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 March 31, 1998
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 No.)
incorporation or organization)
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 May 12, 1998, is 2,481,264 shares.
<PAGE>
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PART 1 FINANCIAL INFORMATION (Unaudited) Page
--------------------------------- ----
Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997 3
Consolidated Statements of Operations (Unaudited) - 4
Three Month Period Ended March 31, 1998 and 1997
Consolidated Statements of Cash Flows (Unaudited) - 5
Three Month Period Ended March 31, 1998 and 1997
Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
PART II OTHER INFORMATION 8
----------------- -
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 9
2
<PAGE>
PERFORMANCE INDUSTRIES, INC.AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
31-Mar-98 31-Dec-97
--------- ---------
<S> <C> <C>
Current assets:
Cash and equivalents, unrestricted $ 2,387 $ 2,815
Accounts and other receivables,
less allowance for doubtful accounts 425 410
Notes Receivable 350 --
Current Portion of Receivables from sale of businesses,
net of allowance 269 269
Factored receivables, net of allowance for doubtful accounts 261 261
Inventories 250 313
Prepaid expenses and other current assets 157 227
Real estate held for sale 785 785
-------- --------
Total current assets 4,884 5,080
Deferred income taxes 1,291 1,291
Property and equipment, net 2,636 2,757
Other assets 1,258 1,277
-------- --------
TOTAL ASSETS $ 10,069 $ 10,405
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,051 $ 1,051
Accounts payable 487 637
Accrued employment costs 435 476
Accrued expenses and other current liabilities 446 666
Factored receivables reserve 61 61
Liabilities subject to compromise 797 797
Foreign Tax Liability 250 250
-------- --------
Total current liabilities 3,527 3,938
Long-term debt, less current portion 169 255
Shareholder's equity:
Preferred Stock, par value $1.00 per share: authorized
100,000 shares; none issued -- --
Common stock, no par value; authorized 5,000,000 shares;
3,157,332 issued; outstanding 2,376,889 and 2,377,889, respectively 31,202 31,202
Accumulated deficit (21,583) (21,745)
-------- --------
9,619 9,457
Treasury stock at cost 671,784 and 670,784 shares, respectively (3,246) (3,245)
-------- --------
Total shareholders' equity 6,373 6,212
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 10,069 $ 10,405
======== ========
</TABLE>
3
<PAGE>
PERFORMANCE INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
For the Three Month Periods Ended March 31, 1998 and 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(Unaudited)
Three Months Ended March 31
---------------------------
31-Mar-98 31-Mar-97
--------- ---------
Revenues $ 4,900 $ 5,730
Cost of revenues (4,377) (5,332)
Selling, general and administrative expenses (396) (498)
Interest expense (8) (37)
Other income (expenses), net 31 286
Gain (loss) on sale or disposition of assets (60) 20
----------- -----------
Income (loss) from continuing operations before
income taxes 90 169
Provision for income taxes 0 (1)
----------- -----------
Income (loss) from continuing operations 90 168
Income (loss) from discontinued operations 72 (188)
----------- -----------
Net income (loss) $ 162 $ (20)
=========== ===========
Net income (loss) per common share
Continuing operations $ 0.04 $ 0.07
Discontinued operations $ 0.03 $ (0.08)
----------- -----------
Net income (loss) per common share $ 0.07 $ (0.01)
=========== ===========
Average number of shares outstanding 2,376,889 2,481,264
=========== ===========
Certain reclassifications have been made to the consolidated statements of cash
flows for the three-month periods ended March, 1997 to conform to the
consolidated financial statement classifications for 1998.
4
<PAGE>
PERFORMANCE INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1998 1997
---- ----
<S> <C> <C>
Net cash provided by (used in) operating activities $ 84 $ (151)
Cash flows from investing activities:
Decrease (increase) in restricted cash -- 253
Decrease (increase) in receivables from sales of businesses, net -- 206
Purchase of property and equipment (75) (196)
Proceeds from sale of property and equipment -- 20
Issuance of Notes Receivable (350) --
------- -------
Net cash provided by (used in) investing activities (425) 283
Cash flows from financing activities:
Repayments of borrowings (86) (122)
(Increase) decrease in treasury stock (1) --
------- -------
Net cash provided by (used in) financing activities (87) (122)
Net increase (decrease) in cash and cash equivalents (428) 10
Cash and cash equivalents at beginning of period 2,815 1,136
------- -------
Cash and cash equivalents at end of period $ 2,387 $ 1,146
======= =======
</TABLE>
Certain reclassifications have been made to the consolidated statements of cash
flows for the three-month periods ended March, 1997 to conform to the
consolidated financial statement classifications for 1998.
5
<PAGE>
Management's Discussion and Analysis
------------------------------------
Results of Operations
During 1997, the Company sold two of its operating companies, Funding and
Development. As a result, there has been a reclassification of income and
expenses related to these businesses as set forth in the Company's Report on
Form 10-Q for the period ending March 31, 1997. Management's Discussion and
Analysis shall be limited to continuing operations.
The Company currently owns and operates five restaurants in California and one
in Arizona. It also owns two Carlos Murphy's Restaurants in San Diego, CA that
were leased to an unrelated third party in the first quarter of 1998.
Revenues for the Company decreased by 14% for the first Quarter of 1998 as
compared in 1997. The decrease in revenue is attributable to the leasing of the
two Carlos Murphy's Restaurants.
Revenues for stores opened at least one year rose by 4% for the first quarter of
1998 as compared to the same period last year. Restaurant earnings were $531,175
for the first quarter 1998 as compared to $410,295 for the first quarter of
1997. This is attributed to continuing savings by cost control at the restaurant
level.
Restaurant net profit was $121,000 for first quarter, 1998 as compared to
$223,382 for the first quarter of 1997. The decrease in Restaurant net profit is
attributable to the increase in administrative expense due to the sale of the
other operation divisions of the Company. As a result of the sale, more of the
corporate administrative expenses were directly classified to the Restaurant
division. The Company is continuing its efforts to reduce administrative
expenses.
The Company had income from discontinued operations of $72,000 for the first
quarter 1998 as compared to a loss of $188,000 for 1997. The income was from the
collection of a Funding Account that had been fully reserved. The Company had a
further loss of $60,000 from discontinued operations. This is primarily related
to the Las Vegas Restaurant which was subleased in the first quarter. The
Company had paid a non-recurring charge of $20,000 during the quarter related to
its prior bankruptcy.
Net income for the Company was $162,000 for the first quarter of 1998 as
compared to a loss of $20,000 for the same period in 1997.
6
<PAGE>
Liquidity and Capital Resources
The company has sufficient cash reserves to meet operational needs for the
upcoming year. Management believes, but there can be no assurance, that it will
be able to finance any future expansion through loans or leases of equipment.
7
<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
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
8
<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
Dated: May 13, 1998 /s/ Joe Hrudka
----------------------------------
Joe Hrudka
Chairman of the Board
(Principal Executive Officer)
/s/ Ed Fochtman, Jr.
----------------------------------
Ed Fochtman, Jr.
Chief Financial Officer
(Principal Accounting Officer)
9
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<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 2,387
<SECURITIES> 0
<RECEIVABLES> 1,280
<ALLOWANCES> 243
<INVENTORY> 250
<CURRENT-ASSETS> 4,884
<PP&E> 4,744
<DEPRECIATION> 2,109
<TOTAL-ASSETS> 10,069
<CURRENT-LIABILITIES> 3,527
<BONDS> 31,202
0
0
<COMMON> 0
<OTHER-SE> (24,829)
<TOTAL-LIABILITY-AND-EQUITY> 10,069
<SALES> 4,900
<TOTAL-REVENUES> 4,900
<CGS> 4,377
<TOTAL-COSTS> 4,802
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> 90
<INCOME-TAX> 0
<INCOME-CONTINUING> 90
<DISCONTINUED> 72
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 162
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
