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, 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 08/ 14 /97: 3,831,251
---------
<PAGE>
INDEX
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
PART I FINANCIAL INFORMATION
- ------ ---------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets--
June 30, 1997 and December 31, 1996 3
Condensed consolidated statements of income
and retained earnings -- Six and Three months
ended June 30, 1997 and 1996 5
Condensed consolidated statements of cash
flows -- Six months ended June 30, 1997
and 1996 6
Notes to condensed consolidated financial
statements -- June 30, 1997 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>
<TABLE>
PART I - FINANCIAL INFORMATION
PLENUM PUBLISHING CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30 December 31
------- -----------
1997 1996
---- ----
(UNAUDITED) ( NOTE )
----------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ( $47,525,968 and $48,930,459 ) $48,480,239 $49,423,477
Marketable securities at aggregate market value 24,105,409 27,417,072
Interest and dividends receivable 305,864 248,198
Receivables net of allowances of $852,000
and $829,000 4,928,399 5,237,940
Inventories --Note D 3,638,016 3,548,543
-------------- -------------
Total Current Assets 81,457,927 85,875,230
-------------- -------------
Costs Applicable to Deferred Subscription Income 457,653 556,988
-------------- -------------
Property, Plant and Equipment, at cost:
Land 690,000 690,000
Building, net of accumulated depreciation of
$689,506 and $638,266 2,844,271 2,895,511
Furniture, fixtures, equipment and leasehold improvements,
net of accumulated depreciation and amortization
of $744,560 and $614,716 386,854 389,841
Plate costs, net of accumulated depreciation of
$4,616,596 and $3,994,410 3,226,795 3,170,906
-------------- -------------
7,147,920 7,146,258
-------------- -------------
Deferred Income Tax 95,043 177,444
-------------- -------------
Deferred Charges and Other Assets:
Cost of subscription lists of Human Sciences Press
and Agathon journals, net of accumulated amortization
of $2,397,128 and $2,259,499 2,305,436 2,443,066
Royalties 1,577,524 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 652,223 319,494
-------------- -------------
8,385,632 8,099,494
-------------- -------------
Excess of Cost of Assets Acquired Over Fair Value
Thereof, net of accumulated amortization of
$235,707 and $231,262 119,933 124,379
-------------- -------------
Total Assets $97,664,108 $101,979,793
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to customers $548,764 $544,277
Accounts payable 1,466,026 3,181,286
Income taxes payable 1,942,424 913,250
Royalties payable 1,514,395 2,362,019
Other accrued expenses and sundry liabilities 3,771,854 4,035,185
Dividends payable 1,187,688 1,165,285
Deferred income tax liabilities 1,553,144 1,230,744
-------------- -------------
Total Current Liabilities 11,984,295 13,432,046
Deferred Subscription Income 19,847,770 25,148,620
-------------- -------------
Total Liabilities 31,832,065 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 109,590,129 105,283,732
-------------- -------------
114,126,379 109,819,982
Less 2,015,990 and 1,962,956 shares of Common
Stock held in treasury - at cost 48,294,336 46,420,855
-------------- -------------
Total Stockholders' Equity 65,832,043 63,399,127
-------------- -------------
Total Liabilities and Stockholders' Equity $97,664,108 $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>
Six Months Ended June 30 Three Months Ended June 30
------------------------- ---------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Subscriptions, books and other sales, net $25,762,862 $25,205,816 $13,475,394 $12,358,214
------------- ------------- ------------- -------------
Costs and Expenses:
Cost of sales 10,532,598 10,566,650 5,289,089 5,342,644
Royalties 1,688,783 1,662,733 855,788 706,404
Selling, general and administrative expenses 5,511,069 5,522,766 2,921,237 2,850,043
------------- ------------- ------------- -------------
17,732,450 17,752,149 9,066,114 8,899,091
------------- ------------- ------------- -------------
Income from operations 8,030,412 7,453,667 4,409,280 3,459,123
Dividend income 143,187 281,563 62,260 130,693
Interest income 1,490,299 1,262,533 742,430 622,734
Net realized gain on sales of marketable securities 303,356 750,170 100,975 311,852
Net unrealized gain (loss) on marketable securities 1,100,912 (562,271) 3,625,712 802,874
Other investment-related expenses (250,553) (185,950) (193,828) (131,825)
------------- ------------- ------------- -------------
Income from continuing operations before income taxes 10,817,613 8,999,712 8,746,829 5,195,451
------------- ------------- ------------- -------------
Income taxes--Note F
Federal 3,320,000 2,625,000 2,753,000 1,523,000
State and City 810,000 813,000 666,000 520,000
------------- ------------- ------------- -------------
4,130,000 3,438,000 3,419,000 2,043,000
------------- ------------- ------------- -------------
Income from continuing operations 6,687,613 5,561,712 5,327,829 3,152,451
Income from discontinued operations, net of
income tax of $135,000 and $90,000 - 249,899 - 179,427
------------- ------------- ------------- -------------
Net income 6,687,613 5,811,611 5,327,829 3,331,878
Retained earnings - beginning of period 105,283,732 94,927,495 105,449,987 96,224,771
------------- ------------- ------------- -------------
111,971,345 100,739,106 110,777,816 99,556,649
Cash dividends ($.62 and $.60 a share and $.31 and $.30 a share) 2,381,216 2,361,114 1,187,687 1,178,657
------------- ------------- ------------- -------------
Retained earnings - end of period $109,590,129 $98,377,992 $109,590,129 $98,377,992
============= ============= ============= =============
Per Share of Common Stock - Notes C and E:
Income from continuing operations $1.73 $1.41 $1.39 $.80
Income from discontinued operations - .07 - $.05
------------- ------------- ------------- -------------
Net income $1.73 $1.48 $1.39 $.85
============= ============= ============= =============
<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
-------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $6,687,613 $5,811,611
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plate costs 622,186 704,823
Depreciation and amortization of building,
furniture, fixtures, equipment and
leasehold improvements 181,084 165,190
Amortization of deferred charges and excess
of cost of assets acquired over fair value
thereof 957,644 869,404
Net realized gain on sale of marketable
securities (303,356) (750,170)
Net unrealized (gain) loss on marketable securities (1,100,912) 562,271
Purchases of marketable securities (5,348,721) (5,987,950)
Proceeds from sale of marketable securities 10,064,652 7,915,746
Decrease (increase) in deferred income
tax benefits 404,801 (260,800)
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables 251,875 672,535
Inventories (89,473) (183,948)
Other assets (1,239,335) (1,023,274)
Increase (decrease) in:
Due to customers, accounts payable, royalties payable,
accrued expenses and sundry liabilities (2,821,728) (3,977,791)
Income taxes payable 1,029,174 (40,861)
Deferred subscription income and costs
applicable thereto-net (5,201,515) (3,251,188)
------------ ------------
Net Cash Provided by Operating Activities 4,093,989 1,225,598
------------ ------------
Cash flows from investing activities:
Additions to plate costs (678,075) (684,434)
Additions to furniture, fixtures, equipment
and leasehold improvements (126,858) (80,653)
------------ ------------
Net Cash Used in Investing Activities (804,933) (765,087)
------------ ------------
Cash flows from financing activities:
Acquisition of treasury stock (1,873,481) (453,096)
Dividends paid (2,358,813) (2,325,499)
------------ ------------
Net Cash Used in Financing Activities (4,232,294) (2,778,595)
------------ ------------
Net Decrease in Cash and Cash Equivalents (943,238) (2,318,084)
Cash and cash equivalents at beginning of period 49,423,477 40,093,105
------------ -------------
Cash and Cash Equivalents at End of Period $48,480,239 $37,775,021
============ =============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 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 six month period ended June 30, 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 six months ended June 30, 1997 and 1996 for:
1997 1996
---- ----
Income Tax $2,696,025 $3,874,661
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, 1997 and December 31, 1996 are comprised of:
1997 1996
---- ----
Finished publications $3,276,941 $3,177,949
Work in process 361,075 370,594
---------- -----------
$3,638,016 $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 and six months ended June 30, 1997 and 1996 is as
follows:
1997 1996
---- ----
Six months 3,856,589 3,937,523
Three months 3,839,962 3,934,523
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>
NOTE F -- INCOME TAXES:
Total tax expense for the six month periods ended June 30, 1997 and 1996
amounted to $4,130,000 and $3,438,000 (effective rates of 38.18% and 38.20%),
and for the three month periods ended June 30, 1997 and 1996 amounted to
$3,419,000 and $2,043,000 (effective rates of 39.09% and 39.32%), 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:
<TABLE>
<CAPTION>
Six Months Ended June 30 Three Months Ended June 30
------------------------ --------------------------
1997 1996 1997 1996
--------------------------------------------- --------------------------------------------
% 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 $3,786,200 35.00% $3,149,800 35.00% $3,061,400 35.00% $1,818,300 35.00%
Increases (reductions) in tax
resulting from:
State and local income
taxes, net of Federal
income tax benefit 526,500 4.87 528,400 5.87 432,900 4.95 338,000 6.50
Nontaxable portion of
dividend income - - (69,000) (0.46) - - (32,000) (0.61)
FSC income taxed at a
lower rate (175,000) (1.62) (199,500) (2.22) (87,500) (1.00) (103,300) (1.99)
Miscellaneous - net (7,700) (0.07) 28,300 0.01 12,200 0.14 22,000 0.42
----------- ------ ---------- ------ ---------- ------ ----------- ------
Actual Tax Expense $4,130,000 38.18% $3,438,000 38.20% $3,419,000 39.09% $2,043,000 39.32%
=========== ====== ========== ====== ========== ====== =========== ======
</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, 1997 increased by 9.0% and 2.2%, respectively. Revenues
from subscriptions for the three and six months ended June 30, 1997 increased
by 13.7% and 4.7 %, respectively, primarily due to more journal issues
published, higher selling prices and increased sales of single issues of back
volume journals, offset by nonrenewals of subscriptions partially attributable
to the reduced buying power of libraries and to changes in the market for the
Company's translations of Russian language journals.
Revenues from book sales for the three and six months ended June 30,
1997 decreased by 0.4 % and 3.2%, respectively, due to the reduction in the
number of book titles published, offset by increased sales of backlist books.
The cost of sales as a percentage of revenues for the three and six
months ended June 30, 1997 decreased from 43.2% and 41.9% to 39.3% and 40.9%,
respectively, mainly due to increased sales of backlist books and back volume
journal issues, which have above average gross margins. The Company provides
for obsolescence by writing down the inventory value of backlist books and
back volume journals issues, resulting in higher gross margins on backlist
sales.
The increase in royalty expenses for the three and six months ended June
30, 1997 was principally attributable to increased subscription revenues,
offset by the decline in book sales. The increase in selling, general and
administrative expenses for the three months ended June 30, 1997 was
primarily due to higher salaries and professional fees, offset by decreased
advertising expenditures, mailing expenses, repair and maintenance cost and
insurance expense.
The increase in interest income for the three and six months ended June
30, 1997 was principally due to increased investment in commercial paper,
time deposits, and money market funds. The decrease in dividend income for the
three and six months ended June 30, 1997 was attributable to the changes in
the portfolio of marketable securities. The Company had net realized and
unrealized gains of $100,975 and $3,625,712, respectively, on marketable
securities for the three months ended June 30, 1997 as compared to net
realized and unrealized gains of $311,852 and $802,874, respectively, on
marketable securities for the three months ended June 30, 1996. The Company
had net realized and unrealized gains of $303,356 and $1,100,912,
respectively, on marketable securities for the six months ended June 30, 1997
as compared to net realized gain of $750,170 and net unrealized loss of
$562,271 on marketable securities for the six months ended June 30, 1996.
The increase in net income for the three and six months ended June 30,
1997 was mainly due to the increase in investment income as discussed in the
preceding paragraph and increased income from publishing operations.
LIQUIDITY AND SOURCES OF CAPITAL
- --------------------------------
The ratio of current assets to current liabilities is 6.8 to 1 at June
30, 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 $72,586,000 at June 30, 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 4. Submission of Matters to a Vote of Security Holders.
- ------- ----------------------------------------------------
(a) The Company's Annual Meeting of Stockholders was held on June
26, 1997.
(b) The sole purpose of the meeting was the election of four
directors of the Company, to serve for a term of two years (i.e. until
the Annual Meeting to be held in 1999). 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
Israel Gitman, Howard F. Mathiasen, Nathan Tash and Earl Ubell, 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 1998)
are Bernard Bressler, Mark Shaw and Martin E. Tash.
(c) The votes cast for, and withheld from, each of the nominees
(out of the 3,831,251 shares of Common Stock outstanding and entitled
to vote as of the record date of May 15, 1997) are set forth below.
There were no broker non-votes.
Nominees For Withheld
- -------- --- --------
Israel Gitman 3150518 61815
Howard F. Mathiasen 3148921 63412
Nathan Tash 3125965 86368
Earl Ubell 3146335 65998
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, 1997 ---------------------------------------
Martin E. Tash
President and CEO
By: /s/ Ghanshyam A. Patel
Date: Aug 14, 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 six months ended June 30, 1997 and is
qualified in its entirety by reference to such financial statements.
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 6-MOS
<CASH> 48,480,239
<SECURITIES> 24,105,409
<RECEIVABLES> 5,780,399
<ALLOWANCES> (852,000)
<INVENTORY> 3,638,016
<CURRENT-ASSETS> 81,457,927
<PP&E> 13,198,582
<DEPRECIATION> (6,050,662)
<TOTAL-ASSETS> 97,664,108
<CURRENT-LIABILITIES> 11,984,295
<BONDS> 0
0
0
<COMMON> 584,724
<OTHER-SE> 65,247,319
<TOTAL-LIABILITY-AND-EQUITY> 97,664,108
<SALES> 25,762,862
<TOTAL-REVENUES> 28,800,616
<CGS> 10,532,598
<TOTAL-COSTS> 10,532,598
<OTHER-EXPENSES> 250,553
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,817,613
<INCOME-TAX> 4,130,000
<INCOME-CONTINUING> 6,687,613
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,687,613
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 0
</TABLE>
