UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 30, 1997
------------------
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 __________________
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
---------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-1334199
- ------------------------------- ----------------------------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) No.)
2701 E. Camelback Road, Suite 210
Phoenix, Arizona 85016
- ------------------------------- ----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (602) 912-0100
Indicate by checkmark whether the registrant: (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15d of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO
--- ---
Number of shares outstanding of each of the issuer's classes of common stock as
of November 12, 1997, is 2,481,264 shares.
<PAGE>
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PART 1 FINANCIAL INFORMATION (Unaudited) Page
--------------------------------- ----
Consolidated Balance Sheets - 3
September 30, 1997 and December 31, 1996
Consolidated Statements of Operations (Unaudited) - 4
Nine Month Period Ended September 30, 1997 and 1996
Consolidated statements of Operations (Unaudited) - 5
Three Month Period Ended September 30, 1997 and 1996
Consolidated Statements of Cash Flows (Unaudited) - 6
Nine Month Period Ended September 30, 1997 and 1996
Notes to Consolidated Financial Statements (Unaudited) 7
Management's Discussion and Analysis of Financial 8 - 9
Condition and Results of Operations
PART II OTHER INFORMATION 10
-----------------
Item 1. Legal Proceedings
- -----------------------------
Item 2. Changes in Securities
- ---------------------------------
Item 3. Defaults upon Senior Securities
- -------------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders
- ---------------------------------------------------------------
Item 5. Other Information
- -----------------------------
Item 6. Exhibits and Reports on Form 8-K
- --------------------------------------------
Signatures 11
2
<PAGE>
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
30-Sept-97 31-Dec-96
<S> <C> <C>
Current assets:
- ---------------
Cash and equivalents, unrestricted $ 2,108 $ 1,136
Cash, restricted 0 409
Securities available for sale 318 727
Accounts and other receivables,
less allowance for doubtful accounts 584 503
Current Portion of Receivables from sale of businesses,
net of allowance 472 1,356
Factored accounts receivables, net of allowance for doubtful accounts 61 1,139
Inventories 309 328
Prepaid expenses and other current assets 157 192
Other assets held for sale 206 206
-------- --------
Total current assets 4,215 5,996
Receivables from sales of businesses, less current portion,
net of allowance 0 119
Investment in real estate 9,244 9,481
Deferred income taxes 1,517 1,460
Property and equipment, net 2,969 3,084
Other assets 1,846 1,831
-------- --------
TOTAL ASSETS $ 19,791 $ 21,971
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
- --------------------
Current portion of long-term debt $ 497 $ 547
Accounts payable 804 1,000
Accrued employment costs 376 491
Accrued expenses and other current liabilities 783 1,339
Factored receivables reserve 61 286
Liabilities subject to compromise 753 754
Foreign Tax Liability 250 250
-------- --------
Total current liabilities 3,524 4,667
Long-term debt, less current portion 8,076 8,403
Minority interest 304 371
Shareholders' equity:
- ---------------------
Preferred Stock, par value $1.00 per share: authorized
100,000 shares; none issued 0 0
Common stock, no par value; authorized 5,000,000 shares;
3,157,332 issued; outstanding 2,481,264 and 2,481,264, respectively 31,202 31,202
Accumulated deficit (20,433) (20,139)
Unrealized appreciation on securities available for sale
net of income taxes 94 443
-------- --------
10,863 11,506
Treasury stock at cost 670,784 shares (2,976) (2,976)
-------- --------
Total shareholders' equity 7,887 8,530
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 19,791 $ 21,971
======== ========
</TABLE>
3
<PAGE>
PERFORMANCE INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30
------------------------------
30-Sept-97 30-Sept-96
---------- ----------
<S> <C> <C>
Revenues $ 17,279 $ 16,433
Cost of revenues (15,833) (14,570)
Selling, general and administrative expenses (1,340) (3,252)
Interest expense (559) (563)
Other income (expenses), net 135 93
Gain (loss) on sale or disposition assets (42) 993
----------- -----------
Income (loss) from continuing operations before
income taxes and minority interest (360) (866)
Provision for income taxes (1) (241)
Minority interest in loss from subsidiary 67 20
----------- -----------
Net income (loss) $ (294) $ (1,087)
=========== ===========
Net income (loss) per common share ($ 0.12) ($ 0.44)
=========== ===========
Average number of shares outstanding 2,481,264 2,481,264
=========== ===========
</TABLE>
4
<PAGE>
PERFORMANCE INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30
-------------------------------
30-Sept-97 30-Sept-96
---------- ----------
<S> <C> <C>
Revenues $ 5,373 $ 5,463
Cost of revenues (5,050) (4,911)
Selling, general and administrative expenses (316) (1,368)
Interest expense (176) (172)
Other income (expenses), net 16 (151)
Gain (loss) on sale or disposition of assets (12) 1,568
----------- -----------
Income (loss) from continuing operations before
income taxes and minority interest (165) 429
Provision for income taxes 0 (247)
Minority interest in loss from subsidiary 26 2
----------- -----------
Net income (loss) $ (139) $ 184
=========== ===========
Net income (loss) per common share $ (0.06) $ (0.07)
=========== ===========
Average number of shares outstanding 2,481,264 2,481,264
=========== ===========
</TABLE>
5
<PAGE>
PERFORMANCE INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPTING PER SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30
------------------------------
1997 1996
---- ----
<S> <C> <C>
Net cash provided by (used in) operating activities $ 339 $(1,150)
Cash flows from investing activities:
Decrease (increase) in restricted cash 409 579
Decrease (increase) in receivables from sales of businesses,
net 1,003 (661)
Purchase of property and equipment (402) (1,181)
Increase in real estate under development 0 1,413
------- -------
Net cash provided by (used in) investing activities 1,010 150
Cash flows from financing activities:
Proceeds from borrowings 0 1,071
Repayments of borrowings (377) (384)
(Increase) decrease in treasury stock 0 (25)
------- -------
Net cash provided by (used in) financing activities (377) 662
Net increase (decrease) in cash and cash equivalents 972 (338)
Cash and cash equivalents at beginning of period 1,136 411
------- -------
Cash and cash equivalents at end of period $ 2,108 $ 73
======= =======
</TABLE>
6
<PAGE>
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
(1) Reclassifications:
------------------
Certain reclassifications have been made to the consolidated financial
statements of prior periods to conform to the classifications for the current
period's presentation.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
Consolidated
- ------------
Revenues for the Nine Months ending September 30, 1997, were up 5% to
$17,279,000. from $16,443,000. for the same period last year. Revenues for the
three month period were down 1% from the same period last year. This resulted
from the sale of the Funding division in August, 1997 and the reduction in fee
income from last year's levels. This was partially offset by an increase in
revenues at the Restaurant Division.
Selling General and Administrative expenses were 77% lower for the
Three month period ending September 30, 1997 and 59% lower for the nine month
period ending than for the same periods last year. The reduction was a result of
the Company's elimination of management positions at the corporate level. The
reduction has resulted in lower expenses for travel and entertainment, employee
benefits and resulted in the reduction of office space for the Corporate
headquarters. The company has also realized savings from a reduction in the cost
of Worker's Compensation and General Liability Insurance.
The company had a net loss of $139,000. for the three month period
ending September 30, 1997, as compared to net income of $184,000. for the same
period last year. The Company benefited from a one-time gain of $1,568,000. on
the sale of an asset in the quarter ending September 30, 1996. Without the gain
the Company would have lost $1,139,000. for the three month period ending
September 30, 1996. Management is studying further ways to reduce overhead and
corporate costs.
Restaurants
- -----------
Revenues for the Restaurant division increased $119,000. or 2% for the
quarter ending September 30, 1997 from the same period last year. The sales
increase is attributed to the addition of the two Carlos Murphy's Restaurants
during the past year. The Restaurant Division has a net profit of $97,800. for
the three months ending September 30, 1997 as compared to a loss of $243,900.
for the same period last year. Net income for Restaurants for the nine month
period ending September 30, 1997 was $434,600. as compared to a loss of
$1,260,000. for the same period last year. Management believes that the cost
controls that were instituted over the past year resulted in the Restaurant
Divisions having a net profit for the quarter and year to date.
Management believes that revenues for the Fourth Quarter will be higher
than the previous year because of increased sales at many of the company's
stores as well as the addition of one of the Carlos Murphy's in 1997. Management
believes, but there can be no assurance, that the Restaurant Division shall
continue to generate operating profits for the fourth Quarter and year end.
8
<PAGE>
Development
- -----------
This division is under contract to be sold. The closing was originally
scheduled to occur in August, 1997 but due to delays in financing by the Buyer,
the sale has been delayed. It is expected to close by November 26, 1997 or the
sale agreement will be canceled.
Development had a net loss of $93,300 for the Three month period ending
September 30, 1997 as compared to a net loss of $3,800. for the same period last
year. The loss of the Restaurant tenant in the Fourth Quarter of last year and
the delay in locating a suitable tenant and doing renovations to the space
contributed to the loss.
With the sale of this division the Company expects to suffer a capital
loss of approximately $1.2 million dollars in the Fourth Quarter of this year.
However, the sale will allow the Company to concentrate on its core business of
Restaurants and will eliminate operating losses for this division.
Liquidity and Capital Resources
- -------------------------------
Operations provided net cash flow of $339,000. for the nine month
period ended September 30, 1997 as compared to a use of cash in operations of
$1,150,000. for the same period last year.
The Company had a net increase in cash of $972,000. from operations and
investments in the nine month period ending September 30, 1997. The increase in
cash will give the company needed capital to acquire restaurant locations. The
Company is currently in active negotiations for one additional location and is
seeking other opportunities.
Management believes that current cash flow, along with cash on hand
will meet all of its capital needs for the near future. Should it be necessary,
Management believes, but there can be no assurance, that it could borrow monies
to meet any additional cash needs.
9
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Company held its annual meeting on July 28, 1996 at which
the Board of Directors was reelected to serve for one year and
employment of Toback CPA's as auditiors was approved.
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
None
10
<PAGE>
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.
PERFORMANCE INDUSTRIES, INC. and SUBSIDIARIES
Date: November 19, 1997 /s/ Joe Hrudka
--------------
Joe Hrudka
Chairman of the Board
(Principal Executive Officer)
/s/ Ed Fochtman
---------------
Ed Fochtman
Chief Financial Officer
(Principal Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 2,108
<SECURITIES> 318
<RECEIVABLES> 1,545
<ALLOWANCES> 428
<INVENTORY> 309
<CURRENT-ASSETS> 4,215
<PP&E> 14,691
<DEPRECIATION> 2,478
<TOTAL-ASSETS> 19,791
<CURRENT-LIABILITIES> 3,524
<BONDS> 0
0
0
<COMMON> 31,202
<OTHER-SE> (23,409)
<TOTAL-LIABILITY-AND-EQUITY> 19,791
<SALES> 17,279
<TOTAL-REVENUES> 17,279
<CGS> 15,833
<TOTAL-COSTS> 17,080
<OTHER-EXPENSES> 67
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 559
<INCOME-PRETAX> (293)
<INCOME-TAX> 1
<INCOME-CONTINUING> (294)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (294)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
