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, 1997
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 /97: 3,834,251
---------
<PAGE>
INDEX
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
PART I FINANCIAL INFORMATION
- ------ ---------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--
March 31, 1997 and December 31, 1996 3
Condensed consolidated statements of income
and retained earnings -- Three months ended
March 31, 1997 and 1996 5
Condensed consolidated statements of cash
flows -- Three months ended March 31, 1997
and 1996 6
Notes to condensed consolidated financial
statements -- March 31, 1997 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
-------- -----------
1997 1996
---- ----
(UNAUDITED) ( NOTE )
------------- -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ( $47,874,685 and $ 48,930,459 ) 48,223,300 $49,423,477
Marketable securities at aggregate market value 23,727,603 27,417,072
Interest and dividends receivable 209,357 248,198
Receivables net of allowances of $847,000
and $ 829,000 5,370,227 5,237,940
Inventories --Note D 3,885,225 3,548,543
------------- -------------
Total Current Assets 81,415,712 85,875,230
------------- -------------
Costs Applicable to Deferred Subscription Income 492,230 556,988
------------- -------------
Property, Plant and Equipment, at cost:
Land 690,000 690,000
Building, net of accumulated depreciation of
$663,886 and $638,266 2,869,891 2,895,511
Furniture, fixtures, equipment and leasehold improvements,
net of accumulated depreciation and amortization
of $679,639 and $614,716 367,167 389,841
Plate costs, net of accumulated depreciation of
$4,323,034 and $3,994,410 3,237,854 3,170,906
------------- -------------
7,164,912 7,146,258
------------- -------------
Deferred Income Tax 132,343 177,444
------------- -------------
Deferred Charges and Other Assets:
Cost of subscription lists of Human Sciences Press
and Agathon journals, net of accumulated amortization
of $2.328,313 and $2,259,499 2,374,251 2,443,066
Royalties 1,614,309 1,486,485
Investment in Gradco Systems, Inc. 2,750,449 2,750,449
Investment in Tutor Time Learning Systems, Inc., at cost,
and related note receivable 1,100,000 1,100,000
Deposits and other 978,587 319,494
------------- -------------
8,817,596 8,099,494
------------- -------------
Excess of Cost of Assets Acquired Over Fair Value
Thereof, net of accumulated amortization of
$233,484 and $231,262 122,156 124,379
------------- -------------
Total Assets $98,144,949 $101,979,793
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to customers $551,680 $544,277
Accounts payable 2,246,695 3,181,286
Income taxes payable 2,401,125 913,250
Royalties payable 2,265,533 2,362,019
Other accrued expenses and sundry liabilities 3,036,349 4,035,185
Dividends payable 1,193,529 1,165,285
Deferred income tax liabilities 138,044 1,230,744
------------- -------------
Total Current Liabilities 11,832,955 13,432,046
Deferred Subscription Income 23,938,209 25,148,620
------------- -------------
Total Liabilities 35,771,164 38,580,666
------------- -------------
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 105,449,987 105,283,732
------------- -------------
109,986,237 109,819,982
Less 1,997,146 and 1,962,956 shares of Common
Stock held in treasury - at cost 47,612,452 46,420,855
------------- -------------
Total Stockholders' Equity 62,373,785 63,399,127
------------- -------------
Total Liabilities and Stockholders' Equity $98,144,949 $101,979,793
============= =============
<FN>
Note: The balance sheet at December 31, 1996 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
------------------------------
1997 1996
-------------- -------------
<S> <C> <C>
Income:
Subscriptions, books and other sales, net $12,287,468 $12,847,602
------------- -------------
Costs and Expenses:
Cost of sales 5,243,509 5,224,006
Royalties 832,995 956,329
Selling, general and administrative expenses 2,589,832 2,672,723
------------- -------------
8,666,336 8,853,058
------------- -------------
Income From Operations 3,621,132 3,994,544
Dividend income 80,927 150,870
Interest income 747,869 639,799
Net realized gain on sales of marketable securities 202,381 438,318
Net unrealized loss on marketable securities (2,524,800) (1,365,145)
Other investment related expenses (56,725) (54,125)
------------- -------------
Income from continuing operations before income taxes 2,070,784 3,804,261
------------- -------------
Income taxes--Note F
Federal 567,000 1,102,000
State and City 144,000 293,000
------------- -------------
711,000 1,395,000
------------- -------------
Income from continuing operations 1,359,784 2,409,261
Income from discontinued operations, net of
income tax of $45,000 - 70,472
------------- -------------
Net income 1,359,784 2,479,733
Retained earnings - beginning of period 105,283,732 94,927,495
------------- -------------
106,643,516 97,407,228
Cash dividends ($.31 and $.30 a share) 1,193,529 1,182,457
------------- -------------
Retained earnings - end of period $105,449,987 96,224,771
============= =============
Per Share of Common Stock - Notes C and E:
Income from continuing operations $.35 $.61
Income from discontinued operations - 0.02
------------- -------------
Net income $.35 $.63
============= =============
<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
-----------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $1,359,784 $2,479,733
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plate costs 328,624 350,258
Depreciation and amortization of building,
furniture, fixtures, equipment and
leasehold improvements 90,543 84,143
Amortization of deferred charges and excess
of cost of assets acquired over fair value
thereof 527,114 512,792
Net realized gain on sale of marketable
securities (202,381) (438,318)
Net unrealized loss on marketable securities 2,524,800 1,365,145
Purchases of marketable securities (3,627,569) (3,207,189)
Proceeds from sale of marketable securities 4,994,619 6,138,209
Decrease (increase) in deferred income
tax benefits (1,047,599) (695,800)
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables (93,446) (453,782)
Inventories (336,682) (442,058)
Other assets (1,242,992) (966,147)
Increase (decrease) in:
Due to customers, accounts payable, royalties payable,
accrued expenses and sundry liabilities (2,022,510) (3,321,599)
Income taxes payable 1,487,875 2,035,987
Deferred subscription income and costs
applicable thereto-net (1,145,653) 150,114
------------ ------------
Net Cash Provided by Operating Activities 1,594,527 3,591,488
------------ ------------
Cash flows from investing activities:
Additions to plate costs (395,572) (407,709)
Additions to furniture, fixtures, equipment
and leasehold improvements (42,250) (26,374)
------------ ------------
Net Cash Used in Investing Activities (437,822) (434,083)
------------ ------------
Cash flows from financing activities:
Acquisition of treasury stock (1,191,597) -
Dividends paid (1,165,285) (1,143,042)
------------ ------------
Net Cash Used in Financing Activities (2,356,882) (1,143,042)
------------ ------------
Net (Decrease) Increase in Cash and Cash Equivalents (1,200,177) 2,014,363
Cash and cash equivalents at beginning of period 49,423,477 40,093,105
------------ ------------
Cash and Cash Equivalents at End of Period $48,223,300 $42,107,468
============ ============
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
March 31, 1997
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, 1997 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1997. 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,
1996.
NOTE B -- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the three months ended March 31, 1997 and 1996 for:
1997 1996
---- ----
Income Tax $270,724 $99,813
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, 1997 and December 31, 1996 are comprised of:
1997 1996
---- ----
Finished publications $3,634,128 $3,177,949
Work in process 251,097 370,594
---------- ----------
$3,885,225 $3,548,543
========== ==========
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, 1997 and 1996 is 3,871,593
and 3,941,523 , respectively.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods.
The adoption of Statement 128 will not have a material impact on the
calculation of fully diluted earnings per share for all prior periods.
<PAGE>
<TABLE>
NOTE F -- INCOME TAXES:
Total tax expense for the three month periods ended March 31, 1997 and 1996 amounted to $711,000 and $1,395,000
(effective rates of 34.33% and 36,67%), 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
---------------------------
1997 1996
-------------------------------------------------------
% of % of
Income Income
Before Before
Income Income
Amount Taxes Amount Taxes
--------------------------------------------------------
<S> <C> <C> <C> <C>
Computed "expected" tax expense $724,800 35.00% $1,331,500 35.00%
Increases (reductions) in tax
resulting from:
State and local income
taxes, net of Federal
income tax benefit 93,600 4.52 190,400 5.00
Nontaxable portion of
dividend income (500) (37,000) (0.97)
FSC income taxed at a
lower rate (87,500) (4.22) (96,200) (2.53)
Miscellaneous - net (19,400) (.97) 6,300 0.17
----------- ----------- ---------- -----------
Actual Tax Expense $711,000 34.33% $1,395,000 36.67%
=========== =========== =========== ===========
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Three Month Period - 1997 vs 1996
- ---------------------------------
Revenues from the Company's continuing publishing operations decreased
by 4.4 % to $12,287,468. Revenues from subscriptions decreased by 4.8 %,
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 (the "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 published.
In November 1993, the Company entered into 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, 1997.
Revenues from book sales for the three months ended March 31, 1997
decreased by 5.4 %, mainly due to the reduction in the number of book titles
published, and decreased sales of backlist books.
The cost of sales from continuing operations as a percentage of revenues
for the three months ended March 31, 1997 increased from 40.7% to 42.7%,
principally due to decreased sales of backlist books. The Company provides for
absolescence by writing down the inventory value of backlist books, resulting
in higher gross margin 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. The decrease in selling, general,
and administrative expenses was primarily due to decreased advertising
expenditures, mailing expenses and repair and maintenance cost, offset by
higher professional fees.
The increase in interest income was principally due to increased
investment in commercial paper, time deposits and money market funds. The
decrease in dividend income was attributable to the changes in the portfolio
of marketable securities. The company had net realized gain of $202,381 and
net unrealized loss of $2,524,800 on marketable securities for the three months
ended March 31, 1997, as compared to 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.
The decrease in net income was principally attributable 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 6.9 to 1 at
March 31, 1997 compared to 6.4 to 1 at December 31, 1996.
Management anticipates that internally generated funds will exceed the
requirements of the operations of the business. The Company also has funds of
approximately $71,950,900 at March 31, 1997 invested in marketable securities
and in cash and cash equivalents, which are available for use in business or
acquisitions.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Report on Form 8-K
- ----------------------------------------
(a) Exhibits - None.
(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, 1997 ---------------------------------------
Martin E. Tash
President and CEO
By: /s/ Ghanshyam A. Patel
Date: May 15, 1997 ---------------------------------------
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, 1997 and is
qualified in its entirety by reference to such financial statements.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<PERIOD-TYPE> 3-MOS
<CASH> 48,223,300
<SECURITIES> 23,727,603
<RECEIVABLES> 6,217,227
<ALLOWANCES> (847,000)
<INVENTORY> 3,885,225
<CURRENT-ASSETS> 81,415,712
<PP&E> 12,831,471
<DEPRECIATION> (5,666,559)
<TOTAL-ASSETS> 98,144,949
<CURRENT-LIABILITIES> 11,832,955
<BONDS> 0
0
0
<COMMON> 584,724
<OTHER-SE> 61,789,061
<TOTAL-LIABILITY-AND-EQUITY> 98,144,949
<SALES> 12,287,468
<TOTAL-REVENUES> 13,318,655
<CGS> 5,243,509
<TOTAL-COSTS> 5,243,509
<OTHER-EXPENSES> 56,725
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,070,784
<INCOME-TAX> 711,000
<INCOME-CONTINUING> 1,359,784
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,359,784
<EPS-PRIMARY> .35
<EPS-DILUTED> 0
</TABLE>
