SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Nine Month Period Ended Commission File #0-916-3
September 30, 1995
PLENUM PUBLISHING CORPORATION
(Exact name of the Registrant
as specified in Charter)
Delaware 13-5648711
(State of Incorporation) (I.R.S. Employer
Identification No.)
233 Spring Street
New York, New York 10013
(Address of principal (Zip Code)
executive offices)
Registrant's Telephone Number,
Including Area Code (212) 620-8000
SECURITIES REGISTERED PURSUANT
TO SECTION 12 (g) OF THE ACT:
COMMON STOCK $.10 PAR VALUE
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 (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to the filing requirements for at least the past 90 days.
Yes X No
------- ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of 11/ 8 /95: 3,941,523
---------
<PAGE>
INDEX
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--
September 30, 1995 and December 31, 1994 3
Condensed consolidated statements of income
and retained earnings -- Nine and Three months
ended September 30, 1995 and 1994 5
Condensed consolidated statements of cash
flows -- Nine months ended September 30, 1995
and 1994 6
Notes to condensed consolidated financial
statements -- September 30, 1995 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
<PAGE>
PART I - FINANCIAL INFORMATION
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 December 31
------------- ------------
1995 1994
---- ----
(UNAUDITED) (NOTE)
------------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ($27,801,634 and $30,981,399) $28,441,835 $31,775,618
Marketable securities at aggregate market value 23,295,999 24,290,875
Interest and dividends receivable 109,140 154,654
Receivables -- net of allowances of $1,002,000
and $921,000 5,491,825 6,018,648
Inventories -- Note C 3,821,517 3,636,301
Deferred income tax benefits 1,147,144 2,074,818
------------- ------------
Total Current Assets 62,307,460 67,950,914
------------- ------------
Costs Applicable to Deferred Subscription Income 636,742 720,370
------------- ------------
Property, Plant and Equipment, at cost:
Land 690,000 690,000
Building, net of accumulated depreciation of
$510,166 and $433,306 3,023,611 3,100,471
Furniture, Fixtures, equipment and leasehold improvements,
net of accumulated depreciation and amortization
of $1,051,212 and $882,829 257,135 384,219
Plate costs, net of accumulated depreciation of
$5,809,591 and $4,634,308 3,198,982 3,246,892
------------- ------------
7,169,728 7,421,582
------------- ------------
Deferred Income Tax 508,418 863,128
------------- ------------
Deferred Charges and Other Assets:
Cost of subscription lists of Human Sciences Press
and Agathon journals, net of accumulated amortization
of $1,915,422 and $1,708,970 2,787,143 2,993,595
Royalties 1,802,467 1,755,394
Investment in Gradco Systems, Inc 2,074,829 2,074,829
Other 607,620 277,813
------------- ------------
7,272,059 7,101,631
------------- ------------
Excess of Cost of Assets Acquired Over Book Amount
Thereof, net of accumulated amortization of
$1,323,413 and $1,283,309 815,437 855,541
------------- ------------
Total Assets $78,709,844 $84,913,166
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to customers $502,162 $451,231
Accounts payable 1,308,814 1,792,874
Income taxes payable 2,507,601 2,145,872
Royalties payable 2,516,879 2,911,685
Other accrued expenses and sundry liabilities 3,621,235 4,819,105
Dividends payable 1,143,042 1,127,726
------------- ------------
Total Current Liabilities 11,599,733 13,248,493
Deferred Subscription Income 14,860,929 26,333,855
------------- ------------
Total Liabilities 26,460,662 39,582,348
------------- ------------
Stockholders' Equity -- Note F
Preferred Stock, par value $1 per share;
Authorized - 1,000,000 shares; none issued
Common Stock, par value $.10 per share;
Authorized-12,000,000 shares;
Issued-5,847,241 shares 584,724 584,724
Paid-in additional capital 3,951,526 3,951,526
Retained earnings 92,190,635 83,983,599
------------- ------------
96,726,885 88,519,849
Less 1,905,718 and 1,862,983 shares of Common
Stock held in treasury - at cost 44,477,703 43,189,031
------------- ------------
Total Stockholders' Equity 52,249,182 45,330,818
------------- ------------
Total Liabilities and Stockholders' Equity $78,709,844 $84,913,166
============= ============
<FN>
Note: The balance sheet at December 31, 1994 has been derived from the audited consolidated financial
statements at that date. See Notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED
EARNINGS (UNAUDITED)
<CAPTION>
Nine Months Ended September 30 Three Months Ended September 30
------------------------------ -------------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Subscriptions, books, outside journals and other sales, net $40,071,400 $39,232,721 $13,783,922 $12,537,868
------------ ------------ ------------- ------------
Costs and Expenses:
Cost of sales 16,379,114 15,900,143 5,352,142 5,049,087
Royalties 3,335,428 3,408,521 1,291,329 1,215,868
Selling, general and administrative expenses 8,432,823 8,348,096 2,634,342 2,708,417
------------ ------------ ------------- ------------
28,147,365 27,656,760 9,277,813 8,973,372
------------ ------------ ------------- ------------
Income From Operations 11,924,035 11,575,961 4,506,109 3,564,496
Dividend income 280,802 1,327,418 78,472 394,006
Interest income 1,476,531 179,809 520,809 40,270
Net realized gain (loss) on sales of marketable securities 2,964,744 (2,516,689) 470,689 (675,501)
Net unrealized gain on marketable securities 2,858,065 3,756,525 1,029,279 3,875,161
Interest expense -- (20,320) -- (4,082)
Other investment-related expenses (508,275) (274,681) (148,947) (172,499)
------------ ------------ ------------- ------------
Income Before Income Taxes 18,995,902 14,028,023 6,456,411 7,021,851
------------ ------------ ------------- ------------
Income taxes--Note E: 5,791,000 3,900,000 1,934,000 2,000,000
Federal 1,568,000 1,260,000 605,000 676,000
------------ ------------ ------------- ------------
State and City 7,359,000 5,160,000 2,539,000 2,676,000
------------ ------------ ------------- ------------
Net Income 11,636,902 8,868,023 3,917,411 4,345,851
Retained earnings - beginning of period 83,983,599 76,165,428 89,416,266 78,169,017
------------ ------------ ------------- ------------
95,620,501 85,033,451 93,333,677 82,514,868
Cash dividends ($.87 and $.84 a share and $.29 and $.28 a share) 3,429,866 3,773,221 1,143,042 1,254,638
------------ ------------ ------------- ------------
Retained earnings - end of period $92,190,635 $81,260,230 $92,190,635 $81,260,230
============ ============ ============= ============
Net income per share of Common Stock - Note D $2.95 $1.97 $0.99 $0.97
============ ============ ============= ============
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Nine Months Ended September 30
-------------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $11,636,902 $8,868,023
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plate costs 1,175,283 1,011,783
Depreciation and amortization of building,
furniture, fixtures, equipment and
leasehold improvements 256,005 252,142
Amortization of deferred charges and excess
of cost of assets acquired over book amount
thereof 1,646,738 1,841,336
Net realized (gain) loss on sale of marketable
securities (2,964,744) 2,516,689
Net unrealized (gain) on marketable securities (2,858,065) (3,756,525)
Purchases of marketable securities (12,574,638) (27,619,720)
Proceeds from sale of marketable securities 19,392,323 33,994,243
Decrease in deferred income tax benefits 1,282,384 355,081
Changes in operating assets and liabilities;
Decrease (increase) in:
Receivables 572,337 3,326,844
Inventories (185,216) 245,628
Other assets (1,777,062) (1,826,878)
Increase (decrease) in:
Due to customers, accounts payable, royalties payable,
accrued expenses and sundry liabilities (1,094,930) (127,342)
Income taxes payable 361,729 (400,014)
Deferred subscription income and costs
applicable thereto-net (11,389,298) (9,447,784)
-------------- -------------
Net Cash Provided by Operating Activities 3,479,748 9,233,506
-------------- -------------
Cash flows from investing activities:
Additions to plate costs (1,127,373) (1,146,950)
Additions to furniture, fixtures, equipment
and leasehold improvements (52,061) (109,652)
-------------- -------------
Net Cash Used in Investing Activities (1,179,434) (1,256,602)
-------------- -------------
Cash flows from financing activities:
Acquisition of treasury stock (a) (2,219,547) (892,778)
Dividends paid (3,414,550) (3,737,850)
-------------- -------------
Net Cash Used in Financing Activities (5,634,097) (4,630,628)
-------------- -------------
Net (Decrease) Increase in Cash and Cash Equivalents (3,333,783) 3,346,276
Cash and cash equivalents at beginning of period 31,775,618 5,030,060
-------------- -------------
Cash and Cash Equivalents at End of Period $28,441,835 $8,376,336
============== =============
<FN>
See notes to condensed consolidated financial statements.
(a) Includes $930,875 paid in 1995 for treasury stock acquired in 1994.
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
September 30, 1995
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the nine month period ended September 30, 1995 are not necessarily
indicative of the results that may be expected for the year ended December
31, 1995. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1994.
NOTE B -- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the nine months ended September 30, 1995 and 1994 for:
1995 1994
---- ----
Income Taxes $5,714,887 $5,204,933
Interest - 20,320
NOTE C -- INVENTORIES
Inventories at September 30, 1995 and December 31, 1994 are comprised of:
1995 1994
---- ----
Finished publications $3,340,484 $3,164,658
Work in process 481,033 471,643
----------- -----------
$3,821,517 $3,636,301
=========== ===========
NOTE D -- PER SHARE AMOUNTS
Net income per share of Common Stock is computed on the basis of the
weighted average number of shares outstanding. The number of shares used in
this computation for the nine and three months ended September 30, 1995 and
1994 is as follows:
1995 1994
---- ----
Nine months 3,946,860 4,496,964
Three months 3,941,523 4,487,037
<PAGE>
<TABLE>
NOTE E -- INCOME TAXES:
Total tax expense for the nine month periods ended September 30, 1995 and
1994 amounted to $7,359,000 and $5,160,000 (effective rates of 38.74% and
36.78%), and for the three month periods ended September 30, 1995 and 1994
amounted to $2,539,000 and $ 2,676,000 (effective rates of 39.32% and
38.11%), totals different from those computed by applying the U.S. Federal
income tax rate of 35% to income before income taxes. The reasons for these
differences are as follows:
<CAPTION>
Nine Months Ended September 30 Three Months Ended September 30
-------------------------------------------- ----------------------------------------------
1995 1994 1995 1994
-------------------------------------------- ----------------------------------------------
% of % of % of % of
Income Income Income Income
Before Before Before Before
Income Income Income Income
Amount Taxes Amount Taxes Amount Taxes Amount Taxes
--------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Computed "expected" tax expense $6,648,600 35.00% $4,909,800 35.00% $2,259,800 35.00% $2,457,800 35.00%
Increases (reductions) in tax
resulting from:
State and local income
taxes, net of Federal
income tax benefit 1,019,200 5.36 819,000 5.84 393,300 6.09 439,400 6.26
Nontaxable portion of
dividend income (68,800) (0.36) (325,200) (2.32) (19,200) (0.30) (96,500) (1.37)
FSC income taxed at a
lower rate (262,500) (1.38) (262,500) (1.87) (105,000) (1.63) (87,500) (1.25)
Miscellaneous - net 22,500 0.12 18,900 0.13 10,100 0.16 (37,200) (0.53)
----------- ------ ----------- ------ ------------ ------ ----------- ------
Actual Tax Expense $7,359,000 38.74% $5,160,000 36.78% $2,539,000 39.32% $2,676,000 38.11%
=========== ====== =========== ====== ============ ====== =========== ======
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OPERATIONS
- ----------
Revenues from the Company's publishing operations for the three
and nine months ended September 30, 1995 increased by 9.9% and 2.1%,
respectively. Revenues from subscriptions and outside journals for the
three and nine months ended September 30, 1995 increased by 8.2% and 2.6%,
respectively, primarily due to more non-translated journal issues (Plenum
Press) being published and higher selling prices, offset by the following:
(a) cessation of the publication of 11 Russian language journals under
a contract with an American learned society (which ended with the
1993 volume year - see below),
(b) the decrease in revenues from the translation journals resulting
from the Company's altered status with respect to the journals
covered by the Journal Production and Distribution Agreement (see
below), and
(c) nonrenewals of subscriptions partially attributable to the reduced
buying power of libraries and to changes in the market for the
Company's translation of Russian language journals.
In December 1993, the Company entered into a Journal Production
and Distribution Agreement (the "Distribution Agreement") with the Russian
Academy of Sciences (the "Academy") and other interested parties pursuant to
which litigation then pending, relating to the translation of Russian
scientific journals, was ended, and the Company's role as publisher and
distributor of certain of such journals was altered. The Distribution
Agreement extends from 1994 through 2006. The new arrangement resulted in
decreased revenues from Russian scientific journals for the three and nine
months ended September 30, 1995, since the publication of most of the
affected journals for the 1994 volume year commenced during the second
quarter of fiscal 1994.
In April 1993, an American learned society with which the Company
had a contract to produce English translations of 11 Russian language
journals for publication by that society gave formal notice that it would
not exercise the option of renewing the contract beyond the term ending with
the 1993 volume year. The amount of revenue generated from the production
of these 11 journals was approximately $527,000 for the nine months ended
September 30, 1994. Such revenues ceased during the second quarter of
fiscal 1994, resulting in no revenues being earned in the third quarter of
1995 or 1994.
Revenues from book sales for the three and nine months ended
September 30, 1995 increased by 15.1% and 5.0%, respectively, primarily due
to an increase in the number of book titles being published. Revenues from
database products for the three and nine months ended September 30, 1995
increased by 4.6% and 5.6%, respectively, primarily due to the increased
usage of the database system.
The cost of sales as a percentage of revenues for the three months
ended September 30, 1995 decreased from 40.3% to 38.8%, principally due to
higher selling prices, offset by a lower gross margin on certain Russian
scientific journals published by the Academy under the Distribution
Agreement. The cost of sales as a percentage of revenues for the nine
months ended September 30, 1995 increased from 40.5% to 40.9%, mainly due to
a lower gross margin on certain Russian scientific journals published by the
Academy under the Distribution Agreement and the cessation of the
publication of 11 Russian language journals under a contract with an
American learned society, which had an above average gross margin, offset by
higher selling prices.
Royalty expenses as a percentage of revenues for the three and
nine months ended September 30, 1995 decreased from 9.7% and 8.7% to 9.4%
and 8.3%, respectively, principally due to the fact that under the
Distribution Agreement there were no royalties payable on certain Russian
scientific journals published by the Academy. Selling, general and
administrative expenses as a percentage of revenue for the three and nine
months ended September 30, 1995 decreased from 21.6% and 21.3% to 19.1% and
21.0%, respectively, primarily due to decreased professional fees, mailing
and telephone expenses, offset by sales and use taxes paid with respect
to prior years' assessments.
The increase in interest income for the three and nine months
ended September 30, 1995 was principally due to increased investment in
commercial paper, time deposits, money market funds and foreign government
securities. The decrease in dividend income for the three and nine months
ended September 30, 1995 was attributable to decreased investment in
marketable securities. The Company had net realized and unrealized gains of
$470,689 and $1,029,279, respectively, on marketable securities for the
three months ended September 30, 1995 as compared to a net realized loss of
$675,501 and a net unrealized gain of $3,875,161, on marketable securities
for the three months ended September 30, 1994. The Company had net realized
and unrealized gains of $2,964,744 and $2,858,065, respectively, on marketable
securities for the nine months ended September 30, 1995 as compared to a net
realized loss of $2,516,689 and a net unrealized gain of $3,756,525 on
marketable securities for the nine months ended September 30, 1994.
The decrease in net income for the three months ended September
30, 1995 was primarily due to the decrease in investment income as discussed
in the preceding paragraph, offset by increased income from publishing
operations. The increase in net income for the nine months ended September
30, 1995 was mainly due to the increase in investment income as discussed in
the preceding paragraph and increased income from publishing operations.
LIQUIDITY AND SOURCES OF CAPITAL
- --------------------------------
The ratio of current assets to current liabiilties is 5.4 to 1 at
September 30, 1995 compared to 5.1 to 1 at December 31, 1994.
Management anticipates that internally generated funds will exceed
the requirements of the operations of the business. The Company also has
funds of approximately $51,738,000 at September 30, 1995 invested in
marketable securities and in cash and cash equivalents, which are available
for corporate purposes.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Report on Form 8-K
(a) Exhibits-None
(b) Reports on Form 8-K-None.
<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.
PLENUM PUBLISHING CORPORATION
-----------------------------
Date: November 8, 1995 -------------------------------
Martin E. Tash
President and CEO
Date: November 8,1995 -------------------------------
Ghanshyam A. Patel
Treasurer and CFO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from quarterly
financial statements for the nine months ended September 30, 1995 and is
qualified in its entirety by reference to such financial statements.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<PERIOD-TYPE> 9-MOS
<CASH> 28,441,835
<SECURITIES> 23,295,999
<RECEIVABLES> 6,493,825
<ALLOWANCES> (1,002,000)
<INVENTORY> 3,821,517
<CURRENT-ASSETS> 62,307,460
<PP&E> 14,540,697
<DEPRECIATION> (7,370,969)
<TOTAL-ASSETS> 78,709,844
<CURRENT-LIABILITIES> 11,599,733
<BONDS> 0
0
0
<COMMON> 584,724
<OTHER-SE> 51,664,458
<TOTAL-LIABILITY-AND-EQUITY> 78,709,844
<SALES> 40,071,400
<TOTAL-REVENUES> 47,651,542
<CGS> 16,379,114
<TOTAL-COSTS> 16,379,114
<OTHER-EXPENSES> 508,275
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 18,995,902
<INCOME-TAX> 7,359,000
<INCOME-CONTINUING> 11,636,902
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,636,902
<EPS-PRIMARY> 2.95
<EPS-DILUTED> 0
</TABLE>
