SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Six Month Period Ended Commission File #0-916-3
June 30, 1996
PLENUM PUBLISHING CORPORATION
(Exact name of the Registrant
as specified in Charter)
Delaware 13-5648711
(State of Incorporation) (I.R.S. Employer
Identification No.)
233 Spring Street
New York, New York 10013
(Address of principal (Zip Code)
executive offices)
Registrant's Telephone Number,
Including Area Code (212) 620-8000
SECURITIES REGISTERED PURSUANT
TO SECTION 12 (g) OF THE ACT:
COMMON STOCK $.10 PAR VALUE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to the filling requirements for at least the past 90 days.
Yes X No
------- ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of 08/ 14 /96: 3,892,356
---------
<PAGE>
INDEX
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
PART I FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--
June 30, 1996 and December 31, 1995 3
Condensed consolidated statements of income
and retained earnings --Six and Three months
ended June 30, 1996 and 1995 5
Condensed consolidated statements of cash
flows -- Six months ended June 30, 1996
and 1995 6
Notes to condensed consolidated financial
statements --June 30, 1996 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II OTHER INFORMATION
- ------- -----------------
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
- ----------
<PAGE>
PART I - FINANCIAL INFORMATION
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
----------- ------------
1996 1995
---- ----
(UNAUDITED) ( NOTE )
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ($37,148,005 and $39,326,264) $37,775,021 $40,093,105
Marketable securities at aggregate market value 24,533,366 26,273,263
Interest and dividends receivable 244,531 258,347
Receivables net of allowances of $986,000
and $935,000 4,985,376 5,644,095
Inventories --Note D 3,676,274 3,492,326
Deferred income tax benefits 1,519,626 1,213,526
------------ ------------
Total Current Assets 72,734,194 76,974,662
------------ ------------
Costs Applicable to Deferred Subscription Income 547,968 556,219
------------ ------------
Property, Plant and Equipment, at cost:
Land 690,000 690,000
Building, net of accumulated depreciation of
$587,026 and $535,786 2,946,751 2,997,991
Furniture, fixtures, equipment and leasehold improvements,
net of accumulated depreciation and amortization
of $796,142 and $682,192 248,472 281,769
Plate costs, net of accumulated depreciation of
$5,049,593 and $4,344,770 3,186,584 3,206,973
------------ ------------
7,071,807 7,176,733
------------ ------------
Deferred Income Tax 405,244 450,544
------------ ------------
Deferred Charges and Other Assets:
Cost of subscription lists of Human Sciences Press
and Agathon journals, net of accumulated amortization
of $2,121,869 and $1,984,240 2,580,696 2,718,325
Royalties 1,527,862 1,581,130
Investment in Gradco Systems, Inc. 2,376,119 2,376,119
Other 627,515 278,303
------------ ------------
7,112,192 6,953,877
------------ ------------
Excess of Cost of Assets Acquired Over Book Amount
Thereof, net of accumulated amortization of
$226,816 and $222,371 128,825 133,270
------------ ------------
Total Assets $88,000,230 $92,245,305
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to customers $655,812 $552,298
Accounts payable 1,642,103 2,552,396
Income taxes payable 1,671,798 1,712,659
Royalties payable 1,373,380 2,642,191
Other accrued expenses and sundry liabilities 3,142,763 4,117,180
Dividends payable 1,178,657 1,143,042
------------ ------------
Total Current Liabilities 9,664,513 12,719,766
Deferred Subscription Income 20,352,274 24,539,497
------------ ------------
Total Liabilities 30,016,787 37,259,263
------------ ------------
Stockholders' Equity -- Note E
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 98,377,992 94,927,495
------------ ------------
102,914,242 99,463,745
Less 1,918,385 and 1,905,718 shares of Common
Stock held in treasury - at cost 44,930,799 44,477,703
------------ ------------
Total Stockholders' Equity 57,983,443 54,986,042
------------ ------------
Total Liabilities and Stockholders' Equity $88,000,230 $92,245,305
============ ============
<FN>
Note: The balance sheet at December 31, 1995 has been derived from the audited
consolidated financial statements at that date. See Notes to condensed
consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED
EARNINGS (UNAUDITED)
<CAPTION>
Six Months Ended June 30 Three Months Ended June 30
--------------------------- ----------------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
Income: ---- ---- ---- ----
Subscriptions, books and other sales, net $25,205,816 $25,755,304 $12,358,214 $12,637,378
------------ ------------ ------------ -------------
Costs and Expenses:
Cost of sales 10,566,650 10,889,372 5,342,644 5,370,779
Royalties 1,662,733 2,044,099 706,404 918,658
Selling, general and administrative expenses 5,522,766 5,479,562 2,850,043 2,689,901
------------ ------------ ------------ -------------
17,752,149 18,413,033 8,899,091 8,979,338
------------ ------------ ------------ -------------
Income from operations 7,453,667 7,342,271 3,459,123 3,658,040
Dividend income 281,563 202,330 130,693 68,844
Interest income 1,262,533 950,364 622,734 509,019
Net realized gain on sales of marketable securities 750,170 2,494,055 311,852 1,725,310
Net unrealized (loss) gain on marketable securities (562,271) 1,828,786 802,874 163,245
Other investment-related expenses (185,950) (359,328) (131,825) (167,550)
------------ ------------ ------------ -------------
Income from continuing operations before income taxes 8,999,712 12,458,478 5,195,451 5,956,908
------------ ------------ ------------ -------------
Income taxes--Note F
Federal 2,625,000 3,825,000 1,523,000 1,851,000
State and City 813,000 952,000 520,000 408,000
------------ ------------ ------------ -------------
3,438,000 4,777,000 2,043,000 2,259,000
------------ ------------ ------------ -------------
Income from continuing operations 5,561,712 7,681,478 3,152,451 3,697,908
Income from discontinued operations, net of
income tax of $135,000, $43,000, $90,000 and $19,000 249,899 38,013 179,427 15,787
------------ ------------ ------------ -------------
Net income 5,811,611 7,719,491 3,331,878 3,713,695
Retained earnings - beginning of period 94,927,495 83,983,599 96,224,771 86,845,615
------------ ------------ ------------ -------------
100,739,106 91,703,090 99,556,649 90,559,310
Cash dividends ($.60 and $.58 a share and $.30 and
$.29 a share) 2,361,114 2,286,824 1,178,657 1,143,044
------------ ------------ ------------ -------------
Retained earnings - end of period $98,377,992 $89,416,266 $98,377,992 $89,416,266
============ ============ ============ =============
Per Share of Common Stock - Notes C and E:
Income from continuing operations $1.41 $1.94 $.80 $.94
Income from discontinued operations .07 .01 $.05 -
------------ ------------ ------------ -------------
Net income $1.48 $1.95 $.85 $.94
============ ============ ============ =============
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Six Months Ended June 30
---------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $5,811,611 $7,719,491
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plate costs 704,823 752,356
Depreciation and amortization of building,
furniture, fixtures, equipment and
leasehold improvements 165,190 170,669
Amortization of deferred charges and excess
of cost of assets acquired over book amount
thereof 869,404 1,117,076
Net realized gain on sale of marketable
securities (750,170) (2,494,055)
Net unrealized loss (gain) on marketable securities 562,271 (1,828,786)
Purchases of marketable securities (5,987,950) (3,007,274)
Proceeds from sale of marketable securities 7,915,746 13,350,871
Decrease (increase) in deferred income
tax benefits (260,800) 755,200
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 672,535 1,241,783
Inventories (183,948) (59,991)
Other assets (1,023,274) (1,464,524)
Increase (decrease) in:
Due to customers, accounts payable, royalties payable,
accrued expenses and sundry liabilities (3,977,791) (1,976,685)
Income taxes payable (40,861) (225,958)
Deferred subscription income and costs
applicable thereto-net (3,251,188) (5,135,876)
------------- ------------
Net Cash Provided by Operating Activities 1,225,598 8,914,297
------------- ------------
Cash flows from investing activities:
Additions to plate costs (684,434) (792,728)
Additions to furniture, fixtures, equipment
and leasehold improvements (80,653) (42,164)
------------- ------------
Net Cash Used in Investing Activities (765,087) (834,892)
------------- ------------
Cash flows from financing activities:
Acquisition of treasury stock (a) (453,096) (2,219,547)
Dividends paid (2,325,499) (2,271,508)
------------- ------------
Net Cash Used in Financing Activities (2,778,595) (4,491,055)
------------- ------------
Net (Decrease) Increase in Cash and Cash Equivalents (2,318,084) 3,588,350
Cash and cash equivalents at beginning of period 40,093,105 31,775,618
------------- ------------
Cash and Cash Equivalents at End of Period $37,775,021 $35,363,968
============= =============
<FN>
See notes to condensed consolidated financial statements.
(a) Includes $930,875 paid in 1995 for treasury stock acquired in 1994.
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
June 30, 1996
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the six month
period ended June 30, 1996 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1996. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended December 31,
1995.
NOTE B -- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the six months ended June 30, 1996 and 1995 for
1996 1995
---- ----
Income Tax $3,874,661 $4,290,758
NOTE C -- DISCONTINUED OPERATIONS
In December 1995, the Company's Board of Directors adopted a plan to
discontinue the operations of its wholly-owned subsidiary, J S.Canner &
Company, Inc., effective October 1996.
NOTE D -- INVENTORIES
Inventories at June 30, 1996 and December 31, 1995 are comprised of:
1996 1995
---- ----
Finished publications $3,336,543 $3,033,329
Work in process 339,731 458,997
----------- -----------
$3,676,274 $3,492,326
=========== ===========
NOTE E -- PER SHARE AMOUNTS
Net income per share of Common Stock is computed on the basis of the weighted
average number of shares outstanding. The number of shares used in this
computation for the three and six months ended June 30, 1996 and 1995 is as
follows:
1996 1995
---- ----
Six months 3,937,523 3,949,148
Three months 3,934,523 3,942,160
<PAGE>
NOTE F -- INCOME TAXES:
<TABLE>
Total tax expense for the six months periods ended June 30, 1996 and 1995 amounted to $3,438,000 and $4,777,000
(effective rates of 38.20% and 38.35%), and for the three month periods ended June 30, 1996 and 1995 amounted to $2,043,000
and $2,259,000 (effective rates of 39.32% and 37.93%), totals different from those computed by applying the U.S. Federal income
tax rate of 35% to income before income taxes. The reasons for these differences are as follows:
<CAPTION>
Six Months Ended June 30 Three Months Ended June 30
------------------------ --------------------------
1996 1995 1996 1995
------------------------------------------- ------------------------------------------
% of % of % of % of
Income Income Income Income
Before Before Before Before
Income Income Income Income
Amount Taxes Amount Taxes Amount Taxes Amount Taxes
------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C>
Computed "expected" tax expense $3,149,800 35.00% $4,360,500 35.00% $1,818,300 35.00% $2,084,900 35.00%
Increases (reductions) in tax
resulting from:
State and local income
taxes, net of Federal
income tax benefit 528,400 5.87 618,800 4.96 338,000 6.50 265,200 4.45
Nontaxable portion of
dividend income (69,000) (0.46) (49,600) (0.39) (32,000) (0.61) (16,900) (0.28)
FSC income taxed at a
lower rate (199,500) (2.22) (157,500) (1.25) (103,300) (1.99) (78,700) (1.31)
Miscellaneous - net 28,300 0.01 4,800 0.03 22,000 0.42 4,500 0.07
---------- ------- ---------- ------- ----------- -------- ---------- --------
Actual Tax Expense $3,438,000 38.20% $4,777,000 38.35% $2,043,000 39.32% $2,259,000 37.93%
========== ======= ========== ======= =========== ======== ========== ========
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OPERATIONS
- ----------
Revenues from the Company's publishing operations for the three and six
months ended June 30, 1996 decreased by 2.2% and 2.1%, respectively. Revenues
from subscriptions for the three and six months ended June 30, 1996 decreased
by 1.9% and 2.5 %, respectively, primarily due to the following:
(a) 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),
(b) nonrenewals of subscriptions partially attributable to the
reduced buying power of libraries and to changes in the
market for the Company's translation of Russian language
journals, offset by higher selling prices, and
(c) 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 the three and six months ended June 30, 1996.
Revenues from book sales for the three and six months ended June 30, 1996
decreased by 6.1% and 4.0%, respectively, due to the reduction in the number
of book titles being published and decreased sales of backlist books. Revenues
from database products for the three and six month ended June 30, 1996
increased by 6.8% and 6.9%, respectively, primarily due to increased usage
of the database system.
The cost of sales as a percentage of revenues for the three months ended
June 30, 1996 increased from 42.5% to 43.2%, principally due to decreased
sales of backlist books, offset by higher selling prices and increased usage
of the database system which has an above average gross margin. The Company
provides for obsolescence by writing down the inventory value of backlist
books, resulting in higher gross margins on backlist sales. The cost of sales
as a percentage of revenues for the six months ended June 30, 1996 decreased
from 42.3% to 41.9%, mainly due to higher selling prices and increased usage
of the database system, offset by decreased sales of backlist books.
Under the Distribution Agreement, there were no royalties payable on
certain Russian scientific journals published by the Academy, resulting in
decreased royalty expenses. The increase in selling, general and
administrative expenses was primarily due to higher salaries, increased
mailing expenses, advertising expenditures, bad debt expense and repairs and
maintenance cost, offset by decreased professional fees, and a provision for
sales and use taxes recorded in the first quarter of 1995 with respect to
prior years' audit assessments.
The increase in interest income for the three and six months ended June
30, 1996 was principally due to increased investment in commercial paper,
time deposits, money market funds and foreign government securities. The
increase in dividend income for the three and six months ended June 30, 1996
was attributable to the changes in the portfolio of marketable securities. The
Company had net realized and unrealized gains of $311,852 and $802,874,
respectively, on marketable securities for the three months ended June 30,
1996 as compared to net realized and unrealized gains of $1,725,310 and
$163,245, respectively, on marketable securities for the three months ended
June 30, 1995. The Company had net realized gain of $750,170 and net
unrealized loss of $562,271 on marketable securities for the six months ended
June 30, 1996 as compared to realized and unrealized gains of $2,494,055
and $1,828,786, respectively, on marketable securities for the six months
ended June 30, 1995.
The decrease in net income for the three months ended June 30, 1996 was
mainly due to the decrease in investment income as discussed in the preceding
paragraph and decreased income from publishing operations. The decrease in net
income for the six months ended June 30, 1996 was mainly due to the decrease
in investment income as discussed in the preceding paragraph, offset by
increased income from publishing operations.
LIQUIDITY AND SOURCES OF CAPITAL
- --------------------------------
The ratio of current assets to current liabilities is 7.5 to 1 at June
30, 1996 compared to 6.1 to 1 at December 31,1995.
Management anticipates that internally generated funds will exceed the
requirements of the operations of the business. The Company also has funds of
approximately $62,308,000 at June 30, 1996 invested in marketable securities
and in cash and cash equivalents, which are available for corporate purposes.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
(a) The Company's Annual Meeting of Stockholders was held on June 27,
1996.
(b) The sole purpose of the meeting was the election of three directors
of the Company, to serve for a term of two years (i.e. until the Annual
Meeting to be held in 1998). Proxies were solicited by management for its
nominees, pursuant to Regulation 14 under the Securities Exchange Act of 1934,
and there was no opposing solicitation. All of such nominees were elected as
directors by the required plurality of the votes cast. The directors so
elected are Bernard Bressler, Mark Shaw and Martin E. Tash, all of whom were
incumbent directors. The other directors (whose current two-year term of
office expires at the Annual Meeting to be held in 1997) are Israel Gitman,
Howard F. Mathiasen, Nathan Tash and Earl Ubell.
(c) The votes cast for, and withheld from, each of the nominees (out of
the 3,938,856 shares of Common Stock outstanding and entitled to vote as of
the record date of May 16, 1996) are set forth below. There were no broker
non-votes.
Nominees For Withheld
- -------- --- --------
Bernard Bressler 3,430,837 21,398
Mark Shaw 3,418,285 33,950
Martin E. Tash 3,429,680 22,555
Item 6. Exhibits and Report on Form 8-K
- ----------------------------------------
(a) Exhibits - None.
(b) Reports on Form 8 - K - None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
PLENUM PUBLISHING CORPORATION
-----------------------------
By: /s/ Martin E. Tash
Date: Aug 14, 1996 ---------------------------------------
Martin E. Tash
President and CEO
By: /s/ Ghanshyam A. Patel
Date: Aug 14, 1996 ---------------------------------------
Ghanshyam A. Patel
Treasurer and CFO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from quarterly
financial statements for the six months ended Jun 30, 1996 and is qualified
in its entirety by reference to such financial statements.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> 6-MOS
<CASH> 37,775,021
<SECURITIES> 24,533,366
<RECEIVABLES> 5,971,376
<ALLOWANCES> (986,000)
<INVENTORY> 3,676,274
<CURRENT-ASSETS> 72,734,194
<PP&E> 13,504,568
<DEPRECIATION> (6,432,761)
<TOTAL-ASSETS> 88,000,230
<CURRENT-LIABILITIES> 9,664,513
<BONDS> 0
0
0
<COMMON> 584,724
<OTHER-SE> 57,398,719
<TOTAL-LIABILITY-AND-EQUITY> 88,000,230
<SALES> 25,205,816
<TOTAL-REVENUES> 27,500,082
<CGS> 10,566,650
<TOTAL-COSTS> 10,566,650
<OTHER-EXPENSES> 185,950
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,999,712
<INCOME-TAX> 3,438,000
<INCOME-CONTINUING> 5,561,712
<DISCONTINUED> 249,899
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,811,611
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 0
</TABLE>
