10QSB 1 pgi10q.txt 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 AND EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2004 ---------------------- / / 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 (I.R.S. Employer of incorporation) Identification No.) 212 SOUTH CENTRAL, SUITE 100, ST. LOUIS, MISSOURI 63105 ------------------------------------------------------- (Address of principal executive offices) (314) 512-8650 -------------- (Issuer's telephone number) N/A --------------------------------------------------------------- (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 shorter period that a 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 November 12, 2004, there were 5,317,758 shares of the Registrant's common stock, $.10 par value, per share, outstanding. Transitional Small Business Disclosure Format (Check one): Yes No X ---------- ---------- 1 PGI INCORPORATED AND SUBSIDIARIES Form 10 - QSB For the Quarter Ended September 30, 2004 Table of Contents -----------------
Form 10 - QSB Page No. ------------- PART I Financial Information Item 1. Financial Statements Consolidated Statements of Financial Position September 30, 2004 (Unaudited) and December 31, 2003 3 Consolidated Statements of Operations (Unaudited) Three and Nine Months Ended September 30, 2004 and 2003 4 Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2004 and 2003 5 Notes to Consolidated Financial Statements (Unaudited) 6 - 11 Item 2. Management's Discussion and Analysis or Plan of Operation 12 - 15 Item 3. Controls and Procedures 15 PART II Other Information Item 1. Legal Proceedings 16 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 16 Item 3. Defaults Upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5. Other Information 16 Item 6. Exhibits 16 SIGNATURES 17 EXHIBIT INDEX 18
2 Part I Financial Information Item 1. Financial Statements -------------------- PGI INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ($ in thousands)
September 30, December 31, 2004 2003 ---- ---- (Unaudited) ASSETS Cash and cash equivalents $ 247 $ 250 Restricted cash 251 1 Receivables 361 377 Land and improvement inventories 628 670 Other assets 179 168 -------- -------- $ 1,666 $ 1,466 ======== ======== LIABILITIES Accounts payable & accrued expenses $ 50 $ 69 Accrued real estate taxes 355 402 Deferred credits 1 3 Accrued interest: Primary Lender 5 5 Debentures 21,288 19,406 Other 2,214 2,160 Credit Agreements - Primary lender 500 700 Notes payable 1,198 1,198 Subordinated debentures payable 9,059 9,059 Convertible debentures payable 1,500 1,500 -------- -------- $ 36,170 $ 34,502 -------- -------- STOCKHOLDERS' DEFICIENCY 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 $8,000,000 and cumulative dividends) 2,000 2,000 Common stock, par value $.10 per share; authorized 25,000,000 shares; 5,317,758 shares issued and outstanding 532 532 Paid in capital 13,498 13,498 Accumulated deficit (50,534) (49,066) -------- -------- (34,504) (33,036) -------- -------- $ 1,666 $ 1,466 ======== ======== See accompanying notes to consolidated financial statements.
3 Part I Financial Information (Continued) PGI INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands, except per share data) (Unaudited)
Three Months Ended Nine Months Ended ------------------ ----------------- September 30, September 30, September 30, September 30, 2004 2003 2004 2003 ---- ---- ---- ---- REVENUES Real Estate Sales $ 4 $ 113 $ 664 $ 200 Interest Income 9 9 27 31 Other Income 4 5 9 9 ------- ------- ------- ------- 17 127 700 240 ------- ------- ------- ------- COSTS AND EXPENSES Cost of Real Estate Sales $ - $ 31 $ 69 $ 51 Interest 678 618 1,984 1,813 Taxes & Assessments 2 6 17 27 Consulting & Accounting 10 10 30 30 Legal & Professional 2 16 33 69 General & Administrative 13 16 35 49 ------- ------- ------- ------- 705 697 2,168 2,039 ------- ------- ------- ------- NET (LOSS) $ (688) $ (570) $(1,468) $(1,799) ======= ======= ======= ======= NET (LOSS) PER SHARE (*) $ (.16) $ (.14) $ (.37) $ (.43) ======= ======= ======= ======= * Considers the effect of cumulative preferred dividends in arrears for the three and nine months ended September 30, 2004 and 2003. See accompanying notes to consolidated financial statements.
4 Part I Financial Information (Continued) PGI INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands) (Unaudited)
Nine Months Ended ----------------- September 30, September 30, 2004 2003 ---- ---- Net cash provided by (used in) operating activities $ 459 $ (4) ----- ---- Cash flows from investing activities: Payment on primary lender indebtedness (200) - Payment to restricted cash (250) - Purchases of inventory and deferred expenditures (12) (6) Proceeds from notes receivables - 204 ----- ---- Net cash provided by (used in) investing activities (462) 198 ----- ---- Net increase (decrease) in cash (3) 194 Cash at beginning of period 250 93 ----- ---- Cash at end of period $ 247 $287 ===== ==== See accompanying notes to consolidated financial statements.
5 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (1) Basis of Presentation The accompanying unaudited consolidated financial statements of PGI Incorporated and its subsidiaries (the "Company") 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, 2003. The consolidated balance sheet as of December 31, 2003 has been derived from the audited consolidated balance sheet as of that date. The Company remains in default under the indentures governing its unsecured subordinated and convertible debentures and in default of its primary debt obligations. (See Management's Discussion and Analysis or Plan of Operation and Notes 9, 10, 11, and 16 to the Company's consolidated financial statements for the year ended December 31, 2003, as contained in the Company's Annual Report on Form 10 - KSB). All 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 nine months ended September 30, 2004 are not necessarily indicative of operations to be expected for the fiscal year ending December 31, 2004 or any other interim period. (2) Per Share Data Basic 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 and collateralized convertible debentures are not deemed to be common stock equivalents. The average number of common shares outstanding for the nine months ended September 30, 2004 and 2003 was 5,317,758. Diluted per share amounts are computed by dividing net income (loss) by the average number of common shares outstanding, after adjusting for the estimated effect of the assumed conversion of all cumulative convertible preferred stock and collateralized convertible debentures into shares of common stock. For the nine months ended September 30, 2004 and 2003, the assumed conversion of all cumulative convertible preferred stock and collateralized convertible debentures would have been anti-dilutive. 6 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) The following is a summary of the calculations used in computing basic and diluted (loss) per share for the three and nine months ended September 30, 2004 and 2003.
Three Months Ended Nine Months Ended ------------------ ----------------- September 30, September 30, September 30, September 30, 2004 2003 2004 2003 ---- ---- ---- ---- Net (Loss) $(688,000) $(570,000) $(1,468,000) $(1,799,000) Preferred Dividends $(160,000) $(160,000) $ (480,000) $ (480,000) --------- --------- ----------- ----------- (Loss) Available to Common Shareholders $(848,000) $(730,000) $(1,948,000) $(2,279,000) ========= ========= =========== =========== Weighted Average Number Of Shares Outstanding 5,317,758 5,317,758 5,317,758 5,317,758 Basic and Diluted (Loss) Per Share $(.16) $(.14) $(.37) $(.43)
(3) 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, 2004 and 2003 was $49,000 and $83,000, respectively. (4) Restricted Cash Restricted cash includes restricted proceeds held by the primary lender as collateral for debt repayment. 7 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) (5) Receivables Net receivables consisted of:
September 30, December 31, 2004 2003 ---- ---- ($ in thousands) Contracts receivable on homesite sales $ 64 $ 64 Less: Allowance for cancellations (64) (64) ---- ---- Net receivables on real estate sales - - Other notes receivable - trade - 21 Other notes receivable - related party 340 340 Other interest receivable 21 16 ---- ---- $361 $377 ==== ====
(6) Land and Improvements Land and improvement inventories consisted of:
September 30, December 31, 2004 2003 ---- ---- ($ in thousands) Unimproved land $613 $613 Fully improved land 15 57 ---- ---- $628 $670 ==== ====
(7) Property and Equipment Property and Equipment consisted of:
September 30, December 31, 2004 2003 ---- ---- ($ in thousands) Furniture, fixtures and other equipment $ 31 $ 31 Less: Accumulated depreciation (31) (31) ---- ---- $ - $ - ==== ====
(8) Other Assets Other assets consisted of:
September 30, December 31, 2004 2003 ---- ---- ($ in thousands) Deposit with Trustee of 6-1/2% debentures $161 $160 Other 18 8 ---- ---- $179 $168 ==== ====
8 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) (9) Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of:
September 30, December 31, 2004 2003 ---- ---- ($ in thousands) Accounts payable $ 25 $ 24 Accrued audit & professional 21 27 Accrued consulting fees 3 11 Accrued legal - 6 Accrued miscellaneous 1 1 ------ ------ $ 50 $ 69 ====== ====== Accrued Real Estate Taxes consisted of: Current real estate taxes $ 6 $ 11 Delinquent real estate taxes 349 391 ------ ------ $ 355 $ 402 ====== ======
(10) Primary Lender Credit Agreements, Notes Payable, Subordinated and Convertible Debentures Payable Credit agreements with the Company's primary lender and notes payable consisted of the following:
September 30, December 31, 2004 2003 ---- ---- ($ in thousands) Credit agreements - primary lender: (maturing July 8, 1997, bearing interest at prime plus 5%) $ 500 $ 700 Notes payable - $1,176,000 bearing interest at prime plus 2% 1,198 1,198 ------ ------ $1,698 $1,898 ------ ------ Subordinated debentures payable: At 6-1/2% interest; due June 1991 1,034 1,034 At 6% interest; due May 1, 1992 8,025 8,025 ------ ------ $9,059 $9,059 ------ ------
Collateralized convertible debentures payable: At 14% interest; due July 8, 1997, 1,500 1,500 convertible into shares of common stock ------ ------- at $1.72 per share $12,257 $12,457 ======= =======
9 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) In September, 2004 the Company made a principal payment of $200,000 to reduce the primary lender indebtedness. (11) Real Estate Sales and Other Income Real Estate Sales and Cost of Sales for the three and nine months ended September 30, 2004 and 2003 were as follows:
Three Months Ended Nine Months Ended ------------------ ----------------- September 30, September 30, September 30, September 30, 2004 2003 2004 2003 ---- ---- ---- ---- ($ in thousands) ($ in thousands) Real Estate Sales $4 $113 $664 $200 Cost of Sales - 31 69 51
In the second quarter, the Company closed the sale of two unusual real estate parcels, at the price of $250,000 each. These two parcels were not carried for value on the Company's books, inasmuch as they were undevelopable thin strips of mangrove fringe. However, because of the height of the mangroves, the adjoining property owners purchased these fringe strips in order to be able to enhance the view amenity on their proposed developments. Other income was $9,000 for the nine months ended September 30, 2004 and 2003, respectively. The other income mainly consists of recoveries of contracts receivable which have been fully provided for. (12) Income Taxes At December 31, 2003, the Company had an operating loss carryforward of approximately $33,000,000 to reduce future taxable income. These operating losses expire at various dates through 2023. 10 PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) The following summarizes the temporary differences of the Company at December 31, 2003 at the current statutory rate:
($ in thousands) Deferred tax asset: Net operating loss carryforward $ 12,898 Adjustments to reduce land to net realizable value 12 Expenses capitalized under IRC 263(a) 56 Valuation allowance (12,794) -------- 172 Deferred tax liability: Basis difference of land and improvement inventories 172 -------- Net deferred tax asset $ - ========
11 PGI INCORPORATED AND SUBSIDIARIES Item 2. Management's Discussion and Analysis or Plan of Operation Preliminary Note The Company's business focus and emphasis recently has been to concentrate its sales and marketing efforts on the disposition of its remaining real estate, as a result of its continuing financial difficulties due to the principal and interest owed on its debt. Presently, the most valuable remaining asset is a parcel of 366 acres located in Hernando County, Florida. The Company also owns about 100 acres in various sites which are scattered in Charlotte County, Florida, but most of these are subject to easements which markedly reduce their value and/or consist of wetlands of indeterminate value. As of September 30, 2004, the Company also owns 4 single family lots, located in Citrus County, Florida. In addition, the Company has been actively pursuing collection on delinquent contract receivables from home site sales. The Company is in the process of foreclosing on 12 lots, which represent the remaining contracts receivable outstanding as of September 30, 2004. The 366 acre parcel in Hernando County is difficult to value because of uncertainty related to the possible extension of the Suncoast Expressway, which terminates on the south side of Route 98 opposite the subject property. Debate continues over whether the Suncoast Expressway will be continued, which would most certainly require acquisition of at least part of the property. Further, there are currently several potential corridors under discussion for such continuation, making it impossible to predict which part of the property would be most affected. Development and/or sale plans for this parcel as a result are necessarily held in abeyance pending the decisions about the Suncoast Expressway. The sole activity presently concerning this property relates to the installation of a gas pipeline in adjacent property near one of the property's boundaries. The Company is continuing to negotiate with the pipeline company to address the Company's concerns that the presence of such pipeline adversely affects the value of this property. Results of Operations Revenues for the first nine months of 2004 increased by $460,000 to $700,000 from $240,000 for the comparable 2003 period reflecting increased real estate sales revenue in the current year. Expenses for the nine month period ended September 30, 2004 increased by $129,000 when compared to the same period in 2003, reflecting increases in cost of sales related to such real estate sales and interest expense. The increase in interest expense is a result of interest accruing on past due interest balances which increase at various intervals throughout the year. As a result, a net loss of $1,468,000 was incurred for the first nine months of 2004 compared to a net loss of $1,799,000 for the first nine months of 2003. After consideration of cumulative preferred dividends in arrears, totaling $480,000 for each of the nine months ended September 30, 2004 and 2003 ($.15 per share of common stock), a net loss per share of $(.37) and $(.43), respectively, was reported for the nine month periods ended September 30, 2004 and 2003. The total cumulative preferred dividends in arrears through September 30, 2004 is $6,035,000. Real Estate Sales and Cost of Sales consisted of:
Three Months Ended Nine Months Ended ------------------ ----------------- September 30, September 30, September 30, September 30, 2004 2003 2004 2003 ---- ---- ---- ---- ($ in thousands) ($ in thousands) Real Estate Sales $4 $113 $664 $200 Cost of Sales - 31 69 51
12 INCORPORATED AND SUBSIDIARIES Item 2. Management's Discussion and Analysis or Plan of Operation (continued) In the second quarter of 2004, the Company completed the sale of two unusual real estate parcels, at the PGI price of $250,000 each. These two parcels were not carried for value on the Company's books, inasmuch as they were undevelopable thin strips of mangrove fringe. However, because of the height of the mangroves, the adjoining property owners purchased these fringe strips in order to be able to enhance the view amenity on their proposed developments. Other income was $ 9,000 for the nine months ended September 30, 2004 and 2003, respectively. Other income primarily consists of recoveries of contracts receivable which had been fully provided for cancellation. As of September 30, 2004, the Company remained in default of its primary lender indebtedness with PGIP, LLC ("PGIP") of $500,000. The Company made a principal payment of $200,000 in September, 2004 to PGIP to reduce the primary lender indebtedness. PGIP holds restricted funds of the Company pursuant to an escrow agreement whereby funds may be disbursed (i) as requested by the Company and agreed to by PGIP, or (ii) as deemed necessary and appropriate by PGIP, in either case, to protect PGIP's interest in the Retained Acreage (as hereinafter defined), including PGIP's right to receive principal and interest under the note agreement securing the remaining indebtedness, or (iii) to PGIP to pay any other obligations owed to PGIP by the Company. The restricted escrow funds held by PGIP at September 30, 2004 and December 31, 2003 was $ 251,000 and $ 1,000, respectively. The real estate owned by the Company that has not been sold, totaling 366 acres (the "Retained Acreage"), remains subject to the primary lender indebtedness. The Company restored $250,000 of the restricted escrow funds in September, 2004. Contracts receivable on homesite sales and related receivables are fully provided for cancellation at September 30, 2004 and December 31, 2003 (See Note 5 of the Company's Notes to Consolidated Financial Statements contained herein). The Company has been actively pursuing collection on the delinquent contract receivables. An assessment is made for each contract receivable as to the economic benefit of reacquisition of the lot, which serves as collateral for such contract receivable, considering the cost of foreclosure, delinquent taxes and association fees due, and estimated current sale value of such lot. For those contract receivables with an anticipated economic benefit, foreclosure action is initiated in the absence of payment or receipt of a quit claim deed of the property back to the Company. Cash provided by operating activities for the nine months ended September 30, 2004 was $459,000 compared to cash used of $4,000 for the comparable 2003 period. Net cash used in investing activities during the nine months ended September 30, 2004 included a $200,000 payment on the primary lender indebtedness, a $250,000 payment for restricted cash and $12,000 in purchases of inventory and deferred expenditures. Net cash provided by investing activities during the nine months ended September 30, 2003 included $204,000 in proceeds from repayment of a short term note receivable from Love Investment Company, an affiliate of L-PGI, the Company's preferred shareholder, less $6,000 in purchases of inventory and deferred expenditures. 13 PGI INCORPORATED AND SUBSIDIARIES Item 2. Management's Discussion and Analysis or Plan of Operation (continued) Analysis of Financial Condition Total assets increased by $200,000 at September 30, 2004 compared to total assets at December 31, 2003, reflecting the following changes:
September 30, December 31, Increase 2004 2003 (Decrease) ---- ---- ---------- Cash and cash equivalents $ 247 $ 250 $ (3) Restricted cash 251 1 250 Receivables 361 377 (16) Land and improvement inventories 628 670 (42) Other assets 179 168 11 ------ ------ ---- $1,666 $1,466 $200 ====== ====== ====
Liabilities were approximately $36.1 million at September 30, 2004 compared to approximately $34.5 million at December 31, 2003, reflecting the following changes:
September 30, December 31, Increase 2004 2003 (Decrease) ---- ---- ---------- Accounts payable & accrued expenses $ 50 $ 69 $ (19) Accrued real estate taxes 355 402 (47) Deferred credits 1 3 (2) Accrued interest 23,507 21,571 1,936 Credit agreements - primary lender 500 700 (200) Notes 1,198 1,198 - Convertible subordinated debentures payable 9,059 9,059 - Convertible debentures payable 1,500 1,500 - ------- ------- ------ $36,170 $34,502 $1,668 ======= ======= ======
The Company has aggressively taken steps to curtail and simplify operations as well as concentrate on major bulk sales of its undeveloped acreage. The Company remains totally dependent upon the sale of property to fund its operations and debt service requirements. 14 PGI INCORPORATED AND SUBSIDIARIES Item 2. Management's Discussion and Analysis or Plan of Operation (continued) The Company remains in default of the entire principal plus interest on its subordinated and convertible debentures and notes payable. The amounts due are as indicated in the following table:
September 30, 2004 ------------------ Principal Accrued Amount Due Interest ---------- -------- ($ in thousands) Subordinated debentures: ------------------------ At 6 1/2%, due June 1, 1991 $1,034 $ 1,022 At 6%, due May 1, 1992 8,025 9,845 ------ ------- $9,059 $10,867 ====== ======= Collateralized convertible debentures: -------------------------------------- At 14%, due July 8, 1997 $1,500 $10,421 ====== ======= Notes Payable: -------------- At prime plus 2% $1,176 $ 2,214 Non-interest bearing 22 - ------ ------- $1,198 $ 2,214 ====== =======
The Company does not have funds available to make any payments of either principal or interest on the above debentures and notes payable. Forward-Looking Statements -------------------------- The discussion set forth in this Item 2, as well as other portions of this Form 10-QSB, may contain forward-looking comments. Such comments are based upon the information currently available to management of the Company and management's perception thereof as of the date of the Form 10-QSB. When used in this Form 10-QSB, words such as "anticipates," "estimates," "believes," "expects," and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties. Actual results of the Company's operations could materially differ from those forward-looking comments. The differences could be caused by a number of factors or combination of factors including, but not limited to: changes in the real estate market in Florida and the counties in which the Company owns any property; institution of legal action by the bondholders for collection of any amounts due under the subordinated convertible debentures; continued failure by governmental authorities to make a decision with respect to the Suncoast Expressway as described under Item 2; changes in management strategy; and other factors set forth in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. Item 3. Controls and Procedures We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). Based on this evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 30, 2004. There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2004, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 15 PGI INCORPORATED AND SUBSIDIARIES PART II Other Information Item 1. Legal Proceedings As previously reported by the Company, a tax matter relating to the 1997 agricultural exemption status on the undeveloped Sugarmill Woods property remains in dispute on a matter of timely filing of petition for such exemption. In June 2002, the District Court of Appeals denied the agricultural exemption for 1997, and the Company filed a motion for rehearing. In November 2003, the trial court conducted an evidentiary hearing on the Company's motion for rehearing, but the motion was denied. In December 2003, an appeal to the District Court of Appeals was filed by the Company and is pending. The Company does not believe that the resolution of this matter will have a material effect on its financial position. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Not applicable. Item 3. Defaults Upon Senior Securities See discussion in Part 1 Item 2 with respect to defaults on the Company's subordinated debentures and collateralized convertible debentures and with respect to cumulative preferred dividends in arrears, which discussions are 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 Reference is made to the Exhibit Index hereof for a list of exhibits filed under this Item. 16 PGI INCORPORATED AND SUBSIDIARIES In accordance with the requirements 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 15, 2004 /s/ Laurence A. Schiffer ----------------- ------------------------ Laurence A. Schiffer President (Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer) 17 PGI INCORPORATED AND SUBSIDIARIES EXHIBIT INDEX ------------- 2. Inapplicable. 3.(i) Inapplicable. 3.(ii) Inapplicable. 4. Inapplicable. 10. Inapplicable. 11. Statement re: Computation of Per Share Earnings (Set forth in Note 2 of the Notes to Consolidated Financial Statements herein). 15. Inapplicable. 18. Inapplicable. 19. Inapplicable. 20. Inapplicable. 22. Inapplicable. 23. Inapplicable. 24. Inapplicable. 31.1 Principal Executive Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended. 31.2 Principal Financial Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended. 32.1 Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350. 32.2 Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350. 18