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 Three Month Period Ended Commission File #0-916-3
March 31, 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 05/ 15 /96: 3,938,856
---------
<PAGE>
INDEX
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
PART I FINANCIAL INFORMATION
- ------ ---------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--
March 31, 1996 and December 31, 1995 3
Condensed consolidated statements of income
and retained earnings -- Three months ended
March 31, 1996 and 1995 5
Condensed consolidated statements of cash
flows -- Three months ended March 31, 1996
and 1995 6
Notes to condensed consolidated financial
statements -- March 31, 1996 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II OTHER INFORMATION
- ------- -----------------
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
- ----------
<PAGE>
PART I - FINANCIAL INFORMATION
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March-31 December 31
------------ -------------
1996 1995
---- ----
(UNAUDITED) (NOTE)
------------ -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ($40,659,454 and $39,326,264) $42,107,468 $40,093,105
Marketable securities at aggregate market value 22,415,416 26,273,263
Interest and dividends receivable 150,536 258,347
Receivables -- net of allowances of $940,000
and $935,000 6,205,688 5,644,095
Inventories -- Note D 3,934,384 3,492,326
Deferred income tax benefits 1,927,626 1,213,526
------------ -------------
Total Current Assets 76,741,118 76,974,662
------------ -------------
Costs Applicable to Deferred Subscription Income 689,541 556,219
------------ -------------
Property, Plant and Equipment, at cost:
Land 690,000 690,000
Building, net of accumulated depreciation of
$561,406 and $535,786 2,972,371 2,997,991
Furniture, Fixtures, equipment and leasehold improvements,
net of accumulated depreciation and amortization
of $740,715 and $682,192 249,620 281,769
Plate costs, net of accumulated depreciation of
$4,695,028 and $4,344,770 3,264,424 3,206,973
------------ -------------
7,176,415 7,176,733
------------ -------------
Deferred Income Tax 432,244 450,544
------------ -------------
Deferred Charges and Other Assets:
Cost of subscription lists of Human Sciences Press
and Agathon journals, net of accumulated amortization
of $2,053,055 and $1,984,240 2,649,510 2,718,325
Royalties 1,502,774 1,581,130
Investment in Gradco Systems, Inc 2,376,119 2,376,119
Other 881,051 278,303
------------ -------------
7,409,454 6,953,877
------------ -------------
Excess of Cost of Assets Acquired Over Book Amount
Thereof, net of accumulated amortization of
$224,593 and $222,371 131,048 133,270
------------ -------------
Total Assets $92,579,820 $92,245,305
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to customers $570,949 $552,298
Accounts payable 2,035,978 2,552,396
Income taxes payable 3,748,646 1,712,659
Royalties payable 2,199,872 2,642,191
Other accrued expenses and sundry liabilities 2,663,451 4,117,180
Dividends payable 1,182,457 1,143,042
------------ -------------
Total Current Liabilities 12,401,353 12,719,766
Deferred Subscription Income 23,895,149 24,539,497
------------ -------------
Total Liabilities 36,296,502 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 96,224,771 94,927,495
------------ -------------
100,761,021 99,463,745
Less 1,905,718 shares of Common
Stock held in treasury - at cost 44,477,703 44,477,703
------------ -------------
Total Stockholders' Equity 56,283,318 54,986,042
------------ -------------
Total Liabilities and Stockholders' Equity $92,579,820 $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>
Three Months Ended March 31
------------------------------
1996 1995
-------------- -------------
<S> <C> <C>
Income:
Subscriptions, books, outside journals and other sales, net $12,847,602 $13,117,926
-------------- -------------
Costs and Expenses:
Cost of sales 5,224,006 5,518,593
Royalties 956,329 1,125,441
Selling, general and administrative expenses 2,672,723 2,789,661
-------------- -------------
8,853,058 9,433,695
-------------- -------------
Income From Operations 3,994,544 3,684,231
Dividend income 150,870 133,486
Interest income 639,799 441,345
Net realized gain on sales of marketable securities 438,318 768,745
Net unrealized (loss) gain on marketable securities (1,365,145) 1,665,541
Other investment-related expenses (54,125) (191,778)
-------------- -------------
Income from continuing operations before income taxes 3,804,261 6,501,570
-------------- -------------
Income taxes--Note F:
Federal 1,102,000 1,974,000
State and City 293,000 544,000
-------------- -------------
1,395,000 2,518,000
-------------- -------------
Income from continuing operations 2,409,261 3,983,570
Income from discontinued operations, net of income tax of $45,000 and $24,000 70,472 22,226
-------------- -------------
Net Income 2,479,733 4,005,796
Retained earnings - beginning of period 94,927,495 83,983,599
-------------- -------------
97,407,228 87,989,395
Cash dividends ($.30 and $.29 a share) 1,182,457 1,143,780
-------------- -------------
Retained earnings - end of period $96,224,771 $86,845,615
============== =============
Per share of Common Stock - Notes C and E:
Income from continuing operations $.61 $1.00
Income from discontinued operations .02 .01
-------------- -------------
Net income $.63 $1.01
============== =============
<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>
Three Months Ended March 31
-----------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $2,479,733 $4,005,796
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plate costs 350,258 400,492
Depreciation and amortization of building,
furniture, fixtures, equipment and
leasehold improvements 84,143 85,335
Amortization of deferred charges and excess
of cost of assets acquired over book amount
thereof 512,792 640,052
Net realized gain on sale of marketable
securities (438,318) (768,745)
Net unrealized loss (gain) on marketable securities 1,365,145 (1,665,541)
Purchases of marketable securities (3,207,189) (151,454)
Proceeds from sale of marketable securities 6,138,209 5,168,977
(Increase) decrease in deferred income
tax benefits (695,800) 465,400
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables (453,782) 137,910
Inventories (442,058) (334,150)
Other assets (966,147) (1,259,001)
Increase (decrease) in:
Due to customers, accounts payable, royalties payable,
accrued expenses and sundry liabilities (3,321,599) (1,222,324)
Income taxes payable 2,035,987 1,757,461
Deferred subscription income and costs
applicable thereto-net 150,114 (1,646,220)
------------ ------------
Net Cash Provided by Operating Activities 3,591,488 5,613,988
------------ ------------
Cash flows from investing activities:
Additions to plate costs (407,709) (441,363)
Additions to furniture, fixtures, equipment
and leasehold improvements (26,374) (37,424)
------------- ------------
Net Cash Used in Investing Activities (434,083) (478,787)
------------- ------------
Cash flows from financing activities:
Acquisition of treasury stock (a) - (2,145,077)
Dividends paid (1,143,042) (1,127,726)
------------- ------------
Net Cash Used in Financing Activities (1,143,042) (3,272,803)
------------- ------------
Net Increase in Cash and Cash Equivalents 2,014,363 1,862,398
Cash and cash equivalents at beginning of period 40,093,105 31,775,618
------------- ------------
Cash and Cash Equivalents at End of Period $42,107,468 $33,638,016
============= ============
<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)
March 31, 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 three month period ended March 31, 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 three months ended March 31, 1996 and 1995 for:
1996 1995
---- ----
Income Taxes $99,813 $319,139
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 March 31, 1996 and December 31, 1995 are comprised of:
1996 1995
---- ----
Finished publications $3,666,569 $3,033,329
Work in process 267,815 458,997
---------- ----------
$3,934,384 $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 months ended March 31, 1996 and 1995 is $3,941,523
and 3,954,116, respectively.
<PAGE>
<TABLE>
NOTE F -- INCOME TAXES:
Total tax expense for the three month periods ended March 31, 1996 and 1995 amounted to $1,395,000 and $2,542,000 (effective
rates of 36.67% and 38.80%), totals different from those computed by applying the U.S. Federal income tax rate to
income before taxes. The reasons for these differences are as follows:
<CAPTION>
Three Months Ended March 31
---------------------------
1996 1995
-------------------------------------------------------
% of % of
Income Income
Before Before
Income Income
Amount Taxes Amount Taxes
--------------------------------------------------------
<S> <C> <C> <C> <C>
Computed "expected" tax expense $1,331,500 35.00% $2,291,700 35.00%
Increases (reductions) in tax
resulting from:
State and local income
taxes, net of Federal
income tax benefit 190,400 5.00 357,500 5.40
Nontaxable portion of
dividend income (37,000) (.97) (32,700) (.50)
FSC income taxed at a
lower rate (96,200) (2.53) (78,800) (1.20)
Miscellaneous - net 6,300 .17 4,300 .10
----------- ----------- ----------- ------------
Actual Tax Expense $1,395,000 36.67% $2,542,000 38.80%
=========== =========== =========== ============
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Three Month Period - 1996 vs 1995
- ---------------------------------
Revenues from the Company's continuing publishing operations decreased by
2.1% to $12,847,602. Revenues from subscriptions decreased by 3.2%, primarily
due to the following:
(a) the decrease in revenues from the translations 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 months ended March 31, 1996.
Revenues from book sales for the three months ended March 31, 1996
decreased by 2.3%, mainly due to the reduction in the number of book titles
being published. Revenues from database products for the three months ended
March 31, 1996 increased by 6.6%, primarily due to increased usage of the
database system.
The cost of sales from continuing operations as a percentage of revenues
for the three months ended March 31, 1996 decreased from 42.1% to 40.7%,
principally due to higher selling prices and increased usage of the database
system which has an above average gross margin. Under the Distribution
Agreement, there were no royalties payable on certain Russian scientific
journals published by the Academy, resulting in decreased royalty expenses.
The decrease in selling, general, and administrative expenses was mainly due
to decreased advertising expenditures, office supplies and mailing expenses,
and a provision for sales and use taxes recorded in the three months ended
March 31, 1995 with respect to prior year's audit assessments.
The increase in interest income was principally due to increased
investment in commercial paper, time deposits and money market funds and
foreign government securities. The increase in dividend income was
attributable to the changes in the portfolio of marketable securities. The
company had net realized gain of $438,318 and net unrealized loss of $1,365,145
on marketable securities for the three months ended March 31, 1996, as
compared to net realized and unrealized gains of $768,745 and $1,665,541,
respectively, on marketable securities for the three months ended March 31,
1995.
The decrease in net income was principally attributable 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 6.2 to 1 at March
31, 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 $64,522,884 at March 31, 1996 invested in marketable securities
and in cash and cash equivalents, which are available for corporate purposes.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Report on Form 8-K
- ----------------------------------------
(a) Exhibits
--------
10.1 Indemification Agreements dated as of March 14, 1996
between the Registrant and Dr. Israel Gitman, and between the Registrant and
Mr. Nathan A. Tash. These Agreements are identical to the Indemification
Agreements dated as of November 18, 1987 betwen the Registrant and certain
persons, which agreements are listed as Exhibit 10.6 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987. To avoid
unnecessary duplication, copies of the agreements with Dr. Gitman and Mr.Tash
(while they are to be deemed exhibits to this Report on Form 10-Q) are not
being filed herewith.
(b) Report 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: May 15, 1996 ---------------------------------------
Martin E. Tash
President and CEO
By: /s/ Ghanshyam A. Patel
Date: May 15, 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 three months ended March 31, 1996 and is
qualified in its entirety by reference to such financial statements.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<PERIOD-TYPE> 3-MOS
<CASH> 42,107,468
<SECURITIES> 22,415,416
<RECEIVABLES> 7,145,688
<ALLOWANCES> (940,000)
<INVENTORY> 3,934,384
<CURRENT-ASSETS> 76,741,118
<PP&E> 13,173,564
<DEPRECIATION> (5,997,149)
<TOTAL-ASSETS> 92,579,820
<CURRENT-LIABILITIES> 12,401,353
<BONDS> 0
0
0
<COMMON> 584,724
<OTHER-SE> 55,698,594
<TOTAL-LIABILITY-AND-EQUITY> 92,579,820
<SALES> 12,847,602
<TOTAL-REVENUES> 14,076,589
<CGS> 5,224,006
<TOTAL-COSTS> 5,224,006
<OTHER-EXPENSES> 54,125
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,804,261
<INCOME-TAX> 1,395,000
<INCOME-CONTINUING> 2,409,261
<DISCONTINUED> 70,472
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,479,733
<EPS-PRIMARY> .63
<EPS-DILUTED> 0
</TABLE>
