SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
----------- ----------
Commission File No. 0-916-3
PLENUM PUBLISHING CORPORATION
-----------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 13-5648711
-------- -----------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
233 Spring Street, New York, New York 10013
- ----------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 212-620-8000
Securities registered pursuant to Section 12(b) of the Act
Name of each Exchange
Title of each class on which Registered
------------------- ---------------------
None
------------------- ----------------------
Securities registered pursuant to Section 12(g) of the Act
Common Stock, $.10 par value
----------------------------
(Title of Class)
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
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
---
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 19, 1996 was $126,930,600.
-------------
The number of shares outstanding of the Issuer's common stock, as of March 19,
1996, was 3,941,523 shares.
<PAGE>
PART I
Item 1. Business
--------
The Registrant is and for many years has been engaged
in the business of publishing and distributing advanced scientific and
technical material. The Registrant publishes and distributes books and
journals and creates and maintains databases for which it receives royalties
from unrelated organizations providing access to such materials throughout the
world under the imprints of Plenum Press, Consultants Bureau, Da Capo Press,
IFI/Plenum Data, J.S. Canner & Company, and Human Sciences Press. The
Registrant and its subsidiaries maintain offices in New York, New York;
Wilmington, Delaware; Needham Heights, Massachusetts; Wilmington, North
Carolina; London, England; and Moscow, Russia; and warehouse facilities in
Edison, New Jersey.
The Registrant's principal markets are public and private libraries,
technically oriented corporations, research organizations and individual
scientists, engineers, research workers, other professionals and graduate
students throughout the world. Except as to the sale of reprints and trade
books, the Registrant does not generally sell to book stores. The Registrant's
principal methods of marketing are by direct mail and by advertising in
scientific publications, including its own journals. The Registrant makes a
wide distribution of its catalogs of published material, as well as plans for
new publications. In certain foreign markets, the Registrant utilizes the
services of independent distributors and agents.
The Registrant generally secures copyrights on its publications in
its own name or in the name of its subsidiaries. In some cases, pursuant to
written agreement, the copyright is secured in the name of the author of the
publication or a learned society or other organization. Copyrights on
translations of foreign journals are limited to English language translations
and do not cover the original foreign language works. Those translations of
Russian journals as to which the Registrant is the distributor but not the
publisher are copyrighted in the name of the publisher. Most publications
printed by the Registrant's Da Capo Press subsidiary are reprints of works in
the public domain which are not subject to copyright protection or are works
published by others who have sold to the Registrant certain rights for
publication, either for a fixed payment or under a royalty agreement.
The Registrant does not perform any printing operations. It uses
outside printing and binding services, with much of the material being prepared
by the Registrant for printing. Preparations by the Registrant include
editing, creation of a suitable design and typesetting.
The following table sets forth the total revenues contributed by each
class of similar products and services, and the income (loss) generated from
securities owned by the Registrant.
<TABLE>
<CAPTION>
1995 1994(b) 1993(b) 1992(b) 1991(b)
---- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Subscription Journals $32,913,103 $32,241,873 $33,297,585 $31,812,705 $31,342,821
Outside Journals (a) - 527,161 1,255,223 1,538,317 1,463,723
Books 14,197,328 13,917,674 13,317,503 14,191,600 14,953,336
Database Products 4,520,290 4,122,123 4,210,802 4,202,308 3,831,838
Miscellaneous sales 598,950 549,062 810,581 415,039 463,664
Interest income 1,996,434 441,009 544,290 3,007,811 3,504,594
Dividend income 377,698 1,592,837 2,136,989 1,636,462 1,546,865
Net realized gain
on sales of marketable
securities 3,229,729 2,160 801,387 2,476,916 19,714
Net unrealized gain
(loss) on marketable
securities 3,868,361 2,523,173 (1,713,197) - 6,544,417
Equity in net income
(loss) of Gradco
Systems, Inc. 301,290 102,986 4,565 ( 100,430) ( 91,300)
------------ ------------ ------------ ----------- -----------
$62,003,183 $56,020,058 $54,665,728 $59,180,728 $63,579,672
============ ============ ============ =========== ===========
<FN>
Notes:
(a) 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.
(b) Certain amounts of revenues for 1994, 1993, 1992 and 1991 have been
reclassified from continuing operations to discontinued operations to
conform to the 1995 presentation. See note 3 of Notes to Consolidated
Financial Statements included under item 14(a).
</TABLE>
<PAGE>
Subscription Journals
- ---------------------
During 1995, the Registrant published a total of 210 journals. 60
were translations of Russian language scientific journals, 103 were published
in the English Language Journal Program, and 47 were published by the
Registrant's subsidiary, Human Sciences Press, Inc. The Registrant also
distributed translations of 35 Russian scientific journals (see below).
Translations of Russian Language Journals
-----------------------------------------
The translation journals are in the fields of physical sciences,
mathematics, engineering and life sciences. In December 1993, in settlement
of certain litigation, the Registrant entered into a Journal Production and
Distribution Agreement (the "Distribution Agreement") through the year 2006
with the Russian Academy of Sciences (the "Academy") and other interested
parties.
Since the inception of the Distribution Agreement, MAIK Nauka ("MN"),
an entity owned in part by Pleiades Publishing, Inc. and the Academy, has
become the exclusive publisher of the English translations of 40 Russian
scientific journals (21 journals in 1994, 14 in 1995 and 5 thus far in 1996).
The Registrant has become the exclusive distributor of such journals, all of
which the Registrant had translated, published and distributed under contracts
which have been assigned to MN. Under the Distribution Agreement, the
Registrant continues to promote and distribute these journals throughout the
world, and continues to deal with and collect from subscribers to the journals,
retaining a portion of such revenues for performing its function. Thus, as to
each journal which is published by MN and distributed by the Registrant under
the Agreement, the Registrant retains 35% of the revenue in the initial year of
distribution, with the amount gradually being reduced to 30% over a six-year
period, and remaining at that level for the balance of the term. The portion
retained is included in subscription revenue.
In the remainder of 1996 and thereafter, MN may elect to publish the
English translations of up to 15 additional Russian journals, to be promoted
and distributed by the Registrant.
The journals published by MN are translated and published in Russia.
The Registrant continues its activities in translating, publishing and
distributing the 40 English Translation Russian Journals which are not subject
to the Distribution Agreement, as well as the 15 journals referred to above
which may become subject to the Agreement in the future. These activities are
undertaken pursuant to the Registrant's existing English translation and
publication contracts with the individual entities publishing the Russian
language journals which generally extend through 2001.
The journals published by MN are distributed by the Registrant under
the MAIK Nauka/Interperiodica imprint, and it is indicated in each journal that
it is distributed worldwide by Plenum/Consultants Bureau. Those journals
translated and published by the Registrant continue to be published under the
Registrant's "Consultant's Bureau" imprint.
The translation work required for the publication of the Registrant's
non-MN Journals is done primarily by scientists and technical persons in the
United States and elsewhere who have other principal occupations. The
Registrant maintains relationships with approximately 130 such persons, most of
whom have been rendering translation services to the Registrant for several
years. The Registrant has been able to obtain the required translators to
enable it to meet its needs. The number of translators reflects a reduction
from previous years since the Registrant, under the Distribution Agreement,
translates fewer journals.
Plenum Press Journals
---------------------
The Registrant published 103 journals in its English Language Journal
Program in 1995. The journals are published under the Registrant's "Plenum
Press" imprint, and include titles in chemistry, physics, mathematics, computer
science, engineering, biology, medicine, psychiatry, social sciences and law.
Each journal is published under the direction of an editorial board composed of
professionals specializing in the fields of research covered by the journal.
Human Sciences Press Journals
-----------------------------
The Registrant's subsidiary, Human Sciences Press, Inc., publishes 47
journals, under the "Human Sciences Press" imprint. These journals are
primarily in the health, behavioral and social science fields.
Outside Journals
- ----------------
The Registrant's Boston-based J.S. Canner & Company, Inc. subsidiary
("Canner"), engages in the purchase and sale of backissue periodicals to
libraries, colleges, universities and other users. In December 1995, the
Registrant's Board of Directors adopted a plan to discontinue Canner's
operations, effective October 1996.
Books
- -----
The Registrant's Plenum Press division publishes scientific,
technical and medical books for use by scientists, engineers, research workers,
other professionals and graduate students, and their supporting libraries,
research laboratories and institutions. During 1995, the division published
276 new titles as part of this program, and had an active backlist of
approximately 4,000 titles as of December 31, 1995. During 1994, 263 new
titles were published. Titles include comprehensive treatises, monographs and
other advanced text-reference works, as well as proceedings of meetings
reporting original scientific research, works surveying the state of the art
in various scientific fields and specialized bibliographies and data
compilations. In recent years, a number of books treating scientific topics
of interest to the general reader have also been published.
The Registrant's Da Capo Press, Inc. subsidiary publishes a line of
academic/trade paperbacks in the arts, biography and history. During 1995,
this subsidiary published 63 titles compared to 62 titles in the prior year.
As of December 31, 1995, this subsidiary had an active backlist of
approximately 1,450 titles, of which approximately 650 titles were academic/
trade paperbacks, and 800 were hardcover reprints of books in music, dance,
visual arts and the social sciences, which were published by Da Capo in prior
years.
The Registrant's Human Sciences Press, Inc. subsidiary had an active
backlist of approximately 325 titles as of December 31, 1995. The Registrant
has no immediate plans to publish new titles under the Human Sciences imprint,
but will continue to publish the backlist under such imprint. The Human
Sciences books are primarily in the health, behavioral and social science
fields, and are sold mainly to libraries and professionals in these fields.
Database Products
- -----------------
The Registrant's IFI/Plenum Data Corporation subsidiary ("IFI") is
primarily involved in providing to major industrial users on-line access to the
IFI Comprehensive Data Base of Patents, a computerized index file containing
references to all United States chemical and chemical related patents issued
since January 1950. The Registrant's customers generally use terminals at
their own facilities to obtain the information through several international
database networks. The file is further utilized by IFI in its performance of
patent searches for law firms and other customers. IFI produces other on-line
databases for searching chemical, general, electrical and mechanical United
States patents, and publishes in book format the Patent Intelligence and
Technology Report. IFI also offers other online database products including
Mental Health Abstracts and Information Science Abstracts.
Other Publishing Activities
- ---------------------------
Plenum Publishing Company Limited, the Registrant's English
subsidiary, provides sales representation for the Registrant in the United
Kingdom and European markets. Plenum Publishing Company Limited also performs
editorial procurement services for the scientific book and journal publishing
programs of the Registrant.
Competition
- -----------
The market in which the Registrant operates both for the procurement
of manuscripts and the sale of its products is highly competitive. The
Registrant is one of the leading publishers and distributors of English
translations of Russian scientific journals. However, several other companies
with English translation capabilities have relationships with individuals and
entities responsible for the publication of scientific and technical material
in the former Soviet Union. In addition, other publishers in the United States
and abroad with greater financial resources than the Registrant are engaged in
the publication of original English language scientific materials and database
products, as well as the reprint of out-of-print books and other books
generally not available.
Export Sales
- ------------
The Registrant's sales derived from customers outside the United
States aggregated approximately $22,493,000 in 1995 (approximately 43% of
consolidated sales). Sales derived from customers outside the United States
were approximately $20,590,000 in 1994 and $23,217,000 in 1993 (approximately
40% and 44%, respectively, of consolidated sales). The Registrant generally
prices its products sold abroad in U.S. dollars.
Investments in Securities
- -------------------------
In 1995, the Registrant's dividends, interest income, net realized
and unrealized gains/losses on marketable securities, and equity in the net
income (loss) of Gradco Systems, Inc. (the foregoing items net of interest
expense and other investment-related expenses) represented 36% of the
Registrant's pre-tax income from continuing operations. In 1994, such items
(net of interest expense and other investment-related expenses) represented 21%
of pre-tax income from continuing operations.
The Registrant's excess cash is invested in a portfolio of marketable
securities, and in short-term investments such as time deposits, money market
funds and commercial paper. The investments of excess cash are available for
corporate purposes, and have been so used periodically. Market conditions and
the nature of the investments have an impact on the performance of the
marketable securities portfolio.
The Registrant owns 913,000 shares of Common Stock of Gradco Systems,
Inc. ("Gradco"), an office automation company, which were acquired by the
Registrant during the period October, 1989 through August, 1991. The
acquisitions by the Registrant have been reported in a Statement on Schedule
13D and amendments thereto filed jointly with the Securities and Exchange
Commission by the Registrant and by its Chairman, Martin E. Tash, and his wife,
who as of the date hereof had acquired a total of 250,672 shares. Mr. Tash
also has currently exercisable options to purchase 50,000 additional shares.
The filings are required because the Registrant and Mr. and Mrs. Tash as a
group (the "Group") beneficially own more than 5% of the outstanding shares
of Gradco (11.7% by the Company and 3.8% by Mr. and Mrs. Tash, inclusive of his
currently exercisable options, as of the date hereof, for a total of 15.5%).
In October 1990, in a proxy contest, a five-person slate of directors
was nominated by the Group in opposition to the nominees of Gradco's then
current management. The slate consisted of Martin E. Tash (Registrant's
Chairman of the Board and Chief Executive Officer), Bernard Bressler (Secretary
and a director of Registrant) and three other individuals not affiliated with
Registrant. Three nominees of the Group (including Messrs. Tash and Bressler)
were elected to directorships, constituting a majority of the Board. The newly
named Board named Mr. Tash as Gradco's Chairman and Chief Executive Officer.
The Group may be deemed to have obtained control of Gradco in October
1990, as a result of the fact that its nominees were elected as a majority of
Gradco's Board of Directors. Gradco's current five-person Board, elected
without any opposing nominees at its September 1995 Annual Meeting, consists of
Messrs. Tash and Bressler, and three other persons. All of the nominees were
designated as such at the request of the Group, which therefore may be deemed
to continue to have control of Gradco.
Registrant has not undertaken any obligations in connection with
Gradco's operations or advanced any funds to it and does not otherwise engage
in business through Gradco.
The Registrant's investment in Gradco is reflected in the
Consolidated Financial Statements included herein using the equity method of
accounting.
In view of the securities investments described above, the Registrant
evaluates its status under the Investment Company Act of 1940, as amended (the
"Company Act"), on an annual basis. The Company Act requires the registration
with the Securities and Exchange Commission of, and imposes various substantive
restrictions on, any "investment company." The Company Act defines the term
"investment company" to include a company that engages primarily, or proposes
to engage primarily, in the business of investing, reinvesting or trading in
securities. An "investment company" may also include a company which engages
or proposes to engage in the business of investing, reinvesting, owning,
holding or trading in securities and which owns or proposes to acquire
investment securities (which for this purpose excludes U.S. Government
securities) having a value that exceeds 40% of the value of such company's
total assets (excluding cash items and U.S. Government securities), unless the
company is primarily engaged in a business or businesses other than that of
investing, reinvesting, owning, holding or trading in securities.
The Registrant's principal business continues to be publishing and
distributing advanced scientific and technical material, and the Registrant is
not primarily engaged in investing, reinvesting or trading in securities. As
of December 31, 1995, investment securities represented less than 40% of the
value of the Registrant's total assets (exclusive of cash items), and in any
event the Registrant continued to be exempt from status as an investment
company pursuant to Rule 3a-1 under the Company Act because less than 45% of
the value of its total assets (exclusive of cash items) consisted of, and less
than 45% of its net income after taxes for the last four fiscal quarters
combined was derived from, securities.
Miscellaneous Information
- -------------------------
The Registrant currently employs approximately 285 full time
employees.
Backlog is not significant in the Registrant's business because
orders are filled on a current basis. The Registrant does receive payments
and on occasion records receivables from journal subscribers in advance of the
issuance of journals, and the amounts appearing on the Registrant's
Consolidated Balance Sheets as "Deferred Subscription Income" represent these
items. See Note 1 of Notes to Consolidated Financial Statements.
The business of the Registrant is not seasonal. No material portion
of the business of the Registrant is subject to renegotiation of profits or
termination of contracts at the election of the Government. Compliance with
the provisions enacted regulating the discharge of materials into the
environment or otherwise relating to the protection of the environment does not
have an effect upon the Registrant.
Item 2. Properties
----------
As of December 31, 1995, the Registrant had leases at the following
principal locations:
Expiration Annual
Address Size Date of Lease Rent
- ------- ---- ------------- ------
233 Spring Street 61,650 sq. ft. 2007 $276,528 in 1996,
New York, NY and increasing to a
maximum of $340,512
in 2006.
150 Bay Street 10,000 sq. ft. 1997 $49,400 in 1996
Jersey City, NJ and thereafter
10 Charles Street 20,800 sq. ft. 1996 $98,512 in 1996(1)
Needham Heights, MA
90 Middlesex Street 2,400 sq. ft. 1996 $11,260 in 1996(2)
London, U.K.
(1) Represents rent through October 1996, when lease will terminate in
conjunction with discontinuance of operations of J.S. Canner & Company,
Inc.
(2) Represents rent through March 1995, when lease expires. It is expected
that occupancy will continue on a month-to-month basis thereafter, until
either the lease is renewed or a new location for this office is found.
Various of the leases referred to above provide for additional
payments or increases in rent over the base rental specified above under
different circumstances. In addition to the leases referred to above, the
Registrant or its subsidiaries have leases on space at various locations with a
total annual rental of approximately $25,000.
The Registrant's warehouse operations are conducted at a 69,000
square foot warehouse in Edison, New Jersey which is owned by the Registrant.
Item 3. Legal Proceedings
-----------------
Waterman v. Calt and Da Capo Press, Inc.
---------------------------------------
This civil action was filed by an individual residing in Oxford,
Mississippi, by Complaint dated January 5, 1995. Da Capo Press, Inc.
(a wholly-owed subsidiary of the Registrant) published a book entitled
I'd Rather be the Devil: Skip James and the Blues about a deceased blues
- --------------------------------------------------
singer (the "Book"). The plaintiff, the singer's former manager, has alleged
that he was libeled by the Book. He seeks compensatory damages in the amount
of $1,500,000 and punitive damages in the amount of $1,500,000 against Da Capo
and the book's author, Stephen Calt. Plaintiff also seeks $20,000 in damages
for the alleged unauthorized use of a photograph.
The case was removed to the United States District Court for the
Western District of Tennessee, from Tennessee State Court where it had been
filed. Defendants filed an answer asserting the following defenses: (1) the
Book is not defamatory to plaintiff, and, indeed, presents him in a sympathetic
light; (2) plaintiff is a public figure, and must show actual malice; (3) the
publication of the Book was not malicious, as it was thoroughly researched; (4)
the statements in the Book are true; and (5) the plaintiff has not been damaged
by the Book. After discovery by plaintiff and defendants, both parties moved
for summary judgment in October 1995 to resolve the case without a trial. The
motions are pending.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
-----------------------------------------------------------------
Matters
-------
The Common Stock of the Registrant is traded on the NASDAQ National
Market System. The following table sets forth, for the calendar quarters
indicated, information furnished by the NASD, Inc. as to the high and low sale
prices for the Registrant's Common Stock as reported on the NASDAQ National
Market System under the symbol PLEN. The table also sets forth dividends
declared during such periods. There were approximately 529 record holders of
the Registrant's Common Stock on March 19, 1996. The number of holders as so
stated does not include individual participants in security position listings.
Dividends
Calendar Year Ended December 31, High Low Per Share
- -------------------------------- ---- --- ---------
1995
- ----
First Quarter.................... 33-3/4 29 $ .29
Second Quarter................... 36-1/4 29-1/4 .29
Third Quarter.................... 36-3/4 33-3/4 .29
Fourth Quarter................... 42-3/4 34 .29
Dividends
Calendar Year Ended December 31, High Low Per Share
- -------------------------------- ---- --- ---------
1994
- ----
First Quarter.................... 27-1/2 25 $ .28
Second Quarter................... 27 22-1/4 .28
Third Quarter.................... 27-1/4 23-1/2 .28
Fourth Quarter................... 32-1/4 24-3/4 .28
The Registrant has paid cash dividends on its Common Stock in each
year since 1974. The payment and amount of future dividends are dependent upon
the Registrant's earnings, general financial condition and the requirements of
the business and upon declaration of the dividend from time to time by the
Board of Directors.
Item 6. Selected Financial Data
------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Subscriptions, books,
outside journals and
other sales, net $52,229,671 $51,357,893 $52,891,694 $52,159,969 $52,055,382
Income (loss) from interest
and dividends, and net
realized and unrealized
gain/loss on marketable
securities 9,472,222 4,559,179 1,769,469 7,121,189 11,615,590
Equity in net income (loss)
of Gradco Systems, Inc. 301,290 102,986 4,565 (100,430) (91,300)
Income from continuing
operations 15,647,051 12,609,812 10,755,649 11,953,875 17,021,555
(Loss) income from
discontinued operations,
net(d) (130,247) 109,306 173,058 195,008 213,499
Income before extraordinary
items and cumulative
effect on prior years of
accounting change 15,516,804 12,719,118 10,928,707 12,148,883 17,235,054
Extraordinary (loss)
gain(a) - - (1,319,794) 394,823 100,638
Cumulative effect on
prior years of accounting
change(b) - - - 1,179,950 -
Net income 15,516,804 12,719,118 9,608,913 13,723,656 17,335,692
Per share of Common Stock
- -- primary:
Income from continuing
operations 3.96 2.84 2.33 2.53 3.39
(Loss) income from
discontinued operations,
net(d) (.03) .03 .04 .04 .04
Income before extraordinary
items and cumulative
effect on prior years of
accounting change 3.93 2.87 2.37 2.57 3.43
Extraordinary (loss)
gain(a) - - (.29) .08 .02
Cumulative effect on
prior years of accounting
change(b) - - - .25 -
Net income 3.93 2.87 2.08 2.90 3.45
Per share of Common
Stock -- fully diluted(c):
Income from continuing
operations - - 2.27 2.25 2.89
(Loss) income from
discontinued operations,
net(d) - - .03 .03 .03
Income before extraordinary
items and cumulative
effect on prior years of
accounting change - - 2.30 2.28 2.92
Extraordinary (loss)
gain(a) - - (.26) .06 .02
Cumulative effect on prior
years of accounting
change(b) - - - .19 -
Net income - - 2.04 2.53 2.94
Total assets $92,245,305 84,913,166 88,605,160 125,852,355 128,364,118
Long-term debt - - - 40,827,000 47,635,000
Dividend declared per
share of Common Stock 1.16 1.12 1.08 1.04 1.00
<FN>
Footnotes to Table of Selected Financial Data
(a) Extraordinary loss in 1993 resulted from the early retirement of 6 1/2%
Convertible Subordinated Debentures on April 30, 1993.
(b) Effective January 1, 1992, the Registrant made an accounting change for
deferred taxes as a result of the application of the Statement of Financial
Accounting Standards No. 109.
(c) As a result of the redemption of the 6 1/2% Convertible Subordinated
Debentures, fully diluted net income per share is not applicable in 1995
and 1994.
(D) In December 1995, the Registrant's Board of Directors adopted a plan to
discontinue the operations of its wholly-owned subsidiary, J.S. Canner &
Company, Inc., effective October 1996. See note 3 of Notes to Consolidated
Financial Statements included under item 14(a).
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
--------------------------------------------------
Results of Operations
- ---------------------
1995 Compared to 1994
- ---------------------
Revenues from the Company's continuing publishing operations increased
by 1.7%. Revenues from subscriptions and outside journals increased by .4%
primarily due to more journal issues 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 "1994 Compared to 1993", 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, which had its inception in 1994 (see "1994 Compared
to 1993", below) and became applicable to additional journals in 1995; and (c)
non-renewals 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.
Management expects that in 1996 and thereafter, further decreases in
the Company's revenues from translation journals will occur as a result of the
Company's altered status with respect to the journals covered by the
Distribution Agreement, and also as a result of the political and economic
situation in Russia and in the other republics of the former Soviet Union.
Revenues from book sales increased by 2.3%, primarily due to an
increase in the number of book titles being published. Revenues from database
products increased by 9.7%, mainly due to the increased usage of the database
system.
The cost of sales from continuing operations as a percentage of
revenues decreased from 40.8% to 40.7%, principally due to higher selling
prices and increased usage of the database system which has an above average
gross margin, offset by a lower gross margin on certain Russian scientific
journals published by the Russian Academy of Sciences 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. Under the Distribution Agreement, there were no royalties
payable on certain Russian scientific journals published by the Academy of
Sciences, resulting in decreased royalty expenses. The increase in selling,
general and administrative expenses was primarily due to increased professional
fees, advertising expenditures and sales and use taxes paid in 1995 with
respect to prior years' audit assessments, offset by decreased mailing and
telephone expenses.
The increase in interest income was principally due to increased
investment in commercial paper, time deposits, money market funds and foreign
government securities. The decrease in dividend income was attributable to
decreased investment in marketable securities. The Company had net realized
and unrealized gains of $3,229,729 and $3,868,361, respectively, on marketable
securities for fiscal 1995 as compared to net realized and unrealized gains
of $2,160 and $2,523,176, respectively, on marketable securities for fiscal
1994.
The increase in net income in fiscal 1995 was principally attributable
to the increase in investment income as discussed in the preceding paragraph
and increased income from continuing publishing operations, offset by a net
loss from discontinued operations. In December 1995, the Company's Board of
Directors adopted a plan to discontinue its wholly-owned subsidiary, J.S.
Canner & Company, Inc. effective October 1996.
1994 Compared to 1993
- ---------------------
Revenues from the Company's continuing publishing operations decreased
by 2.9%. Revenues from subscriptions and outside journals decreased by 5.2%
primarily due to 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); (c) non-renewals 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, offset
by higher selling prices; and (d) fewer journal issues being published.
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
subscription journals for fiscal 1994, since the publication of most of the
journals which became subject to the Agreement 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 fiscal 1994, compared to approximately
$1,261,000 for fiscal 1993. Such revenues ceased during fiscal 1994.
Despite the reduction in the number of book titles being published,
revenues from book sales increased by 4.5%, primarily due to an increase in
backlist sales.
The cost of sales from continuing operations as a percentage of
revenues increased from 40.5% to 40.8%, principally due to a lower gross margin
on certain Russian scientific journals published by the Russian Academy of
Sciences 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 increased sales of
backlist books. The Company provides for obsolescence by writing down the
inventory values of backlist books, resulting in higher gross margins on
backlist sales, as compared to frontlist sales. Under the Distribution
Agreement, there were no royalties payable on certain Russian scientific
journals published by the Academy of Sciences, resulting in decreased royalty
expenses. The decrease in selling, general and administrative expenses was
primarily due to decreased professional fees, advertising expenditures and
mailing expenses.
The decrease in interest income was principally due to lower interest
rates and decreased investment in U.S. Government securities, arising mainly
because of the decrease in investment assets utilized for redemption of the
Company's 6 1/2% Convertible Subordinated Debentures (the "Debentures") on
April 30, 1993. The decrease in dividend income was due to decreased
investment in marketable securities. The Company had a net realized gain of
$2,160, and an unrealized gain of $2,523,173 on marketable securities for
fiscal 1994, as compared to a net realized gain of $801,387 and an unrealized
loss of $1,713,197 on marketable securities for fiscal 1993. The decrease in
interest expense was primarily due to the redemption of the Debentures on
April 30, 1993.
The increase in net income in fiscal 1994 was principally attributable
to the increase in investment income as discussed in the preceding paragraph,
and the extraordinary loss from early retirement of the Debentures for fiscal
1993, offset by decreased income from publishing operations in fiscal 1994.
Liquidity and Sources of Capital
- --------------------------------
The ratio of current assets to current liabilities is 6.1 to 1 at
December 31, 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 $66,366,000 at December 31, 1995 invested in marketable
securities and in cash and cash equivalents, which are available for corporate
purposes.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
Response to this Item is contained in Item 14(a).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
---------------------------------------------------------------
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
---------------------------------------------------
(a) The following table sets forth the name of each director and
executive officer of the Registrant, the date on which his present
term as a director will expire, and the nature of all positions and
offices with the Registrant held by him at present. The term of
office of all executive officers expires at the next Annual
Meeting of Stockholders of the Registrant, which is to be held in
June 1996.
Present Term
as Director
Name Expires Position
- ---- ------------- --------
Martin E. Tash 1996 President and Chairman of the Board
of Directors
Mark Shaw 1996 Executive Vice President and
Director
Bernard Bressler 1996 Secretary and Director
Earl Ubell 1997 Director
Howard F. Mathiasen 1997 Director
Israel Gitman 1997 Director
Nathan Tash 1997 Director
Ghanshyam A. Patel ---- Treasurer and Chief Financial
Officer;
Assistant Secretary
The Registrant's Board of Directors is divided into two classes. One
class consists of four members, and the other class consists of three members.
Each class is elected in alternate years for a term of two years. The term of
one class (consisting of Messrs. Mathiasen and Ubell, Dr. Gitman and Nathan
Tash) expires at the 1997 Annual Meeting. The term of office of the other
class (consisting of Messrs. Shaw, Bressler, and Martin E. Tash) expires at
the 1996 Annual Meeting.
(b) The following is a brief account of the recent business experience
of each director and executive officer, each nominee to serve as a director,
and directorships held with other companies which file reports with the
Securities and Exchange Commission.
Name Director Since Business Experience
- ---- -------------- -------------------
Martin E. Tash, 1972 Mr. Tash has been actively engaged in
age 55 the Registrant's business since 1971.
He has been Chairman of the Board and
President since July 15, 1977, and
served as Treasurer and Chief Financial
Officer from 1971 until September 29,
1986. Mr. Tash is also Chairman of the
Board and Chief Executive Officer of
Gradco Systems, Inc.
Mark Shaw, 1977 Mr. Shaw has been actively engaged in
age 57 the Registrant's business since 1963.
He has been Executive Vice President
since July 15, 1977, and manages the
Registrant's book and journal
publication program.
Bernard Bressler, 1962 Mr. Bressler has been a practicing
age 68 attorney since 1952, and is presently a
member of the firm of Bressler, Amery &
Ross, P.C. counsel to the Registrant.
Mr. Bressler is also a director of
Gradco Systems, Inc.
Earl Ubell, 1972 Mr. Ubell is retired. From September
age 69 1978 until August 1995, he was Health
and Science Editor of WCBS-TV. Between
August 1976 and September 1978, Mr.
Ubell was the Producer of Special Events
and Documentaries for NBC News. For more
than three years prior to that time,
Mr. Ubell was the Director of News of
WNBC-TV.
Howard F. Mathiasen, 1978 Mr. Mathiasen is retired. From July 1982
age 58 to June 1987 Mr. Mathiasen was Senior
Vice President of National Westminster
Bank U.S.A. (formerly known as The
National Bank of North America).
Between June 1979 and July 1982 he was
Vice President of that Bank. Between
May 1, 1978 and April 1979, Mr.
Mathiasen was Senior Vice President of
Nassau Trust Company. Between January
1975 and May 1978, Mr. Mathiasen was
Vice President of Chemical Bank.
Israel Gitman, 1995 For the past twenty years, Dr. Gitman
age 56 has been a consultant to Fortune 500
companies in the development of advanced
communications systems and technology
and in the formulation of systems
strategies. From 1979 to 1994, he was
Chairman and President of DVI
Communications, Inc., a systems
engineering and consulting company that
he co-founded. Prior thereto, he was
active in research and development in
the areas of computer-communications and
artificial intelligence. Dr. Gitman has
published widely in scientific and
technical journals, and has been a
speaker and chairman in national and
international conferences.
Nathan A. Tash, 1995 From 1990 through 1992, Mr. Tash, an
age 33 attorney, was associated with the law
firm of McKenna & Cuneo in Washington,
D.C. From 1993 to the present, he has
been engaged in private business,
providing legal and investment advice
to private clientele regarding real
estate matters.
Ghanshyam A. Patel, -- Mr. Patel has been Treasurer and Chief
age 59 Financial Officer of the Registrant
since September 29, 1986. Prior to that
he was with the accounting firm of Ernst
& Whinney (predecessor to Ernst & Young
LLP)from April 1970 and served in the
capacity of Senior Manager commencing
June 1977.
(c) Nathan Tash is the son of Martin E. Tash, the Company's Chairman and
President.
(d) Dr. Israel Gitman and Nathan Tash, who became directors of the
Registrant during the fiscal year ended 1995, each failed to file on
a timely basis a Statement of Beneficial Ownership on Form 3,
reporting his holdings of Common Stock of the Registrant as of the
date he became a director. Each of them subsequently filed the
required information on Form 5.
Item 11. Executive Compensation
----------------------
(a) Summary Compensation Table. The following table sets forth all
compensation awarded to, earned by or paid to the following persons through
March 19, 1996 for services rendered in all capacities to the Registrant and
its subsidiaries during each of the fiscal years ended December 31, 1995, 1994
and 1993:
(1) the Registrant's Chief Executive Officer, and (2) each of the other
executive officers whose total compensation for the fiscal year ended December
31, 1995 required to be disclosed in column (c) and (d) below exceeded
$100,000.
SUMMARY COMPENSATION TABLE
--------------------------
(a) (b) (c) (d)1 (e)2
Name and All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($)
- ------------------ ---- ---------- --------- ----------------
Martin E. Tash 1995 320,000 428,050 27,435
Chairman of the 1994 305,000 353,525 27,657
Board and President 1993 290,000 295,400 30,000
(Chief Executive
(Officer)
Mark Shaw 1995 320,000 305,750 27,435
Executive Vice 1994 305,000 252,375 27,657
President 1993 290,000 211,000 30,000
Ghanshyam A. Patel 1995 150,000 48,000 25,308
Treasurer and Chief 1994 143,000 40,000 23,173
Financial Officer 1993 136,000 33,000 22,868
Footnotes to Summary Compensation Table
- ---------------------------------------
1Represents amounts paid to the named executive officer, for the applicable
fiscal year, under the Registrant's Incentive Compensation Plan. For each
fiscal year an amount equal to 5% of the Registrant's Income from Operations
as reported in the Registrant's year-end financial statements (together with,
when applicable, 5% of the excess of cumulative Investment Profit over
cumulative Investment Loss) is distributed to key employees. Thirty-five
percent of such amount is distributed to the chief executive officer and 25%
is distributed to the next senior officer. The balance of such amount is
distributed as determined by the chief executive officer. Since there was
Investment Profit (as defined) in 1993, 1994 and 1995, the amount of such
Profit was added to Income from Operations for the purpose of calculating
incentive compensation for each of such years.
2Represents amount of contribution made to or accrued for the account of the
named executive officer, in respect of the applicable fiscal year, in the
Registrant's Profit Sharing Plan (a defined contribution plan qualified under
the Internal Revenue Code). The Plan is maintained for all full-time employees
who have completed certain minimum periods of service. The Registrant
contributes to the Plan specified amounts based upon its after tax income as a
percentage of gross revenue. The Registrant's contribution to the Plan for
each employee is determined by his salary level and length of service.
Contributions are invested by the Plan Trustee in stock of the Registrant and/
or in a variety of other investment options, depending upon the employee's
election. Interests in the Plan become vested to the extent of 20% after three
years of service and vest at the rate of an additional 20% for each year of
service thereafter and in any event become 100% vested at death or at the
"normal retirement age" of 55 as specified in the Plan. Each employee (or his
beneficiary) is entitled to receive the value of his vested interest upon his
death or retirement. He may also receive the value of such interest upon prior
termination of his services with the Registrant, or if he elects at any time to
withdraw his interest. The interests of Messrs. Tash, Shaw and Patel are fully
vested.
The aggregate contributions made or accrued by the Registrant through
the end of fiscal 1995 for Messrs. Tash, Shaw and Patel under this Plan are
$460,742, $480,617 and $158,175, respectively; these contributions have been
invested in the manner set forth above, and (as to Mr. Shaw) a portion of the
investments was transferred from the Plan into a private profit sharing plan of
which Mr. Shaw is the beneficiary.
(b) Compensation of Directors.
-------------------------
Directors fees for Dr. Israel Gitman and Messrs. Earl Ubell,
Howard F. Mathiasen and Nathan Tash are currently at the rate of $11,000 per
annum each. Directors of the Registrant who are also officers of the
Registrant receive no additional compensation for their services as directors.
(c) Termination of Employment and Change of Control Arrangements
Regarding Named Executive Officers.
------------------------------------------------------------
(i) See footnote (2) to table in Item 11(a) for information as
to entitlement of Messrs. Tash, Shaw and Patel to receive certain distributions
under the Registrant's Profit Sharing Plan upon termination of their
employment.
(ii) On September 22, 1989, the Registrant adopted Amended
Contingent Compensation Agreements with Martin Tash and Mark Shaw (executive
officers of the Registrant named in the table in item 11(a)) and with Harry
Allcock and Marshall Lebowitz (officers of subsidiaries of the Registrant).
The Amended Agreements supersede the Contingent Compensation Agreements,
adopted on October 8, 1986, and provide that if (a) during the officer's
employment or within six months after his employment terminates, there is a
sale of 75% of the book value of the Registrant's operating assets (as
defined), or if any person or group becomes the owner of over 25% of the
Registrant's outstanding stock, and (b) the officer's employment is terminated
at or prior to the end of the sixth month after such event, then the Registrant
or a successor in interest to the Registrant shall pay the terminated officer
cash equal to 290% of the officer's average annual taxable compensation over
the preceding five calendar years.
On December 14, 1993, the Registrant entered into Contingent
Compensation Agreements with Ghanshyam Patel (an executive officer of the
Registrant named in the table in item 11(a)) and Ken Derham (an officer of a
subsidiary of the Registrant) on the same terms as the Amended Agreements
described above.
(d) Indemnification Agreements.
--------------------------
In September 1987, the Registrant's liability insurance for its
directors and officers expired and was not renewed due to the significantly
increased cost. In light of this development, and to provide increased
protection, the Registrant's By-Laws were amended on November 18, 1987 to
require the Registrant to advance expenses of directors or officers in
defending a civil or criminal action as such expenses are incurred, subject
to certain conditions. Furthermore, on that date the Registrant entered into
a contract with each person then holding a position as a director or executive
officer, requiring indemnification for expenses, judgments, fines and amounts
paid in settlement, in accordance with the By-Laws as amended, or any future
By-Laws which provide greater indemnification. On December 14, 1993, the
Registrant entered into a substantially identical contract with an officer of
one of its subsidiaries. The Registrant has also agreed to indemnify Israel
Gitman and Nathan Tash (who became directors on June 23, 1995) in the same
manner.
The present By-Laws provide for indemnification of directors and
officers, in connection with claims arising from service to the Registrant,
or to another entity at Registrant's request, except where it would be
prohibited under applicable law.
(e) Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
The Registrant's Board of Directors has no compensation committee
(or other Board committee performing equivalent functions); compensation
policies applicable to executive officers are determined by the Board. During
the fiscal year ended December 31, 1995, the officers of the Registrant
participating in the Board's deliberations concerning executive compensation
were Martin E. Tash, Mark Shaw and Bernard Bressler (who are members of the
Board).
During the fiscal year ended December 31, 1995, Martin E. Tash
(an executive officer of the Registrant) served as a member of the Board of
Directors of Gradco Systems, Inc. ("Gradco"). Gradco has no compensation
committee (or other Board committee performing equivalent functions);
compensation policies applicable to executive officers are determined by its
Board. Mr. Tash is an executive officer of Gradco and is the only such
executive officer who also served on Registrant's Board. Bernard Bressler
(Secretary and a director of Registrant) is an officer and director of Gradco,
but he is not an executive officer of either entity.
During the period since January 1, 1995, there were no
transactions between the Registrant and Gradco of the type required to be
disclosed under Item 13, Certain Relationships and Related Transactions.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) The following table sets forth information regarding persons
known to the Registrant to be the beneficial owners of more than 5% of the
Registrant's voting securities as of March 19, 1996, based on 3,941,523 shares
of Common Stock, $.10 par value, outstanding as of such date.
Amount and
Nature of
Name and Address of Beneficial Percentage
Title of Class Beneficial Owner Ownership of Class
- -------------- ------------------- ---------- ----------
Common Stock Martin E. Tash 423,402
$.10 par value 233 Spring Street shares(1) 10.7%
New York, NY 10013
Arlene S. Tash 298,229
17049 Northway Circle shares(2) 7.6%
Boca Raton, FL 33496
Southeastern Asset 321,000
Management, Inc. shares(3) 8.2%
860 Ridgelake Boulevard
Memphis, TN 38120
Quest Advisory Corp. 324,550
and Quest Management shares(4) 8.2%
Company as a Group
1414 Avenue of the Americas
New York, NY 10019
Mellon Bank Corporation, 279,598 7.1%
One Mellon Bank Center shares(5)
Pittsburgh, PA 15258
Footnotes
- ---------
(1) Includes 112,253 shares held by the Registrant's Profit Sharing Plan,
as to which Mr. Tash has voting and investment power. Of the
aggregate of 423,402 shares shown, Mr. Tash has sole voting and
investment power as to 125,173, and shared voting and investment power
with his wife as to 298,229.
(2) Shares are owned jointly by Mrs. Tash with her husband, Martin E.
Tash, and she shares voting and investment power with him. Shares are
included in the 423,402 shares shown as owned by Mr. Tash.
(3) Number of shares as shown in beneficial owner's Amendment No. 4 to
Schedule 13G dated January 31, 1996, filed with the Securities and
Exchange Commission, reporting ownership as of December 31, 1995.
According to such Schedule 13G, Southeastern Asset Management, Inc.
is an Investment Adviser registered under the Investment Advisers Act
of 1940. It has sole voting and dispositive power as to 211,000 of
the shares shown, and shared voting and dispositive power as to
110,000 of said shares. According to the Schedule 13G, all of the
aforesaid securities "are owned legally by Southeastern's investment
advisory clients and none are owned directly or indirectly by
Southeastern. As permitted by Rule 13d-4, the filing of this
statement shall not be construed as an admission that Southeastern is
the beneficial owner of any of [such] securities." The Schedule 13G
was also filed by O. Mason Hawkins, Chairman of the Board and
President of Southeastern "in the event he could be deemed to be a
controlling person of that firm as the result of his official position
with or ownership of its voting securities. The existence of such
control is expressly disclaimed. Mr. Hawkins does not own directly or
indirectly any securities covered by this statement for his own
account. As permitted by Rule 13d-4, the filing of this statement
shall not be construed as an admission that Mr. Hawkins is the
beneficial owner of any of the securities covered by this statement."
The Schedule 13G reflects that Mr. Hawkins has voting or dispositive
power as to none of the Registrant's shares.
(4) Number of shares as shown in beneficial owner's Amendment No. 3 to
Schedule 13G dated February 14, 1996, reporting ownership as of
December 31, 1995. According to such Schedule 13G, each of Quest
Advisory Corp. ("Quest") and Quest Management Company ("QMC") is an
Investment Adviser registered under the Investment Advisers Act of
1940. Quest has sole voting and dispositive power as to 301,050 of
the shares shown above, representing 7.6% of the outstanding Common
Stock, and QMC has sole voting and dispositive power as to 23,500 of
the shares shown above, representing .6% of the outstanding Common
Stock. The Schedule 13G also includes Charles M. Royce as part of the
Group and indicates that he may be deemed to be a controlling person
of Quest and QMC, and as such may be deemed to beneficially own the
shares of the Registrant beneficially owned by Quest and QMC. Mr.
Royce owns no shares of the Registrant outside of Quest and QMC and
has disclaimed beneficial ownership of the shares reported above.
(5) According to Amendment No. 1 to Schedule 13G dated January 22, 1996,
the Dreyfus Trust Company, a wholly-owned subsidiary of Mellon Bank
Corporation, as trustee of the Registrant's Profit Sharing Plan (the
"Plan"), was the record owner of 258,598 shares of the Registrant's
Common Stock as of December 31, 1995. Each employee participating in
the Plan is entitled to instruct the Trustee as to the voting and
disposition of all shares of Common Stock allocated to the employee's
account. To the extent that the voting right is not exercised or
shares are held by the Trustee which are not allocated to participant
accounts, the Trustee votes these shares in the same proportion as
those shares for which the Trustee receives voting instructions from
employees. Mellon Bank Corporation (including shares held by its
subsidiaries) reported that, excluding Plan shares, it held an
aggregate of 21,000 other shares of Common Stock of the Company, as to
which such entities had sole or shared voting and dispositive power.
(b) The following table sets forth information regarding the
voting securities of the Registrant beneficially owned by each director of the
Registrant, each nominee for director, each of the executive officers named in
the Summary Compensation table in item 11, Executive Compensation, and all
executive officers and directors as a group (8 persons), as of March 19, 1996.
Amount and
Nature of
Name and Address of Beneficial Percentage
Title of Class Beneficial Owner Ownership of Class
- -------------- ------------------- ---------- ----------
Common Stock Martin E. Tash 423,402
$.10 par value 233 Spring Street shares (1) 10.7%
New York, NY 10013
Mark Shaw 80,667
233 Spring Street shares (2) 2.0%
New York, NY 10013
Earl Ubell 1,000
WCBS-TV shares *
114 West 27th Street
New York, NY 10001
Howard F. Mathiasen 28,125
10276 Totem Run shares *
Littleton, CO 80125
Bernard Bressler 12,809
Bressler, Amery & shares (3) *
Ross, P.C.
17 State Street
New York, NY 10004
Israel Gitman 500 *
12 West 72nd Street shares
New York, NY 10023
Nathan Tash --
3303 Pine Heights
Drive N.E.
Atlanta, GA 30324
Ghanshyam A. Patel 10,204 *
233 Spring Street shares(4)
New York, NY 10013
All Executive 556,707 14.1%
Officers and Directors shares
shares as a Group
(comprising the 8
persons shown above)
* Less than 1%.
(1) See footnote (1) to table in Item 12(a).
(2) Includes 50,625 shares held in trust for adult children. Of the
aggregate of 80,667 shares shown, Mr. Shaw has sole voting and
dispositive power as to 67,085 and shared voting and dispositive power
with his wife as to 13,582.
(3) Includes 572 shares held by a trustee for Mr. Bressler under an
Individual Retirement Account. Does not include 12,497 shares held by
Mr. Bressler's wife as to which he disclaims beneficial ownership.
(4) Includes 4,854 shares held by the Registrant's Profit Sharing Plan, as
to which Mr. Patel has sole voting and dispositive power. As to the
balance of 5,350 shares, Mr. Patel shares voting and dispositive power
with his wife.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
Bernard Bressler, Secretary and a director of the Registrant, is a
member of the law firm of Bressler, Amery & Ross, P.C., counsel to the
Registrant. During the 1995 fiscal year, the Registrant paid legal fees of
$103,699, to such firm.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
(a) See index to financial statements and financial statement
schedules. See list of exhibits in paragraph (c) below.
(b) 8-K reports - None.
(c) Exhibits -
3.1 Certificate of Incorporation of the Registrant has been
filed as part of Exhibit 3 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December
31, 1986.(1)
3.2 (a) By-Laws of the Registrant, as amended November 18,
1987, have been filed as Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987.(1)
(b) Section 2.1 of By-Laws, as amended March 10, 1995,
has been filed as Exhibit 3.2(b) to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994.(1)
10.1 Journal Production and Distribution Agreement dated
November 29, 1993 among the Registrant, MAIK Nauka,
Interperiodica, Pleiades Publishing, Inc., the Russian
Academy of Sciences and Vo Nauka, has been filed as
Exhibit 99 to the Registrant's Report on Form 8-K dated
December 13, 1993.(1)
10.2 Incentive Compensation Plan for Executive Officers and
Key Employees of Registrant as amended on June 18, 1985
has been filed as part of Exhibit 10 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1985.(1)
10.3 Amendment adopted on December 5, 1990 to Plan referred
to in Item 10.3 has been filed as exhibit 10.4 to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990.(1)
10.4 Amended Contingent Compensation Agreements dated
September 22, 1989 between the Registrant and Martin
Tash, Mark Shaw, Harry Allcock and Marshall Lebowitz
have been filed as Exhibit 10.4 to the Registrant's
Annual Report on form 10-K for the fiscal year ended
December 31, 1989.(1) The Registrant has entered into
identical agreements as of December 14, 1993, with
Ghanshyam Patel and Ken Derham. To avoid unnecessary
duplication, such additional agreements have been
omitted from the exhibit filing.
10.5 Indemnification Agreement dated as of November 18, 1987
between the Registrant and Martin E. Tash has been
filed as Exhibit 10.6 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31,
1987.(1) The Registrant has entered into identical
agreements as of the same date with each of the
following persons: Howard F. Mathiasen, Mark Shaw,
Earl Ubell, Dr. N. Bruce Hannay, and Bernard Bressler.
The Registrant entered into a substantially identical
agreement dated March 9, 1988 with Ghanshyam A. Patel
and dated December 14, 1993 with Ken Derham. To avoid
unnecessary duplication, such additional agreements
have been omitted from the exhibit filing.
10.6 Amendment dated March 9, 1988 to Indemnification
Agreements referred to in Item 10.6 between the
Registrant and Martin E. Tash has been filed as Exhibit
10.7 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987.(1) The
Registrant has entered into identical amendments of the
same date with Mark Shaw and Bernard Bressler. To
avoid unnecessary duplication, such identical
amendments were omitted from the exhibit filing.
11 Statement re: computation of per share earnings - filed
herewith.
21 Subsidiaries of Registrant
(i) Plenum Publishing Co., Ltd.
(United Kingdom)
(ii) Da Capo Press, Incorporated
(New York)
(iii) J.S. Canner & Company, Inc.
(Massachusetts)
(iv) Plenum International Sales
Corporation (Virgin Islands)
(v) IFI/Plenum Data Corporation
(Delaware)
(vi) Human Sciences Press, Inc.
(Delaware)
27 Financial Data Schedule - filed herewith
- ------------------------------------------------------------------------------
(1)Not filed with this report but incorporated by reference herein.
<PAGE>
Signatures
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PLENUM PUBLISHING CORPORATION
(Registrant)
By: /s/ Martin E. Tash
----------------
Martin E. Tash
Chairman of the Board of Directors
and President
Dated: March 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
By: /s/ Martin E. Tash
----------------
Martin E. Tash
Chairman of the Board of Directors and
President (Principal Executive Officer)
Dated: March 28, 1996
By: /s/ Mark Shaw
---------------------
Mark Shaw
Executive Vice President and
a Director
Dated: March 28, 1996
By: /s/ Ghanshyam A. Patel
---------------------
Ghanshyam A. Patel
Treasurer and Chief Financial Officer
(Principal Financial and Accounting
Officer)
Dated: March 28, 1996
By: /s/ Bernard Bressler
---------------------
Bernard Bressler
Secretary and a Director
Dated: March 28, 1996
By: /s/ Earl Ubell
---------------------
Earl Ubell
Director
Dated: March 28, 1996
By: /s/ Howard F. Mathiasen
---------------------
Howard F. Mathiasen
Director
Dated: March 28, 1996
By: /s/ Israel Gitman
---------------------
Israel Gitman
Director
Dated: March 28, 1996
By: /s/ Nathan Tash
---------------------
Nathan Tash
Director
Dated: March 28, 1996
<PAGE>
Plenum Publishing Corporation
and Subsidiary Companies
Form 10-K Item 14(a)(1) and (2)
Index to Financial Statements
and Financial Statement Schedule
The following consolidated financial statements of Plenum Publishing
Corporation and subsidiary companies are included in Item 8:
Report of Independent Auditors S- 1
Consolidated Balance Sheets-December 31, 1995 and 1994 S- 2
Consolidated Statements of Income-Years ended
December 31, 1995, 1994 and 1993 S- 4
Consolidated Statements of Stockholders' Equity-Years ended
December 31, 1995, 1994 and 1993 S- 6
Consolidated Statements of Cash Flows-Years ended
December 31, 1995, 1994 and 1993 S- 7
Notes to Consolidated Financial Statements S- 9
The following consolidated financial statement schedule of Plenum Publishing
Corporation and subsidiary companies is included in Item 14(d):
Schedule:
II Valuation and Qualifying Accounts S- 23
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and, therefore, have been omitted.
<PAGE>
Report of Independent Auditors
Stockholders and Board of Directors
Plenum Publishing Corporation
We have audited the accompanying consolidated balance sheets of Plenum
Publishing Corporation and subsidiary companies as of December 31, 1995 and
1994, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1995. Our audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Plenum
Publishing Corporation and subsidiary companies at December 31, 1995 and 1994,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
March 19, 1996
<PAGE>
<TABLE>
<CAPTION>
Plenum Publishing Corporation
and Subsidiary Companies
Consolidated Balance Sheets
December 31
1995 1994
---- -----
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ($39,326,264 and $30,981,399)
in 1995 and 1994 $ 40,093,105 $ 31,775,618
Marketable securities, at aggregate market value (Note 11) 26,273,263 24,290,875
Interest and dividends receivable 258,347 154,654
Receivables-substantially all trade, net of allowances for
doubtful accounts ($125,000 and $181,000) and sales returns
($810,000 and $740,000) in 1995 and 1994 5,644,095 6,018,648
Inventories (Note 4) 3,492,326 3,636,301
Deferred income tax benefits (Note 7) 1,213,526 2,074,818
------------- -------------
Total current assets 76,974,662 67,950,914
------------- -------------
Costs applicable to deferred subscription income 556,219 720,370
------------- -------------
Property, plant and equipment, at cost:
Land 690,000 690,000
Building, net of accumulated depreciation of $535,786 and $433,306 2,997,991 3,100,471
Furniture, fixtures, equipment and leasehold improvements, net of
accumulated depreciation and amortization of $682,192 and
$882,829 281,769 384,219
Plate costs, net of accumulated depreciation of $4,344,770 and
$4,634,308 3,206,973 3,246,892
------------- -------------
7,176,733 7,421,582
------------- -------------
Deferred income taxes (Note 7) 450,544 863,128
------------- -------------
Deferred charges and other assets:
Cost of subscription lists of Human Sciences Press and Agathon
journals, net of accumulated amortization of $1,984,240 and
$1,708,970 2,718,325 2,993,595
Royalties 1,581,130 1,755,394
Investment in Gradco Systems, Inc. (Note 5) 2,376,119 2,074,829
Other 278,303 277,813
------------- -------------
6,953,877 7,101,631
------------- -------------
Excess of cost of assets acquired over book amount thereof, net
of accumulated amortization of $222,371 and $1,283,309 (Note 3) 133,270 855,541
------------- -------------
Total assets $ 92,245,305 $ 84,913,166
============= =============
Liabilities and stockholders' equity
Current liabilities:
Due to customers $ 552,298 $ 451,231
Accounts payable 2,552,396 1,792,874
Income taxes payable 1,712,659 2,145,872
Royalties payable 2,642,191 2,911,685
Other accrued expenses and sundry liabilities (Notes 9 and 10) 4,117,180 4,819,105
Dividends payable 1,143,042 1,127,726
------------- -------------
Total current liabilities 12,719,766 13,248,493
Deferred subscription income 24,539,497 26,333,855
------------- -------------
Total liabilities 37,259,263 39,582,348
------------- -------------
Commitments and contingencies (Notes 8, 9, 13 and 14)
Stockholders' equity:
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 94,927,495 83,983,599
------------- -------------
99,463,745 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 54,986,042 45,330,818
------------- -------------
Total liabilities and stockholders' equity $ 92,245,305 $ 84,913,166
============= =============
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Plenum Publishing Corporation
and Subsidiary Companies
Consolidated Statements of Income
Year ended December 31
1995 1994 (a) 1993 (a)
------------- ------------- -------------
<S> <C> <C> <C>
Subscriptions, books, outside journals and other sales, net $ 52,229,671 $ 51,357,893 $ 52,891,694
------------- ------------- -------------
Costs and expenses:
Cost of sales 21,236,836 20,957,751 21,430,229
Royalties (Note 13) 4,141,404 4,257,729 4,659,246
Selling, general and administrative expenses 10,745,276 10,408,969 10,801,608
------------- -------------- -------------
36,123,516 35,624,449 36,891,083
------------- -------------- -------------
Income from operations 16,106,155 15,733,444 16,000,611
Investment income and other:
Dividend income 377,698 1,592,837 2,136,989
Interest income 1,996,434 441,009 544,290
Net realized gain on sales of marketable securities 3,229,729 2,160 801,387
Net unrealized gain (loss) on marketable securities 3,868,361 2,523,173 (1,713,197)
Equity in net income of Gradco Systems, Inc. (Note 5) 301,290 102,986 4,565
Interest expense - (20,320) (998,060)
Other investment related expenses (648,616) (412,477) (239,936)
------------- -------------- -------------
Income from continuing operations before income taxes 25,231,051 19,962,812 16,536,649
Income taxes (Note 7) 9,584,000 7,353,000 5,781,000
------------- -------------- -------------
Income from continuing operations 15,647,051 12,609,812 10,755,649
------------- -------------- -------------
Discontinued operations (Note 3):
(Loss) income, net of income tax (benefit) of
($600,000), $113,000 and $155,000 (46,192) 109,306 173,058
Estimated loss on disposal, net of income tax
benefit of $45,300 (84,055) - -
------------- -------------- -------------
(Loss) income from discontinued operations (130,247) 109,306 173,058
------------- -------------- -------------
Income before extraordinary items 15,516,804 12,719,118 10,928,707
Extraordinary items (Note 6):
Gain on repurchase of 6-1/2% Convertible Subordinated
Debentures due April 15, 2007, less applicable income
taxes of $2,400 - - 3,656
Loss from early retirement of 6-1/2% Convertible
Subordinated Debentures due April 15, 2007, net of
income tax benefit of $674,900 - - (1,323,450)
------------- -------------- -------------
Extraordinary loss - - (1,319,794)
------------- -------------- -------------
Net income $ 15,516,804 $ 12,719,118 $ 9,608,913
============= ============== =============
Per share of Common Stock-primary (Note 10):
Income from continuing operations $ 3.96 $ 2.84 $ 2.33
(Loss) income from discontinued operations (0.03) .03 .04
Extraordinary loss - - (.29)
------------- -------------- -------------
Net income $ 3.93 $ 2.87 $ 2.08
============= ============== =============
Per share of Common Stock-fully diluted (Note 10):
Income from continuing operations $ 2.27
(Loss) income from discontinued operations .03
Extraordinary loss (.26)
-------------
Net income $ 2.04
=============
<FN>
(a) Certain amounts of 1994 and 1993 have been reclassified from continuing
operations to discontinued operations to conform to the 1995 presentation
(Notes 3 and 12).
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Plenum Publishing Corporation
and Subsidiary Companies
Consolidated Statements of Stockholders' Equity
Common Stock Issued Paid-In Total
-------------------
Par Additional Retained Treasury Stock Stockholders'
--------------
Shares Value Capital Earnings Shares Cost Equity
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 5,844,681 $584,468 $3,871,782 $71,520,740 1,217,661 $25,818,732 $50,158,258
Net income for the year ended December
31, 1993 - - - 9,608,913 - - 9,608,913
Dividend declared, $1.08 a share - - - (4,964,225) - - (4,964,225)
Acquisition of Common Stock for treasury - - - - 113,775 2,652,209 (2,652,209)
Conversion of 6-1/2% Convertible Subordinated
Debentures into shares of Common Stock 2,560 256 79,744 - - - 80,000
----------- --------- ----------- ------------ ---------- ------------ ------------
Balance at December 31, 1993 5,847,241 584,724 3,951,526 76,165,428 1,331,436 28,470,941 52,230,737
Net income for the year ended December
31, 1994 - - - 12,719,118 - - 12,719,118
Dividend declared, $1.12 a share - - - (4,900,947) - - (4,900,947)
Acquisition of Common Stock for treasury - - - - 531,547 14,718,090 (14,718,090)
----------- --------- ----------- ------------ ---------- ------------ ------------
Balance at December 31, 1994 5,847,241 584,724 3,951,526 83,983,599 1,862,983 43,189,031 45,330,818
Net income for the year ended December
31, 1995 - - - 15,516,804 - - 15,516,804
Dividend declared, $1.16 a share - - - (4,572,908) - - (4,572,908)
Acquisition of Common Stock for treasury - - - - 42,735 1,288,672 (1,288,672)
----------- --------- ----------- ------------ ---------- ------------ ------------
Balance at December 31, 1995 5,847,241 $584,724 $3,951,526 94,927,495 1,905,718 $44,477,703 $54,986,042
=========== ========= =========== ============ ========== ============ ============
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Plenum Publishing Corporation
and Subsidiary Companies
Consolidated Statements of Cash Flows
Year ended December 31
1995 1994 1993
---------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 15,516,804 $ 12,719,118 $ 9,608,913
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plate costs 1,465,390 1,620,375 1,802,526
Depreciation and amortization of building,
furniture, fixtures, equipment and leasehold
improvements 294,634 313,233 320,158
Amortization of deferred charges and excess
of cost of assets acquired over book amount
thereof 2,801,351 2,626,442 2,461,451
Net realized gain on sales of marketable
securities (3,229,729) (2,160) (801,387)
Net unrealized (gain) loss on marketable
securities (3,868,361) (2,523,173) 1,713,197
Purchase of marketable securities (14,949,402) (30,183,628) (23,389,658)
Proceeds from sale of marketable securities 20,065,104 57,243,299 24,326,944
Equity in net income of Gradco Systems, Inc. (301,290) (102,986) (4,565)
Extraordinary loss, net of income taxes - - 1,319,794
Decrease (increase) in deferred income
tax benefits 1,273,876 1,063,054 (1,141,279)
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 270,860 2,749,346 (3,125,394)
Advance under the Distribution Agreement - 750,000 (750,000)
Inventories 143,975 542,884 306,510
Other assets (1,630,036) (1,983,242) (2,000,985)
Increase (decrease) in:
Due to customers, accounts payable,
royalties payable, accrued expenses and
sundry liabilities 820,045 1,226,688 (165,240)
Income taxes payable (433,213) (38,925) 1,048,636
Deferred subscription income and costs applicable
thereto-net (1,630,207) 1,118,408 113,726
---------------------------------------------
Net cash provided by operating activities 16,609,801 47,138,733 11,643,347
---------------------------------------------
Cash flows from investing activities
Additions to plate costs $ (1,425,471) $ (1,473,350) $(1,821,035)
Additions to furniture, fixtures, equipment
and leasehold improvements (89,704) (140,122) (200,654)
Proceeds from sale and redemption of U.S.
Government securities - - 32,858,033
---------------------------------------------
Net cash (used in) provided by investing
activities (1,515,175) (1,613,472) 30,836,344
---------------------------------------------
Cash flows from financing activities
Repurchase of 6-1/2% Convertible Subordinated
Debentures - - (41,755,663)
Acquisition of treasury stock (2,219,547) (13,787,215) (2,652,209)
Dividends paid (4,557,592) (4,992,488) (3,744,958)
---------------------------------------------
Net cash used in financing activities (6,777,139) (18,779,703) (48,152,830)
---------------------------------------------
Net increase (decrease) in cash and cash
equivalents 8,317,487 26,745,558 (5,673,139)
Cash and cash equivalents at beginning of year 31,775,618 5,030,060 10,703,199
---------------------------------------------
Cash and cash equivalents at end of year $ 40,093,105 $ 31,775,618 $ 5,030,060
=============================================
<FN>
Acquisition of treasury stock is net of $930,875 payable at December 31, 1994
(see Note 10).
See accompanying notes.
</TABLE>
<PAGE>
1. Summary of Significant Accounting Policies
Basis of Presentation
- ---------------------
The accompanying financial statements include the accounts of the Plenum
Publishing Corporation (the "Company") and its domestic and foreign
subsidiaries, which are wholly-owned. The accounts of the foreign subsidiaries
are not material. Intercompany items and transactions are eliminated in
consolidation.
The Company accounts for its investment in Gradco Systems, Inc. under the
equity method (see Note 5).
The Company and its subsidiaries are engaged in the publishing and
distribution of advanced scientific and technical materials in the United
States and in foreign countries. Export sales aggregated approximately
$22,493,000 (1995), $20,590,000 (1994) and $23,217,000 (1993).
Inventories
- -----------
Inventories are stated at the lower of cost (principally average cost or
specific invoice cost) or market (based on selling market).
Use of Estimates
- ----------------
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and 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.
Depreciation and Amortization
- -----------------------------
Depreciation is provided for by the straight-line method or by the declining-
balance method over estimated useful lives ranging from 4 to 35 years.
Amortization of leasehold improvements is provided for by the straight-line
method generally over the terms of the related leases or the estimated useful
lives of the improvements, whichever period is shorter.
The excess of cost of assets acquired over book amount thereof (which arose in
connection with various acquisitions by the Company in prior years, other than
Gradco Systems, Inc.) is being amortized by the straight-line method
principally over 40 years.
The cost of the subscription lists of Human Sciences Press and Agathon journals
is being amortized by the straight-line method over estimated useful lives
ranging from 12 to 20 years.
Other assets include the cost of rights to produce and distribute certain
journals, which is being amortized by the straight-line method, primarily over
a period of 15 years.
Deferred Subscription Income
- ----------------------------
The Company bills subscribers to certain publications and patent information
services in advance of issuance thereof. The publications are generally issued
over a one-year period and subscription revenues are taken into income by the
straight-line method based on the relationship of the number of publications
issued to the number ordered by subscribers. Patent information service
revenues are taken into income when published.
The portion of advance billings which will require use of financial resources
within one year is not practicable to determine and, accordingly, no portion
thereof is included in current liabilities; expenditures at balance sheet dates
in respect of such advance billings have similarly been excluded from current
assets.
Marketable Securities
- ---------------------
As determined by management, marketable securities are classified as trading
securities and are stated at fair market value. Gains and losses, both realized
and unrealized, are included as a component of current earnings. Realized gains
and losses on marketable securities are determined based on specific
identification of securities sold.
Cash Equivalents and Supplemental Cash Flow Information
- -------------------------------------------------------
The Company considers all highly liquid financial instruments with a maturity
of three months or less when purchased to be cash equivalents. As of December
31, 1995, the Company had time deposits, commercial paper and money market
accounts totalling approximately $39,326,000 substantially on deposit with
three financial institutions. As of December 31, 1994, the Company had time
deposits, commercial paper and money market accounts of approximately
$30,981,000 on deposit with three financial institutions.
At December 31, 1995 and 1994, cash equivalents included commercial paper
totaling $38,000,000 and $20,500,000, respectively. The commercial paper is
held to maturity and, as such, it is recorded at amortized cost which
approximates fair value.
The Company paid income taxes in 1995, 1994 and 1993 of approximately
$8,098,000, $6,442,000 and $6,029,000, respectively. In addition, the Company
paid interest in 1994 and 1993 of approximately $20,000 and $1,565,000,
respectively.
2. Accounting Changes
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." The Company adopted the provisions of the new
standard for investments held as of or acquired after January 1, 1994.
Accordingly, the Company has classified its marketable equity securities held
as trading securities on the basis of its intent to trade such securities and
has carried them at fair market value, with unrealized gains and losses
reported as a component of current earnings.
Since at December 31, 1993, the Company valued marketable equity securities at
market with unrealized losses reported as a component of 1993 earnings, there
was no cumulative effect on net income as of January 1, 1994 of adopting
Statement 115.
3. Discontinued Operations
In December 1995, the Company's Board of Directors adopted a plan to
discontinue its wholly-owned subsidiary, J.S. Canner & Company, Inc. ("Canner")
effective October 1996. Canner is engaged in the purchase and sale of back
issue periodicals to libraries, universities, colleges and other users. Loss
from discontinued operations in 1995 includes the write-off of Canner's
unamortized intangible assets of $89,284, net of applicable income tax benefit
of $624,000. The remaining assets and liabilities of Canner at December 31,
1995 are not material to the consolidated financial statements.
4. Inventories
Inventories at December 31 are comprised of:
1995 1994
----------------------------
Finished publications $3,033,329 $3,164,658
Work in process 458,997 471,643
----------------------------
$3,492,326 $3,636,301
============================
5. Investment in Gradco Systems, Inc.
As of December 31, 1995 and 1994, the Company owned 913,000 common shares of
Gradco Systems, Inc. ("Gradco"), a company engaged in the development and
marketing of photocopier machine technology, representing approximately 11.7%
of its outstanding common stock. Gradco stock is publicly traded on the NASDAQ
National Market System. The aggregate market value of this investment as of
December 31, 1995 and 1994 amounted to approximately $2,111,000 and $3,196,000,
respectively.
Selected financial data of Gradco as of and for the 12 months ended December
31, 1995, 1994 and 1993 is as follows and has been extracted from unaudited
financial information as filed by Gradco with the Securities and Exchange
Commission (in thousands):
1995 1994 1993
-------------------------------
Balance sheet data
Total assets $58,957 $54,800 $38,863
Working capital 18,032 12,744 9,147
Noncurrent liabilities,
including minority interest and excluding
current installments 17,988 17,689 15,669
Shareholders' equity 15,715 12,477 9,767
Statement of operations data
Net revenues 101,069 71,458 55,773
Net income 2,576 878 233
The President and Chairman of the Board of the Company, Mr. Martin E. Tash, is
also the President and Chairman of the Board of Gradco.
6. Long-Term Debt
Long-term debt at January 1, 1993 consisted of 6-1/2% Convertible Subordinated
Debentures (the "Debentures") due April 15, 2007. The Debentures were issued
in April and May 1987.
In 1993, the Company purchased Debentures in the principal amount of $1,149,000
for an aggregate cost (including the write-off of related deferred issuance
costs of approximately $28,000) of approximately $1,143,000.
On April 30, 1993 (the "Redemption Date"), pursuant to a notice of election
to redeem which had been given to the holders on March 24, 1993, the Company
redeemed the Debentures which were outstanding on the Redemption Date. In
accordance with the terms of the Debentures and the applicable Trust Indenture,
the redemption price was equal to 102.60% of the principal amount of
outstanding Debentures, and the holders were also paid accrued interest for
the period from April 15, 1993 (the date on which the last semiannual
installment of interest was paid) to the Redemption Date. Prior to the
Redemption Date, Debentures in the aggregate principal amount of $80,000 were
converted into 2,560 shares of Common Stock at the applicable conversion rate
of $31.25 per $1,000 of principal amount. On the Redemption Date, Debentures
in the aggregate principal amount of $39,598,000 were outstanding, requiring a
total payment to the holders of approximately $40,735,000 (including accrued
interest). This amount was funded by liquidating a portion of the Company's
investments of its excess cash, and from short-term borrowing on the Company's
margin account with a broker. The premium paid for the Debentures, and the
write-off of related deferred issuance costs of approximately $956,000, and
professional fees of approximately $13,000 incurred for redemption, net of
applicable income tax benefit of $675,000 totalled approximately $1,323,000,
which has been accounted for as an extraordinary loss.
7. Income Taxes
Income taxes for the years ended December 31 consist of the following:
1995
-------------------------------------------
Current Deferred Total
-------------------------------------------
Federal $6,680,477 $ 902,523 $7,583,000
State and local 1,629,647 371,353 2,001,000
-------------------------------------------
$8,310,124 $ 1,273,876 $9,584,000
===========================================
1994
-------------------------------------------
Current Deferred Total
-------------------------------------------
Federal $4,800,664 $ 838,336 $5,639,000
State and local 1,489,282 224,718 1,714,000
-------------------------------------------
$6,289,946 $ 1,063,054 $7,353,000
===========================================
1993
-------------------------------------------
Current Deferred Total
-------------------------------------------
Federal $5,307,809 $ (874,809) $4,433,000
State and local 1,614,470 (266,470) 1,348,000
-------------------------------------------
$6,922,279 $(1,141,279) $5,781,000
===========================================
Deferred income taxes result from the recognition of the income tax effect of
timing differences in reporting transactions for financial and tax purposes.
A description of the differences and the related tax effect follows:
1995 1994 1993
------------------------------------
Valuation of inventories $ (95,869) $ (129,727) $ (337,711)
Depreciation 412,584 207,181 (77,000)
Allowance for doubtful accounts, etc. 26,100 (45,100) (26,768)
Adjustments applicable to net
unrealized gains (losses) 1,555,100 1,030,700 (699,800)
Intangibles related to discontinued
operations (624,039) - -
--------------------------------------
$1,273,876 $1,063,054 $(1,141,279)
======================================
Significant components of the Company's deferred tax assets as of December 31
are as follows:
1995 1994
--------------------------
Valuation of inventories $2,343,307 $2,247,438
Depreciation 450,544 863,128
Allowance for doubtful accounts, etc. 132,180 158,280
Net unrealized gains (1,886,000) (330,900)
Intangibles related to discontinued
operations 624,039 -
Equity in losses of Gradco 1,856,000 1,962,400
--------------------------
Total deferred tax assets 3,520,070 4,900,346
Valuation allowance (1,856,000) (1,962,400)
--------------------------
Net deferred tax assets $1,664,070 $2,937,946
==========================
The Company has recorded a valuation allowance for the entire value of the
deferred tax asset attributable to the equity in losses of Gradco, since
management believes the realization of such asset is not reasonably assured.
The change in the valuation allowance in 1995, 1994 and 1993 was $(106,400),
$(36,000) and $(1,600), respectively.
A reconciliation of the computed "expected" tax expense at the Federal
statutory rate and the actual tax expense for the years shown below is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
-----------------------------------------------------------------------------------------
% of % of % of
Income Income Income
Before Before Before
Income Income Income
Amount Taxes Amount Taxes Amount Taxes
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax expense $8,830,900 35.0% $6,987,000 35.0% $5,787,800 35.0%
Increases (reductions) in tax resulting from:
State and city income taxes, net of Federal
income tax benefit 1,300,700 5.2 1,114,000 5.6 876,200 5.3
Nontaxable portion of dividend income (92,500) (.4) (390,200) (2.0) (523,600) (3.2)
Foreign Sales Corporation income taxed
at a lower rate (363,000) (1.4) (363,000) (1.8) (363,000) (2.2)
Equity in net income of Gradco Systems, Inc.
not recognized as deferred tax benefits (106,400) (.5) (36,000) (.2) (1,600) -
Miscellaneous-net 14,300 .1 41,200 .2 5,200 .1
-----------------------------------------------------------------------------------------
Actual tax expense $9,584,000 38.0% $7,353,000 36.8% $5,781,000 35.0%
=========================================================================================
</TABLE>
8. Leases
The Company leases certain real properties. Certain leases provide for the
payment of real estate taxes and escalation of rentals based on increases in
real estate taxes.
Rental expense for the years ended December 31 is as follows:
1995 $ 769,000
1994 737,000
1993 758,000
Approximate future minimum rentals under all noncancelable operating leases for
real property at December 31, 1995 are as follows:
1996 $ 460,000
1997 301,000
1998 289,000
1999 295,000
2000 301,000
Subsequent to 2000 2,052,000
----------
$3,698,000
==========
9. Profit Sharing and Incentive Compensation Plans
The Company has a profit sharing plan for its employees which provides for
annual contributions based upon the Company's net income as a percentage of
gross revenue and the employees' salary level and length of service. Such
contributions, which are placed in a trust fund, are invested at the
employees' discretion. Contributions under the plan aggregated approximately
$1,096,000 (1995), $1,032,000 (1994) and $1,121,000 (1993). Other accrued
expenses and sundry liabilities include accrued contributions under the plan
of $1,096,000 (1995) and $1,032,000 (1994).
The Company has an incentive compensation plan for executive officers and
key employees of the Company providing for 5% of the Company's income from
operations to be distributed (as provided) to participants of the plan. In
addition to the amounts payable as set forth above, since there was investment
income (as defined) in 1993, 1994 and 1995, the amount of such income was
added to income from operations for the purpose of calculating incentive
compensation for 1993, 1994 and 1995. Distributions under the plan aggregated
$1,223,000 (1995), $1,009,500 (1994) and $844,000 (1993). Other accrued
expenses and sundry liabilities include accrued incentive compensation of
$908,000 (1995) and $879,500 (1994).
The Company has the right to change, modify or terminate the above plans at
any time.
10. Per Share Amounts
Primary net income per share of Common Stock is computed on the basis of
weighted average number of common shares outstanding (3,945,629 (1995),
4,435,831 (1994) and 4,607,458 (1993)).
Amounts per share of Common Stock assuming full dilution are computed on the
basis of the weighted average number of shares set forth in the preceding
paragraph adjusted for shares issuable upon conversion of the Convertible
Subordinated Debentures, after elimination from net income of related debt
expense thereon, less applicable income taxes. The number of shares used in
this computation is 5,003,791 (1993).
Other accrued expenses and sundry liabilities at December 31, 1994 include
$930,875 payable for the acquisition of 31,000 shares of the Company's
Common Stock for treasury.
11. Marketable Securities
The Company's portfolio of marketable securities is substantially invested
in a limited number of issuers, operating principally in the pharmaceutical
and communications industries at December 31, 1995 and 1994. At December 31,
1995 and 1994, the market value of the Company's largest holding (invested
in a company operating in the pharmaceutical industry) was $8,436,000 and
$11,268,000 at December 31, 1995 and 1994, respectively.
12. Quarterly Financial Information (Unaudited)
Subscriptions Income (Loss) Net Income Per
and from Securities, Share of
Cost Net of Certain Net Common
Quarter Other Sales of Sales Expenses Income (1) Stock (1)
- -----------------------------------------------------------------------------
1995
First $13,117,926 $5,518,593 $ 2,817,339 $4,005,796 $1.01
Second 12,637,378 5,370,779 2,298,868 3,713,695 .94
Third 13,487,629 5,245,042 1,946,339 3,917,411 .99
Fourth 12,986,738 5,102,422 2,062,350 3,879,902 .98
1994
First $13,145,116 $5,554,926 $(3,090,193) $ 613,788 $ .14
Second 12,937,672 5,164,849 2,081,804 3,908,384 .87
Third 12,330,191 4,964,575 3,456,238 4,345,851 .97
Fourth 12,944,914 5,273,401 1,781,519 3,851,095 .90
(1) The 1994 amounts have been reclassified from continuing operations to
discontinued operations to conform to the 1995 presentation. Amounts of
discontinued operations included in net income and net income per share of
common stock are as follows:
1995 1994
- ------------------------------------------------------------------------------
Net Income Net Income
Net Income Per Share of Net Income Per Share of
Quarter (Loss) Common Stock (Loss) Common Stock
- ------------------------------------------------------------------------------
First $ 22,226 $ .01 $ 60,786 $ .02
Second 15,787 .005 29,654 .01
Third 16,311 .005 (22,439) (.01)
Fourth (184,571) (.05) 41,305 .01
-----------------------------------------------------------------
$(130,247) $(.03) $ 109,306 $ .03
=================================================================
13. Distribution Agreement
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 the
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.
Pursuant to the Distribution Agreement, in 1994 the Company distributed for
MAIK Nauka ("MN"), an entity owned in part by Pleiades Publishing, Inc. and
the Academy, 21 Russian scientific journals in English. MN became the exclusive
publisher of such journals. Prior thereto, the Company had translated,
published and distributed these journals under a contract with the Copyright
Agency of the former Soviet government, and under contracts with the
individual institutes publishing the journals, and had paid royalties based
in part upon the number of subscribers. Under the Distribution Agreement, the
Company continues to promote and distribute these journals throughout the
world, and continues to deal with and collect from subscribers to the journals,
retaining a portion of such revenues for performing these functions. In 1994,
the Company retained 35% of the revenue. The amount will gradually be reduced
to 30% in 1999 and will remain at that level for the balance of the term of
the Distribution Agreement. Pursuant to the Distribution Agreement, the
Company advanced the Academy $1,000,000 during 1993, which was fully
recovered during 1993 and 1994.
Under the Distribution Agreement, in 1995 MN undertook the publication of the
English translations of 14 additional Russian journals, which are promoted and
distributed by the Company. In 1996, MN has undertaken the publication of the
English translations of five additional Russian journals to be promoted and
distributed by the Company. As to each additional journal which is published
by MN and distributed by the Company under the Distribution Agreement, the
Company will retain 35% of the revenue in the initial year of distribution,
with the amount gradually being reduced to 30% over a six-year period.
MN may eventually publish the English-language version of 15 additional
journals from the Russian Academy of Sciences. Pending various required
agreements, the Company continues to translate and publish these journals.
MN intends to translate and publish the above-mentioned journals in Russia.
The Company continues its activities in translating, publishing and
distributing both the journals subject to the Distribution Agreement until
they are published by MN and the 40 English Translation Russian Journals not
subject to the Agreement. These activities are undertaken pursuant to the
Company's existing English translation and publication contracts with the
individual entities publishing the Russian language journals which generally
extend through 2001.
14. Contingencies
The Company has contingent compensation agreements with certain key personnel.
Each agreement provides for the cash payment of an amount equal to 290% of
average annual compensation (as defined), in the event of termination of
employment, under certain conditions which include, among other matters, (a)
the sale of 75% of the book value of the Company's operating assets (as
defined) or (b) any person (as defined) becoming the owner of more than 25% of
the issued and outstanding shares of the Company's voting stock.
In a prior year, the Company was named as a co-defendant in an action brought
by former executives of Gradco, seeking compensatory and other damages of a
material amount. In April 1995, the litigation was settled by all the
plaintiffs. The settlement involved a release of all claims and cross-claims
without any payment by any of the parties.
<TABLE>
<CAPTION>
Plenum Publishing Corporation
and Subsidiary Companies
Schedule II-Valuation and Qualifying Accounts
Column A Column B Column C Column D Column E
- --------------------------------------------------------------------------------------------------------
Additions
Balance Charged
at Beginning to Costs and Balance at
Description of Period Expenses Deductions End of Period
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31, 1995
Allowances deducted from assets
to which they apply:
Allowance for doubtful accounts $181,000 $ 30,260 $ 86,260 (a) $125,000
Allowance for sales returns $740,000 $ 2,790,457 $2,720,457 (b) $810,000
Year ended December 31, 1994
Allowances deducted from assets
to which they apply:
Allowance for doubtful accounts $179,000 $ 14,168 $ 12,168 (a) $181,000
Allowance for sales returns $669,000 $ 2,774,520 $2,703,520 (b) $740,000
Year ended December 31, 1993
Allowances deducted from assets
to which they apply:
Allowance for doubtful accounts $187,000 $ 6,611 $ 14,611 (a) $179,000
Allowance for sales returns $680,000 $ 2,908,367 $2,919,367 (b) $669,000
<FN>
Notes:
(a) Uncollectible receivables written off.
(b) Returns made by customers.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit II
Plenum Publishing Corporation
and Subsidiary Companies
Computation of Per Share Amounts of Common Stock-
Assuming Full Dilution
Year ended December 31, 1993
<S> <C>
Net income:
Income from continuing operations (1) $10,755,649
Debt expense, less applicable income tax benefit,
attributable to conversion of 6-1/2% Convertible
Subordinated Debentures (2) 567,769
------------
Adjusted income from continuing operations (3) 11,323,418
Income from discontinued operations (4) 173,058
Extraordinary loss (5) (1,319,794)
------------
Net income-adjusted for computation of per
share amounts of common stock-fully diluted (3)+(4)+(5)=(6) $10,176,682
============
Shares of Common Stock:
Weighted average number of shares
outstanding during the year (7) 4,607,458
Shares issuable upon conversion of 6-1/2%
Convertible Subordinated Debentures due
April 15, 2007 (8) 396,333
------------
Adjusted number of shares outstanding for
the purpose of fully diluted computation (7)+(8)=(9) 5,003,791
============
Per share amounts of Common Stock-fully diluted:
Income from continuing operations (3)/(9) $2.27
Income from discontinued operations (4)/(9) .03
Extraordinary loss (5)/(9) (.26)
-----------
Net income (6)/(9) $2.04
===========
</TABLE>
In 1995 and 1994, there was no dilution in the computation of per share
amounts of common stock.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from quarterly
financial statements for the twelve months ended December 31, 1995 and is
qualified in its entirety by reference to such financial statements.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<PERIOD-TYPE> 12-MOS
<CASH> 40,093,105
<SECURITIES> 26,273,263
<RECEIVABLES> 6,579,095
<ALLOWANCES> (935,000)
<INVENTORY> 3,492,326
<CURRENT-ASSETS> 76,974,662
<PP&E> 12,739,481
<DEPRECIATION> (5,562,748)
<TOTAL-ASSETS> 92,245,305
<CURRENT-LIABILITIES> 12,719,766
<BONDS> 0
0
0
<COMMON> 584,724
<OTHER-SE> 54,401,318
<TOTAL-LIABILITY-AND-EQUITY> 92,245,305
<SALES> 52,229,671
<TOTAL-REVENUES> 62,003,183
<CGS> 21,236,836
<TOTAL-COSTS> 21,236,836
<OTHER-EXPENSES> 648,616
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 25,231,051
<INCOME-TAX> 9,584,000
<INCOME-CONTINUING> 15,647,051
<DISCONTINUED> (130,247)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,516,804
<EPS-PRIMARY> 3.93
<EPS-DILUTED> 0
</TABLE>
