-----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, TmMATa2j+jXaxJ5Is7h1wAjpJU0HYTpuqbff9Cpi3XA4JJrQ+YTbixEKFzhzrknX a3zm4d+LydZsWbgIEvaO5A== 0000950114-96-000203.txt : 19960816 0000950114-96-000203.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950114-96-000203 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96613894 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-Q 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 June 30, 1996 ----------------------------------- 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) 212 SOUTH CENTRAL, SUITE 100; ST. LOUIS, MISSOURI 63105 ------------------------------------------------------------------ (Address of principal executive offices) (314) 512-8650 ------------------------------------------------------------------ (Issuer's telephone number) 515 OLIVE STREET, SUITE 1400; ST. LOUIS, MISSOURI 63101 ------------------------------------------------------------------ (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 August 12, 1996 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 June 30, 1996 Table of Contents ---------------------
Form 10-QSB Page No. ----------- PART I Financial Information Item 1 Financial Statements Consolidated Statements of Financial Position June 30, 1996 and December 31, 1995 3 Consolidated Statements of Operations Three and Six Months Ended June 30, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 1996 and 1995 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 - 20 SIGNATURES 17
-2- 3 PGI INCORPORATED AND SUBSIDIARIES PART I Financial Information Item 1 Financial Statements CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ($ in thousands)
June 30, December 31, 1996 1995 ---------- ------------ (unaudited) ASSETS Cash, including restricted cash of $1,111,000 and $1,102,000 $ 1,115 $ 1,165 Receivables on real estate sales - net 357 682 Other receivables 15 11 Land and improvement inventories 9,022 9,031 Property and equipment - net 62 81 Other assets 758 766 ---------- ---------- $ 11,329 $ 11,736 ========== ========== LIABILITIES Accounts payable $ 78 $ 91 Other liabilities 1,441 1,143 Accrued interest: Primary lender 1,968 1,541 Debentures 6,241 5,628 Other 1,370 1,302 Credit agreements - Primary lender 7,283 7,287 Notes and mortgages payable 3,668 3,802 Convertible subordinated debentures payable 9,059 9,059 Convertible debentures payable 1,500 1,500 ---------- ---------- 32,608 31,353 ---------- ---------- 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 (37,309) (35,647) ---------- ---------- (21,279) (19,617) ---------- ---------- $ 11,329 $ 11,736 ========== ========== 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 Six Months Ended -------------------- -------------------- June 30, June 30, June 30, June 30, 1996 1995 1996 1995 -------- -------- -------- -------- REVENUES Real estate sales $ - $ - $ - $ 15 Interest income 24 47 54 99 Other income 77 204 169 452 -------- -------- -------- -------- 101 251 223 566 -------- -------- -------- -------- COSTS AND EXPENSES Cost of real estate sales - - - 11 Selling expenses 3 8 9 25 General & administrative expenses 388 166 492 328 Interest 638 578 1,211 1,221 Other expenses 74 99 173 210 -------- -------- -------- -------- 1,103 851 1,885 1,795 -------- -------- -------- -------- NET INCOME (LOSS) $ (1,002) $ (600) $ (1,662) $ (1,229) ======== ======== ======== ======== NET INCOME (LOSS) PER SHARE Primary and fully diluted $ (.35) $ (.23) $ (.60) $ (.47) ======== ======== ======== ======== Considers the effect of cumulative preferred dividends in arrears for the three and six months ended June 30, 1996 and 1995. 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)
Six Months Ended ---------------------- June 30, June 30, 1996 1995 -------- -------- Net cash provided by operating activities $ 88 $ 234 -------- -------- 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: Proceeds from borrowings 115 - Principal payments on debt (253) (295) -------- -------- Net cash used in financial activities (138) (295) -------- -------- Net decrease in cash (50) (61) Cash at beginning of period 1,165 1,261 -------- -------- Cash at end of period $ 1,115 $ 1,200 ======== ======== 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, 1995. 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, 1995, as contained in the Company's Annual Report on Form 10-KSB, 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 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 six months ended June 30, 1996 are not necessarily indicative of operations to be expected for the fiscal year ending December 31, 1996 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 additional accumulation of 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 six months ended June 30, 1996 and 1995. The average number of common shares outstanding for the six months ended June 30, 1996 and 1995 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 six months ended June 30, 1996 and 1995, 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 for the six months ended June 30, 1996 and 1995 was $103,000 and $134,000, respectively. For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. (5) Restricted Cash Restricted cash included cash and certificates of deposit pledged to agencies in various states and local Florida governmental units related to land development and environmental matters, escrowed receipts related to pledged receivables on real estate sales and the servicing of sold receivables and, as a result of sales agreements and Company policies, customer payments and deposits related to homesite and housing contracts. -7- 8 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) (6) Receivables on Real Estate Sales Net receivables on real estate sales consisted of:
June 30, December 31, 1996 1995 -------- ------------ ($ in thousands) Contracts receivable on homesite sales $ 1,292 $ 1,599 Other 98 128 -------- -------- 1,390 1,727 Less: Allowance for cancellations (976) (976) Unamortized valuation discount (57) (69) -------- -------- $ 357 $ 682 ======== ========
(7) Land and Improvements Land and improvement inventories consisted of:
June 30, December 31, 1996 1995 -------- ------------ ($ in thousands) Unimproved land $ 8,724 $ 8,724 Fully improved land 298 307 -------- -------- $ 9,022 $ 9,031 ======== ========
(8) Property and Equipment Property and equipment consisted of:
June 30, December 31, 1996 1995 -------- ------------ ($ in thousands) Furniture, fixtures and other equipment $ 396 $ 405 Less: Accumulated depreciation (334) (324) -------- -------- $ 62 $ 81 ======== ========
(9) Other Assets Other assets consisted of:
June 30, December 31, 1996 1995 -------- ------------ ($ in thousands) Guaranteed future connections related to sale of utility plants and equipment, net $ 621 $ 621 Prepaid loan and debenture costs 8 13 Deposit with Trustee of 6-1/2% debentures 122 120 Other 7 12 -------- -------- $ 758 $ 766 ======== ========
-8- 9 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) (10) Other Liabilities Other Liabilities consisted of:
June 30, December 31, 1996 1995 -------- ------------ ($ in thousands) Accrued property taxes - current $ 103 $ 37 - delinquent 476 249 Other accrued expenses 254 243 Deposits, advances and escrows 340 346 Estimated recourse liability for receivables sold 252 252 Other 16 16 -------- -------- $ 1,441 $ 1,143 ======== ========
(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:
June 30, December 31, 1996 1995 -------- ------------ ($ in thousands) Credit agreements - primary lender: maturing July 8, 1997, bearing interest at prime plus 5%: $ 7,283 $ 7,287 Notes and mortgages payable - $1,535,000 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 3,668 3,802 -------- -------- 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 -------- -------- $ 21,510 $ 21,648 ======== ========
-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 and six months ended June 30, 1996 and 1995 consisted of:
Three Months Ended Six Months Ended ----------------------- ----------------------- June 30, June 30, June 30, June 30, 1996 1995 1996 1995 -------- -------- -------- -------- ($ in thousands) ($ in thousands) Revenues: Homesite sales $ - $ - $ - $ 15 Home sales - - - - Acreage sales - - - - --------- --------- --------- --------- $ - $ - $ - $ 15 ========= ========= ========= ========= Cost of Sales: Homesite sales $ - $ - $ - $ 11 Home sales - - - - Acreage sales - - - - --------- --------- --------- --------- $ - $ - $ - $ 11 ========= ========= ========= =========
Other income for the three and six months ended June 30, 1996 and 1995 consisted of:
Three Months Ended Six Months Ended ----------------------- ----------------------- June 30, June 30, June 30, June 30, 1996 1995 1996 1995 -------- -------- -------- -------- ($ in thousands) ($ in thousands) Commission income $ 60 $ 80 $ 138 $ 158 Installment sale income - 61 - 98 Other income 17 63 31 196 --------- --------- --------- --------- $ 77 $ 204 $ 169 $ 452 ========= ========= ========= =========
(13) Commitments and Contingencies The aggregate outstanding balances of all receivables sold and exchanged with recourse totaled $305,000 and $384,000 at June 30, 1996 and December 31, 1995, respectively. Based on its collection experience with such receivables, the Company maintained allowances at both June 30, 1996 and December 31, 1995, classified in other liabilities, of $252,000 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 -10- 11 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) 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 financial position. At December 31, 1995, 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, 1995 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 and will not be in a position to do so until its debt obligations have been substantially reduced. The reason the Company is no longer pursuing its core business is set forth with more particularity below. During the fiscal year ended December 31, 1995, 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 parcels or by selling in bulk. Results of Operations Revenues for the first six months of 1996 decreased by $343,000 to $223,000 from $566,000 for the comparable 1995 period. A net loss of $1,662,000 was incurred for the first six months of 1996 compared to a net loss of $1,229,000 for the first six months of 1995. After consideration of accumulation of preferred dividends in arrears, totaling $320,000 for each of the six months ended June 30, 1996 and 1995 ($.10 per share of common stock), net losses per share of $.60 and $.47, respectively, were reported for the six month periods ended June 30, 1996 and 1995. On March 28, 1996, the Company's primary lender, First Union National Bank of Florida, a national banking association ("First Union") assigned to PGIP L.L.C., a Missouri limited liability company ("PGIP") all of First Union's right, title and interest in and to the documents (the "Loan Documents") evidencing and securing its primary credit agreements with the Company and the Company's subsidiaries, Sugarmill Woods, Inc., Burnt Store Marina, Inc. and Gulf Coast Credit Corporation (collectively, the "Borrowers"), which credit agreements are in default and the maturity of the indebtedness secured thereby has been accelerated. The Company has been advised by PGIP that it will be the policy of PGIP not to proceed with collection of the principal and interest evidenced and secured by the Loan Documents so long as PGI pursues satisfactory efforts to market and sell the Property. PGIP's policy, but not its contractual obligation, will be to facilitate sales of the Property by agreeing to the release of Property to be sold from the lien of the Loan Documents against payments of the net sale proceeds therefrom, after all expenses, closing costs and the like incurred by PGI in connection with any such sale, in a manner to be agreed upon by PGIP and PGI. -12- 13 PGI INCORPORATED AND SUBSIDIARIES Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) PGIP is managed by Love Savings Holding Company ("LSHC"), Andrew S. Love, Jr. and Laurence A. Schiffer. Messrs. Love and Schiffer are directors and executive officers of LSHC and own slightly more than half of all the issued and outstanding voting stock of LSHC. Messrs. Love and Schiffer serve as executive officers and directors of the Company and the other Borrowers and the Guarantors. 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. 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 $1.5 million gain related to the sale of the Southern Woods development. The 1994 Secured lender Transaction has been treated as a non-cash transaction in the Company's Statement of Cash Flows. Sales revenue by major components for real estate operations, excluding the effect of the Company's adoption of the installment method of reporting homesite sales for the three and six month periods ended June 30, 1996 and 1995, were: Real estate sales and cost of sales for the three and six months ended June 30, 1996 and 1995 consisted of:
Three Months Ended Six Months Ended ----------------------- ----------------------- June 30, June 30, June 30, June 30, 1996 1995 1996 1995 -------- -------- -------- -------- ($ in thousands) ($ in thousands) Revenues: Homesite sales $ - $ - $ - $ 15 Home sales - - - - Acreage sales - - - - --------- --------- --------- --------- $ - $ - $ - $ 15 ========= ========= ========= ========= Cost of Sales: Homesite sales $ - $ - $ - $ 11 Home sales - - - - Acreage sales - - - - --------- --------- --------- --------- $ - $ - $ - $ 11 ========= ========= ========= =========
Other income for the three and six months ended June 30, 1996 and 1995 consisted of:
Three Months Ended Six Months Ended ----------------------- ----------------------- June 30, June 30, June 30, June 30, 1996 1995 1996 1995 -------- -------- -------- -------- ($ in thousands) ($ in thousands) Commission income $ 60 $ 80 $ 138 $ 158 Installment sale income - 61 - 98 Other income 17 63 31 196 --------- --------- --------- --------- $ 77 $ 204 $ 169 $ 452 ========= ========= ========= =========
-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 to zero for the first six months of 1996 from $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. 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. 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 six months ended June 30, 1996 was $88,000 compared to $234,000 for the comparable 1995 period. During the first six months of 1996, financing activities utilized $138,000 in cash flow with $253,000 for normal debt repayment as compared to $295,000 for the same period in 1995. Analysis of Financial Condition Assets totaled $11.3 million at June 30, 1996 compared to $11.7 million at December 31, 1995, reflecting the following changes:
June 30, December 31, Increase 1996 1995 (Decrease) -------- ------------ ---------- ($ in thousands) Cash $ 1,115 $ 1,165 $ (50) Receivables 372 693 (321) Land and improvement inventories 9,022 9,031 (9) Net property and equipment 62 81 (19) Other assets 758 766 (8) --------- ---------- -------- $ 11,329 $ 11,736 $ (407) ========= ========== ========
-14- 15 PGI INCORPORATED AND SUBSIDIARIES Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Liabilities were $32.6 million at June 30, 1996 compared to $31.4 million at December 31, 1995, reflecting the following changes among categories.
June 30, December 31, Increase 1996 1995 (Decrease) -------- ------------ ---------- ($ in thousands) Accounts payable $ 78 $ 91 $ (13) Other liabilities 1,441 1,143 298 Accrued interest 9,579 8,471 1,108 Credit agreements - primary lender 7,283 7,287 (4) Notes and mortgages payable 3,668 3,802 (134) Convertible subordinated debentures payable 9,059 9,059 - Convertible debentures payable 1,500 1,500 - --------- ---------- -------- $ 32,608 $ 31,353 $ 1,255 ========= ========== ========
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. 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:
June 30, 1996 ------------------------- Principal Unpaid Amount Due Interest ---------- --------- ($ in thousands) Convertible subordinated debentures due June 1, 1991 $ 1,034 $ 432 Convertible subordinated debentures due May 1, 1992 8,025 3,478 ---------- --------- $ 9,059 $ 3,910 ========== =========
The Company does not have funds available to make any payments of either principal or interest on the above debentures. The Company has investigated the consequences of a bankruptcy filing and believes that such a course is not in the best interest of either the debenture or equity holders because a bankruptcy filing would negatively impact the Company's business and its ability to maximize its results from bulk sales of land. -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 June 30, 1996. -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: August 13, 1996 /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 15. Inapplicable. 18. Inapplicable. 19. Inapplicable. 22. Inapplicable. 23. Inapplicable. 24. Inapplicable. 27. Financial Data Schedule.................................. 20
-18- EX-11 2 FACTS FOR COMPUTATION OF NET LOSS PER SHARE 1 PGI INCORPORATED AND SUBSIDIARIES FACTS FOR COMPUTATION OF NET LOSS PER SHARE
Three Months Ended June 30, Six Months Ended June 30, ------------------------------ ------------------------------ 1996 1995 1996 1995 ---- ---- ---- ---- 1) Net loss for period $ (1,002,000) $ (600,000) $ (1,662,000) $ (1,229,000) 2) Average shares outstanding before assumed exercise of stock options and conversion of preferred stock and debentures 3,317,555 3,317,555 3,317,555 3,317,555 ============= ============ ============= ============= 3) Average shares outstanding from assumed exercise of stock options: Primary - - - - ============= ============ ============= ============= Fully diluted - - - - ============= ============ ============= ============= 4) Average shares outstanding from assumed conversion of preferred stock 3,760,000 3,760,000 3,760,000 3,760,000 ============= ============ ============= ============= 5) Average shares outstanding from assumed conversion of debentures 1,341,076 1,341,076 1,341,076 1,341,076 ============= ============ ============= ============= 6) Cumulative preferred dividends in arrears $ 160,000 $ 160,000 $ 320,000 $ 320,000 ============= ============ ============= ============= 7) Interest and amortization charged against income for debentures during period $ 190,000 $ 190,000 $ 380,000 $ 380,000 ============= ============ ============= ============= ADJUSTMENT OF NET LOSS: - ----------------------- Primary ------- Net loss for period (Line 1) $ (1,002,000) $ (600,000) $ (1,662,000) $ (1,229,000) Less cumulative preferred dividends in arrears (Line 6) (160,000) (160,000) (320,000) (320,000) ------------- ------------ ------------- ------------- 8) Adjusted net loss for primary net loss per share $ (1,162,000) $ (760,000) $ (1,982,000) $ (1,549,000) ============= ============ ============= ============= Fully Diluted ------------- Adjusted net loss for primary net loss per share (Line 8) $ (1,162,000) $ (760,000) $ (1,982,000) $ (1,549,000) Add cumulative preferred dividends in arrears on preferred stock ssumed converted (Line 6) 160,000 160,000 320,000 320,000 Add interest and amortization charged against income for debentures during period (Line 7) 190,000 190,000 380,000 380,000 Tax effect on Line 7 - - - - ------------- ------------ ------------- ------------- 9) Adjusted net loss for fully diluted net loss per share ($812,000) ($410,000) ($1,282,000) $(849,000) ============= ============ ============= ============= ADJUSTMENT OF AVERAGE SHARES OUTSTANDING - ---------------------------------------- Primary - ------- Average shares outstanding (Line 2) 3,317,555 3,317,555 3,317,555 3,317,555 Average shares outstanding (Line 3) - - - - ------------- ------------ ------------- ------------- 10) Shares assumed outstanding for primary net loss per share 3,317,555 3,317,555 3,317,555 3,317,555 ============= ============ ============= ============= Fully Diluted - ------------- Average shares outstanding (Line 2) 3,317,555 3,317,555 3,317,555 3,317,555 Average shares outstanding from assumed exercise of stock options (Line 3) - - - - Average shares outstanding from assumed conversion of preferred stock (Line 4) 3,760,000 3,760,000 3,760,000 3,760,000 Average shares outstanding from assumed conversion of debentures (Line 5) 1,341,076 1,341,076 1,341,076 1,341,076 ------------- ------------ ------------- ------------- 11) Shares assumed outstanding for fully diluted net loss per share 8,418,631 8,418,631 8,418,631 8,418,631 ============= ============ ============= ============= NET LOSS PER SHARE: - ------------------- Before Adjustment - ----------------- (Line 1 divided by Line 2) $ (.30) $ (.18) $ (.50) $ (.37) ======= ======= ======= ======= Primary - ------- Net loss (Line 8 divided by Line 10) $ (.35) $ (.23) $ (.60) $ (.47) ======= ======= ======= ======= Fully Diluted - ------------- Net loss $ (.35) $ (.23) $ (.60) $ (.47) ======= ======= ======= ======= - ------------------------- No tax calculation has been made because of full utilization of all available tax benefits for financial account purposes. Fully diluted net loss per share is the same as primary net loss per share due to anti-dilutive effect of assumed exercise of stock options and conversion of preferred stock and debentures to common stock.
-19- EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS JUN-30-1996 APR-01-1996 JUN-30-1996 1,115,000 0 1,348,000 (976,000) 9,022,000 0 396,000 (334,000) 11,329,000 0 21,510,000 332,000 0 2,000,000 (23,611,000) 11,329,000 0 101,000 0 3,000 462,000 0 638,000 (1,002,000) 0 0 0 0 0 (1,002,000) (.35) (.35) CURRENT ASSETS AND CURRENT LIABILITIES VALUES ARE ZERO BECAUSE OF AN UNCLASSIFIED BALANCE SHEET.
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