<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
----------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1--5332
P & F INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 22-1657413
(State of incorporation) (I.R.S. Employer Identification Number)
300 SMITH STREET, FARMINGDALE, NEW YORK 11735
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 694-1800
----------------
Indicate by check mark 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, and (2) has been subject to such filing
requirements for the past 90 days. YES ( X ) NO ( )
As of November 4, 1997, there were outstanding 3,008,867 shares of the
Registrant's Class A Common Stock, par value $1.00 per share.
<PAGE>
P & F INDUSTRIES, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
PART I
Item 1. Financial Statements..........................................................................
Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996.................. 1 - 2
Consolidated Statements of Income for the six months ended September 30, 1997 and 1996...... 3 - 4
Consolidated Statements of Cash Flows for the nine months ended September 30, 1997 and 5 - 6
1996......................................................................................
Notes to Consolidated Financial Statements.................................................. 7 - 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....... 9 - 11
PART II
Item 1. Legal Proceedings............................................................................. 12
Item 2. Changes in Securities......................................................................... 12
Item 3. Defaults Upon Senior Securities............................................................... 12
Item 4. Submission of Matters to a Vote of Security Holders........................................... 12
Item 5. Other Information............................................................................. 12
Item 6. Exhibits and Reports on Form 8-K.............................................................. 12
Signatures.................................................................................... 13
</TABLE>
i
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
---------------- ---------------
<S> <C> <C>
ASSETS
CURRENT:
Cash........................................................................ $ 944,742 $ 4,558,135
Accounts receivable, less allowance for possible losses of $408,563 in 1997
and $370,410 in 1996...................................................... 9,884,911 6,113,259
Inventories................................................................. 16,646,123 11,119,850
Note receivable from officer................................................ -- 40,000
Deferred income taxes....................................................... 262,000 211,000
Prepaid expenses and other assets........................................... 146,426 300,850
---------------- ---------------
TOTAL CURRENT ASSETS...................................................... 27,884,202 22,343,094
---------------- ---------------
PROPERTY AND EQUIPMENT:
Land........................................................................ 958,020 993,020
Buildings and improvements.................................................. 4,241,577 4,505,889
Machinery and equipment..................................................... 5,419,880 5,246,699
---------------- ---------------
10,619,477 10,745,608
Less accumulated depreciation and amortization.............................. 5,120,495 4,965,956
---------------- ---------------
NET PROPERTY AND EQUIPMENT................................................ 5,498,982 5,779,652
---------------- ---------------
DEFERRED INCOME TAXES......................................................... -- 175,000
GOODWILL, net of accumulated amortization of $1,001,125 in 1997 and $927,334
in 1996..................................................................... 2,812,642 2,886,433
OTHER ASSETS, net of accumulated amortization of $46,665 in 1997 and $34,659
in 1996..................................................................... 135,458 147,464
---------------- ---------------
TOTAL ASSETS.............................................................. $ 36,331,284 $ 31,331,643
---------------- ---------------
---------------- ---------------
</TABLE>
1
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
---------------- ---------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings....................................................... $ 4,252,602 $ --
Accounts payable............................................................ 3,827,966 2,661,589
Accruals and other liabilities.............................................. 3,489,211 2,082,031
Current maturities of long-term debt........................................ 149,640 1,917,691
---------------- ---------------
TOTAL CURRENT LIABILITIES................................................. 11,719,419 6,661,311
LONG-TERM DEBT, less current maturities....................................... 3,802,306 3,919,370
DEFERRED INCOME TAXES......................................................... 331,000 --
SUBORDINATED DEBENTURES....................................................... 1,369,200 1,369,200
---------------- ---------------
17,221,925 11,949,881
---------------- ---------------
SHAREHOLDERS' EQUITY:
Preferred stock, $10 par, cumulative; shares authorized 2,000,000;.......... -- 2,633,450
Common stock:
Class A--$1 par; shares authorized 7,000,000; outstanding 3,008,867 and
2,928,867; reserved for options--809,000 shares; reserved for
warrants--70,000 shares................................................. 3,008,867 2,928,867
Class B--$1 par; shares authorized 2,000,000.............................. -- --
Additional paid-in capital.................................................. 7,647,614 7,607,614
Retained earnings........................................................... 8,452,878 6,211,831
---------------- ---------------
TOTAL SHAREHOLDERS' EQUITY................................................ 19,109,359 19,381,762
---------------- ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................ $ 36,331,284 $ 31,331,643
---------------- ---------------
---------------- ---------------
</TABLE>
2
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------------- ------------- ------------- -------------
REVENUES:
Net sales......................................... $ 14,862,840 $ 12,857,555 $ 34,585,064 $ 31,785,290
Other............................................. 118,615 97,851 257,522 237,751
------------- ------------- ------------- -------------
14,981,455 12,955,406 34,842,586 32,023,041
------------- ------------- ------------- -------------
COSTS AND EXPENSES:
Cost of sales..................................... 10,122,611 8,787,068 22,725,294 21,259,432
Selling, administrative and general............... 2,958,227 2,681,189 8,196,987 7,397,940
Interest--net..................................... 207,293 194,053 500,934 626,938
Depreciation...................................... 169,768 156,194 509,303 459,740
------------- ------------- ------------- -------------
13,457,899 11,818,504 31,932,518 29,744,050
------------- ------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES ON INCOME............................ 1,523,556 1,136,902 2,910,068 2,278,991
TAXES ON INCOME..................................... 652,000 425,000 1,190,000 861,000
------------- ------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS................... 871,556 711,902 1,720,068 1,417,991
INCOME FROM DISCONTINUED
OPERATION (NET OF INCOME
TAXES OF $850,000)................................ 542,837 -- 542,837 --
------------- ------------- ------------- -------------
NET INCOME.......................................... $ 1,414,393 $ 711,902 $ 2,262,905 $ 1,417,991
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
3
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
------------ ------------ ------------ ------------
NET INCOME............................................... $ 1,414,393 $ 711,902 $ 2,262,905 $ 1,417,991
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Preferred dividends.................................... $ -- $ 65,836 $ 21,858 $ 197,509
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income attributable to common stock:
Continuing operations.............................. $ 871,556 $ 646,066 $ 1,698,210 $ 1,220,482
Discontinued operation............................. 542,837 -- 542,837 --
------------ ------------ ------------ ------------
Net income......................................... $ 1,414,393 $ 646,066 $ 2,241,047 $ 1,220,482
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Average number of common shares
and common share equivalents:
Primary............................................ 3,490,263 3,237,809 3,480,992 3,204,686
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Fully diluted...................................... 3,554,299 3,317,177 3,556,555 3,317,916
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings per share of common stock:
Primary:
Continuing operations.............................. $ .25 $ .20 $ .49 $ .38
Discontinued operation............................. .16 -- .16 --
------------ ------------ ------------ ------------
Net income......................................... $ .41 $ .20 $ .65 $ .38
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Fully diluted:
Continuing operations.............................. $ .25 $ .19 $ .48 $ .37
Discontinued operation............................. .15 -- .15 --
------------ ------------ ------------ ------------
Net income......................................... $ .40 $ .19 $ .63 $ .37
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
4
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
<S> <C> <C>
1997 1996
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................................... $ 2,262,905 $ 1,417,991
------------ ------------
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization................................................... 619,767 595,660
Deferred income taxes........................................................... 455,000 --
Provision for losses on accounts receivable..................................... 62,093 76,067
Gain on sale of land and building of discontinued operation..................... (1,652,927) --
Decrease (increase):
Accounts receivable............................................................... (3,833,745) 969,588
Inventories....................................................................... (5,526,273) 1,821,866
Note receivable from officer...................................................... 40,000 25,000
Prepaid expenses and other assets................................................. 144,524 91,275
Other assets...................................................................... -- 3,200
Increase (decrease):
Accounts payable.................................................................. 1,166,377 (959,893)
Accruals and other................................................................ 1,407,180 6,343
------------ ------------
Total adjustments............................................................... (7,118,004) 2,629,106
------------ ------------
Net cash (used in) provided by operating activities........................... (4,855,099) 4,047,097
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................................ (356,233) (194,996)
Proceeds from sale of land and building of discontinued operation............... 1,765,760 --
------------ ------------
Net cash used in investing activities......................................... 1,409,527 (194,996)
------------ ------------
</TABLE>
5
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
<S> <C> <C>
1997 1996
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings............................................. 14,712,324 10,525,943
Repayments of short-term borrowings............................................. (10,459,722) (13,954,463)
Principal payments on long-term debt............................................ (1,885,115) (2,402,484)
Proceeds from exercise of stock options......................................... 120,000 --
Dividends paid on preferred stock............................................... (21,858) (197,509)
Redemption of preferred stock................................................... (2,633,450) --
Proceeds from mortgage refinancing.............................................. -- 2,062,500
-------------- --------------
Net cash used in financing activities....................................... (167,821) (3,966,013)
-------------- --------------
NET (DECREASE) INCREASE IN CASH................................................... (3,613,393) (113,912)
CASH AT BEGINNING OF PERIOD....................................................... 4,558,135 1,224,603
-------------- --------------
CASH AT END OF PERIOD............................................................. $ 944,742 $ 1,110,691
-------------- --------------
-------------- --------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes................................................................ $ 974,865 $ 817,199
-------------- --------------
-------------- --------------
Interest.................................................................... $ 590,874 $ 847,231
-------------- --------------
-------------- --------------
</TABLE>
6
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SUMMARY OF ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements contained herein include the accounts
of P & F Industries, Inc. and its subsidiaries (the "Company"). All significant
intercompany balances and transactions have been eliminated.
The consolidated financial statements for the periods ended September 30,
1997 and 1996 are presented as unaudited but, in the opinion of the Company,
they include all adjustments necessary for a fair statement of the results of
operations for those periods. All such adjustments are of a normal recurring
nature. The consolidated balance sheet information for December 31, 1996 was
derived from audited financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. These interim
financial statements should be read in conjunction with that report.
Results for interim periods are not necessarily indicative of results to be
expected for a full year, since the operations of some of the Company's
subsidiaries are seasonal in nature.
The Company conducts its business operations through two wholly-owned
subsidiaries. Florida Pneumatic Manufacturing Corporation ("Florida Pneumatic")
is engaged in the importation, manufacture and sale of pneumatic hand tools for
the industrial, retail and automotive markets and air filters. Florida Pneumatic
also markets, through its Berkley Tool Division ("Berkley"), a line of pipe
cutting and threading tools, wrenches and replacement electrical components for
a widely used brand of pipe cutting and threading machines. Embassy Industries,
Inc. ("Embassy") is engaged in the manufacture and sale of baseboard and radiant
hot-water heating products. Embassy also imports, assembles and packages a line
of small hardware items through its Franklin Hardware division ("Franklin").
BASIS OF FINANCIAL STATEMENT PRESENTATION
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
7
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1--SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE
Primary and fully diluted earnings per share are computed using the treasury
stock method, modified for stock options and warrants outstanding in excess of
20% of the total outstanding shares of common stock. Under this method, the
aggregate number of shares outstanding reflects the assumed use of proceeds from
the hypothetical exercise of the outstanding options and warrants, unless the
effect on earnings per share is antidilutive. The assumed proceeds are used to
repurchase shares of common stock, to a maximum of 20% of the shares
outstanding. The balance of the proceeds, if any, are used to reduce outstanding
debt. Fully diluted earnings per share also reflects the assumed use of proceeds
from the hypothetical exercise of contingent issuances if such contingent
issuances have a reasonable possibility of occurring.
In calculating the purchase price of common stock, the average market value
for the period is used for primary earnings per share and the greater of the
average or ending market value for the period is used for fully diluted earnings
per share.
Net income or loss is adjusted for preferred dividends in computing the net
income or loss attributable to the common stock.
NOTE 2--INVENTORIES
Major classes of inventory were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
---------------- ---------------
<S> <C> <C>
Finished goods............................................ $ 12,536,348 $ 7,661,749
Work in process........................................... 1,220,691 735,792
Raw materials and supplies................................ 2,889,084 2,722,309
---------------- ---------------
$ 16,646,123 $ 11,119,850
---------------- ---------------
---------------- ---------------
</TABLE>
8
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THIRD QUARTER ENDED SEPTEMBER 30, 1997 COMPARED WITH THIRD QUARTER
ENDED SEPTEMBER 30, 1996
Consolidated revenues increased 15.6%, from $12,955,406 to $14,981,455.
Revenues from pneumatic tools and related equipment increased 21.2%, from
$9,354,712 to $11,337,858, due to the addition of a new category of tools to the
product line. Revenues from heating equipment increased 9.3%, from $2,319,108 to
$2,534,485, while revenues from hardware declined 13.5%, from $1,281,132 to
$1,108,692, mostly due to timing differences of shipments. Selling prices of all
products were virtually unchanged.
Consolidated gross profit, as a percentage of revenues, was virtually
unchanged at 32.4%, compared to 32.2% in the prior year. Gross profit from
pneumatic tools and related equipment declined from 33.1% to 32.6%, due to a
slightly less favorable product mix offset partially by an increase in the value
of the U.S. dollar as compared to the Japanese yen, which lowered the cost of
imported product. Gross profit from heating equipment rose from 32.3% to 34.1%
and gross profit from hardware rose from 22.5% to 23.5%, both due to a more
profitable product mix.
Consolidated selling, administrative and general expenses increased 10.3%,
from $2,681,189 to $2,958,227, but declined as a percentage of revenues, from
20.7% to 19.8%, due to the increased revenues.
Interest expense increased from $194,053 to $207,293, due to higher
borrowings for the purchase of inventory required to support the increased
sales.
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1996
Consolidated revenues increased 8.8%, from $32,023,041 to $34,842,586.
Revenues from pneumatic tools and related equipment increased 10.9%, from
$23,280,056 to $25,827,535, due to the addition in the current quarter of a new
category of tools to the product line. Revenues from heating equipment increased
7.3%, from $5,502,364 to $5,903,112. Revenues from hardware declined 4%, from
$3,239,220 to $3,110,345, due to the timing differences of shipments noted
above. Selling prices of all products were virtually unchanged.
Consolidated gross profit, as a percentage of sales, rose from 33.6% to
34.8%. Gross profit from pneumatic tools and related equipment rose from 34.6%
to 35.6%, due to an increase in the value of the U.S. dollar as compared to the
Japanese yen, which lowered the cost of imported product. Gross profit from
heating equipment rose from 32.8% to 34.0% and gross profit from hardware rose
from 24.6% to 25.7%, both due to a more profitable product mix.
9
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1996 (CONTINUED)
Consolidated selling, administrative and general expenses rose 10.8%, from
$7,397,740 to $8,196,987, essentially in line with the increase in revenues. As
a percentage of revenues, these expenses increased from 23.1% to 23.5%.
Interest expense decreased $126,004, from $626,938 to $500,934, as a result
of lower average short-term borrowings in 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company gauges its liquidity and financial stability by the measurements
shown in the following table (dollar amounts in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1997 1996 1996
---------------- --------------- ----------------
<S> <C> <C> <C>
Working Capital......................... $ 16,165 $ 15,682 $ 17,202
Current Ratio........................... 2.38 to 1 3.35 to 1 3.95 to 1
Shareholders' Equity.................... $ 19,109 $ 19,382 $ 18,912
</TABLE>
During the nine months ended September 30, 1997, gross accounts receivable
increased approximately $3,810,000 and inventories increased approximately
$5,526,000. Both of these increases were primarily attributable to the addition
of a new category of pneumatic tools to the product line, with corresponding
sales volume and inventory requirements. Short-term borrowings and accounts
payable, combined, increased approximately $5,419,000 as a result of the
increase in inventories.
On January 30, 1997, the Company redeemed all of its outstanding preferred
stock, at the par value of $10 per share, for a total of $2,633,450. This
redemption was funded by working capital and contributed to the decreases in the
Company's current ratio and shareholders' equity from December 31, 1996 to
September 30, 1997, as shown above.
On August 22, 1997, the Company sold the land and building it owned in New
Hyde Park, New York, the location of a former subsidiary. This sale resulted in
a non-recurring net gain of $542,837, which is shown as income from discontinued
operation on the statement of operations. The remaining balance of the mortgage
on this property, totalling $1,749,090, was paid in full at the time of the
sale.
Capital spending for the nine months ended September 30, 1997 was
approximately $356,000. The total amount was provided from working capital.
Capital expenditures for the rest of 1997 are expected to total approximately
$479,000, some of which may be financed. Included in the expected total for 1997
are capital expenditures relating to new products, expansion of existing product
lines and replacement of old equipment.
10
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company's credit facility provides a line of credit totalling
$18,000,000. Of this amount, $14,000,000 is available for direct loans, letters
of credit and bankers' acceptances. At September 30, 1997, there were loans
totalling approximately $4,253,000 outstanding against this line of credit.
There was a commitment at September 30, 1997 of approximately $1,970,000 for
open letters of credit. In addition, at September 30, 1997, approximately
$1,441,000 of the Company's credit facility was used to secure accounts payable.
The total line of credit also includes $4,000,000 earmarked for acquisitions
subject to the lending bank's approval. The Company's credit facility also
provides the availability of up to $10,000,000 in foreign currency forward
contracts. These contracts fix the exchange rate on future purchases of Japanese
yen needed for payments to foreign suppliers. The total amount of foreign
currency forward contracts outstanding at September 30, 1997 was approximately
$1,800,000.
The Company's credit facility agreement is subject to annual review by the
lending bank. Under this agreement, the Company is required to adhere to certain
financial covenants. At September 30, 1997, and for the nine months then ended,
the Company satisfied all of these covenants.
The Company continues to conduct an extensive acquisition search. The funds
for an acquisition will be provided by working capital and existing credit
facilities, including the $4,000,000 credit facility earmarked for acquisitions
referred to above. The total funds available, including cash derived from
operations, will be approximately $9,000,000.
The Company, through Florida Pneumatic, imports a significant amount of its
purchases from Japan, with payment due in Japanese yen. As a result, the Company
is subject to the effects of foreign currency exchange fluctuations. The Company
uses a variety of techniques to protect itself from any adverse effects from
these fluctuations, including increasing its selling prices, obtaining price
reductions from its overseas suppliers, using alternative supplier sources and
entering into foreign currency forward contracts. Because of these steps taken
by the Company, foreign currency exchange rate fluctuations have not had a
significant negative effect on the Company's results of operations or its
financial position. Any future weakness of the dollar would again, however,
present a problem and there can be no certainty that the Company will continue
to be successful in its efforts to counter this problem.
11
<PAGE>
PART II--OTHER INFORMATION
<TABLE>
<S> <C>
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
(a) Exhibits
The following exhibits have been filed as part of this report:
Exhibit 11--Schedule of Computation of Earnings Per Common Share.
Exhibit 27--Financial Data Schedules (submitted to the Securities and Exchange
Commission in electronic format).
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter ended
September 30, 1997.
</TABLE>
12
<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.
P & F INDUSTRIES, INC.
(REGISTRANT)
BY /S/ LEON D. FELDMAN
-----------------------------------------
Leon D. Feldman
EXECUTIVE VICE PRESIDENT
(PRINCIPAL FINANCIAL OFFICER)
DATED: NOVEMBER 4, 1997
13
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 11
SCHEDULE OF COMPUTATION OF EARNINGS PER COMMON SHARE
QUARTER ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
FULLY
PRIMARY DILUTED
------------ ------------
<S> <C> <C>
Net income............................................................................ $ 1,414,393 $ 1,414,393
Dividends on preferred stock.......................................................... -- --
------------ ------------
Net income for earnings per common share.............................................. $ 1,414,393 $ 1,414,393
Weighted average number of common shares outstanding during the period................ 2,979,991 2,979,991
Common share equivalents--shares issuable upon exercise of stock options.............. 510,272 574,308
------------ ------------
Weighted average number of common shares and common share equivalents used in
calculation of earnings per common share............................................ 3,490,263 3,554,299
------------ ------------
------------ ------------
Earnings per common share............................................................. $.41 $.40
------------ ------------
------------ ------------
</TABLE>
14
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 11
(CONTINUED)
SCHEDULE OF COMPUTATION OF EARNINGS PER COMMON SHARE
QUARTER ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
FULLY
PRIMARY DILUTED
------------ ------------
<S> <C> <C>
Net income............................................................................ $ 711,902 $ 711,902
Dividends on preferred stock.......................................................... (65,836) (65,836)
------------ ------------
Net income for earnings per common share.............................................. $ 646,066 $ 646,066
------------ ------------
------------ ------------
Weighted average number of common shares outstanding during the period................ 2,929,991 2,929,991
Common share equivalents--shares issuable upon exercise of stock options.............. 307,818 387,186
------------ ------------
Weighted average number of common shares and common share equivalents used in
calculation of earnings per common share............................................ 3,237,809 3,317,177
------------ ------------
------------ ------------
Earnings per common share............................................................. $.20 $.19
------------ ------------
------------ ------------
</TABLE>
15
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 11
(CONTINUED)
SCHEDULE OF COMPUTATION OF EARNINGS PER COMMON SHARE
NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
FULLY
PRIMARY DILUTED
------------ ------------
<S> <C> <C>
Net income............................................................................ $ 2,262,905 $ 2,262,905
Dividends on preferred stock.......................................................... (21,858) (21,858)
------------ ------------
Net income for earnings per common share.............................................. $ 2,241,047 $ 2,241,047
------------ ------------
------------ ------------
Weighted average number of common shares outstanding during the period................ 2,975,192 2,975,192
Common share equivalents--shares issuable upon exercise of stock options.............. 505,800 581,363
------------ ------------
Weighted average number of common shares and common share equivalents used in
calculation of earnings per common share............................................ 3,480,992 3,556,555
------------ ------------
------------ ------------
Earnings per common share............................................................. $.65 $.63
------------ ------------
------------ ------------
</TABLE>
16
<PAGE>
P & F INDUSTRIES, INC. AND SUBSIDIARIES
EXHIBIT 11
(CONTINUED)
SCHEDULE OF COMPUTATION OF EARNINGS PER COMMON SHARE
NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
FULLY
PRIMARY DILUTED
------------ ------------
<S> <C> <C>
Net income............................................................................ $ 1,417,991 $ 1,417,991
Dividends on preferred stock.......................................................... (197,509) (197,509)
------------ ------------
Net income for earnings per common share.............................................. $ 1,220,482 $ 1,220,482
------------ ------------
------------ ------------
Weighted average number of common shares outstanding during the period................ 2,929,991 2,929,991
Common share equivalents--shares issuable upon exercise of stock options.............. 274,695 387,925
------------ ------------
Weighted average number of common shares and common share equivalents used in
calculation of earnings per common share............................................ 3,204,686 3,317,916
------------ ------------
------------ ------------
Earnings per common share............................................................. $.38 $.37
------------ ------------
------------ ------------
</TABLE>
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 944,742
<SECURITIES> 0
<RECEIVABLES> 9,884,911
<ALLOWANCES> 0
<INVENTORY> 16,646,123
<CURRENT-ASSETS> 27,884,202
<PP&E> 10,619,477
<DEPRECIATION> 5,120,495
<TOTAL-ASSETS> 36,331,284
<CURRENT-LIABILITIES> 11,719,419
<BONDS> 5,171,506
0
0
<COMMON> 3,008,867
<OTHER-SE> 16,100,492
<TOTAL-LIABILITY-AND-EQUITY> 36,331,284
<SALES> 34,585,064
<TOTAL-REVENUES> 34,842,586
<CGS> 22,725,294
<TOTAL-COSTS> 22,725,294
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 500,934
<INCOME-PRETAX> 2,910,068
<INCOME-TAX> 1,190,000
<INCOME-CONTINUING> 1,720,068
<DISCONTINUED> 542,837
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,262,905
<EPS-PRIMARY> .65
<EPS-DILUTED> .63
<FN>
<F1>ACCOUNTS RECEIVABLE ARE NET OF ALLOWANCE
</FN>
</TABLE>
