-----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, Qiv7YD9QjDz96lodS0FyCf2hQyXH9o0R6ZlVPL1cT/DgS1vCflsHlLDVcjXTBQZA jMR6ZkckkzyMhX3xps6nzA== 0000950114-97-000494.txt : 19971117 0000950114-97-000494.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950114-97-000494 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 001-06471 FILM NUMBER: 97720372 BUSINESS ADDRESS: STREET 1: 515 OLIVE ST 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 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 September 30, 1997 ----------------------------------------- OR /X/ 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) ------------------------------------------------------------------------ (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 14, 1997 there were 5,317,758 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 September 30, 1997 Table of Contents -----------------
Form 10-QSB Page No. ----------- PART I Financial Information Item 1 Financial Statements Consolidated Statements of Financial Position September 30, 1997 and December 31, 1996 3 Consolidated Statements of Operations Three and Nine Months Ended September 30, 1997 and 1996 4 Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 1997 and 1996 5 Notes to Consolidated Financial Statements for Form 10-QSB 6-10 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 11-14 PART II Other Information Item 1 Legal Proceedings 15 Item 2 Changes in Securities 15 Item 3 Defaults Upon Senior Securities 15 Item 4 Submission of Matters to a Vote of Security Holders 15 Item 5 Other Information 15 Item 6 Exhibits and Reports on Form 8-K 17-19 SIGNATURES 16
-2- 3 PGI INCORPORATED AND SUBSIDIARIES PART I Financial Information Item 1 Financial Statements CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ($ in thousands)
September 30, December 31, 1997 1996 ------------ ----------- (unaudited) ASSETS Cash and Cash Equivalents $ 5 $ 12 Restricted Cash 1,131 1,140 Receivables on real estate sales - net 131 318 Other receivables 35 26 Land and improvement inventories 9,003 9,016 Property and equipment - net 21 46 Other assets 763 759 -------- -------- $ 11,089 $ 11,317 ======== ======== LIABILITIES Accounts payable $ 193 $ 78 Other liabilities 1,661 1,428 Accrued interest: Primary lender 3,207 2,461 Debentures 7,887 6,880 Other 1,581 1,449 Credit agreements - Primary lender 7,343 7,307 Notes and mortgages payable 3,685 3,667 Convertible subordinated debentures payable 9,059 9,059 Convertible debentures payable 1,500 1,500 -------- -------- $ 36,116 $ 33,829 -------- -------- 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; 5,317,758 and 3,317,555 shares issued and outstanding 532 332 Paid in capital 13,498 13,698 Accumulated deficit (41,057) (38,542) -------- -------- (25,027) (22,512) -------- -------- $ 11,089 $ 11,317 ======== ======== 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 Nine Months Ended --------------------------- ------------------------- Sept.30, Sept.30, Sept.30, Sept.30, 1997 1996 1997 1996 -------- -------- -------- -------- REVENUES Interest income 3 19 23 73 Other income 137 219 412 388 ------ ----- ------- ------- 140 238 435 461 ------ ----- ------- ------- COSTS AND EXPENSES Selling expenses 2 1 6 10 General & administrative expenses 257 162 620 654 Interest 682 646 2,008 1,857 Other expenses 91 109 316 282 ------ ----- ------- ------- 1,032 918 2,950 2,803 ------ ----- ------- ------- NET INCOME (LOSS) $ (892) $(680) $(2,515) $(2,342) ====== ===== ======= ======= NET INCOME (LOSS) PER SHARE (F*) Primary and fully diluted $ (.20) $(.25) $ (.69) $ (.85) ====== ===== ======= ======= (F*) Considers the effect of cumulative preferred dividends in arrears for the three and nine months ended September 30, 1997 and 1996. 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)
Nine Months Ended -------------------------- Sept. 30, Sept. 30, 1997 1996 --------- --------- Net cash provided by (used in) operating activities $ (59) $ 136 ----- ----- Cash flows from investing Activities: Purchase of property and equipment (2) -- ----- ----- Net cash used in investing activities (2) -- ----- ----- Cash flows from financing activities: Proceeds from borrowings 172 150 Principal payments on debt (118) (340) ----- ----- Net cash provided by (used in) financial activities 54 (190) ----- ----- Net increase (decrease) in cash (7) (54) Cash at beginning of period 12 63 ----- ----- Cash at end of period $ 5 $ 9 ===== ===== 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 10QSB 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, 1996. 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, 1996, as contained in the Company's Annual Report on Form 10KSB/A, 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 and nine months ended September 30, 1997 are not necessarily indicative of operations to be expected for the fiscal year ending December 31, 1997 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 (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 nine months ended September 30, 1997 and 1996. The average number of common shares outstanding for the nine months ended September 30, 1997 and 1996 was 4,335,973 and 3,317,555, respectively. On May 15, 1997, preferred dividends accrued through April 25, 1995 were paid in the form of 2,000,203 shares of common stock. 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 nine months ended September 30, 1997 and 1996, 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 antidilutive. (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 nine months ended September 30, 1997 and 1996 was $121,000 and $149,000, respectively. For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. (5) Restricted Cash Restricted cash included cash and certificates of deposit pledged to agencies in various states and local Florida governmental units related to land development and environmental matters, escrowed receipts related to pledged receivables on real estate sales and the servicing of sold receivables and, as a result of sales agreements and Company policies, customer payments and deposits related to homesite and housing contracts. -7- 8 PGI INCORPORATED AND SUBSIDIARIES (6) Receivables on Real Estate Sales Net receivables on real estate sales consisted of:
September 30, December 31, 1997 1996 ------------- ------------ ($ in thousands) Contracts receivable on homesite sales $ 855 $1,076 Other 91 98 ----- ------ 946 1,174 Less: Allowance for cancellations (771) (806) Unamortized valuation discount (44) (50) ----- ------ $ 131 $ 318 ===== ======
(7) Land and Improvements Land and improvement inventories consisted of:
September 30, December 31, 1997 1996 ------------- ------------ ($ in thousands) Unimproved land $8,724 $8,724 Fully improved land 279 292 ------ ------ $9,003 $9,016 ====== ======
(8) Property and Equipment Property and equipment consisted of:
September 30, December 31, 1997 1996 ------------- ------------ ($ in thousands) Furniture, fixtures and other equipment $ 212 $ 363 Less: Accumulated depreciation (191) (317) ----- ----- $ 21 $ 46
===== ===== (9) Other Assets Other assets consisted of:
September 30, December 31, 1997 1996 ------------- ------------ ($ in thousands) Guaranteed future connections, net $621 $621 Deposit with Trustee of 6-1/2% debentures 130 125 Other 12 13 ---- ---- $763 $759 ==== ====
-8- 9 PGI INCORPORATED AND SUBSIDIARIES (10) Other Liabilities Other Liabilities consisted of:
September 30, December 31, 1997 1996 ------------- ------------ ($ in thousands) Accrued property taxes - current $ 154 $ 208 - delinquent 778 476 Other accrued expenses 331 316 Deposits, advances and escrows 316 346 Estimated recourse liability for receivables sold 66 66 Other 16 16 ------ ------ $1,661 $1,428 ====== ======
(11) Primary Lender Credit Agreements, Notes and Mortgages Payable and Convertible Subordinated Debentures Payable Credit agreements with the Company's primary lender and notes and mortgages payable consisted of the following:
September 30, December 31, 1997 1996 ------------- ------------ ($ in thousands) Credit agreements - primary lender: (maturing July 8, 1997, bearing interest at prime plus 5%): $ 7,343 $ 7,307 Notes and mortgages payable - $1,267,000 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 3,685 3,667 ------- ------- 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 ------- ------- $21,587 $21,533 ======= =======
-9- 10 PGI INCORPORATED AND SUBSIDIARIES (12) Real Estate Sales and Other Income There were no real estate sales for the nine months ended September 30, 1997 and 1996. Other income for the three and nine months ended September 30, 1997 and 1996 consisted of:
Three Months Ended Nine Months Ended -------------------- --------------------- Sept. 30, Sept.30, Sept. 30, Sept. 30, 1997 1996 1997 1996 --------- -------- --------- --------- ($ in thousands) ($ in thousands) Commission income $ 91 $107 $292 $245 Other income 46 112 120 143 ---- ---- ---- ---- $137 $219 $412 $388 ==== ==== ==== ====
(13) Commitments and Contingencies The aggregate outstanding balances of all receivables sold and exchanged with recourse totaled $157,000 and $246,000 at September 30, 1997 and December 31, 1996, respectively. Based on its collection experience with such receivables, the Company maintained allowances at both September 30, 1997 and December 31, 1996, classified in other liabilities, of $66,000 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 financial position. At December 31, 1996, the Company had an operating loss carryforward of approximately $34,000,000 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, 1996 at the current statutory rate: Deferred tax asset: Net operating loss carryforward $ 12,531,000 Adjustments to reduce land to net realizable value 12,000 Expenses capitalized under IRC 263(a) 56,000 ITC carryforward 215,000 Other 2,000 Valuation allowance (10,347,000) ------------ 2,469,000 Deferred tax liability ------------ Basis difference of land and improvement inventories 2,453,000 Excess tax over book depreciation 16,000 ------------ 2,469,000 ------------ Net deferred tax asset $ 0 ============
-10- 11 PGI INCORPORATED AND SUBSIDIARIES Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Preliminary Note Readers should understand as they read this report 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. During the fiscal year ended December 31, 1996, 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. On January 31, 1997, Sugarmill Woods, Inc., a Florida corporation and a wholly-owned subsidiary of the Company, and Love-PGI Partners, L.P. ("L-PGI") (collectively as "Seller"), entered into an Option Agreement For Sale and Purchase ("Sale Agreement") with The Nature Conservancy, Inc., an unrelated nonprofit District of Columbia corporation ("Purchaser"), for the sale of and purchase of approximately 5,240 acres of certain undeveloped real estate located in Citrus County and Hernando County, Florida ("Property"). Approximately 4,890 acres of the Property is owned by the Company, and 350 acres is owned by L-PGI. A First Amendment and a Second Amendment to the Option Agreement For Sale and Purchase have been executed extending the option expiration date to March 3, 1998 and extending the date for PGI shareholder approval to October 31, 1997. For various reasons, the Company was unable to hold the Annual Meeting on or prior to October 31, 1997. The Company intends nevertheless to submit the sale of such property to the vote of the Company's shareholders at an annual meeting which the Company hopes to hold later this year. The Company views the October 31, 1997 date as a condition of the Option Agreement as Amended which the Purchaser has the power to waive. In other words, if the Company's shareholders approve the sale of the property and the Purchaser exercises the option and purchases the property, the Purchaser could close the purchase of the property regardless of when shareholder approval is obtained. Results of Operations Revenues for the first nine months of 1997 decreased by $26,000 to $435,000 from $461,000 for the comparable 1996 period. A net loss of $2,515,000 was incurred for the first nine months of 1997 compared to a net loss of $2,342,000 for the first nine months of 1996. After consideration of cumulative preferred dividends in arrears, totaling $480,000 for each of the nine months ended September 30, 1997 and 1996 ($.15 per share of common stock), net losses per share of $.69 and $.85, respectively, were reported for the nine month periods ended September 30, 1997 and 1996. 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. -11- 12 PGI INCORPORATED AND SUBSIDIARIES Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 disposition 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. The largest investor in PGIP is Love Savings Holding Company ("LSHC") which holds approximately a 72% interest. Messrs. Love and Schiffer own approximately 52% of LSHC and serve as the only directors and executive officers of LSHC. Messrs. Love, Schiffer and LSHC are the managers of PGIP. 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. There were no real estate sales for the nine months ended September 30, 1997 and 1996. Other income for the three and nine months ended September 30, 1997 and 1996 consisted of:
Three Months Ended Nine Months Ended --------------------------- --------------------------- Sept. 30, Sept. 30, Sept. 30, Sept. 30, 1997 1996 1997 1996 --------- --------- --------- --------- ($ in thousands) ($ in thousands) Commission income $ 91 $107 $292 $245 Other income 46 112 120 143 ---- ---- ---- ---- $137 $219 $412 $388 ==== ==== ==== ====
The Company suspended the construction of homes and sale of homes and homesites in 1994. Starting in January 1996, the Company began concentrating on disposing in bulk of its undeveloped, platted, residential real estate in order to decrease its debt obligations. The Company envisioned selling off such property and retaining its undeveloped commercial real estate for future development or bulk sales depending on the profitability. The Company has not been successful in selling off its undeveloped residential real estate and is constantly seeking new opportunities to sell this property and to decrease its debt and stay in operation. 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 nonrecourse sale of receivables, all previously deferred profits were recognized -12- 13 PGI INCORPORATED AND SUBSIDIARIES during 1992. Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Cash used in operating activities for the nine months ended September 30, 1997 was $59,000 compared to $136,000 cash provided by operating activities for the comparable 1996 period. During the first nine months of 1997, financing activities provided $54,000 in cash flow with $172,000 in proceeds from borrowings. Net cash used in financing activities was $118,000 for normal debt repayment as compared to $340,000 for the same period in 1996. Analysis of Financial Condition Assets totaled $11.1 million at September 30, 1997 compared to $11.3 million at December 31, 1996, reflecting the following changes:
September 30, December 31, Increase 1997 1996 (Decrease) ------------- ------------ ---------- ($ in thousands) Cash and Cash Equivalents $ 5 $ 12 $ (7) Restricted Cash 1,131 1,140 (9) Receivables 166 344 (178) Land and improvement inventories 9,003 9,016 (13) Net property and equipment 21 46 (25) Other assets 763 759 4 ------- ------- ----- $11,089 $11,317 $(228) ======= ======= ===== -13- 14 PGI INCORPORATED AND SUBSIDIARIES Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Liabilities were $36.1 million at September 30, 1997 compared to $33.8 million at December 31, 1996, reflecting the following changes among categories.
September 30, December 31, Increase 1997 1996 (Decrease) ------------- ------------ ---------- ($ in thousands) Accounts payable $ 193 $ 78 $ 115 Other liabilities 1,661 1,428 233 Accrued interest 12,675 10,790 1,885 Credit agreements - primary lender 7,343 7,307 36 Notes and mortgages payable 3,685 3,667 18 Convertible subordinated debentures payable 9,059 9,059 -- Convertible debentures payable 1,500 1,500 -- ------- ------- ------ $36,116 $33,829 $2,287 ======= ======= ======
The Company has aggressively taken steps to curtail and simplify operations as well as concentrate on major bulk sales of its undeveloped acreage. The Company remains totally dependent upon the sale of property to fund its operations and debt service requirements. The Company remains in default of the entire principal plus interest on its convertible subordinated debentures. The amounts due are as indicated in the following table:
September 30, 1997 -------------------------- Principal Unpaid Amount Due Interest ---------- -------- ($ in thousands) Convertible subordinated debentures due June 1, 1991 $1,034 $ 522 Convertible subordinated debentures due May 1, 1992 8,025 4,316 ------ ------ $9,059 $4,838 ====== ======
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 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. -14- 15 PGI INCORPORATED AND SUBSIDIARIES PART II Other Information Item 1 Legal Proceedings In 1994, the Citrus County Tax Appraiser denied agricultural exemption status for the undeveloped Sugarmill Woods property and the Company was forced to sue the County to reclaim the tax benefit. In 1995, the Citrus County Tax Appraiser again denied agricultural exemption status for the undeveloped Sugarmill Woods property, but was overruled by the Value Adjustment Board. As a result, the Tax Appraiser sued Sugarmill Woods, and was again successful in denying the agricultural exemption for the property. The Company has filed an appeal to reinstate the exemption. At this time the outcome of the appeal cannot be determined. 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 8K (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 September 30, 1997. -15- 16 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: November 14, 1997 /s/ Laurence A. Schiffer ------------------------------- ------------------------------ Laurence A. Schiffer President -16- 17 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
-17- EX-11 2 COMPUTATION OF NET LOSS 1 PGI INCORPORATED AND SUBSIDIARIES FACTS FOR COMPUTATION OF NET LOSS PER SHARE
Three Months Ended Sept. 30, Nine Months Ended Sept. 30, ---------------------------- ------------------------------ 1997 1996 1997 1996 ---- ---- ---- ---- 1) Net loss for period $ (892,000) $ (680,000) $(2,515,000) $(2,342,000) 2) Average shares outstanding before assumed exercise of stock options and conversion of preferred stock and debentures 5,317,758 3,317,555 4,335,973 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 debenture 1,341,076 1,341,076 1,341,076 1,341,076 =========== ========== =========== =========== 6) Cumulative preferred dividends in arrears $ 160,000 $ 160,000 $ 480,000 $ 480,000 =========== ========== =========== =========== 7) Interest and amortization charged against income for debentures during period $ 190,000 $ 190,000 $ 569,000 $ 569,000 =========== ========== =========== =========== ADJUSTMENT OF NET LOSS: - ----------------------- Primary Net loss for period (Line 1) $ (892,000) $ (680,000) $(2,515,000) $(2,342,000) Less cumulative preferred dividends in arrears (Line 6) ( 160,000) (160,000) (480,000) (480,000) ----------- ---------- ----------- ----------- 8) Adjusted net loss for primary net loss per share $(1,052,000) $ (840,000) $(2,995,000) $(2,822,000) =========== ========== =========== =========== Fully Diluted ------------- Adjusted net loss for primary net loss per share (Line 8) $(1,052,000) $ (840,000) $(2,995,000) $(2,822,000) Add cumulative preferred dividends in arrears on preferred stock assumed converted (Line 6) 160,000 160,000 480,000 480,000 Add interest and amortization charged against income for debentures during period (Line 7) 190,000 190,000 569,000 569,000 Tax effect on Line 7 -- -- -- -- ----------- ---------- ----------- ----------- 9) Adjusted net loss for fully diluted net loss per share $ (702,000) $ (490,000) $(1,946,000) $(1,773,000) =========== ========== =========== =========== ADJUSTMENT OF AVERAGE SHARES OUTSTANDING - ---------------------------------------- Primary - ------- Average shares outstanding (Line 2) 5,317,758 3,317,555 4,335,973 3,317,555 Average shares outstanding (Line 3) -- -- -- -- ----------- ---------- ----------- ----------- 10) Shares assumed outstanding for primary net loss per share 5,317,758 3,317,555 4,335,973 3,317,555 =========== ========== =========== =========== Fully Diluted - ------------- Average shares outstanding (Line 2) 5,317,758 3,317,555 4,335,973 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 10,418,834 8,418,631 9,437,049 8,418,631 =========== ========== =========== =========== NET LOSS PER SHARE: - ------------------- Before Adjustment - ----------------- (Line 1 divided by Line 2) $ (.17) $ (.20) $ (.58) $ (.71) ====== ====== ====== ====== Primary - ------- Net loss (Line 8 divided by Line 10) $ (.20) $ (.25) $ (.69) $ (.85) ====== ====== ====== ====== Fully Diluted - ------------- Net loss $ (.20) $ (.25) $ (.69) $ (.85) ====== ====== ====== ====== 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 antidilutive effect of assumed exercise of stock options and conversion of preferred stock and debentures to common stock.
-18- EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 JUL-01-1997 SEP-30-1997 1,136,000 0 937,000 (771,000) 9,003,000 0 212,000 (191,000) 11,089,000 0 21,587,000 532,000 0 2,000,000 (27,559,000) 11,089,000 0 140,000 0 2,000 257,000 0 682,000 (892,000) 0 0 0 0 0 (892,000) (.20) (.20) CURRENT ASSETS AND CURRENT LIABILITIES VALUES ARE ZERO BECAUSE OF AN UNCLASSIFIED BALANCE SHEET.
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