-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KyzSkGLn57pZoXM0K1Pv0C+qJ0YYsTEjku3jk53VBU+jMa1ROUNxf0VQ7jNalzKu HeEZjjAVRMyHNh04HmMw/A== 0000950114-95-000094.txt : 19950516 0000950114-95-000094.hdr.sgml : 19950516 ACCESSION NUMBER: 0000950114-95-000094 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PGI INC CENTRAL INDEX KEY: 0000081157 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 590867335 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-06471 FILM NUMBER: 95539475 BUSINESS ADDRESS: STREET 1: 515 OLIVE STREET STREET 2: SUITE 1400 CITY: ST LOUIS STATE: MO ZIP: 63101 BUSINESS PHONE: 8136373881 MAIL ADDRESS: STREET 1: 515 OLIVE ST STREET 2: SUITE 1400 CITY: ST LOUIS STATE: MO ZIP: 63101 FORMER COMPANY: FORMER CONFORMED NAME: PUNTA GORDA ISLES INC DATE OF NAME CHANGE: 19900403 10QSB 1 PGI INCORPORATED FORM 10-QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (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, 1995 --------------------------------------- OR - ---- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - ---- EXCHANGE ACT OF 1934 For the transition period from to ------------------ ------------------ Commission File Number 1-6471 ----------------------------------------------- PGI INCORPORATED ---------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) FLORIDA 59-0867335 - --------------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 515 OLIVE STREET, SUITE 1400; ST. LOUIS, MISSOURI 63101 ---------------------------------------------------------------------- (Address of principal executive offices) (314) 982-0780 ---------------------------------------------------------------------- (Issuer's telephone number) ---------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if changed since last report) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 . ------ --- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of May 12, 1995 there were 3,317,555 shares of the Registrant's common stock outstanding. Transitional Small Business Disclosure Format (Check one): Yes No X ------ ----- -1- 2 PGI INCORPORATED AND SUBSIDIARIES FORM 10-QSB For the Quarter Ended March 31, 1995 Table of Contents ---------------------
Form 10-QSB Page No. ------------ PART I Financial Information Item 1 Financial Statements Consolidated Statements of Financial Position March 31, 1995 and December 31, 1994 3 Consolidated Statements of Operations Three Months Ended March 31, 1995 and 1994 4 Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 1995 and 1994 5 Notes to Consolidated Financial Statements for Form 10-QSB 6 - 11 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 12 - 15 PART II Other Information Item 1 Legal Proceedings 16 Item 2 Changes in Securities 16 Item 3 Defaults Upon Senior Securities 16 Item 4 Submission of Matters to a Vote of Security Holders 16 Item 5 Other Information 16 Item 6 Exhibits and Reports on Form 8-K 18 - 21 SIGNATURES 17
-2- 3 PGI INCORPORATED AND SUBSIDIARIES PART I Financial Information Item 1 Financial Statements CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ($ in thousands)
March 31, December 31, 1995 1994 ----------- ------------ (unaudited) ASSETS Cash, including restricted cash of $1,156,000 and $1,235,000 $ 1,201 $ 1,261 Receivables on real estate sales - net 1,247 1,227 Other receivables 20 19 Land and improvement inventories 9,111 9,154 Property and equipment - net 109 119 Other assets 783 788 ---------- ---------- $ 12,471 $ 12,568 ========== ========== LIABILITIES Accounts payable $ 70 $ 79 Other liabilities 1,650 1,512 Accrued interest: Primary lender 971 791 Debentures 4,751 4,388 Other 1,192 1,162 Credit agreements - Primary lender 7,002 7,002 Notes and mortgages payable 4,080 4,250 Convertible subordinated debentures payable 9,059 9,059 Convertible debentures payable 1,500 1,500 ---------- ---------- 30,275 29,743 ---------- ---------- Commitments and contingencies STOCKHOLDERS' EQUITY Preferred stock, par value $1.00 per share; authorized 5,000,000 shares; 2,000,000 Class A cumulative convertible shares issued and outstanding; (liquidation preference of $4.00 per share or $8,000,000) 2,000 2,000 Common stock, par value $.10 per share; authorized 25,000,000 shares; 3,317,555 shares issued and outstanding 332 332 Paid in capital 13,698 13,698 Accumulated deficit (33,834) (33,205) ---------- ---------- (17,804) (17,175) ---------- ---------- $ 12,471 $ 12,568 ========== ========== See accompanying notes to consolidated financial statements for Form 10-QSB.
-3- 4 PGI INCORPORATED AND SUBSIDIARIES PART I Financial Information (Continued) CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands) (Unaudited)
Three Months Ended --------------------- March 31, March 31, 1995 1994 --------- --------- REVENUES Real estate sales $ 15 $ 1,758 Interest income 52 82 Other income 248 124 -------- -------- 315 1,964 -------- -------- COSTS AND EXPENSES Cost of real estate sales 11 1,387 Selling expenses 17 76 General & administrative expenses 162 245 Interest 643 551 Other expenses 111 106 -------- -------- 944 2,365 -------- -------- NET INCOME (LOSS) $ (629) $ (401) ======== ======== NET INCOME (LOSS) PER SHARE Primary and fully diluted $ (.24) $ (.17) ======== ======== Considers the effect of cumulative preferred dividends in arrears for the three months ended March 31, 1995 and 1994. See accompanying notes to consolidated financial statements for form 10-QSB.
-4- 5 PGI INCORPORATED AND SUBSIDIARIES PART I Financial Information (Continued) CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands) (Unaudited)
Three Months Ended ------------------------- March 31, March 31, 1995 1994 ---------- ---------- Net cash provided by operating activities $ 110 $ 159 ---------- ---------- Cash flows from investing activities: Proceed from fixed asset sales - - Purchase of property and equipment - - ---------- ---------- Net cash used in investing activities - - ---------- ---------- Cash flows from financing activities: Principal payments on debt (170) (232) ---------- ---------- Net cash used in financial activities (170) (232) ---------- ---------- Net decrease in cash (60) (73) Cash at beginning of period 1,261 1,521 ---------- ---------- Cash at end of period $ 1,201 $ 1,448 ========== ========== See accompanying notes to consolidated financial statements for Form 10-QSB.
-5- 6 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (1) Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB and therefore do not include all disclosures necessary for fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The Company's independent accountants included an explanatory paragraph regarding the Company's ability to continue as a going concern in their opinion on the Company's consolidated financial statements for the year ended December 31, 1994. The Company continues, however, to remain in default under the indentures governing its convertible unsecured subordinated debentures (the "Indentures") (See Management's Discussion and Analysis of Financial Condition and Results of Operations). However, as more fully discussed in Note 10 to the Company's consolidated financial statements for the year ended December 31, 1994, as contained in the Company's Annual Report on Form 10-K, the Company's management is seeking purchasers for its remaining undeveloped land. The financial statements do not include any adjustments relating to the recoverability of recorded asset amounts or the amounts of liabilities that might be necessary should the Company be unsuccessful in its sales and refinancing efforts. In the opinion of management, subject to the effects on the Company's unaudited consolidated financial statements of such adjustments, if any, as might have been required had the outcome of the matters discussed in the preceding paragraph been known, all other adjustments (consisting of only normal recurring accruals) necessary for fair presentation of financial position, results of operations and cash flows have been made. The results for the three months ended March 31, 1995 are not necessarily indicative of operations to be expected for the fiscal year ending December 31, 1995 or any other interim period. (2) Recognition of Real Estate Sales The Company has adopted the installment method of profit recognition for all homesite sales effective January 1, 1990 and thereafter. For sales consummated prior to January 1, 1990, the Company recognized profit under the full accrual or percentage-of-completion methods as appropriate. The full accrual method recognizes the entire profit when minimum down payments and other requirements are met. Under the percentage-of-completion method, profit is recognized by the relationship of costs incurred to total estimated costs to be incurred. The installment method recognizes gross profit as down payments and principal payments on contracts are received. -6- 7 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) (3) Per Share Data Primary per share amounts are computed by dividing net income (loss), after considering cumulative dividends in arrears on the Company's preferred stock, by the average number of common shares and common stock equivalents outstanding. For this purpose, the Company's cumulative convertible preferred stock, convertible subordinated debentures and collateralized convertible debentures are not deemed to be common stock equivalents, but outstanding vested stock options are considered as such. However, under the treasury stock method, no vested stock options were assumed to be exercised, and therefore no common stock equivalents existed, for the calculation of primary per share amounts for the three months ended March 31, 1995 and 1994. The average number of common shares outstanding for the three months ended March 31, 1995 and 1994 was 3,317,555, respectively. Fully diluted per share amounts are computed by dividing net income (loss) by the average number of common shares outstanding, after adjusting both for the estimated effects of the assumed exercise of stock options and the assumed conversion of all cumulative convertible preferred stock, convertible subordinated debentures and collateralized convertible debentures into shares of common stock. For the three months ended March 31, 1995 and 1994, no stock options were assumed to be exercised and the effect of the assumed exercise of stock options and the assumed conversion of all cumulative convertible preferred stock, convertible subordinated debentures and collateralized convertible debentures would have been anti-dilutive. (4) Statement of Cash Flows The Financial Accounting Standards Board issued Statement No. 95, "Statement of Cash Flows", which requires a statement of cash flows as part of a full set of financial statements. For quarterly reporting purposes, the Company has elected to condense the reporting of its net cash flows. Interest paid, net of amounts capitalized, for the three months ended March 31, 1995 and 1994 was $ 70,000 and $114,000, respectively. For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. (5) Restricted Cash Restricted cash included cash and certificates of deposit pledged to agencies in various states and local Florida governmental units related to land development and environmental matters, escrowed receipts related to pledged receivables on real estate sales and the servicing of sold receivables and, as a result of sales agreements and Company policies, customer payments and deposits related to homesite and housing contracts. -7- 8 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) (6) Receivables on Real Estate Sales Net receivables on real estate sales consisted of:
March 31, December 31, 1995 1994 ---------- ------------ ($ in thousands) Contracts receivable on homesite sales $ 2,026 $ 2,187 Other 291 123 ---------- ---------- 2,317 2,310 Less: Allowance for cancellations (976) (976) Unamortized valuation discount (94) (107) ---------- ---------- $ 1,247 $ 1,227 ========== ==========
(7) Land and Improvements Land and improvement inventories consisted of:
March 31, December 31, 1995 1994 ---------- ------------ ($ in thousands) Unimproved land $ 8,730 $ 8,730 Land being improved - - Fully improved land 381 424 Completed and in progress homes held for sale - - ---------- ---------- $ 9,111 $ 9,154 ========== ==========
(8) Property and Equipment Property and equipment consisted of:
March 31, December 31, 1995 1994 ---------- ------------ ($ in thousands) Furniture, fixtures and other equipment $ 407 $ 407 Construction in progress 2 2 ---------- ---------- 409 409 Less: Accumulated depreciation (300) (290) ---------- ---------- $ 109 $ 119 ========== ==========
(9) Other Assets Other assets consisted of:
March 31, December 31, 1995 1994 ---------- ------------ ($ in thousands) Guaranteed future connections related to sale of utility plants and equipment, net $ 621 $ 621 Prepaid loan and debenture costs 34 42 Deposit with Trustee of 6-1/2% debentures 116 114 Other 12 11 ---------- ---------- $ 783 $ 788 ========== ==========
-8- 9 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) (10) Other Liabilities Other Liabilities consisted of:
March 31, December 31, 1995 1994 ---------- ------------ ($ in thousands) Accrued property taxes - current $ 276 $ 238 - delinquent 286 303 Other accrued expenses 222 234 Deposits, advances and escrows 393 419 Estimated recourse liability for receivables sold 300 300 Other 173 18 ---------- ----------- $ 1,650 $ 1,512 ========== ===========
(11) Primary Lender Credit Agreements, Notes and Mortgages Payable and Convertible Subordinated Debentures Payable Credit agreements with the Company's primary lender and notes and mortgages payable consisted of the following:
March 31, December 31, 1995 1994 ---------- ------------ ($ in thousands) Credit agreements - primary lender: (maturing July 8, 1997, bearing interest at prime plus 1.5%): Revolving land loan line of credit $ 4,297 $ 4,297 Receivable loan payable 2,705 2,705 ---------- ----------- 7,002 7,002 ---------- ----------- Notes and mortgages payable - $2,117,000 bearing interest at 12-1/4%, $1,176,000 bearing interest at prime plus 2%, the remainder bearing interest at varying rates to 23%; maturing through 2000 4,080 4,250 ---------- ----------- Convertible subordinated debentures payable: At 6-1/2% interest; due June 1991; convertible into shares of common stock at $18.00 per share $ 1,034 $ 1,034 At 6% interest; due May 1, 1992; convertible into shares of common stock at $19.50 per share 8,025 8,025 ---------- ----------- $ 9,059 $ 9.059 ---------- ----------- Collateralized convertible debentures payable: At 14% interest; due July 8, 1997, convertible into share of common stock at $1.72 per share 1,500 1,500 ---------- ----------- $ 21,641 $ 21,811 ========== ===========
-9- 10 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) (12) Real Estate Sales and Other Income Real estate sales and cost of sales for the three months ended March 31, 1995 and 1994 consisted of:
Three Months Ended ------------------- March 31, March 31, 1995 1994 --------- --------- ($ in thousands) Revenues: Homesite sales $ 15 $ 64 Home sales --- 1,349 Acreage sales --- --- --------- --------- $ 15 $ 1,758 ========= ========= Cost of Sales: Homesite sales $ 11 $ 19 Home sales --- 1,291 Acreage sales --- 77 --------- --------- $ 11 $ 1,387 ========= =========
Other income for the three months ended March 31, 1995 and 1994 consisted of:
Three Months Ended ------------------- March 31, March 31, 1995 1994 --------- --------- ($ in thousands) Commission income $ 78 $ 96 Installment sale income 37 --- Other income 133 28 --------- --------- $ 248 $ 124 ========= =========
(13) Commitments and Contingencies The aggregate outstanding balances of all receivables sold and exchanged with recourse totaled $544,000 and $618,000 at March 31, 1995 and December 31, 1994, respectively. Based on its collection experience with such receivables, the Company maintained allowances at both March 31, 1995 and December 31, 1994, classified in other liabilities, of $300,000 for the recourse provisions related to all receivables sold. (14) Income Taxes Effective January 1, 1993 the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which requires a change from the deferred method to the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Under SFAS No. 109, the effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Under the deferred method, deferred taxes were recognized using the tax rate applicable to the year of the calculation and were not adjusted for subsequent changes in tax rates. Based on the Company's current tax status and current tax laws, adoption of SFAS No. 109 did not have a material effect on the Company's -10- 11 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) financial position. At December 31, 1994, the Company had an operating loss carryforward of approximately $28,000,000 to reduce future taxable income. These operating losses expire at various dates through 2,009. The following summarizes the temporary differences of the Company at December 31, 1994 at the current statutory rate: Deferred tax asset: Net operating loss carryforward $10,352,000 Adjustments to reduce land to net realizable value 311,000 Expenses capitalized under IRC 263(a) 57,000 ITC carryforward 731,000 Other 7,000 Valuation allowance (8,972,000) ----------- 2,486,000 ----------- Deferred tax liability Basis difference of land and improvement inventories 2,452,000 Excess tax over book depreciation 34,000 ----------- 2,486,000 Net deferred tax asset $ 0 ===========
-11- 12 PGI INCORPORATED AND SUBSIDIARIES Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Preliminary Note The description of the Company's business in the Quarterly Report on Form 10-QSB focuses on its traditional core business of selling individual homes and homesites and the construction of residences. Readers should understand as they read the report, however, that the Company is not presently pursuing its core business until its debt obligations have been substantially eliminated. The reason the Company is no longer pursuing its core business is set forth with more particularity below. As of May 1, 1995 the Company is in default of its primary credit agreements with First Union. The Company was unsuccessful in consummating a large land sale to meet the May 1st obligations and does not have funds available to make any payments of either principal or interest. The Company has had discussions with First Union with the objective of securing an extension of its obligation and a cure of the default with no success as of this date. During the fiscal year ended December 31, 1994, the Company's business focus and emphasis changed substantially as it concentrated its sales and marketing efforts almost exclusively on the disposition in bulk of its undeveloped, platted, residential real estate. This change was prompted by it's continuing financial difficulties due to the principal and interest owed on its debt and managements' conclusion that a bulk sale was the best way to reduce the Company's debt service obligations. If the Company is successful in its sale of this undeveloped land, its remaining inventory will consist of undeveloped commercial property. There can be no assurance that the Company will be successful in its efforts to effect a bulk sale. Assuming a bulk sale occurs, the Company intends to decide at that point whether it will pursue the development and sale of the commercial property in accordance with its traditional core business plans or whether it will attempt to sell such property in bulk. That decision will depend, in part, on whether the Company believes it can generate more revenue by developing and selling individual commercial properties or by selling in bulk. Results of Operations Revenues for the first three months of 1995 decreased by $1.6 million to $315,000 from $1.7 million for the comparable 1994 period. A net loss of $629,000 was incurred for the first three months of 1995 compared to a net loss of $401,000 for the first three months of 1994. After consideration of cumulative preferred dividends in arrears, totaling $160,000 for each of the three months ended March 31, 1995 and 1994 ($.05 per share of common stock), net losses per share of $.24 and $.17, respectively, were reported for the three month periods ended March 31, 1995 and 1994. With the completion of the Second Secured Lender Transaction more specifically described below, the Company has sold all of its developed Sugarmill Woods inventory. It retains 4,800 acres of undeveloped property planned and platted into 8,000 single family homesites and a 600 acre undeveloped commercially zoned tract (all acreage numbers are approximate). Additionally, the Company has a small scattering of unsold lots remaining in its Charlotte County developments which it is selling in the normal course of business through the local broker network. Company management has determined that the Company's primary activity must concentrate on one goal - the sale of sufficient additional acreage as soon as possible to again substantially reduce the primary lender debt as well as pay the 1993 and 1994 property taxes which will be owed on the Sugarmill Woods acreage. -12- 13 PGI INCORPORATED AND SUBSIDIARIES Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) In 1994 the Company successfully completed the Second Secured Lender Transaction. The transaction was comprised of a series of agreements executed in April 1994 wherein the Company sold the remainder of its Southern Woods developed homesites inventory (approximately 72 homesites), the remainder of the undeveloped acreage of Southern Woods (approximately 200 acres) and 162 prepaid water and sewer connections in exchange for a $2.4 million reduction in the principal due to its primary lender, a net $310,000 reduction in accrued interest due to the primary lender, the satisfaction of $362,000 in other liabilities and additional closing costs of $71,000. Included in the 1994 earnings is a $1.5 million gain related to the sale of the Southern Woods development. The 1994 Secured lender Transaction has been treated as a non-cash transaction in the Company's Statement of Cash Flows. The resulting principal and interest due to its primary lender retains a maturity date of July 8, 1997. Effective with the closing, the Company's interest rate was reduced from the default rate of prime plus 5% to prime plus 1.5%. The primary lender has granted the Company a moratorium until May 1995 on any principal and interest payments other than release payments associated with the sale of properties. On May 1, 1995, the Company failed to pay all accrued interest due as of that date, as well as, pay the 1993 and 1994 property taxes owed on any properties serving as collateral for the primary debt. Sales revenue by major components for real estate operations, excluding the effect of the Company's adoption of the installment method of reporting homesite sales for the three month periods ended March 31, 1995 and 1994, were: Real estate sales and cost of sales for the three months ended March 31, 1995 and 1994 consisted of:
Three Months Ended ------------------- March 31, March 31, 1995 1994 --------- --------- ($ in thousands) Revenues: Homesite sales $ 15 $ 64 Home sales --- 1,349 Acreage sales --- --- --------- --------- $ 15 $ 1,758 ========= ========= Cost of Sales: Homesite sales $ 11 $ 19 Home sales --- 1,291 Acreage sales --- 77 --------- --------- $ 11 $ 1,387 ========= =========
Other income for the three months ended March 31, 1995 and 1994 consisted of:
Three Months Ended ------------------- March 31, March 31, 1995 1994 --------- --------- ($ in thousands) Commission income $ 78 $ 96 Installment sale income 37 --- Other income 133 28 --------- --------- $ 248 $ 124 ========= =========
-13- 14 PGI INCORPORATED AND SUBSIDIARIES Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Gross homesite sales revenues decreased by $49,000 from $64,000 for the first three months of 1994 to $15,000 for the same period in 1995. With the completion of the Second Secured Lender Transaction the Company has sold all of its developed Sugarmill Woods inventory. The homesite sales sold in the first quarter of 1995 represent various lot sales from the Charlotte County inventory. Gross margin on homesite sales increased from 21.1% for the first three months of 1994 to 26.6% profit for the first three months of 1995. With the assignment of the remaining building contracts to another Sugarmill Woods builder during 1994, the Company's activity related to home construction has been suspended during the first quarter of 1995 and subsequent reporting periods. As a result there were no home sales during the first quarter of 1995. Effective January 1, 1990 the Company implemented the installment method of homesite sales reporting in accordance with Statement of Financial Accounting Standard No. 66 "Accounting for Sales of Real Estate" (see Item I - Note 2 - Recognition of Real Estate Sales). This method will be utilized for all installment sales regardless of the down payment percentage. As a result of the Secured Lender Transaction non-recourse sale of receivables, all previously deferred profits were recognized during 1992. Cash provided by operating activities for the three months ended March 31, 1995 was $110,000 compared to $159,000 for the comparable 1994 period. During the first three months of 1995, financing activities utilized $170,000 in cash flow for normal debt repayment as compared to $232,000 for the same period in 1994. Analysis of Financial Condition Assets totaled $12.5 million at March 31, 1995 compared to $12.6 million at December 31, 1994, reflecting the following changes:
March 31, December 31, Increase 1995 1994 (Decrease) ---------- ------------ ---------- ($ in thousands) Cash $ 1,201 $ 1,261 $ (60) Receivables 1,267 1,246 21 Land and improvement inventories 9,111 9,154 (43) Net property and equipment 109 119 (10) Other assets 783 788 (5) ---------- ---------- ---------- $ 12,471 $ 12,568 $ (97) ========== ========== ==========
-14- 15 PGI INCORPORATED AND SUBSIDIARIES Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Liabilities were $30.3 million at March 31, 1995 compared to 29.7 million at December 31, 1994, reflecting the following changes among categories.
March 31, December 31, Increase 1995 1994 (Decrease) ---------- ------------ ---------- ($ in thousands) Accounts payable $ 70 $ 79 $ (9) Other liabilities 1,650 1,512 138 Accrued interest 6,914 6,341 573 Credit agreements - primary lender 7,002 7,002 - Notes and mortgages payable 4,080 4,250 (170) Convertible subordinated debentures payable 9,059 9,059 - Convertible debentures payable 1,500 1,500 - ---------- ---------- ---------- $ 30,275 $ 29,743 $ 532 ========== ========== ==========
The company has aggressively taken steps to curtail and simplify operations as well as concentrate on major bulk sales of its undeveloped acreage. The Company remains totally dependent upon the sale of property to fund its operations and debt service requirements. As was stated earlier, the Company is in default of its primary credit agreements with First Union. The Company was unsuccessful in consummating a large land transaction to meet the May 1st obligation. Although the Company has had financing arrangements with its primary lender since 1985 and has been successful in renegotiating its credit agreements, the primary lender, BancFlorida, was acquired by another banking institution, First Union, on August 1, 1994. The Company is hopeful that the new institution and new personnel will be willing to work with the Company if necessary, but has no assurance that a mutually satisfactory working relationship can be established. The Company remains in default of the entire principal plus interest on its convertible subordinated debentures. The amounts due are as indicated in the following table:
March 31, 1995 ----------------------- Principal Unpaid Amount Due Interest ---------- ---------- ($ in thousands) Convertible subordinated debentures due June 1, 1991 $ 1,034 $ 343 Convertible subordinated debentures due May 1, 1992 8,025 2,684 ---------- --------- $ 9,059 $ 3,027 ========== =========
The Company does not have funds available to make any payments of either principal or interest on the above debentures. If a debenture holder or Trustee institutes action to collect on the debentures, such action could prohibit the Company from continuing to operate, (see Notes 10 and 11 to the consolidated financial statements under Item 8 as contained in the Company's 1994 Form 10-K) which would cause an acceleration of the primary lender debt and could results in a bankruptcy filing. The Company has investigated the consequences of a bankruptcy filing and believes that such an event is not in the best interest of either the debenture or equity holders because a bankruptcy filing would negatively impact the Company's business, as well as cause an acceleration of the primary lender ("First Union") debt, certain other notes and mortgages, and secured debenture debt. -15- 16 PGI INCORPORATED AND SUBSIDIARIES PART II Other Information Item 1 Legal Proceedings Not applicable. Item 2 Changes in Securities Not applicable. Item 3 Defaults Upon Senior Securities See discussion in Item 2 with respect to defaults on the Company's convertible subordinated debentures and collateralized convertible debentures, which discussion is incorporated herein by this reference. Item 4 Submission of Matters to a Vote of Security Holders Not applicable. Item 5 Other Information Not applicable. Item 6 Exhibits and Reports on Form 8-K (a) Exhibits - reference is made to the Exhibit Index contained on page 18 herein for a list of exhibits filed under this Item. (c) No report on Form 8-K was filed during the quarter ended March 31, 1995. -16- 17 PGI INCORPORATED AND SUBSIDIARIES SIGNATURES In accordance with the requirement of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PGI INCORPORATED ------------------------------------ (Registrant) Date: May 12, 1995 /s/Laurence A. Schiffer --------------------------------- ------------------------------ Laurence A. Schiffer President -17- 18 PGI INCORPORATED AND SUBSIDIARIES EXHIBIT INDEX - --------------
Sequential Page Number 2. Inapplicable. 3. Inapplicable. 4. Inapplicable. 10. Inapplicable. 11. Statements re: Computations of Per Share Earnings, filed herewith................................................. 19-20 15. Inapplicable. 18. Inapplicable. 19. Inapplicable. 22. Inapplicable. 23. Inapplicable. 24. Inapplicable. 27. Financial Data Schedule.................................. 21 -18-
EX-11 2 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 1 PGI INCORPORATED AND SUBSIDIARIES EXHIBIT 11 Page 1 of 2 FACTS FOR THE COMPUTATIONS OF NET INCOME/(LOSS) PER SHARE
Three Months Ended -------------------------- March 31, March 31, 1995 1994 ---------- ---------- 1) Net income/(loss) for period $ (629,000) $ (401,000) ========== ========== 2) Average common shares outstanding 3,317,555 3,317,555 ========== ========== 3) Shares outstanding at beginning of period 3,317,555 3,317,555 4) Shares issued on stock options exercised and preferred stock and debentures converted during period, weighted - - 5) Treasury stock transactions, net, weighted - - ---------- ---------- 6) Average shares outstanding before assumed exercise of stock options and conversions of preferred stock and debentures 3,317,555 3,317,555 ========== ========== 7) Average shares outstanding from assumed exercise of stock options: Primary - - ========== ========== Fully diluted - - ========== ========== 8) Average shares outstanding from assumed conversion of preferred stock 3,760,000 3,760,000 ========== ========== 9) Average shares outstanding from assumed conversion of debentures 1,341,076 1,341,076 ========== ========== 10) Cumulative preferred dividends in arrears for period $ 160,000 $ 160,000 ========== ========== 11) Interest and amortized charge against income for debentures during period $ 190,000 $ 190,000 ========== ========== ADJUSTMENT OF NET INCOME/(LOSS): Primary Net income/(loss) for period (Line 1) $ (629,000) $ (401,000) Less cumulative preferred dividends in arrears (Line 10) 160,000 160,000 ---------- ---------- 12) Adjusted net income/(loss) for primary net income/(loss) per share (789,000) (561,000) Fully Diluted Add cumulative preferred dividends in arrears on preferred stock assumed converted (Line 10) 160,000 160,000 Add interest and amortization charged against income for debentures (Line 11) 190,000 190,000 Less tax effect on Line 11 - - ---------- ---------- 13) Adjusted net income/(loss) for fully diluted net income/(loss) per share $ (439,000) $ (211,000) ========== ========== -19- 2 PGI INCORPORATED AND SUBSIDIARIES EXHIBIT 11 Page 2 of 2 FACTS FOR THE COMPUTATIONS OF NET INCOME/(LOSS) PER SHARE (Continued) Three Months Ended -------------------------- March 31, March 31, 1995 1994 ---------- ---------- ADJUSTMENT OF AVERAGE SHARES OUTSTANDING: Primary Average shares outstanding (Line 6) 3,317,555 3,317,555 Add average shares outstanding from assumed exercise of stock options (Line 7) - - ---------- ---------- 14) Shares assumed outstanding for primary net income/(loss) per share 3,317,555 3,317,555 ========== ========== Fully Diluted Average shares outstanding (Line 6) 3,317,555 3,317,555 Add average shares outstanding from assumed exercise of stock options (Line 7) - - Add average shares outstanding from assumed conversion of preferred stock (Line 8) 3,760,000 3,760,000 Add average shares outstanding from assumed conversion of debentures (Line 9) 1,341,076 1,341,076 ---------- ---------- 15) Shares assumed outstanding for fully diluted net income/(loss) per share 8,418,631 8,418,631 ========== ========== NET INCOME/(LOSS) PER SHARE: Before Adjustment (Line 1/Line 2) $ (.19) $ (.12) ========== ========== Primary (Line 12/Line 14) $ (.24) $ (.17) ========== ========== Fully Diluted (Line 13/Line 15) $ (.24) $ (.17) ========== ========== - ---------------------------------- No tax calculation has been made because of full utilization of all available tax benefits for financial accounting purposes. Fully diluted net loss per share is the same as primary net income/(loss) per share due to anti-dilutive effect of assumed exercise of stock options and conversions of preferred stock and debentures to common stock.
-20- EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS MAR-31-1995 JAN-01-1995 MAR-31-1995 1,201,000 0 2,243,000 (976,000) 9,111,000 0 409,000 (300,000) 12,471,000 0 21,641,000 332,000 0 2,000,000 (20,136,000) 12,471,000 15,000 315,000 11,000 28,000 273,000 0 643,000 (629,000) 0 0 0 0 0 (629,000) (.24) (.24) CURRENT ASSETS AND CURRENT LIABILITIES VALUES ARE ZERO BECAUSE OF AN UNCLASSIFIED BALANCE SHEET
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