<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1996
Commission file number 0-9964
BESICORP GROUP INC.
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
New York 14-1588329
__________________________________________________________________
(State or other jurisdiction of (Internal Revenue Service
incorporation or organization) Employer Identification No.)
1151 Flatbush Road, Kingston, New York 12401
_________________________________________________________________
(Address of principal executive office) (Zip Code)
Issuer's Telephone Number, including area code: (914) 336-7700
N/A
__________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes __X__ No____
Common stock outstanding as of August 9, 1996 2,914,648
Transitional Small Business
Disclosure Format Yes______ No ___X___
1
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
BESICORP GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- ---------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 130,015 $ 90,579
Short-term investments 1,001,166 761,807
Trade accounts and notes receivable (less allowance for
doubtful accounts of $25,600) 936,632 540,967
Due from affiliates 126,160 89,734
Current portion of long-term trade notes receivable:
Others (includes interest of $13,560 and $13,854,
respectively) 93,637 92,402
Inventories 1,257,262 1,259,190
Refundable income taxes 186,384 187,384
Other current assets 159,972 111,950
------------- ---------------
Total Current Assets 3,891,228 3,134,013
------------- ---------------
Property, Plant and Equipment:
Land and improvements 279,910 279,910
Buildings and improvements 1,878,781 1,878,781
Machinery and equipment 917,990 917,990
Furniture and fixtures 195,441 195,441
Construction in progress 17,570 14,908
------------- ---------------
3,289,692 3,287,030
Less: Accumulated depreciation and amortization 1,177,254 1,104,817
------------- ---------------
Net Property, Plant and Equipment 2,112,438 2,182,213
------------- ---------------
Other Assets:
Patents and trademarks, less accumulated amortization of
$639,326 and $634,681, respectively 59,385 60,024
Long-term notes receivable:
Affiliates 555,376 555,376
Others 2,236,089 2,254,061
Deferred costs 1,116,906 1,039,421
Other assets 172,202 179,882
------------- ---------------
Total Other Assets 4,139,958 4,088,764
------------- ---------------
TOTAL ASSETS $ 10,143,624 $ 9,404,990
------------- ---------------
------------- ---------------
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
BESICORP GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- --------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,735,370 $ 1,247,612
Current portion of long-term debt 425,727 431,102
Current portion of accrued reserve and warranty expense 157,948 147,024
Taxes other than income taxes 58,870 64,753
Income taxes payable 127,710 340,432
------------- --------------
Total Current Liabilities 2,505,625 2,230,923
Investment in Partnerships 2,704,923 2,635,875
Long-Term Accrued Reserve and Warranty Expense 151,120 139,305
Long-Term Debt 3,110,773 3,137,912
------------- --------------
Total Liabilities 8,472,441 8,144,015
------------- --------------
Shareholders' Equity:
Common stock, $0.10 par value: authorized 5,000,000
shares; issued 3,234,946 and 3,233,146 shares,
respectively 323,495 323,315
Additional paid in capital 4,771,848 4,771,769
Retained earnings (1,580,458) (1,984,367)
------------- --------------
3,514,885 3,110,717
Less: Treasury stock at cost (320,298 shares and 321,212
shares, respectively) (1,843,702) (1,849,742)
--------------- ----------------
Total Shareholders' Equity 1,671,183 1,260,975
------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 10,143,624 $ 9,404,990
------------- --------------
------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
BESICORP GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended June 30,
---------------------------------------------------------
1996 1995
----------------------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Product sales $ 1,368,242 $ 1,352,328
Development and management fees 146,033 68,247
Other 91,379 35,597
------------------ ----------
Total Revenues 1,605,654 1,456,172
------------------ ----------
Costs and Expenses:
Cost of product sales 1,164,979 1,095,793
Selling, general and administrative expenses 1,868,058 1,348,116
------------------ ----------
Total Costs and Expenses 3,033,037 2,443,909
------------------ ----------
Operating Loss (1,427,383 ) (987,737 )
Income from Partnerships 2,004,491 982,394
Interest and Other Investment Income 31,681 44,801
Interest Expense (90,412 ) (92,991 )
Other Income 5,532 8,778
------------------ ----------
Income (Loss) Before Income Taxes 523,909 (44,755 )
Provision for Income Taxes 120,000 366
------------------ --------------
Net Income (Loss) $ 403,909 $ (45,121 )
---------------------- --------------
---------------------- --------------
Income (Loss) per Common Share $ .14 $ (.02 )
---------------------- --------------
---------------------- --------------
Weighted Average Number of Shares Outstanding
(in Thousands) 2,912 2,989
------------------ ----------
------------------ ----------
Dividends per Common Share NONE NONE
------------------ ----------
------------------ ----------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
BESICORP GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three months ended June 30,
--------------------------------------------
1996 1995
----------------------------- --------------
<S> <C> <C>
Operating Activities:
Net income (loss) $ 403,909 $ (45,121)
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Amortization of discounts on notes (549) (549)
Depreciation and amortization 96,365 98,134
Realized and unrealized (gains) losses 5,064 (19,075)
Partnership income recognized (2,004,491) (982,394)
Distributions from partnerships 2,076,038 1,153,346
Changes in assets and liabilities:
Short-term investments (244,423) 2,793
Accounts and notes receivable (397,602) 46,748
Inventory 1,928 130,468
Accounts payable and accrued expenses 487,759 (323,165)
Taxes payable (217,604) (140,656)
Other assets and liabilities, net (135,582) (62,160)
--------------------- -----------
Net cash provided (used) by operating activities 70,812 (141,631)
--------------------- -----------
Financing Activities:
Increase in borrowings 0 68,940
Repayment of borrowings (32,514) (25,361)
Purchase of common stock (1,250) (94,681)
Issuance of common stock 7,549 14,531
--------------- ---------
Net cash used by financing activities (26,215) (36,571)
--------------- ---------
Investing Activities:
Capital contributions to partnerships (2,500) 0
Acquisition of property, plant and equipment (2,661) (100,293)
--------------------- -----------
Net cash used by investing activities (5,161) (100,293)
--------------- ---------
Increase (Decrease) in Cash 39,436 (278,495)
Cash - Beginning 90,579 695,631
--------------- ---------
Cash - Ending $ 130,015 $ 417,136
--------------- ---------
--------------- ---------
Supplemental Cash Flow Information:
Interest paid $ 96,289 $ 91,625
Income taxes paid 331,721 1,079
Additions to Property, Plant and Equipment Which Were
Financed and Not Included Above $ 0 $ 19,700
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
<PAGE>
BESICORP GROUP INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. In the opinion of Management, the accompanying consolidated financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the Company's financial position as of
June 30, 1996, and March 31, 1996; the results of operations for the three-month
periods ended June 30, 1996, and 1995; and the statement of cash flows for the
corresponding three-month periods. Certain items in the Fiscal 1996 financial
statements have been restated to conform with the Fiscal 1997 presentation.
B. The results of operations for the three-month period are not necessarily
indicative of the results to be expected for the full year.
C. Inventories
Inventories are carried at the lower of cost (first-in, first-out method), or
market. Inventories at June 30, 1996 and March 31, 1996, consist of:
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- ---------------
<S> <C> <C>
Assembly parts $ 500,632 $ 467,281
Finished goods 756,630 791,909
------------- ---------------
$ 1,257,262 $ 1,259,190
------------- ---------------
------------- ---------------
</TABLE>
D. Deferred Costs
Deferred costs and reimbursable costs at June 30, 1996 and March 31, 1996 were
as follows:
<TABLE>
<CAPTION>
Internal Costs Third
------------------- -----------
Payroll Expenses Party Costs Total
------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Balance March 31, 1996 $383,930 $ 157,911 $ 497,580 $1,039,421
Additions 98,935 21,051 32,499 152,485
Expensed 0 0 0 0
Reimbursements 0 0 (75,000) (75,000)
------- -------- ----------- ---------
Balance June 30, 1996 $482,865 $ 178,962 $ 455,079 $1,116,906
---------- ----------- -------------- ------------
---------- ----------- -------------- ------------
</TABLE>
E. Investments in Partnerships
At June 30, 1996 and March 31, 1996 the balance of recorded investment was
comprised of the following:
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- --------------
<S> <C> <C>
Capital contributions and investments $ 2,974,313 $ 2,971,813
Partnership distributions (14,858,014) (12,781,976)
Recognized share of income (losses) 9,178,779 7,174,288
------------- --------------
$ (2,704,923) $ (2,635,875)
------------- --------------
------------- --------------
</TABLE>
6
<PAGE>
The financial position and results of operations for the partnerships as
reported in the financial statements issued by the respective partnerships as at
March 31, 1996 (unaudited) and December 31, 1995 (audited) and for the three
months and year then ended were as follows:
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Total Partnerships:
Assets $ 540,776,651 $ 543,148,967
Plant and equipment 408,202,107 413,475,414
Secured debt 524,802,719 526,879,647
Partners' deficit (20,009,525) (22,610,152)
Revenues 34,604,085 114,313,019
Income (loss) 6,747,518 (1,212,069)
Company's Share:
Partners' deficit (9,172,723) (10,488,957)
Income (loss) 3,389,854 57,836
</TABLE>
The operating assets of the partnerships secure the projects' debt, and the
expected significant losses incurred by the partnerships in the early years of
operation are funded by that debt. Consequently, the Company, having no
obligation to fund the losses or pay the partnerships' debt, does not generally
record the losses in the financial statements. The income (loss) from
partnerships, which has been recorded on the financial statements during the
first quarter of Fiscal 1997 in the amount of $2,004,491, has been recognized on
projects where income has exceeded prior unrecognized accumulated losses, but
not on partnerships where current income of $1,413,027 does not exceed prior
unrecognized accumulated losses, nor on one partnership where current losses of
$29,357 are in excess of net investment.
As previously disclosed, Kamine/Besicorp Allegany L.P. ("KBA") filed a voluntary
petition to reorganize under Chapter 11 of the Bankruptcy Code and is seeking
enforcement of its power purchase agreement with Rochester Gas & Electric
("RG&E"). The amounts pertaining to this partnership were excluded from the
partnerships' financial position and results of operations presented above.
On August 1, 1996 Niagara Mohawk Power Corporation ("NIMO") offered to terminate
44 of its independent power contracts in exchange for a combination of cash and
securities. Five of the Company's power purchase agreements are included among
these contracts. Management is uncertain what effect, if any, this proposal will
have on the Company.
F. Revenue Recognition
Revenues on sales of products are recognized at the time of shipment of goods.
Development fee revenue is recognized when deemed payable under the agreement.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The Company's net income for the three months ended June 30, 1996 increased by
$449,030 to $403,909 from a net loss of $45,121 for the three months ended June
30, 1995. The factors which contributed to these changes in net income are
discussed below.
7
<PAGE>
REVENUES
Consolidated
Consolidated revenues increased by $149,482 during the three months ended June
30, 1996 as compared to the three months ended June 30, 1995.
Product Segment
Revenues for the Company's product sales activities during the three-month
period ended June 30, 1996 increased by $15,914 as compared to the three months
ended June 30, 1995, due primarily to increases in sales of solar pool heating
products.
Other revenues, which are primarily attributable to the Product Segment,
increased during the three-month period ended June 30, 1996 by $55,782 compared
to the three months ended June 30, 1995, due primarily to increased revenue of
$58,106 from the New York State Energy Research and Development Authority in
accordance with funding agreements with the Company.
Project Segment
For the Project Segment, revenues attributable to development and management
fees during the three months ended June 30, 1996 increased by $77,786 as
compared to the three months ended June 30, 1995. The Company received no
development fees or reimbursements in excess of deferred costs during the
quarter ended June 30, 1996.
COSTS AND EXPENSES
Costs of Product Sales
Cost of product sales for the three-month periods ended June 30, 1996 and 1995
were $1,164,979 and $1,095,793, respectively, or 85% and 81% of revenues
attributable to product sales. The increase in the cost of sales as a percentage
is due primarily to competitive activity in the solar thermal market (pool
heating), which necessitated several promotional pricing programs during the
current quarter to maintain market share.
Costs of Development and Management Fees
Other than the settlement of deferred expenses in conjunction with project
closings, there are no specific costs and expenses identified with development
and management fee revenue. Costs and expenses associated with this segment are
the normal selling, general and administrative expenses of the Company.
Selling, General and Administrative Expenses
Consolidated
Selling, general and administrative expenses ("SG&A") increased by $519,942, or
39%, for the three-month period ended June 30, 1996 as compared to the
three-month period ended June 30, 1995. The Product Segment showed little change
during such periods, while the Project Segment contributed much of the increase,
as discussed below.
Project Segment
For the Project Segment, SG&A for the three-month periods ended June 30, 1996
and June 30, 1995 was $1,363,335 and $852,192, respectively, representing 73%
and 63% of the consolidated totals. The increase in Fiscal 1997 is due primarily
to legal fees and other expenses of $480,246, including an estimate of $200,000
for fees expected to be billed to the Company, associated with the subpoenas
issued by the U. S. Attorney's office as disclosed in Form 10- KSB for the year
ended March 31, 1996. Also contributing to the higher SG&A was an increase in
gross receipts tax of $51,458.
8
<PAGE>
NON-OPERATING REVENUES AND EXPENSES
Income from Partnerships
During the three-month period ended June 30, 1996, the Company recognized
$2,004,491 of income from partnerships, an increase of $1,022,097 compared to
the three months ended June 30, 1995. While it is anticipated that certain
partnerships will continue to generate income over the balance of the year, the
Company can not reliably estimate the future operations of the cogeneration
partnerships to determine the Company's share of future earnings.
Interest and Other Investment Income
Interest and other investment income during the three months ended June 30, 1996
decreased by $13,120 compared to the three months ended June 30, 1995. This
decrease is attributable primarily to unrealized losses of $2,949 recorded
during the three months ended June 30, 1996, compared to unrealized gains of
$18,214 recorded during the three months ended June 30, 1995.
Interest Expense
Interest expense for the three-month period ended June 30, 1996 decreased by
$2,579 compared to the three month period ended June 30, 1995, primarily due to
a lower average interest rate during the 1996 period on the Stewart & Stevenson,
Inc. ("S&S") loan and on the mortgage on the Company's corporate headquarters.
Provision for Income Taxes
The provision for income taxes increased during the three months ended June 30,
1996 by $119,634 compared to the same period last year. The Company provides
federal and state income taxes based on enacted statutory rates adjusted for
projected benefits of tax operating loss carryforwards and other credits.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased by $482,513 from $903,090 at March 31,
1996, to $1,385,603 at June 30, 1996.
During the quarter ended June 30, 1996, cash of $70,812 was provided from
operations, primarily from distributions received from partnerships of
$2,076,038, partially offset by the net loss adjusted for non-cash items of
$1,499,702, including partnership income of $2,004,491, and by a net decrease in
assets and liabilities of $505,524.
During the current quarter the Company's financing activities resulted in a
decrease in cash of $26,215, primarily due to the repayment of borrowings.
Investing activities during the current quarter resulted in a decrease in cash
of $5,161 due to the acquisition of property, plant and equipment of $2,661 and
the contribution of additional capital of $2,500 to one of the partnerships.
Financing for construction of the development projects is generally provided by
loans to the particular partnerships which are secured by the project assets
only. Except for the financing provided to the Allegany project, the Company
generally does not incur significant capital costs associated with construction
of these projects. The Company provided financing to the Allegany project
utilizing a portion of its $3,000,000 line of credit under the S&S loan
agreement. At June 30, 1996 the Company had $2,500,000 outstanding under this
line of credit, with an additional $500,000 available. The Company expects that
its capital requirements for its operations, for repayment of long-term debt and
for project development expenses will be met
9
<PAGE>
by its current cash and short-term investment position, as well as by
anticipated cash flows from ownership distributions from operations of the
projects and the anticipated cash flows from projects currently under
development, and by future borrowings against project interests and other
corporate financings, as available. However, there can be no assurance of
receipt of ownership distributions from certain operating projects or of the
ability to borrow in amounts and on terms acceptable to the Company,
particularly given NIMO's uncertain financial condition, as disclosed in Form
10-KSB for the year ended March 31, 1996.
The Company has no material capital commitments for Fiscal 1997 other than as
disclosed above and in Form 10-KSB for the year ended March 31, 1996.
PART II - OTHER INFORMATION
Item 1. - LEGAL PROCEEDINGS
As disclosed in previous filings, on November 13, 1995, KBA filed a voluntary
petition to reorganize the business of KBA under Chapter 11 of the Bankruptcy
Code. KBA also filed an adversary proceeding against RG&E seeking enforcement of
the automatic stay, specific performance, breach of contract and breach of the
covenant of good faith and fair dealing. The Bankruptcy Court set a discovery
schedule and a trial date of August 20, 1996. However, on August 5, 1996, the
United States District Court for the District of New Jersey reversed in part a
prior decision of the Bankruptcy Court finding that certain claims in the
adversary proceeding were "non-core." The District Court remanded the matter to
the Bankruptcy Court for further proceedings on the issues of whether the
non-core claims should be transferred or the Bankruptcy Court should abstain. In
light of the decision, the trial has been adjourned pending further proceedings.
Other than as disclosed above, there have been no material changes in the legal
proceedings to which the Company is a party as identified in Form 10-KSB for the
year ended March 31, 1996.
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a.) Exhibit 27 Financial Data Schedule
(b.) Besicorp Group Inc. did not file any reports on Form 8-K for the quarter
ended June 30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Besicorp Group Inc., Registrant
Date: August 14, 1996 /s/ Michael F. Zinn
Michael F. Zinn
President (principal executive officer)
Date: August 14, 1996 /s/ Michael J. Daley
Michael J. Daley
Vice President, Chief Financial Officer and
(principal financial and accounting officer)
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-QSB AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 130,015
<SECURITIES> 1,001,166
<RECEIVABLES> 962,232
<ALLOWANCES> 25,600
<INVENTORY> 1,257,262
<CURRENT-ASSETS> 3,891,228
<PP&E> 3,289,692
<DEPRECIATION> 1,177,254
<TOTAL-ASSETS> 10,143,624
<CURRENT-LIABILITIES> 2,505,625
<BONDS> 3,110,773
0
0
<COMMON> 323,495
<OTHER-SE> 3,191,390
<TOTAL-LIABILITY-AND-EQUITY> 10,143,624
<SALES> 1,368,242
<TOTAL-REVENUES> 1,605,654
<CGS> 1,164,979
<TOTAL-COSTS> 1,164,979
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90,412
<INCOME-PRETAX> 523,909
<INCOME-TAX> 120,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 403,909
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
