FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-3315
PUBLICKER INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0991870
(State of incorporation) (I.R.S. Employer
Identification No.)
1445 East Putnam Avenue, Old Greenwich, Connecticut 06870
(Address of principal executive offices)
(203) 637-4500
(Registrant's telephone number, including area code)
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 such filing
requirements for the past 90 days.
Yes X No .
Number of shares of Common Stock outstanding as of September 30, 1995:
14,860,910
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS AS OF
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
September 30, December
31,
1995 1994
(unaudited)
(in thousands of
dollars)
ASSETS
Current assets:
Cash, including short-term investments of $2,201 in 1995 and $5,740 in 1994
$ 2,473 $ 6,274
Restricted cash 4,500
-
Trade receivables, less allowance for doubtful accounts (1995 - $343; 1994 -
$386) 10,254 10,838
Inventories 9,500
9,061
Net assets of discontinued operations 532
2,510
Other 982
825
Total current assets 28,241
29,508
Property, plant and equipment:
Land 398 398
Buildings 2,330 2,330
Machinery and equipment 8,403 7,207
Less - accumulated depreciation (4,056) (3,091)
7,075 6,844
Goodwill 8,401 8,561
Other assets 1,663 1,517
$ 45,380 $ 46,430
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 7,735 $ 7,657
Trade accounts payable 5,219 6,539
Accrued liabilities 15,084 8,532
Total current liabilities 28,038 22,728
Long-term debt 8,521 9,780
Other non-current liabilities 11,050 16,538
Total liabilities 47,609 49,046
Shareholders' equity
Common shares, $0.10 par value,
Authorized, 30,000,000 shares
Issued - 15,405,937 shares in 1995 and 14,950,937 in 1994 1,541 1,495
Additional paid-in capital 42,488 41,942
Accumulated deficit (since January 1, 1984) (42,367) (42,441)
Common shares held in treasury, at cost - 545,027 shares in 1995 and
418,837 shares in 1994 (3,891) (3,612)
Total shareholders' equity
(2,229) (2,616)
$ 45,380 $ 46,430
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994* 1995
1994*
(in thousands of dollars except per share data)
Net sales $ 18,106 $ 18,787$ 57,993
$ 56,920
Costs and expenses:
Cost of sales 13,373 14,650 42,366
44,444
Selling expenses 1,375 1,378 4,354
4,378
General and administrative expenses 2,894 2,650
8,739 7,946
17,642 18,678
55,459 56,768
Income (loss) from operations 464 109
2,534 152
Other (income) expenses:
Interest income (25) (85)
(135) (223)
Interest expense 538 789 1,731
2,356
Cost of pensions - nonoperating 168 214 550
646
Legal settlements and costs 130 117
314 382
811 1,035
2,460 3,161
Income (loss) from continuing operations (347) (926)
74 (3,009)
Discontinued operations:
Income (loss) from discontinued operations - 178
- 479
Gain on sale or other disposition
of discontinued operations - net - -
- 500
Net income (loss) $ (347) $ (748)
$ 74 $ (2,030)
Earnings (loss) per common share:
Continuing operations $ (.02) $ (.06)
$ .01 $ (.21)
Discontinued operations -
.01 - .07
$ (.02) $ (.05)
$ .01 $ (.14)
Weighted average common shares
outstanding 14,797,410 14,520,100 14,730,489
14,519,700
*Restated for discontinued operations
<PAGE>
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(in thousands of dollars except share data)
(unaudited)
Accumulated
Common Shares
Additional Deficit Common Share-
Shares
Paid-in Since Treasury holders'
Issued Amount
Capital 1-1-84 Shares (1) Equity
Balance - December 31, 1994 14,950,937 $ 1,495 $ 41,942
$ (42,441) $ (3,612) $ (2,616)
Issuance of Common Shares 455,000 46 546
- - 592
Repurchase of Common Shares - - -
- (279) (279)
Net Income - - -
74 - 74
Balance - September 30, 1995 15,405,937 $ 1,541 $ 42,488
$ (42,367) $ (3,891) $ (2,229)
(1) Represents 545,027 and 418,837 of common shares held in treasury at
September
30, 1995 and December 31, 1994, respectively.
<PAGE>
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(unaudited)
Nine Months Ended
September 30,
1995
1994*
(in thousands of
dollars)
Cash flows from operating activities:
Income (loss) from continuing operations $ 74 $
(3,009)
Adjustments to reconcile income (loss) to net cash provided by
(used in) continuing operations:
Depreciation and amortization 1,267
1,128
Provision for doubtful accounts 148
306
Changes in operating assets and liabilities:
Decrease (increase) in restricted cash (4,500)
-
Decrease (increase) in trade receivables 436
(1,269)
Decrease (increase) in inventories (439)
465
Decrease (increase) in other current assets (157)
210
Decrease (increase) in other assets (245)
(84)
Increase (decrease) in trade accounts payable (1,320)
(1,409)
Increase (decrease) in accrued liabilities 6,552
903
Increase (decrease) in other non-current liabilities (5,488)
302
Net cash provided by (used in) continuing operations (3,672)
(2,457)
Income (loss) from discontinued operations - 979
Adjustments to reconcile income to net cash provided by (used in)
discontinued operations:
Decrease (increase) in net assets of discontinued operations
(262) (634)
Net cash provided by (used in) discontinued operations
(262) 345
Net cash provided by (used in) operating activities
(3,934) (2,112)
Cash flows from investing activities:
Proceeds from sale or other disposition of discontinued operations (net)
2,240 1,446
Capital expenditures
(1,196) (1,393)
Net cash provided by (used in) investing activities
1,044 53
Cash flows from financing activities:
Borrowings (repayments) of term and revolving loan financing
(1,224) -
Proceeds from the issuance of common shares 313
2
Net cash provided by (used in) financing activities
(911) 2
Net increase (decrease) in cash (3,801)
(2,057)
Cash - beginning of period
6,274 11,675
Cash - end of period $ 2,473
$ 9,618
* Restated for discontinued operations<PAGE>
Note 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements
reflect all normal and recurring adjustments that are, in the opinion of
management, necessary to present fairly the financial position of Publicker
Industries Inc. and subsidiary companies as of September 30, 1995 and the
results
of their operations and their cash flows for the three and nine months ended
September 30, 1995 and 1994. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted. These condensed financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994. Certain prior period amounts have been reclassified to
conform with the 1995 presentation.
Cash Flow Information
Cash paid for interest during the nine months ended September 30, 1995 and
1994 was approximately $1,156,000 and $1,457,000, respectively. No cash was
paid
for income taxes during the nine months ended September 30, 1995 and 1994.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed using the weighted average
number of outstanding common shares during each period. The effect of stock
options and warrants on the computations for 1995 and 1994 were not included as
they were antidilutive.
Note 2 - CREDIT FACILITY AND NOTE REPAYMENT
On October 11, 1995, the Company entered into a three year $17,060,000 credit
agreement ("Loan Agreement"). The Loan Agreement provides for a $13,161,000
revolving credit line ("Revolver"), $2,149,000 of term promissory notes ("Term
Notes") and a $1,750,000 credit facility for future capital expenditure
financing. The Loan Agreement is secured by substantially all of the Company's
assets and bears interest at a rate of one and one-half percent (1 1/2%) in
excess of the prime rate.
The Revolver allows the Company to borrow up to $13,161,000, subject to
availability limitations and reserves. Letters of credit of up to
$1,000,000 may
be opened under the Revolver. A fee of one quarter of one percent (1/4%) is
charged on the unused portion of the Revolver. The Term Notes amortize on a
sixty month straightline basis with a final payment due on the termination of
the Loan Agreement.
The Loan Agreement and related documents contain certain covenants including,
among others, maintenance of minimum working capital and adjusted net worth (as
defined).
The initial drawdown under the Loan Agreement of $7,449,000, together with
existing cash, was used to extinguish a revolving credit facility at one of the
Company's subsidiaries of $762,000 and to repurchase $7,500,000 face value
of 13%
Subordinated Notes for $7,425,000 plus accrued interest. The repurchase of the
13% Subordinated Notes satisfies the annual sinking fund payment due
December 15,
1995. The $75,000 gain on the repurchase will be recorded in the fourth quarter
of 1995.
Note 3 - DISCONTINUED OPERATIONS
During 1994 and early 1995, the Company undertook the sale or other
disposition of several of its businesses. In March 1994, the Company sold
substantially all the assets of Douglas-Randall, Inc. ("DRI") and subsequently
collected its accounts receivable for an aggregate proceeds of approximately
$831,000. In October 1994, the Company sold Chatas Glass Company, Inc. ("CGC")
and subsequently collected its accounts receivable for an aggregate proceeds of
approximately $290,000. On January 31, 1995, the Company sold substantially all
the assets of Associated Testing Laboratories, Inc. ("ATL") for $2,240,000 cash,
plus the assumption of certain liabilities. As a result, ATL has been reflected
as discontinued operation together with DRI, CGC and operations previously shut
down. The 1994 interim consolidated financial statements have been restated to
also reflect ATL as a discontinued operation. As of September 30, 1995 and
December 31, 1994, the Company's net investment in its discontinued operations
was included in current assets.
Note 4 - INVENTORIES
Inventories at September 30, 1995 and December 31, 1994, consisted of the
following:
September 30, December 31,
1995 1994
(in thousands)
Raw materials and supplies $ 5,222 $ 5,058
Work in process 1,689 1,818
Finished goods 2,589 2,185
$ 9,500 $9,061
Note 5 - INCOME TAXES
As of September 30, 1995, approximately $105,000,000 of U.S. tax loss
carryforwards (subject to review by the Internal Revenue Service), expiring from
1995 through 2009, were available to offset future taxable income. In addition,
approximately $1,600,000 of unused investment tax credits were available to
offset future federal income taxes payable through 2001. As a result of a
corporate revaluation during 1984, tax benefits resulting from the utilization
in subsequent years of net operating losses and other investment tax credit
carryforwards existing as of the date of the corporate revaluation will be
excluded from the results of operations and directly credited to additional
paid-in capital when realized. As of September 30, 1995, approximately
$30,000,000
of the Company's U.S. tax loss carryforwards and approximately $1,600,000 of
unused investment tax credits predated the corporate revaluation.
As of September 30, 1995, deferred tax assets of approximately $39,000,000
relating to the tax benefit of the Company's U.S. tax loss carryforwards of
approximately $105,000,000 and unused investment tax credits of approximately
$1,600,000 were offset by a full valuation allowance. As of September 30, 1995,
approximately $12,000,000 of deferred tax assets predated the corporate
revaluation. Subsequent adjustments to the valuation allowance with respect to
such deferred tax assets would be directly credited to additional paid-in
capital.
Note 6 - ENVIRONMENTAL LITIGATION
As more fully discussed under Legal Proceedings (and environmental matters
included therein) included elsewhere in this Form 10-Q, the United States
brought
an action in 1990 against the Company and two other parties seeking recovery of
costs incurred by the Environmental Protection Agency ("EPA") and other federal
agencies in responding to releases or threatened releases of hazardous
substances
at a facility owned and operated by the Company until early 1986. The
Commonwealth of Pennsylvania intervened as a second plaintiff in 1993, seeking
recovery of costs allegedly incurred by the Pennsylvania Department of
Environmental Protection in responding to such releases or threatened releases
at the facility.
On December 20, 1994, counsel for the Company and litigation counsel for the
United States entered into an Agreement in Principle to settle the United
States'
claims against the Company and the Company's counterclaim. On October 6, 1995,
counsel for the Company, litigation counsel for the United States and counsel
for
the Commonwealth of Pennsylvania subsequently agreed on the final text of a
proposed Consent Decree, which must be finally approved by EPA, the U.S.
Department of Justice and the Pennsylvania Department of Environmental
Protection, and thereafter entered by the Court.
Pursuant to the Agreement in Principle, on April 6, 1995, the Company
deposited with the clerk of the Court, $4,500,000 which will be turned over to
EPA when a Consent Decree embodying the terms of the settlement is entered
by the
Court. Upon entry of the Consent Decree, the Company will make another payment
to the United States of $4,500,000, plus interest. Further payments to the
United States totaling $4,350,000, plus interest, will be made over a six year
period following the entry of the Consent Decree. The Company will pay the
Commonwealth of Pennsylvania a total of $1,000,000, consisting of an initial
payment of $350,000 upon entry of the Consent Decree, followed by four annual
payments of $162,500 each, plus interest. In the fourth quarter of 1993, the
Company recorded a liability of $14,350,000 to cover the estimated costs of
settlement.
The Company believes that it has sufficient liquidity to comply with the
anticipated settlement terms of this environmental litigation and to enable the
Company to continue to meet its obligations to pay principal and interest in
connection with its indebtedness as well as meet its operating cash
requirements.
The resolution of the Philadelphia litigation represents a significant
development for the Company which will greatly increase the Company's
flexibility
in expanding its existing businesses as well as potentially acquiring
businesses.
In connection with its subordinated notes, the Company will be required to make
a final sinking fund payment of $7,500,000 on December 15, 1996. The Company
expects to fund its sinking fund payment and the long-term payments required in
connection with the settlement of the environmental litigation from its
available
cash resources, availability under the Loan Agreement, cash provided by
operations, refinancing or restructuring of existing subordinated notes or in
conjunction with the issuance of new debt securities and, if necessary, the sale
of one or more of its subsidiary companies. While the Company is considering
each of the foregoing, there can be no assurance that these efforts will be
successful.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Operating Results - Third Quarter
Publicker's consolidated sales of $18,106,000 for the third quarter of 1995
decreased by approximately 4% from $18,787,000 for the third quarter of 1994.
The Company's income from operations for the third quarter of 1995 totaled
$464,000 compared to $109,000 for the third quarter of 1994.
The Company reported a net loss of $347,000 or $.02 per share for the third
quarter of 1995 compared to a net loss of $748,000 or $.05 per share for the
third quarter of 1994. The 1995 third quarter results included cost of pensions
non-operating of $168,000 and legal settlements and costs of $130,000. The 1994
third quarter results included cost of pensions non-operating of $214,000, legal
settlements and costs of $117,000 and income from discontinued operations of
$178,000. Interest expense decreased to $538,000 for the third quarter of 1995
compared to $789,000 for the same period in 1994, due to the repurchase or
redemption of $7.4 million of 13% Subordinated Notes in 1994.
Sales for the Company's manufacturing segment (which includes the
operations
of four subsidiary companies: Bright Star Industries Incorporated, Fenwal
Electronics, Inc., Greenwald Industries, Inc. and Masterview Window Company,
Inc.) for the third quarter of 1995 were $15,535,000 compared to $15,526,000 for
the third quarter of 1994. Income from operations for this segment increased by
approximately 130% to $1,532,000 for the third quarter of 1995 compared to
$665,000 for the same period in 1994, primarily due to increased labor
efficiencies at several of the Company's manufacturing businesses.
Sales for the Company's services segment (which consists of one subsidiary
company: Orr-Schelen-Mayeron & Associates, Inc.) decreased by approximately 21%
to $2,571,000 for the third quarter of 1995 compared to $3,261,000 for the third
quarter of 1994. The services segment experienced a loss from operations
for the
third quarter of 1995 of $56,000 compared to income from operations of $310,000
for the same period in 1994. The decline in sales and income from operations
was
due to certain operating inefficiencies, reduced headcount and lower contract
margins.
Operating Results - Nine Months
For the nine months ended September 30, 1995, consolidated sales of
$57,993,000 increased by approximately 2% compared to sales of $56,920,000 for
the first nine months of 1994. The Company's income from operations for the
first nine months of 1995 totaled $2,534,000 compared to $152,000 for the first
nine months of 1994.
The Company reported net income of $74,000 or $.01 per share for the nine
months ended September 30, 1995 compared to a net loss of $2,030,000 or $.14 per
share for the comparable 1994 period. The 1994 results included a loss from
continuing operations of $3,009,000 ($.21 per share) and income from
discontinued operations of $979,000 ($.07 per share). Other expense (interest
expense - net, cost of pensions - nonoperating and legal settlements and costs)
decreased by $701,000 in the first nine months of 1995 compared to the same 1994
period due principally to the reduced interest expense on the 13% Subordinated
Notes.
Sales for the Company's manufacturing segment for the first nine months of
1995 increased by approximately 3% to $49,692,000 compared to $48,031,000
for the
first nine months of 1994. Income from operations for this segment increased by
approximately 179% to $5,297,000 for the first nine months of 1995 compared to
$1,897,000 for the first nine months of 1994.
Sales for the Company's services segment for the first nine months of 1995
decreased by approximately 7% to $8,301,000 compared to $8,889,000 for the first
nine months of 1994. Income from operations for this segment decreased to
$176,000 for the first nine months of 1995 compared to $638,000 for the same
period in 1994.
In March 1994, the Company sold substantially all the assets of
Douglas-Randall, Inc. and subsequently collected its accounts receivable for
aggregate
proceeds of approximately $831,000. In October 1994, the Company sold Chatas
Glass Company, Inc. and subsequently collected its accounts receivable for an
aggregate proceeds of approximately $290,000. On January 31, 1995, the Company
sold substantially all the assets of Associated Testing Laboratories, Inc. for
$2,240,000 cash, plus the assumption of certain liabilities. The foregoing
companies have been reflected in the consolidated financial statements as
discontinued operations.
Liquidity
During the first nine months of 1995, cash, including short-term
investments,
decreased by $3,801,000. Operating activities consumed cash of $3,934,000 while
investing activities provided cash of $1,044,000 and financing activities
consumed cash of $911,000. Operating activities principally consisted of an
increase in operating assets and liabilities of $5,161,000 offset by
depreciation
and amortization of $1,267,000. The increase in operating assets was
attributable
to the $4,500,000 EPA related payment. Investing activities consisted of
proceeds of $2,240,000 from the sale of Associated Testing Laboratories, Inc.,
offset by capital expenditures of $1,196,000. Financing activities consisted of
repayments of term loan and capital equipment financings of $1,224,000 offset by
proceeds from the issuance of common shares upon exercise of stock options of
$313,000.
On October 11, 1995, the Company entered into a three year $17,060,000
credit
agreement ("Loan Agreement"). The Loan Agreement provides for a $13,161,000
revolving credit line, $2,149,000 of term promissory notes and $1,750,000 credit
facility for future capital expenditure financing. The Loan Agreement is
secured
by substantially all of the Company's assets and bears interest at a rate of one
and one half percent (1 1/2%) in excess of the prime rate.
The Loan Agreement and related documents contain certain covenants including,
among others, maintenance of minimum working capital and adjusted net worth (as
defined).
The initial drawdown under the Loan Agreement of $7,449,000, together with
existing cash, was used to extinguish a revolving credit facility at one of the
Company's subsidiaries of $762,000 and to repurchase $7,500,000 face value
of 13%
Subordinated Notes for $7,425,000 plus accrued interest. The repurchase of the
13% Subordinated Notes satisfies the annual sinking fund payment due
December 15,
1995. The $75,000 gain on the repurchase will be recorded in the fourth quarter
of 1995.
As discussed in Part II Item 1 - Legal Proceedings, the Company has reached
a tentative agreement to settle the environmental litigation with the United
States and the Commonwealth of Pennsylvania. On April 6, 1995, the Company
funded a $4,500,000 court administered escrow account. Further payments
totaling
$9,850,000 will be made to the United States and the Commonwealth of
Pennsylvania
over a six year period following the entry of the Consent Decree with the
court.
In connection with its subordinated notes, the Company will be required to make
a final sinking fund payment of $7,500,000 on December 15, 1996. The Company
believes it has sufficient liquidity to comply with the anticipated settlement
terms of its environmental litigation and to enable the Company to continue to
meet its obligations to pay principal and interest in connection with its
indebtedness as well as meet its operating cash requirements. The Company
expects to fund its sinking fund payment and the long-term payments required in
connection with the settlement of the environmental litigation from its
available
cash resources, availability under the Loan Agreement, cash provided by
operations, refinancing or restructuring of existing subordinated notes and, if
necessary the sale of one or more of its subsidiary companies. While the
Company
is considering each of the foregoing, there can be no assurance that these
efforts will be successful. The Company's failure to generate positive cash
flows from operations or its inability to arrange refinancing or restructuring
of the subordinated notes could have a material adverse effect on the Company.
The resolution of the environmental litigation represents a significant
development for the Company which will greatly increase the Company's
flexibility
in expanding its existing businesses as well as potentially acquiring additional
businesses.
The indenture under which the Company's subordinated notes were issued
contains various restrictive covenants that include, among other things,
restrictions on the payment of dividends or distributions to shareholders and
the
maintenance of consolidated net worth (as defined) of at least $8,000,000. If
the Company's consolidated net worth (as defined) at the end of any two
consecutive fiscal quarters declines to less than $8,000,000, the Company would
be required to make an offer to purchase, on the last day of the fiscal quarter
next following such second fiscal quarter, 25% of the aggregate principal amount
of the notes then outstanding at a purchase price equal to 100% of their
principal amount plus accrued interest. The definition of consolidated net
worth
excludes costs incurred in connection with the settlement of the Company's
environmental litigation. Accordingly, as of September 30, 1995, consolidated
net worth (as defined) amounted to approximately $12,000,000.
During the first nine months of 1995, the Company's capital expenditures
totaled $1,196,000. The Company anticipates that its level of capital
expenditures for 1995 will be consistent with those of 1994. The Company has
not
entered into any material commitments for acquisitions or capital expenditures
and retains the ability to increase or decrease capital expenditure levels as
required. The Company anticipates that it will be able to fund its capital
expenditures during 1995 with its available cash resources and its other cash
flows as well as through capital equipment financing.
At September 30, 1995, approximately $105 million of U.S. tax loss
carryforwards (subject to review by the Internal Revenue Service), expiring from
1995 through 2009, were available to offset future taxable income. In addition,
approximately $1,600,000 of unused investment tax credits were available to
offset future federal income taxes payable through 2001. <PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Environmental Matters - Philadelphia, Pennsylvania
A tentative settlement of the following matter has been reached with the
United States and with the Commonwealth of Pennsylvania.
The Company is a defendant in United States, et al., v. Publicker
Industries
Inc., et al., Civil Action No. 90-7984 (E.D. Pa.). The United States commenced
the action in December 1990 against the Company and two other defendants,
Cuyahoga Wrecking Corporation and Overland Corporation. The United States seeks
to recover under the Comprehensive, Environmental Response, Compensation and
Liability Act ("CERCLA") costs incurred by the United States Environmental
Protection Agency ("EPA") and other federal agencies in responding to releases
of hazardous substances at a site located in Philadelphia, Pennsylvania. The
Company owned and operated the site as a manufacturing and storage facility
until
1986, when the Company sold the facility to Overland Corporation.
In May 1993, in contemplation of a settlement, the Commonwealth of
Pennsylvania was granted leave by the Court to join in the litigation as a
plaintiff. The Commonwealth of Pennsylvania seeks to recover money allegedly
expended by its Department of Environmental Protection ("PADEP") in connection
with hazardous substances at the site.
During the fourth quarter of 1993, the Company recorded a liability of
$14,350,000 to cover the estimated costs of settling this litigation.
Counsel for the Company and litigation counsel for the United States
entered
into an Agreement in Principle dated December 20, 1994, setting forth terms and
conditions to be included in a Consent Decree resolving the United States'
claims
against the Company and the Company's counterclaim. Pursuant to this Agreement
in Principle, on April 6, 1995, the Company deposited with the clerk of the
Court
the sum of $4.5 million to be held for use as payment of a portion of the United
States' claim against the Company upon entry of a Consent Decree embodying the
agreed terms and conditions.
Counsel for the Company, litigation counsel for the United States, and
counsel for PADEP agreed upon the final text of a proposed Consent Decree on
October 6, 1995. The agreed Consent Decree is subject to final approval by EPA,
the U.S. Department of Justice, and PADEP. The Company believes that the agreed
Consent Decree will be finally approved by these agencies and thereafter entered
by the Court, although there can be no assurance of this.
Upon entry of the Consent Decree, the Company will make another payment to
the United States of $4.5 million, plus interest. Further payments to the
United
States totaling $4.35 million, plus interest, will be made over a six year
period
following the entry of the Consent Decree. The Company will pay the
Commonwealth
of Pennsylvania a total of $1.0 million, consisting of an initial payment of
$350,000 upon entry of the Consent Decree, followed by four annual payments of
$162,500 each, plus interest. These payments will be in settlement of all
of the
United States' and the Commonwealth of Pennsylvania's claims against the
Company.
The Company may have contribution rights against other parties who sent
hazardous substances to the site or arranged for storage of hazardous substances
at the site for some portion of any payment the Company may be required, or may
agree, to make to the United States or to the Commonwealth of Pennsylvania in
this matter. However, the Company has not yet determined whether, or under what
conditions, it might initiate litigation against such other parties.
The Company has notified its current insurers and identifiable former
insurers of this actions, but no insurer has admitted liability to pay either
the
Company's costs of defending this action or any liability the Company may suffer
in this action. The Company cannot determine at this time whether any portion
of such costs or liability may be recovered through insurance.
Springs Industries Inc. Litigation
This Matter has been Settled
In May 1990, Springs Industries, Inc., a South Carolina corporation
("Springs"), commenced an action against Golding Industries, Inc. (Raytex
Division), a former subsidiary of the Company ("Golding"), in the Supreme Court
of the State of New York, County of New York. The complaint alleges that
Golding
printed and finished fabric supplied by Springs, and that the finished
fabric did
not meet the color fastness and dimensional stability specifications required by
Springs. The complaint seeks unspecified damages exceeding $2 million on each
of five causes of action and punitive damages of $5 million. The Company has
received a letter dated May 7, 1990, from counsel to the party that purchased
Golding from the Company in March 1989, advising it of the commencement of the
action and asserting a claim against the Company for defense and indemnification
under the terms of the purchase agreement. By letter dated June 6, 1990, the
Company advised counsel to the party that purchased Golding that the Company
would defend the action. By motion dated June 21, 1990, the Company moved for
an order dismissing the complaint in its entirety. That motion was submitted to
the Court on October 16, 1990, and was decided by memorandum decision dated
March
11, 1991, dismissing two of the five causes of action and the punitive damages
claim. The plaintiff's time to appeal this decision has expired. During
discovery, Springs increased its damage claim to an amount between $7.9 million
and $10.9 million for alleged losses and lost profits. On October 18, 1995, the
parties agreed to settle this action. In August 1994, the Company commenced an
action in the Supreme Court of the State of New York, County of New York against
Home Insurance Company and Home Indemnity Company seeking a declaration that the
claims asserted by Springs against Golding are covered by the comprehensive
general liability policy and the umbrella policy issued by the Home companies.
The Home companies litigation has also been settled. Stipulations and releases
confirming the settlements are being circulated for signature. The net cost of
the settlements with Springs and the Home companies was not material.
General Litigation
In addition to the foregoing, various other legal proceedings are now
pending
against the Company. The Company considers all such proceedings to be ordinary
litigation incident to the character of its business. The majority of such
claims is covered by liability insurance. The Company believes that the
resolution of those claims to the extent not covered by insurance will not,
individually or in the aggregate, have a material adverse effect on the
financial
position or results of operations of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) None
(b) Reports on Form 8-K: No reports on Form 8-K were filed by the
registrant during the third quarter of 1995.<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.
PUBLICKER INDUSTRIES INC.
(Registrant)
Date: November 14, 1995 ________________________________-
_____
James J. Weis, President and
Chief
Executive Officer
Antonio L. DeLise, Vice President
- -
Finance, Principal Financial and
Accounting Officer
<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.
PUBLICKER INDUSTRIES INC.
(Registrant)
Date: November 14, 1995 /s/ James J. Weis
James J. Weis, President and
Chief Executive Officer
/s/ Antonio L. DeLise
Antonio L. DeLise, Vice President
- -
Finance, Principal Financial and
Accounting Officer
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<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
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<INTEREST-EXPENSE> 538,000 789,000
<INCOME-PRETAX> (347,000) (926,000)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (347,000) (926,000)
<DISCONTINUED> 0 178,000
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