-----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, OZkrm93j6wt1YHpiPX3anXn1c5G7WCWQXP7fCP06gFoOTxYRin8pZHKXVf4Xbytv YvpxVAojc9UtPfBPSGY0Lw== 0000081050-98-000012.txt : 19980813 0000081050-98-000012.hdr.sgml : 19980813 ACCESSION NUMBER: 0000081050-98-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 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: 98683432 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 June 30, 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 June 30, 1998: 13,291,607 PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1998 AND DECEMBER 31, 1997 (in thousands of dollars) June 30, December 31, 1998 1997 (unaudited) ASSETS Current assets: Cash, including short-term investments of $10,738 in 1998 and $11,779 in 1997 $11,427 $13,077 Trade receivables, less allowance for doubtful accounts 3,823 3,935 Inventories 2,478 2,461 Other 362 691 Total current assets 18,090 20,164 Property, plant and equipment: Land 234 234 Buildings 2,334 2,331 Machinery and equipment 3,866 3,555 Less - accumulated depreciation (2,473) (2,197) 3,961 3,923 Goodwill 2,849 2,672 Other assets 1,430 1,412 $26,330 $28,171 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $134 $134 Trade accounts payable 1,273 1,091 Accrued liabilities 4,986 5,331 Total current liabilities 6,393 6,556 Long-term debt 1,073 1,138 Other non-current liabilities 8,626 9,604 Total liabilities 16,092 17,298 Shareholders' equity: Common shares, $0.10 par value, Authorized, 40,000,000 shares Issued - 16,951,849 shares in 1998 and 16,551,849 shares in 1997 1,695 1,655 Additional paid-in capital 50,475 49,915 Accumulated deficit (since January 1, 1984) (33,731) (32,816) Common shares held in treasury, at cost (8,201) (7,881) Total shareholders' equity 10,238 10,873 $26,330 $28,171 PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (LOSS) FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (in thousands of dollars except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 Sales and revenues: Sales of goods $ 4,120 $ 4,957 $ 8,285 $ 9,072 Revenues from services 2,385 2,212 4,843 3,925 6,505 7,169 13,128 12,997 Costs and expenses: Cost of sales 2,937 3,476 5,797 6,365 Cost of services 1,566 1,414 3,206 2,659 General and administrative expenses 1,771 1,855 3,565 3,797 Selling expenses 349 296 681 596 6,623 7,041 13,249 13,417 Income (loss) from operations (118) 128 (121) (420) Other (income) expenses: Interest income (137) (156) (286) (350) Interest expense 79 92 169 200 Cost of pensions - nonoperating 212 199 439 425 Other expense, net 565 19 472 289 719 154 794 564 Net income (loss) $ (837) $ (26) $ (915) $ (984) Basic earnings (loss) per common share $ (.06) $ - $ (.07) $ (.07) Weighted average shares outstanding 13,056,105 13,819,785 13,053,030 14,484,628 PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 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 - December 31, 1997 16,551,849 $1,655 $49,915 $(32,816) $(7,881) $10,873 Issuance of common shares 400,000 40 560 - - 600 Purchase of treasury shares - - - - (320) (320) Net loss - - - (915) - (915) Balance - June 30, 1998 16,951,849 $1,695 $50,475 $(33,731) $(8,201) $10,238 (1) Represents 3,660,242 and 3,440,352 of common shares held in treasury at June 30, 1998 and December 31, 1997, respectively. PUBLICKER INDUSTRIES INC. AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (in thousands of dollars) (unaudited) Six Months Ended June 30, 1998 1997 Cash flows from operating activities: Net income (loss) $ (915) $ (984) Adjustments to reconcile loss to net cash used in continuing operations: Depreciation and amortization 325 427 Changes in operating assets and liabilities, excluding effect of acquisition: Trade receivables 117 (1,316) Inventories 33 411 Other current assets 329 103 Other assets (18) (34) Trade accounts payable 182 (194) Accrued liabilities (366) (1,189) Other non-current liabilities (978) ( 893) Net cash used in operating activities (1,291) (3,669) Cash flows from investing activities: Payments for business acquired (314) - Proceeds from sale of discontinued operations 15 1,160 Capital expenditures (275) (149) Net cash provided by (used in) investing activities (574) 1,011 Cash flows from financing activities: Repayments of term loans and notes payable (65) (426) Proceeds from the issuance of common shares 600 25 Purchase of treasury stock (320) (2,497) Net cash provided by (used in) financing activities 215 (2,898) Net decrease in cash (1,650) (5,556) Cash - beginning of period 13,077 18,318 Cash - end of period $ 11,427 $ 12,762 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, 1998 and the results of their operations and their cash flows for the three and six months ended June 30, 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 six months ended June 30, 1998 and 1997 was approximately $290,000 and $349,000, respectively. No cash was paid for income taxes during the first six 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. 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 June 30, 1998, and December 31, 1997, consisted of the following: June 30, December 31, 1998 1997 (in thousands) Raw materials and supplies $ 1,648 $ 1,407 Work in process 254 282 Finished goods 576 772 $ 2,478 $ 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. On April 30, 1998, the Company announced the conclusion of the common stock buy-back program. The Company repurchased 3,094,100 shares of common stock under the buy-back program for an aggregate cost of $4,270,000. 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 7,990 shares were tendered under the offer which expired on April 3, 1998. Note 4 - INCOME TAXES As of June 30, 1998, approximately $80,000,000 of U.S. tax loss carryforwards (subject to review by the Internal Revenue Service), expiring from 1998 through 2018, 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, 1998, approximately $5,000,000 of the Company's U.S. tax loss carryforwards predated the corporate revaluation. As of June 30, 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 June 30, 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 Commonwealth of Pennsylvania. Through June 30, 1998, the Company has made principal payments aggregating $10,992,000. Further payments totaling $3,358,000 plus interest will be made to the United States and Commonwealth of Pennsylvania over the next four years. Note 6 - OTHER EXPENSE On April 15, 1998, the Company executed a letter of intent to purchase substantially all of the assets of a group of five businesses from Katy Industries, Inc. On August 5, 1998, the Company announced that the letter of intent terminated due to the inability of the parties to reach agreement on certain aspects of the transaction. A charge of $563,000 was recorded in the second quarter of 1998 for cost associated with the terminated transaction. These costs primarily consist of legal, environmental and financing related fees. An additional charge will be recorded in the third quarter of 1998 for costs incurred relating to this transaction subsequent to June 30, 1998. Total costs are expected to range from approximately $800,000 to $900,000. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 Operating Results - Second Quarter Publicker's consolidated sales and revenues of $6,505,000 for the second quarter of 1998 decreased by approximately 9% from $7,169,000 for the second quarter of 1997. The decline was due principally to reduced volume at the Company's manufacturing segment. Cost of sales and services decreased from $4,890,000 in 1997 to $4,503,000 in 1998 principally as a result of lower sales. General and administrative expenses for the second quarter of 1998 were $1,771,000 compared to $1,855,000 in 1997. The Company's loss from operations for the second quarter of 1998 totaled $118,000 compared to income of $128,000 for the second quarter of 1997. The Company reported a net loss of $837,000, or $.06 per share, for the second quarter of 1998 compared to a net loss of $26,000 for the second quarter of 1997. On April 15, 1998, the Company executed a letter of intent to purchase substantially all of the assets of a group of five businesses from Katy Industries, Inc. On August 5, 1998, the Company announced that the letter of intent terminated due to the inability of the parties to reach agreement on certain aspects of the transaction. A charge of $563,000 was recorded in the second quarter of 1998 for cost associated with the terminated transaction. These costs primarily consist of legal, environmental and financing related fees. An additional charge will be recorded in the third quarter of 1998 for costs incurred relating to this transaction subsequent to June 30, 1998. Total costs are expected to range from approximately $800,000 to $900,000. Sales for the Company's manufacturing segment (which consists of one subsidiary company, Greenwald Industries, Inc.) for the second quarter of 1998 were $4,120,000 compared to $4,957,000 for the second quarter of 1997. The decrease in sales was due primarily to reduced volume. This segment had income from operations of $557,000 for the second quarter of 1998 compared to $884,000 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 $314,000. The second quarter 1998 results included Greenwald Intellicard operating losses of approximately $100,000. Revenues for the Company's services segment (which consists of one subsidiary company, Orr-Schelen-Mayeron & Associates, Inc.) increased by approximately 8% to $2,385,000 for the second quarter of 1998 compared to $2,212,000 for the second quarter of 1997. An increase in production employee headcount and improved efficiencies accounted for the improvement in revenues versus 1997. The services segment had income from operations for the second quarter of 1998 of $107,000 compared to $98,000 for the same period in 1997. Operating Results - Six months Publicker's consolidated sales and revenues of $13,128,000 for the first six months of 1998 increased by approximately 1% from $12,997,000 for the first six months of 1997. The improvement in sales was due to a volume increase at the Company's services segment which was offset by a volume reduction at the Company's manufacturing segment. Cost of sales and services was $9,003,000 in 1998 compared to $9,024,000 in 1997. General and administrative expenses for the first six months of 1998 decreased by approximately 6% to $3,565,000 from $3,797,000 in 1997 as a result of overhead expense reductions. The Company's loss from operations for the first six months of 1998 totaled $121,000 compared to a loss of $420,000 for 1997. The Company reported a net loss of $915,000, or $.07 per share, for the first six months of 1998 compared to a net loss of $984,000, or $.07 per share, for 1997. Sales for the Company's manufacturing segment for the first six months of 1998 were $8,285,000 compared to $9,072,000 for 1997. The decrease in sales was due primarily to reduced volume. This segment had income from operations of $1,268,000 for the first six months of 1998 compared to $1,518,000 for the same period in 1997. The 1998 six month results included $140,000 of Greenwald Intellicard start-up losses. Revenues for the Company's services segment increased by approximately 23% to $4,843,000 for the first six months of 1998 compared to $3,925,000 for 1997. An increase in production employee headcount and improved efficiencies accounted for the improvement in revenues versus 1997. The services segment had income from operations for the first six months of 1998 of $185,000 compared to a $112,000 loss for the same period in 1997. Liquidity During the first six months of 1998, cash, including short-term investments, decreased by $1,650,000 to $11,427,000 at June 30, 1998. Operating activities consumed cash of $1,291,000, investing activities consumed cash of $574,000 and financing activities provided cash of $215,000. Operating activities consisted of the loss from operations coupled with the annual payment required under the environmental litigation settlement. Investing activities consisted of acquisition costs associated with the Greenwald Intellicard investment of $314,000 and capital expenditures of $275,000. Financing activities principally consisted of proceeds from the issuance of common shares upon the exercise of stock options of $600,000 offset by treasury stock purchases of $320,000. As discussed above, the letter of intent to acquire five businesses from Katy Industries,Inc. terminated on August 5, 1998. Costs associated with the transaction are expected to range from approximately $800,000 to $900,000. Through June 30, 1998 the Company paid a total of $255,000 of the expected costs. In April 1996, the Consent Decree that settled 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. Pursuant to the Consent Decree, the Company will pay a total of $14,350,000 plus interest to the United States and Commonwealth of Pennsylvania. Through June 30,1998, the Company has made principal payments aggregating $10,992,000. 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. During the first six months of 1998, the Company's capital expenditures totaled $275,000. 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 June 30, 1998, approximately $80 million of U.S. tax loss carryforwards (subject to review by the Internal Revenue Service), expiring from 1998 through 2018, 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 July 31, 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 letter of intent to acquire five businesses from Katy Industries, Inc., was terminated on August 5, 1998. While the Company continues to review and consider potential acquisition candidates, it has not yet identified any specific 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 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 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, 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 1,000 6-MOS DEC-31-1998 JUN-30-1998 11,427 0 3,867 44 2,478 18,090 6,434 2,473 26,330 6,393 1,073 1,695 0 0 8,543 26,330 13,128 13,128 9,003 4,246 625 0 169 (915) 0 (915) 0 0 0 (915) (.07) (.07)
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