-----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, Rz+HoXVPjued6iX6EkfdBuy+ZCKn9lZz+zUOTH3BeCO1dTKBm5GuRSptY0tR/MS6 wgEVYeQOcnIOAZhlupW1sQ== 0000081050-98-000009.txt : 19980609 0000081050-98-000009.hdr.sgml : 19980609 ACCESSION NUMBER: 0000081050-98-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980608 SROS: NASD 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: SEC FILE NUMBER: 001-03315 FILM NUMBER: 98643741 BUSINESS ADDRESS: STREET 1: ONE POST RD CITY: FAIRFIELD STATE: CT ZIP: 06430 BUSINESS PHONE: 2032543900 MAIL ADDRESS: STREET 1: ONE POST ROAD CITY: FAIRFIELD STATE: CT ZIP: 06430 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 March 31, 1998 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, CT 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 March 31, 1998: 12,899,597 PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1998 AND DECEMBER 31, 1997 (in thousands of dollars) March 31, December 31, 1998 1997 (unaudited) ASSETS Current assets: Cash, including short-term investments of $11,457 in 1998 and $11,779 in 1997 $11,981 $13,077 Trade receivables, less allowance for doubtful accounts 4,046 3,935 Inventories 2,463 2,461 Other 374 691 Total current assets 18,864 20,164 Property, plant and equipment: Land 234 234 Buildings 2,334 2,331 Machinery and equipment 3,798 3,555 Less - accumulated depreciation (2,333) (2,197) 4,033 3,923 Goodwill 2,860 2,672 Other assets 1,398 1,412 $27,155 $28,171 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 134 $ 134 Trade accounts payable 1,170 1,091 Accrued liabilities 4,690 5,331 Total current liabilities 5,994 6,556 Long-term debt 1,106 1,138 Other non-current liabilities 9,566 9,604 Total liabilities 16,666 17,298 Shareholders' equity: Common shares, $0.10 par value, Authorized, 40,000,000 shares Issued - 16,551,849 shares in 1998 and 1997 1,655 1,655 Additional paid-in capital 49,915 49,915 Accumulated deficit (since January 1, 1984) (32,894) (32,816) Common shares held in treasury, at cost (8,187) (7,881) Total shareholders' equity 10,489 10,873 $27,155 $28,171 PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (in thousands of dollars except per share data) (unaudited) Three Months Ended March 31, 1998 1997 Sales and revenues: Sales of goods $ 4,165 $ 4,115 Revenues from services 2,458 1,713 6,623 5,828 Costs and expenses: Cost of sales 2,860 2,889 Cost of services 1,640 1,245 General and administrative expenses 1,794 1,942 Selling expenses 332 300 6,626 6,376 Income (loss) from operations (3) (548) Other (income) expenses: Interest income (149) (194) Interest expense 90 108 Cost of pensions - nonoperating 227 226 Other (income) expense (93) 270 75 410 Net income (loss) $ (78) $ (958) Basic earnings (loss) per common share $ (.01) $ (.06) Weighted average shares outstanding 13,011,597 15,152,960 PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 1998 (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 - Dec. 31, 1997 16,551,849 $1,655 $49,915 $(32,816) $(7,881) $10,873 Purchase of treasury shares - - - - (306) (306) Net loss - - - (78) - (78) Balance - March 31, 1998 16,551,849 $1,655 $49,915 $(32,894) $(8,187) $10,489 (1) Represents 3,652,252 and 3,440,352 of common shares held in treasury at March 31, 1998 and December 31, 1997, respectively. PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (in thousands of dollars) (unaudited) Three Months Ended March 31, 1998 1997 Cash flows from operating activities: Net income (loss) $ (78) $ (958) Adjustments to reconcile loss to net cash used in continuing operations: Depreciation and amortization 155 275 Changes in operating assets and liabilities, excluding effect of acquisition: Trade receivables (106) (544) Inventories 48 408 Other current assets 317 41 Other assets 14 (2) Trade accounts payable 79 (428) Accrued liabilities (652) (1,046) Other non-current liabilities (38) 184 Net cash used in operating operations (261) (2,070) Cash flows from investing activities: Payments for business acquired (295) - Proceeds from sale of discontinued operations 5 1,145 Capital expenditures (207) (48) Net cash provided by (used in) investing activities (497) 1,097 Cash flows from financing activities: Repayments of term loans and notes payable (32) (395) Proceeds from the issuance of common shares - 25 Purchase of treasury stock (306) (1,209) Net cash used in financing activities (338) (1,579) Net decrease in cash (1,096) (2,552) Cash - beginning of period 13,077 18,318 Cash - end of period $ 11,981 $ 15,766 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 March 31, 1998 and the results of their operations and their cash flows for the three months ended March 31, 1998 and 1997. 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, 1997. Cash Flow Information Cash paid for interest during the three months ended March 31, 1998 and 1997 was approximately $34,000 and $42,000, respectively. No cash was paid for income taxes during the first three months of 1998 and 1997. Earnings (loss) per common share During 1997, the Company adopted FASB Statement 128 Earnings Per Share. Basic net income (loss) per common share is based on net income divided by the weighted average number of common shares outstanding during each period (13,011,597 in 1998 and 15,152,960 in 1997). Diluted net income (loss) per common share assumes issuance of the net incremental shares from stock options and warrants at the later of the beginning of the year or date of issuance. Diluted net income (loss) per share was not computed for 1998 and 1997 as the effect of stock options and warrants were antidilutive. Note 2 - INVENTORIES Inventories at March 31, 1998, and December 31, 1997, consisted of the following: March 31, December 31, 1998 1997 (in thousands) Raw materials and supplies $ 1,432 $ 1,407 Work in process 511 282 Finished goods 520 772 $ 2,463 $ 2,461 Note 3 - 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 3,300,000 shares in 1997. Through March 31, 1998, the Company repurchased 3,094,100 shares of common stock under the buy-back program for an aggregate cost of $4,270,000. On April 30, 1998, the Company announced the conclusion of the common stock buy-back program. In March 1998, the Company initiated an odd-lot buy-back offer allowing holders of less than 100 shares a convenient method of selling their shares of the Company's common stock. A total of 7,112 shares were tendered under the offer which expired on April 3, 1998. Note 4 - INCOME TAXES As of March 31, 1998, approximately $79,000,000 of U.S. tax loss carryforwards (subject to review by the Internal Revenue Service), expiring from 1998 through 2012, 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 March 31, 1998, approximately $5,000,000 of the Company's U.S. tax loss carryforwards predated the corporate revaluation. As of March 31, 1998, deferred tax assets of approximately $30,000,000, principally relating to the tax benefit of the Company's U.S. tax loss carryforwards, were offset by a full valuation allowance. As of March 31, 1998, approximately $2,000,000 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. Note 5 - 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. Pursuant to the Consent Decree, the Company will pay a total of $14,350,000 plus interest to the United States and the Commonwealth of Pennsylvania. Through March 31, 1998, the Company has made principal payments aggregating $10,146,000. In April 1998, the Company made additional payments totaling $846,000 plus interest. Further payments totaling $3,358,000 plus interest will be made to the United States and Commonwealth of Pennsylvania over the next four years. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1998 AND 1997 Operating Results - First Quarter Publicker's consolidated sales and revenues of $6,623,000 for the first quarter of 1998 increased by approximately 14% from $5,828,000 for the first quarter of 1997. The improvement was due to increased revenues at the Company's services segment. Cost of sales and services increased from $4,134,000 in 1997 to $4,500,000 in 1998 principally as a result of higher revenues. General and administrative expenses for the first quarter of 1998 decreased by approximately 8% to $1,794,000 from $1,942,000 in 1997 as a result of overhead expense reductions. The Company's loss from operations for the first quarter of 1998 totaled $3,000 compared to a loss of $548,000 for the first quarter of 1997. The Company reported a net loss of $78,000, or $.01 per share, for the first quarter of 1998 compared to a net loss of $958,000, or $.06 per share, for the first quarter of 1997. Sales for the Company's manufacturing segment (which consists of one subsidiary company, Greenwald Industries, Inc.) for the first quarter of 1998 were $4,165,000 compared to $4,115,000 for the first quarter of 1997. This segment had income from operations of $711,000 for the first quarter of 1998 compared to $674,000 for the same period in 1997. In February 1998, Greenwald Industries entered into a joint venture to develop, manufacture and market smart card systems for the commercial laundry and other industries. The new entity, Greenwald Intellicard, Inc., is located in Boynton Beach, Florida. Costs associated with this investment amounted to $295,000. The 1998 results were negatively impacted by Greenwald Intellicard start-up costs of approximately $40,000. Revenues for the Company's services segment (which consists of one subsidiary company, Orr-Schelen-Mayeron & Associates, Inc.) increased by approximately 43% to $2,458,000 for the first quarter of 1998 compared to $1,713,000 for the first quarter of 1997. An increase in production employee headcount and improved efficiencies accounted for the jump in revenues versus 1997. The services segment had income from operations for the first quarter of 1998 of $78,000 compared to a $210,000 loss for the same period in 1997. Liquidity During the first three months of 1998, cash, including short-term investments, decreased by $1,096,000 to $11,981,000 at March 31, 1998. Operating activities consumed cash of $261,000, investing activities consumed cash of $497,000 and financing activities consumed cash of $338,000. Operating activities consisted of the loss from operations coupled with a slight increase in working capital. Investing activities consisted of acquisition costs associated with the Greenwald Intellicard investment of $295,000 and capital expenditures of $207,000. Financing activities principally consisted treasury stock purchases of $306,000. On April 15, 1998, the company announced the execution of a letter of intent to purchase substantially all of the assets of a group of five businesses from Katy Industries, Inc. The businesses to be acquired manu- facture machinery and equipment and other specialty industrial products. These businesses serve the baking, wood products, metal working, railroad and electronics industries. The five businesses had aggregate 1997 sales of approximately $38 million. Consummation of the acquisition is subject to, among other things, negotiation and execution of a mutually satisfactory definitive acquisition agreement and satisfaction or waiver of the conditions that may be specified in that agreement. The Company expects to finance the purchase price with cash on hand and borrowings. 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. Through March 31,1998, the Company has made principal payments aggregating $10,146,000. In April 1998, the Company made additional payments totaling $846,000 plus interest. Further payments totaling $3,358,000 plus interest will be made to the United States and the Commonwealth of Pennsylvania over the next four 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 3,300,000 shares in 1997. Through March 31, 1998, the Company repurchased 3,094,100 shares of common stock under the buy-back program for an aggregate cost of $4,270,000. In April 1998, the Company announced that in light of the proposed acquisition discussed above, the common stock buy-back program has concluded. During the first three months of 1998, the Company's capital expenditures totaled $207,000. The Company has not entered into any material commitments for 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 1998 with its available cash resources as well as through capital equipment financing. At March 31, 1998, approximately $79 million of U.S. tax loss carryforwards (subject to review by the Internal Revenue Service), expiring from 1998 through 2012, were available to offset future taxable income. Year 2000 The Company has begun modifying and upgrading its existing computer systems to process transactions in the year 2000 and beyond. While management expects all systems to be year 2000 compliant, there can be no assurance that all such modifications will be successful. Anticipated spending for these modifications and upgrades are not expected to have a significant impact on the Company's ongoing results of operations. Outlook The Company's primary objective for 1998 is to identify a suitable acquisition candidate or candidates. As of April 30, 1998, the Company had approximately $11,000,000 in cash on hand. The Company intends to use such funds, together with other potential borrowings, to seek out and acquire one or more businesses. As discussed above, the Company has executed a letter of intent to acquire five businesses from Katy Industries, Inc. There can be no assurance that the parties will enter into a definitive agreement or ultimately consummate the proposed acquisition of the five businesses. 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 acquisition strategy including the identification, financing and consummation of any acquisition transaction. 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 27: Financial Data Schedule (EDGAR version only) (b) Reports on Form 8-K: None 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: May 14, 1998 /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 EX-27 2
5 3-MOS 3-MOS DEC-31-1997 DEC-31-1998 MAR-31-1997 MAR-31-1998 15,766,000 11,981,000 0 0 3,606,000 4,122,000 54,000 76,000 2,098,000 2,463,000 22,042,000 18,864,000 5,930,000 6,366,000 1,913,000 2,333,000 30,413,000 27,155,000 6,370,000 5,994,000 1,244,000 1,106,000 1,606,000 1,655,000 0 0 0 0 10,248,000 8,834,000 30,413,000 27,155,000 5,828,000 6,623,000 5,828,000 6,623,000 4,134,000 4,500,000 2,242,000 2,126,000 302,000 (15,000) 0 0 108,000 90,000 (958,000) (78,000) 0 0 (958,000) (78,000) 0 0 0 0 0 0 (958,000) (78,000) (.06) (.01) (.06) (.01)
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