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
September 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 11/13/96: 3,884,285
---------
<PAGE>
INDEX
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
PART I FINANCIAL INFORMATION
- ------ ---------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--
September 30, 1996 and December 31, 1995 3
Condensed consolidated statements of income
and retained earnings --Nine and Three months
ended September 30, 1996 and 1995 5
Condensed consolidated statements of cash
flows -- Nine months ended September 30, 1996
and 1995 6
Notes to condensed consolidated financial
statements --September 30, 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>
<TABLE>
PART I - FINANCIAL INFORMATION
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30 December 31
------------- ------------
1996 1995
---- ----
(UNAUDITED) (NOTE)
------------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ( $32,726,998 and $39,326,264 ) $33,110,148 $40,093,105
Marketable securities at aggregate market value 26,915,908 26,273,263
Interest and dividends receivable 160,614 258,347
Receivables net of allowances of $1,071,000
and $ 935,000 5,290,245 5,644,095
Inventories --Note D 3,520,084 3,492,326
Deferred income tax benefits 566,926 1,213,526
------------- -------------
Total Current Assets 69,563,925 76,974,662
------------- -------------
Costs Applicable to Deferred Subscription Income 545,662 556,219
------------- -------------
Property, Plant and Equipment, at cost:
Land 690,000 690,000
Building, net of accumulated depreciation of
$612,646 and $535,786 2,921,131 2,997,991
Furniture, fixtures, equipment and leasehold improvements,
net of accumulated depreciation and amortization
of $837,021 and $682,192 317,178 281,769
Plate costs, net of accumulated depreciation of
$5,419,041 and $4,344,770 3,205,476 3,206,973
------------- -------------
7,133,785 7,176,733
------------- -------------
Deferred Income Tax 382,244 450,544
------------- -------------
Deferred Charges and Other Assets:
Cost of subscription lists of Human Sciences Press
and Agathon journals, net of accumulated amortization
of $2,190,684 and $1,984,240 2,511,881 2,718,325
Royalties 1,690,913 1,581,130
Investment in Gradco Systems, Inc. 2,376,119 2,376,119
Other 611,904 278,303
------------- -------------
7,190,817 6,953,877
------------- -------------
Excess of Cost of Assets Acquired Over Book Amount
Thereof, net of accumulated amortization of
$229,039 and $222,371 126,602 133,270
------------- -------------
Total Assets $84,943,035 $92,245,305
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to customers $580,057 $552,298
Accounts payable 1,750,540 2,552,396
Income taxes payable 1,533,402 1,712,659
Royalties payable 1,880,460 2,642,191
Other accrued expenses and sundry liabilities 3,928,670 4,117,180
Dividends payable 1,167,707 1,143,042
------------- -------------
Total Current Liabilities 10,840,836 12,719,766
Deferred Subscription Income 14,144,713 24,539,497
------------- -------------
Total Liabilities 24,985,549 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 101,565,660 94,927,495
------------- -------------
106,101,910 99,463,745
Less 1,954,885 and 1,905,718 shares of Common
Stock held in treasury - at cost 46,144,424 44,477,703
------------- -------------
Total Stockholders' Equity 59,957,486 54,986,042
------------- -------------
Total Liabilities and Stockholders' Equity $84,943,035 $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.
</FN>
</TABLE>
<PAGE>
<TABLE>
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED
EARNINGS (UNAUDITED)
<CAPTION>
Nine Months Ended September 30 Three Months Ended September 30
------------------------------- -------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Subscriptions, books and other sales, net $38,524,923 $39,242,933 $13,319,107 $13,487,629
------------- ------------- ------------- ------------
Costs and Expenses:
Cost of sales 15,959,040 16,134,414 5,392,390 5,245,042
Royalties 2,889,905 3,335,428 1,227,172 1,291,329
Selling, general and administrative expenses 8,093,703 7,957,059 2,570,937 2,477,497
------------- ------------- ------------- ------------
26,942,648 27,426,901 9,190,499 9,013,868
------------- ------------- ------------- ------------
Income from operations 11,582,275 11,816,032 4,128,608 4,473,761
Dividend income 381,270 280,802 99,707 78,472
Interest income 1,847,557 1,467,210 585,024 516,846
Net realized gain (loss) on sales of marketable securities 703,456 2,964,744 (46,714) 470,689
Net unrealized gain on marketable securities 1,723,112 2,858,065 2,285,383 1,029,279
Other investment-related expenses (376,185) (508,275) (190,235) (148,947)
------------- ------------- ------------- ------------
Income from continuing operations before income taxes 15,861,485 18,878,578 6,861,773 6,420,100
------------- ------------- ------------- ------------
Income taxes--Note F
Federal 4,701,000 5,744,000 2,076,000 1,919,000
State and City 1,362,000 1,552,000 549,000 600,000
------------- ------------- ------------- ------------
6,063,000 7,296,000 2,625,000 2,519,000
------------- ------------- ------------- ------------
Income from continuing operations 9,798,485 11,582,578 4,236,773 3,901,100
Income from discontinued operations, net of
income tax of $199,000, $63,000, $64,000 and $20,000 368,501 54,324 118,602 16,311
------------- ------------- ------------- ------------
Net income 10,166,986 11,636,902 4,355,375 3,917,411
Retained earnings - beginning of period 94,927,495 83,983,599 98,377,992 89,416,266
------------- ------------- ------------- ------------
105,094,481 95,620,501 102,733,367 93,333,677
Cash dividends ($.90 and $.87 a share and $.30 and
$.29 a share) 3,528,821 3,429,866 1,167,707 1,143,042
------------- ------------- ------------- ------------
Retained earnings - end of period $101,565,660 $92,190,635 $101,565,660 $92,190,635
============= ============= ============= ============
Per Share of Common Stock - Notes C and E:
Income from continuing operations $2.50 $2.93 $1.09 $.99
Income from discontinued operations .09 .02 $.03 -
------------- ------------- ------------- ------------
Net income $2.59 $2.95 $1.12 $.99
============= ============= ============= ============
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Nine Months Ended September 30
-------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $10,166,986 $11,636,902
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plate costs 1,074,271 1,175,283
Depreciation and amortization of building,
furniture, fixtures, equipment and
leasehold improvements 252,108 256,005
Amortization of deferred charges and excess
of cost of assets acquired over book amount
thereof 1,305,958 1,646,738
Net realized gain on sale of marketable
securities (703,456) (2,964,744)
Net unrealized gain on marketable securities (1,723,112) (2,858,065)
Purchases of marketable securities (6,657,146) (12,574,638)
Proceeds from sale of marketable securities 8,441,069 19,392,323
Decrease in deferred income tax benefits 714,900 1,282,384
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 451,583 572,337
Inventories (27,758) (185,216)
Other assets (1,536,230) (1,777,062)
Increase (decrease) in:
Due to customers, accounts payable, royalties payable,
accrued expenses and sundry liabilities (2,652,122) (1,094,930)
Income taxes payable (179,257) 361,729
Deferred subscription income and costs
applicable thereto-net (9,456,443) (11,389,298)
------------ ------------
Net Cash (Used in) Provided by Operating Activities (528,649) 3,479,748
------------ ------------
Cash flows from investing activities:
Additions to plate costs (1,072,774) (1,127,373)
Additions to furniture, fixtures, equipment
and leasehold improvements (210,657) (52,061)
------------ ------------
Net Cash Used in Investing Activities (1,283,431) (1,179,434)
------------ ------------
Cash flows from financing activities:
Acquisition of treasury stock (a) (1,666,721) (2,219,547)
Dividends paid (3,504,156) (3,414,550)
------------ ------------
Net Cash Used in Financing Activities (5,170,877) (5,634,097)
------------ ------------
Net Decrease in Cash and Cash Equivalents (6,982,957) (3,333,783)
Cash and cash equivalents at beginning of period 40,093,105 31,775,618
------------ ------------
Cash and Cash Equivalents at End of Period $33,110,148 $28,441,835
============ ============
See notes to condensed consolidated financial statements.
<FN>
(a) Includes $930,875 paid in 1995 for treasury stock acquired in 1994.
</FN>
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
September 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 nine month
period ended September 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 nine months ended September 30, 1996 and 1995 for:
1996 1995
---- ----
Income Tax $5,726,357 $5,714,887
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 September 30, 1996 and December 31, 1995 are comprised of:
1996 1995
---- ----
Finished publications $3,323,494 $3,033,329
Work in process 196,590 458,997
----------- -----------
$3,520,084 $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 nine months ended September 30, 1996 and 1995
is as follows:
1996 1995
---- ----
Nine months 3,924,273 3,946,860
Three months 3,901,481 3,941,523
<PAGE>
<TABLE>
NOTE F -- INCOME TAXES:
Total tax expense for the nine months periods ended September 30, 1996 and 1995 amounted to $6,063,000 and $7,296,000
"(effective rates of 38.20% and 38.65%), and for the three month periods ended September 30, 1996 and 1995 amounted to $2,625,000
"and $2,519,000 (effective rates of 38.25% and 39.24%), totals different from those computed by applying the U.S. Federal income
tax rate of 35% to income before income taxes. The reasons for these differences are as follows:
<CAPTION>
Nine Months Ended September 30 Three Months Ended September 30
------------------------------ -------------------------------
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> <C> <C> <C> <C>
Computed "expected" tax expense $5,551,500 35.00% $6,607,500 35.00% $2,401,700 35.00% $2,247,000 35.00%
Increases (reductions) in tax
resulting from:
State and local income
taxes, net of Federal
income tax benefit 885,300 5.58 1,008,800 5.35 356,900 5.20 390,000 6.07
Nontaxable portion of
dividend income (93,400) (0.59) (68,800) (0.37) (24,400) (0.36) (19,200) (0.30)
FSC income taxed at a
lower rate (295,700) (1.86) (262,500) (1.39) (96,200) (1.40) (105,000) (1.63)
Miscellaneous - net 15,300 0.07 11,000 0.06 (13,000) (0.19) 6,200 0.10
---------- ------ ---------- ------ ---------- ------ ---------- ------
Actual Tax Expense $6,063,000 38.20% $7,296,000 38.65% $2,625,000 38.25% $2,519,000 39.24%
========== ====== ========== ====== ========== ====== ========== ======
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OPERATIONS
- ----------
Revenues from the Company's publishing operations for
the three and nine months ended September 30, 1996 decreased by 1.3% and
1.8%, respectively. Revenues from subscriptions for the three months ended
September 30, 1996 increased by 4.7% primarily due to higher selling prices,
offset by 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 and
(c) fewer journal issues being published.
Revenues from subscriptions for the nine months ended September 30, 1996
decreased by 0.1%, 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
translation journals for the three and nine months ended September 30, 1996.
Revenues from book sales for the three and nine months ended September
30, 1996 decreased by 17.0% and 8.8%, 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 nine months ended
September 30, 1996 increased by 17.6% and 10.3%, respectively, primarily due
to increased usage of the database system.
The cost of sales as a percentage of revenues for the three and nine
months ended September 30,1996 increased from 38.9% and 41.1% to 40.5% and
41.4%, respectively, 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 decrease in royalty expenses resulted from the decline in book sales
and also due to the fact that 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 nine months ended
September 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 nine months ended September
30, 1996 was attributable to the changes in the portfolio of marketable
securities. The Company had net realized loss of $46,714 and unrealized gains
of $2,285,383 on marketable securities for the three months ended September
30, 1996 as compared to net realized and unrealized gains of $470,698 and
$1,029,279, respectively, on marketable securities for the three months ended
September 30, 1995. The Company had net realized and unrealized gains of
$703,456 and $1,723,112, respectively, on marketable securities for the nine
months ended September 30, 1996 as compared to realized and unrealized gains
of $2,964,744 and $2,858,065, respectively, on marketable securities for
the nine months ended September 30, 1995.
The increase in net income for the three months ended September 30, 1996
was mainly due to the increase in investment income as discussed in the
preceding paragraph, offset by decreased income from publishing operations.
The decrease in net income for the nine months ended September 30, 1996 was
mainly due to the decrease in investment income as discussed in the preceding
paragraph and decreased income from publishing operations.
LIQUIDITY AND SOURCES OF CAPITAL
- --------------------------------
The ratio of current assets to current liabilities is 6 to 1 at September
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 $60,026,000 at September 30, 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 - 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: Nov 13, 1996 ---------------------------------------
Martin E. Tash
President and CEO
By: /s/ Ghanshyam A. Patel
Date: Nov 13, 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 nine months ended September 30, 1996 and is
qualified in its entirety by reference to such financial statements.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<PERIOD-TYPE> 9-MOS
<CASH> 33,110,148
<SECURITIES> 26,915,908
<RECEIVABLES> 6,361,245
<ALLOWANCES> (1,071,000)
<INVENTORY> 3,520,084
<CURRENT-ASSETS> 69,563,925
<PP&E> 14,002,493
<DEPRECIATION> (6,868,708)
<TOTAL-ASSETS> 84,943,035
<CURRENT-LIABILITIES> 10,840,836
<BONDS> 0
0
0
<COMMON> 584,724
<OTHER-SE> 59,372,762
<TOTAL-LIABILITY-AND-EQUITY> 84,943,035
<SALES> 38,524,923
<TOTAL-REVENUES> 43,180,318
<CGS> 15,959,040
<TOTAL-COSTS> 15,959,040
<OTHER-EXPENSES> 376,185
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,861,485
<INCOME-TAX> 6,063,000
<INCOME-CONTINUING> 9,798,485
<DISCONTINUED> 368,501
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,166,986
<EPS-PRIMARY> 2.59
<EPS-DILUTED> 0
</TABLE>
