations (611) (1,107) Net cash provided by (used in) operating activities (3,669) (10,566) Cash flows from investing activities: Proceeds from sale of discontinued operations 1,160 30,740 Capital expenditures (149) (877) Net cash provided by (used in) investing activities1,011 29,863 Cash flows from financing activities: Redemption of 13% Subordinated Notes - (7,500) Repayments of revolving credit lines - (2,928) Repayments of term loans and notes payable (426) (1,359) Proceeds from the issuance of common shares 25 591 Purchase of treasury stock (2,497) (26) Net cash provided by (used in) financing activities (2,898 (11,222) Net increase (decrease) in cash (5,556) 8,075 Cash - beginning of period 18,318 874 Cash - end of period $ 12,762 $ 8,949 *Restated for discontinued operations Note 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present fairly the financial position of Publicker Industries Inc. and subsidiary companies as of June 30, 1997 and the results of their operations and their cash flows for the three and six months ended June 30, 1997 and 1996. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Cash Flow Information Cash paid for interest during the six months ended June 30, 1997 and 1996 was approximately $349,000 and $531,000, respectively. Cash paid for income taxes was $912,000 for the six months ended June 30, 1996. No cash was paid for income taxes during the first six months of 1997. Net Income (Loss) Per Common Share Net income (loss) per common share for 1996 was computed using the weighted average number of common shares and the dilutive effect of share equivalents (stock options and warrants) outstanding using the modified treasury method. The effect of stock options and warrants on the computation for 1997 were not included as they were antidilutive. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128") which establishes new standards for computing and presenting earnings per share ("EPS"). SFAS No. 128 replaces the presentation of primary EPS with basic EPS for which common stock equivalents are not considered in the computation and also revises the computation of diluted EPS. The statement is effective for financial statements issued for periods ending after December 15, 1997. Had EPS been determined in accordance with SFAS No. 128, the Company's basic and diluted EPS for the three and six months ended June 30, 1996 would have been as follows: Three Months Ended Six Months Ended June 30, 1996 June 30, 1996 Basic EPS $ (.02) $ .47 Diluted EPS $ (.02) $ .46 The application of SFAS No. 128 would have no effect on EPS reported for 1997. Note 2 - DISCONTINUED OPERATIONS In 1996, the Company completed the sale of substantially all of the assets of Masterview Window Company, Inc. ("Masterview"), Fenwal Electronics, Inc. ("Fenwal") and Bright Star Industries Incorporated ("Bright Star"). The aggregate sales price for the dispositions was $47,771,000. A portion of the sales prices amounting to $1,919,000 at December 31, 1996, was held in escrow to cover potential purchase price adjustments, indemnity claims and certain environmental remediation activities. In the first six months of 1997, an additional $1,160,000 in cash was received principally relating to the finalization of the Masterview purchase price adjustment. Masterview, Fenwal and Bright Star have been reflected as discontinued operations in the accompanying 1996 financial statements. Net sales of discontinued operations for the six months ended June 30, 1996 were $18,893,000. The aggregate pre-tax gain on sale of discontinued operations recorded in the first quarter of 1996 of $15,110,000 was offset by a provision for income taxes of $6,346,000, of which $4,894,000 was credited directly to paid-in-capital due to the utilization of pre- corporate reorganization tax loss carryforwards. The pre-tax income from discontinued operations in 1996 of $2,221,000 was offset by a provision for income taxes of $933,000 which was also credited directly to paid-in-capital (see Note 6). Note 3 - DEBT In 1995, the Company entered into a three year $17,060,000 credit agreement ("Loan Agreement"). The Loan Agreement provided for a revolving credit line ("Revolver"), term promissory notes ("Term Notes") and a credit facility for future capital expenditure financing. The Loan Agreement was secured by substantially all of the Company's assets. In connection with the sale of discontinued operations, the outstanding borrowings under the Revolver and the Term Loans related to Masterview, Fenwal and Bright Star were repaid. On February 28, 1997, the Company repaid the remaining balances outstanding under the Revolver and Term Notes and terminated the Loan Agreement. The Company recorded a charge associated with the termination amounting to $210,000 in the first quarter of 1997. In April 1996, the Company redeemed all of its outstanding 13% Subordinated Notes due December 15, 1996. The redemption price was equal to the principal amount of $7,500,000, plus accrued interest to the redemption date. Note 4 - INVENTORIES Inventories at June 30, 1997 and December 31, 1996, consisted of the following: June 30, December 31, 1997 1996 (in thousands) Raw materials and supplies $ 1,216 $ 1,589 Work in process 274 250 Finished goods 605 667 $ 2,095 $ 2,506 Note 5 - STOCKHOLDERS' EQUITY In August 1996, the Board of Directors of the Company authorized the repurchase of up to 1,000,000 shares of the Company's common stock. The Board of Directors increased the Company's share repurchase authorization to 2,000,000 shares in March 1997. Through June 30, 1997, the Company repurchased 1,938,100 shares of common stock under the buy-back program for an aggregate cost of $2,691,000. In connection with an offering of 13% Subordinated Notes in December 1986, the Company issued 3,600,000 warrants ("Warrants") to purchase shares of the Company's common stock for five years, which period was subsequently extended by five years. In addition, the Company issued 1,200,000 Underwriter's Warrants to purchase the Company's common stock for five years, which period was subsequently extended by five years. Each Warrant and Underwriter Warrant entitled its holder to purchase 1.024 shares of common stock for $1.95 per share (subject to adjustment in certain circumstances). Unexercised warrants were to expire on December 15, 1996 (December 17, 1996, in the case of the Underwriter's Warrants). On November 8, 1996, the Company's Board of Directors, acting upon the recommendation of a special committee of disinterested directors, determined it would be in the Company's best interests to modify the Warrants and Underwriter's Warrants owned by any holder who exercises, at the current exercise price of $1.95 per share of common stock, 25% of the warrants owned on December 15, 1996 (December 17, 1996, in the case of the Underwriter's Warrants). Shareholders of the Company subsequently approved the modification on July 2, 1997 ("Approval Date"). The modification resulted in the following changes to the holder's unexercised Warrants and Underwriter's Warrants (i.e., the 75% balance of the warrants owned on December 15, 1996 or December 17, 1996, as the case may be) (the "Remaining Modified Warrants"): (a)Five-Year Extension The expiration date of the Remaining Modified Warrants was extended to July 2, 2002. (b)Increased Exercise Price The exercise price of the Remaining Modified Warrants was increased from $1.95 per share to (i) $2.00 per share, during the year ending on the first anniversary of the Approval Date, (ii) $2.10 per share, during the year ending on the second anniversary of the Approval Date, (iii) $2.20 per share, during the year ending on the third anniversary of the Approval Date, (iv) $2.30 per share, during the year ending on the fourth anniversary of the Approval Date, and (v) $2.40 per share, during the year ending on the fifth anniversary of the Approval Date. Under the terms of the modification, in order to retain the Warrants and Underwriter's Warrants, each holder must make an exercise election within 30 days from the date of the notice mailing. As of July 2, 1997, a total of 2,257,050 warrants were outstanding entitling the warrant holders to purchase, subject to shareholder approval, an aggregate of 2,311,220 shares of common stock. Members of the Company's Board of Directors hold 2,190,000 warrants. A charge to income of approximately $840,000 will be recorded in the third quarter of 1997 based on the fair value of the Remaining Modified Warrants as of the Approval Date. Note 6 - INCOME TAXES As of June 30, 1997, approximately $90,000,000 of U.S. tax loss carryforwards (subject to review by the Internal Revenue Service), expiring from 1997 through 2010, were available to offset future taxable income. As a result of a corporate revaluation during 1984, tax benefits resulting from the utilization in subsequent years of net operating loss carryforwards existing as of the date of the corporate revaluation will be excluded from the results of operations and directly credited to additional paid-in capital when realized. As of June 30, 1997, approximately $12,000,000 of the Company's U.S. tax loss carryforwards predated the corporate revaluation. As of June 30, 1997, deferred tax assets of approximately $34,000,000 relating to the tax benefit of the Company's U.S. tax loss carryforwards were offset by a full valuation allowance. As of June 30, 1997, approximately $4,000,000 of deferred tax assets predated the corporate revaluation. Subsequent adjustments to the valuation allowance with respect to the deferred tax assets which predated the corporate revaluation would be directly credited to additional paid-in capital. For the six months ended June 30, 1996, the Company recorded a charge in lieu of income taxes of $3,718,000 and a provision for income taxes currently payable of $1,452,000. The charge in lieu of income taxes relates to the utilization of net operating loss carryforwards which existed as of January 1, 1984, the date of the corporate revaluation. Such taxes will never be paid or payable and, accordingly, an amount equal to the charge has been credited to additional paid-in capital. No income tax provision or benefit was recognized in 1997 because the tax benefit associated with the Company's operating losses were offset in full by an increase in the valuation allowance. Note 7 - ENVIRONMENTAL LITIGATION On April 12, 1996, a Consent Decree among the Company, the Environmental Protection Agency, the U.S. Department of Justice and the Pennsylvania Department of Environmental Protection ("PADEP") was entered by the U.S. District Court for the Eastern District of Pennsylvania which resolved all of the United States' and PADEP's claims against the Company for recovery of costs incurred in responding to releases of hazardous substances at a facility previously owned and operated by the Company. The Company had previously funded $4,500,000 into a court administered escrow account. Following the entry of the Consent Decree, additional payments totaling $4,850,000 were made in April and May of 1996. In April 1997, the Company made additional payments totaling $796,000 plus interest. Further payments totaling $4,204,000 plus interest will be made to the United States and Commonwealth of Pennsylvania over the next five years. Note 8 - SPECIAL CHARGE During the fourth quarter of 1995, the Company decided to move the operations of its Greenwald Industries, Inc. subsidiary from a leased facility in Brooklyn, New York to a newly acquired facility in Chester, Connecticut. A special charge of $1,632,000 was recorded in the first six months of 1996 which included $668,000 in severance costs associated with 110 terminated employees, $246,000 for lease termination costs and $718,000 for costs through June 30, 1996, related to plant and employee relocation, recruiting and training new personnel and for temporary living allowances. The move was completed by April 30, 1996. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 Operating Results - Second Quarter Publicker's consolidated sales and revenues of $7,169,000 for the second quarter of 1997 increased by approximately 13% from $6,331,000 for the second quarter of 1996. The improvement in sales was due to a volume increase at the Company's manufacturing segment which was partially offset by a volume reduction at the Company's services segment. Cost of sales and services increased from $4,348,000 in 1996 to $4,890,000 in 1997 principally as a result of the sales and revenues improvement. General and administrative expenses for the second quarter of 1997 decreased by approximately 16% to $1,855,000 from $2,218,000 in 1996 as a result of overhead expense reductions. The Company's pre-tax loss from continuing operations for the second quarter of 1997 totaled $26,000 compared to a loss of $1,315,000 for the second quarter of 1996. The Company reported a net loss of $26,000 for the second quarter of 1997 compared to a net loss of $359,000, or $.02 per share, for the second quarter of 1996. The 1996 second quarter results included a net loss from continuing operations of $762,000, or $.04 per share, and income from discontinued operations of $403,000, or $.02 per share. Sales for the Company's manufacturing segment (which consists of one subsidiary company, Greenwald Industries, Inc.) for the second quarter of 1997 were $4,957,000 compared to $3,742,000 for the second quarter of 1996. The increase in sales was due to a 2% increase in selling prices and a 30% increase in volume. This segment had income from operations of $844,000 for the second quarter of 1997 compared to a loss from operations of $159,000 for the same period in 1996. The 1996 results were negatively impacted by a $637,000 special charge associated with Greenwald's move to a new facility in early 1996 and a disruption in business activities caused by the move. Revenues for the Company's services segment (which consists of one subsidiary company, Orr-Schelen-Mayeron & Associates, Inc.) decreased by approximately 15% to $2,212,000 for the second quarter of 1997 compared to $2,589,000 for the second quarter of 1996. A 1% increase in OSM's fee schedule was more than offset by a reduction in production employee headcount versus 1996. The services segment had income from operations for the second quarter of 1997 of $98,000 compared to income of $257,000 for the same period in 1996. Operating Results - Six months Publicker's consolidated sales and revenues of $12,997,000 for the first six months of 1997 increased by approximately 8% from $12,072,000 for the first six months of 1996. The improvement in sales was due to a volume increase at the Company's manufacturing segment which was partially offset by a volume reduction at the Company's services segment. Cost of sales and services decreased from $9,386,000 in 1996 to $9,024,000 in 1997 as manufacturing efficiency improvements more than offset the effect of the sales and revenues increase. General and administrative expenses for the first six months of 1997 decreased by approximately 19% to $3,797,000 from $4,693,000 in 1996 as a result of overhead expense reductions. The Company's pre-tax loss from continuing operations for the first six months of 1997 totaled $984,000 compared to a loss of $5,021,000 for 1996. The Company reported a net loss of $984,000, or $.07 per share, for the first six months of 1997 compared to net income of $7,140,000, or $.44 per share, for 1996. The 1996 results included a net loss from continuing operations of $2,912,000, or $.17 per share, and income and gains from discontinued operations of $10,052,000, or $.61 per share. Sales for the Company's manufacturing segment for the first six months of 1997 were $9,072,000 compared to $7,478,000 for 1996. The increase in sales was due primarily to a volume improvement. This segment had income from operations of $1,518,000 for the first six months of 1997 compared to a loss from operations of $1,653,000 for the same period in 1996. The 1996 results were negatively impacted by a $1,632,000 special charge associated with Greenwald's move to a new facility in early 1996, a $372,000 writedown of certain obsolete inventories and a disruption in business activities caused by the move. Revenues for the Company's services segment decreased by approximately 15% to $3,925,000 for the first six months of 1997 compared to $4,594,000 for 1996. The revenue decrease was principally due to a reduction in production employee headcount versus 1996. The services segment had a loss from operations for the first six months of 1997 of $112,000 compared to a $138,000 loss for the same period in 1996. Liquidity During the first six months of 1997, cash, including short-term investments, decreased by $5,556,000 to $12,762,000 at June 30, 1997. Operating activities consumed cash of $3,669,000, investing activities provided cash of $1,011,000 and financing activities consumed cash of $2,898,000. Operating activities principally consisted of the loss from continuing operations, the annual payment under the settlement of the environmental litigation and an increase in working capital. Investing activities consisted of additional proceeds of $1,160,000 received from the sale of discontinued operations offset by capital expenditures of $149,000. Financing activities consisted of repayments of the Company's revolving credit line and term loans of $426,000 and treasury stock purchases of $2,497,000 offset by $25,000 of proceeds from the issuance of common shares upon the exercise of stock options. On April 12, 1996, the Consent Decree that settles the Company's environmental litigation with the United States and the Commonwealth of Pennsylvania was entered by the U.S. District Court for the Eastern District of Pennsylvania, and became effective. The Company previously funded $4,500,000 into a court administered escrow account. Following the entry of the Consent Decree, additional payments totaling $4,850,000 were made in April and May of 1996. In April 1997, the Company made additional payments totaling $796,000 plus interest. Further payments totaling $4,204,000 plus interest will be made to the United States and the Commonwealth of Pennsylvania over the next five years. In August 1996, the Board of Directors of the Company authorized the repurchase of up to 1,000,000 shares of the Company's common stock. The Board of Directors increased the Company's share repurchase authorization to 2,000,000 shares in March 1997. Through June 30, 1997, the Company repurchased 1,938,100 shares of common stock under the buy-back program for an aggregate cost of $2,691,000. During the first six months of 1997, the Company's capital expenditures totaled $149,000. The Company anticipates that its level of capital expenditures for 1997 will be less than those of 1996. The Company has not entered into any material commitments for acquisitions or capital expenditures and retains the ability to increase or decrease capital expenditure levels as required. The Company anticipates that it will be able to fund its capital expenditures during 1997 with its available cash resources as well as through capital equipment financing. At June 30, 1997, approximately $90 million of U.S. tax loss carryforwards (subject to review by the Internal Revenue Service), expiring from 1997 through 2010, were available to offset future taxable income. On July 2, 1997, the Company's shareholders approved the modification to certain outstanding warrants to purchase common stock (see Note 5 to the Notes to the Consolidated Financial Statements). If all of the warrant holders exercise the requisite 25% of their warrants prior to the conclusion of the election period, the Company would realize proceeds of approximately $1.1 million from the issuance of 577,805 shares of common stock. Outlook The Company's primary objective for 1997 is to identify a suitable acquisition candidate. As mentioned above, in 1996 and 1997, the Company met its obligations under the terms of the settlement of its environmental litigation and also repaid the remaining balances outstanding under the Revolver and Term Notes and terminated the Loan Agreement. As of June 30, 1997, the Company had approximately $12,700,000 in cash on hand. The Company intends to use such funds, together with other potential indebtedness, to finance the acquisition purchase price. The Company has not yet identified any potential acquisition candidates or determined the amount or source of any indebtedness which would be incurred to finance future acquisitions. Special Note Regarding Forward-Looking Statements: A number of statements contained in this discussion and analysis are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. These risks and uncertainties include but are not limited to: Greenwald's dependance on the mechanical coin meter market and its potential vulnerability to technological obsolescence; OSM's dependence on key personnel and general economic conditions in the Midwest; and the Company's ability to successfully implement its business strategy including the identification, financing and consummation of an acquisition. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS General Litigation Various legal proceedings are pending against the Company. The Company considers all such proceedings to be ordinary litigation incident to the character of its business. Certain claims are covered by liability insurance. The Company believes that the resolution of those claims to the extent not covered by insurance will not, individually or in the aggregate, have a material adverse effect on the financial position or results of operations of the Company. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits required by Item 601 of Regulation S-K. Exhibit 11: Calculation of earnings per share Exhibit 27: Financial Data Schedule (EDGAR version only) (b) Reports on Form 8-K: None PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES 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. PUBLICKER INDUSTRIES INC. (Registrant) Date: August 12, 1997 /s/ James J. Weis James J. Weis, President and Chief Executive Officer /s/ Antonio L. DeLise Antonio L. DeLise, Vice President - Finance, Principal Financial and Accounting Officer Exhibit 11 PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CALCULATION OF EARNINGS PER SHARE (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 1997(a) 1996(b) 1997(a) 1996(b) (in thousands except per share data) Income (loss) from continuing operations $ (26) $(762) $(984) $(2,912) Add - Interest savings, net of tax effect - 27 - 48 Adjusted income (loss) from continuing operations (26) (735) (984) (2,864) Income and gains from discontinued operations - 403 - 10,052 Adjusted net income (loss) $(26) $(332) $(984) $7,188 Average common shares 13,820 15,391 14,485 15,192 Add - Stock options and common stock purchase warrants - 1,240 - 1,240 Adjusted common shares 13,820 16,631 14,485 16,432 Earnings (loss) per common share Continuing operations $ - $(.04) $(.07) $(.17) Discontinued operations - .02 - .61 $ - $(.02) $(.07) $ .44 (a) Earnings per common share is computed using the weighted average number of common shares outstanding during each period. The effect of stock options and warrants were not included as they were antidilutive. (b) Earnings per common share is computed using the modified treasury method. In accordance with this method, proceeds from the exercise of stock options and warrants are first used to buy back up to 20% of the Company's common stock at the average price for the period. Any remaining proceeds are used to retire debt. An adjustment is made to net income to reflect interest assumed to be saved on the debt retirement, net of income taxes. EX-27 2
5 1,000 3-MOS DEC-31-1997 JUN-30-1997 12,762 0 4,384 60 2,095 19,745 5,970 1,983 28,097 6,476 1,213 1,606 0 0 8,934 28,097 12,997 12,997 9,024 9,024 4,757 0 200 (984) 0 (984) 0 0 0 (984) (.07) (.07)
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