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 June 30, 1996
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 June 30, 1996:
15,441,785
Part I. Financial Statements
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS AS OF
JUNE 30, 1996 AND DECEMBER 31, 1995
(in thousands of dollars)
June 30, December 31,
1996 1995 *
(unaudited)
ASSETS
Current assets:
Cash, including short-term
investments of $8,096 in 1996 $ 8,949 $ 874
Restricted cash - 4,500
Trade receivables, less allowance for doubtful
accounts (1996 - $299; 1995 - $143) 7,037 6,633
Inventories 4,262 4,541
Net assets of discontinued operations - 11,142
Other 664 839
Total current assets 20,912 28,529
Property, plant and equipment:
Land 740 731
Buildings 3,133 2,849
Machinery and equipment 4,718 4,337
Less - accumulated depreciation (2,651) (2,467)
5,940 5,450
Goodwill 4,569 4,635
Other assets 1,961 2,203
$ 33,382 $ 40,817
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term obligations, including
current maturities $ 849 $ 10,280
Trade accounts payable 5,139 5,235
Accrued liabilities 5,747 13,754
Total current liabilities 11,735 29,269
Long-term debt 2,478 2,752
Other non-current liabilities 10,340 11,390
Total liabilities 24,553 43,411
Shareholders' equity
Common shares, $0.10 par value,
Authorized, 30,000,000 shares
Issued - 15,999,937 shares in
1996 and 15,405,937 in 1995 1,600 1,541
Additional paid-in capital 46,738 42,488
Accumulated deficit (since January 1, 1984) (35,592) (42,732)
Common shares held in treasury, at cost (3,917) (3,891)
Total shareholders' equity: 8,829 (2,594)
$ 33,382 $ 40,817
* Restated for discontinued operations
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(in thousands of dollars except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995* 1996 1995*
Sales and revenues:
Sales of goods $ 9,980 $ 9,451 $ 19,968 $ 18,996
Revenues from services 2,592 2,999 4,607 5,731
12,572 12,450 24,575 24,727
Costs and expenses:
Cost of sales 7,545 7,028 15,737 14,277
Cost of services 1,593 1,928 3,123 3,754
General and administrative
expenses 2,624 2,396 5,539 4,849
Selling expenses 605 556 1,160 1,091
Special charge 637 - 1,632 -
13,004 11,908 27,191 23,971
Income (loss) from operations (432) 542 (2,616) 756
Other (income) expenses:
Interest income (160) (24) (170) (110)
Interest expense 275 607 685 1,186
Cost of pensions - nonoperating 186 190 370 382
Legal settlements and costs (113) 59 40 184
188 832 925 1,642
Income (loss) from continuing operations
before income taxes (620) (290) (3,541) (886)
Charge (credit) in lieu of
income taxes (261) - (1,487) -
Income (loss) from
continuing operations (359) (290) (2,054) (886)
Discontinued operations:
Income (loss) from discontinued operations (net of
charge in lieu of income taxes
of $311 in 1996) - 708 430 1,307
Gain on sale of discontinued operations (net of
charge in lieu of taxes of $4,894
and income taxes payable of $1,452) - - 8,764 -
Net income (loss) $ (359) $ 418 $ 7,140 $ 421
Earnings (loss) per common share:
Continuing operations $ (.02) $ (.02) $ (.12) $ (.06)
Discontinued operations - .05 .56 .09
$ (.02) $ .03 $ .44 $ .03
Common shares used in calculation of
earnings per share 16,631,346 14,728,910 16,432,181 14,692,737
*Restated for discontinued operations
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(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, 1995 15,405,937 $1,541 $42,488 $(42,732) $(3,891) $(2,594)
Issuance of common shares 594,000 59 532 - - 591
Purchase of treasury shares - - - - (26) (26)
Net income - - - 7,140 - 7,140
Charge in lieu of
income taxes(2) - - 3,718 - - 3,718
Balance - June 30, 1996 15,999,937 $1,600 $46,738 $(35,592) $(3,917) $8,829
(1)Represents 558,152 and 545,027 of common shares held in treasury at
June 30, 1996 and December 31, 1995, respectively.
(2)Represents an increase in additional paid-in capital for charge in lieu
of income taxes related to the utilization of net operating loss
carryforwards which existed as of January 1, 1984, the date of the corporate
revaluation. Such taxes will never be paid or payable and, accordingly, are
added directly to shareholder's equity (See Note 5).
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(in thousands of dollars)
(unaudited)
Six Months Ended
June 30,
1996 1995*
Cash flows from operating activities:
Income (loss) from continuing operations $ (2,054) $ (886)
Adjustments to reconcile income (loss) to net cash provided by
(used in) continuing operations:
Charge (credit) in lieu of income taxes (1,487) -
Depreciation and amortization 643 501
Provision for doubtful accounts 152 63
Changes in operating assets and liabilities:
Restricted cash 4,500 (4,500)
Trade receivables (556) (276)
Inventories 279 (82)
Other current assets 224 (224)
Other assets 133 (104)
Trade accounts payable (96) (1,059)
Accrued liabilities (8,766) 1,425
Other non-current liabilities (1,050) (681)
Net cash provided by (used in)
continuing operations (8,078) (5,823)
Income from discontinued operations 9,194 1,307
Adjustments to reconcile income to net cash provided by (used in)
discontinued operations:
Gain on sale of discontinued operations (13,658) -
Charge in lieu of income taxes 5,205 -
Decrease (increase) in net assets of
discontinued operations (3,213) (782)
Net cash provided by (used in)
discontinued operations (2,472) 525
Net cash provided by (used in)
operating activities (10,550) (5,298)
Cash flows from investing activities:
Proceeds from sale of discontinued operations 30,740 2,240
Capital expenditures (893) (220)
Net cash provided by (used in)
investing activities 29,847 2,020
Cash flows from financing activities:
Redemption of 13% Subordinated Notes (7,500) -
Borrowings (repayments) under revolving
credit lines (2,928) (1,164)
Repayment of term loans and notes payable (1,359) (51)
Proceeds from the issuance of common shares 591 418
Purchase of treasury stock (26) (279)
Net cash provided by (used in)
financing activities (11,222) (1,076)
Net increase (decrease) in cash 8,075 (4,354)
Cash - beginning of period 874 6,274
Cash - end of period $ 8,949 $ 1,920
* 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 June 30, 1996
and the results of their operations and their cash flows for the three and
six months ended June 30, 1996 and 1995. 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,
1995.
Cash Flow Information
Cash paid for interest during the six months ended June 30, 1996 and
1995 was approximately $614,000 and $1,103,000, respectively. Cash paid
for income taxes was $912,000 for the six months ended June 30, 1996. No
cash was paid for income taxes during 1995.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed using the weighted
average number of common shares and the dilutive effect of share
equivalents (stock options and warrants) outstanding during each period.
The effect of stock options and warrants on the computation for 1995 were
not included as they were antidilutive.
Note 2 - DISCONTINUED OPERATIONS
On March 29, 1996, the Company sold substantially all of the assets
of Fenwal Electronics, Inc. ("Fenwal") for $25,300,000 in cash, plus the
assumption of certain liabilities. On July 16, 1996, the buyer paid the
Company an additional $1,183,000 representing an adjustment to the
purchase price based on the closing date net book value of the Fenwal
assets sold. On February 16, 1996, the Company sold substantially all of
the assets of Bright Star Industries Incorporated ("Bright Star") for
$5,500,000, plus the assumption of certain liabilities. The buyer paid
$5,300,000 in cash at closing. Of the remaining $200,000 of the
purchase price, $100,000 was to be held in escrow to cover potential
price adjustments. On une 17, 1996, this amount was released from
escrow to the Company together with an additional $40,000 payment
representing such adjustment. The balance of the purchase price, or
$100,000, will be held in escrow for up to one year to cover potential
indemnity adjustments, which are not expected to be material. The sales
of Fenwal and Bright Star resulted in a pretax gain of $15,110,000 which
was offset by a charge in lieu of income taxes of $4,894,000 and income
taxes payable of $1,452,000. An amount equal to the charge in lieu of
income taxes has been credited to additional paid-in capital (see Note 5).
On January 31, 1995, the Company sold substantially all the assets
of Associated Testing Laboratories, Inc. ("ATL") for $2,240,000 in cash,
plus the assumption of certain liabilities.
Fenwal, Bright Star and ATL have been reflected as discontinued
operations in the accompanying financial statements. Net sales of
discontinued operations for the six months ended June 30, 1996 and 1995
were $6,402,000 and $15,385,000 respectively.
<PAGE>
Note 3 - DEBT
On October 11, 1995, the Company entered into a three year
$17,060,000 credit agreement ("Loan Agreement"). The Loan Agreement
provides for a revolving credit line ("Revolver"), term promissory notes
("Term Notes") and a 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). In the event the Loan Agreement, or
portions thereof, is repaid before maturity, the Company must pay a
prepayment penalty equal to 3% in year one, 2% in year two and 1% in year
three of the credit facility repaid.
In connection with the sale of discontinued operations, the
outstanding borrowings under the Revolver and the Term Loans related to
Fenwal and Bright Star were repaid. As of June 30, 1996, the Company has
borrowing availability under the Revolver based on eligible accounts
receivable and inventories, as defined, of approximately $3,700,000.
On April 19, 1996, the Company redeemed all of its outstanding 13%
Subordinated Notes due December 15, 1996. The redemption price was equal
to the principal amount of $7,500,000, plus accrued interest to the
redemption date.
Note 4 - INVENTORIES
Inventories at June 30, 1996 and December 31, 1995, consisted of the
following:
June 30, December 31,
1996 1995
(in thousands)
Raw materials and supplies $ 2,994 $ 2,945
Work in process 449 451
Finished goods 819 1,145
$ 4,262 $ 4,541
Note 5 - INCOME TAXES
As of June 30, 1996, approximately $94,000,000 of U.S. tax loss
carryforwards (subject to review by the Internal Revenue Service),
expiring from 1997 through 2010, were available to offset future taxable
income. As a result of a corporate revaluation during 1984, tax benefits
resulting from the utilization in subsequent years of net operating loss
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 June 30, 1996,
approximately $18,000,000 of the Company's U.S. tax loss carryforwards
predated the corporate revaluation.
As of June 30, 1996, deferred tax assets of approximately $33,000,000
relating to the tax benefit of the Company's U.S. tax loss carryforwards
were offset by a full valuation allowance. As of June 30, 1996,
approximately $6,000,000 of deferred tax assets predated the corporate
revaluation. Subsequent adjustments to the valuation allowance with
respect to the deferred tax assets which predated the corporate
revaluation would be directly credited to additional paid-in capital.
For the six months ended June 30, 1996, the Company recorded a
charge in lieu of income taxes of $3,718,000 and a provision for income
taxes currently payable of $1,452,000. The charge in lieu of income
taxes relates to the utilization of net operating loss carryforwards
which existed as of January 1, 1984, the date of the corporate
revaluation. Such taxes will never be paid or payable and, accordingly,
an amount equal to the charge has been credited to additional paid-in
capital.
Note 6 - ENVIRONMENTAL LITIGATION
On April 12, 1996, a Consent Decree among the Company, the
Environmental Protection Agency, the U.S. Department of Justice and
the Pennsylvania Department of Environmental Protection ("PADEP") was
entered by the court which resolved all of the United States' and
PADEP's claims against the Company for recovery of costs incurred in
responding to releases of azardous substances at a facility previously
owned and operated by the Company. The Company had previously funded
$4,500,000 into a court administered escrow account. Following the
entry of the Consent Decree,additional payments totaling $4,850,000 were
made in April and May of 1996. Further payments totaling $5,000,000
plus interest will be made to
the United States and Commonwealth of Pennsylvania over a six year period
commencing on April 12, 1997.
Note 7 - SPECIAL CHARGE
During the fourth quarter of 1995, the Company decided to move the
operations of its Greenwald Industries, Inc. subsidiary from a leased
facility in Brooklyn, New York to a newly acquired facility in Chester,
Connecticut. A special charge of $1,632,000 was recorded in the first six
months of 1996 which included $668,000 in severance associated with 110
terminated employees in New York, $246,000 for lease termination costs and
$718,000 for costs related to plant and employee relocation, recruiting
and training new personnel and for temporary living allowances. The move
was completed by April 30, 1996. As of June 30, 1996, the accrued
liability related to the special charge was $236,000. It is expected that
the remaining accrual balance will be expended by September 30, 1996.
Note 8 - COMMON STOCK LISTING
On July 11, 1996, the New York Stock Exchange ("NYSE") announced that
trading in the Company's common stock would be suspended before the
opening of trading on August 1, 1996. The NYSE indicated that its
decision to delist was based on consideration of certain qualitative
listing criteria, including the reduction in operations due to recent and
proposed subsidiary sales, as well as the Company's failure to meet
certain quantitative listing criteria, including average net income for
the last three years and net tangible assets. On August 1, 1996, the
Company's common stock began trading on the OTC Bulletin Board under the
symbol PLKR.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Operating Results - Second Quarter
Publicker's consolidated sales of $12,572,000 for the second
quarter of 1996 increased by approx imately 1% from $12,450,000 for the
second quarter of 1995. The increase in sales was due to a 2% increase in
selling prices offset by a 1% reduction in volume. The Company's loss from
continuing operations for the second quarter of 1996 totaled $432,000
compared to income of $542,000 for the second quarter of 1995.
The Company reported a net loss of $359,000 or $.02 per share for
the second quarter of 1996 compared to net income of $418,000 or $.03 per
share for the second quarter of 1995. The 1996 second quarter results
included cost of pensions non-operating of $186,000 and income from legal
settlements and costs of $113,000.
The 1995 second quarter results included cost of pensions non-operating
of $190,000, legal settlements and costs of $59,000 and income from
discontinued operations of $708,000. Interest expense decreased to $275,000
for the second quarter of 1996 compared to $607,000 for the same period in
1995, due to a reduction in overall debt levels.
Sales for the Company's manufacturing segment (which includes the
operations of Greenwald Industries, Inc. and Masterview Window Company, Inc.)
for the second quarter of 1996 were $9,980,000 compared to $9,451,000 for the
second quarter of 1995. The sales improvement was driven by a significant
increase over the prior year in window unit shipments. This segment had
income from operations of $571,000 for the second quarter of 1996 compared
to income from operations of $1,264,000 for the same period in 1995. Income
from operations was negatively impacted by a $637,000 special charge
associated with Greenwald's move to a newly acquired facility in Chester,
Connecticut and a disruption in business activities caused by the move,
which was completed by April 30, 1996.
Revenues for the Company's services segment (which consists of one
subsidiary company, Orr-Schelen-Mayeron & Associates, Inc.) decreased by
approximately 14% to $2,592,000 for the second quarter of 1996 compared to
$2,999,000 for the second quarter of 1995. A 4% increase in OSM's fee
schedule was more than offset by a significant reduction in production
employee headcount versus 1995. The services segment had income from
operations for the second quarter of 1996 of $257,000 compared to $243,000
for the same period in 1995.
Operating Results - Six Months
For the six months ended June 30, 1996, Publicker had consolidated
sales of $24,575,000 compared to $24,727,000 for 1995. The decrease in
sales was due to a 5% decrease in volume offset by a 4% increase in selling
prices. The Company's loss from continuing operations for the six months
ended June 30, 1996 totaled $2,616,000 compared to income of $756,000 for
the six months ended June 30, 1995.
The Company reported net income of $7,140,000 or $.44 per share
for the six month period ended June 30,1996 and $421,000 or $.03 per share
for the comparable period in 1995. The 1996 results include cost of
pensions-nonoperating of $370,000, legal settlements and costs of
$40,000 and income from discontinued operations of $9,194,000. The 1995
results include cost of pensions-nonoperating of $382,000, legal settlements
and costs of $184,000 and income from discontinued operations of $1,307,000.
Sales for the Company's manufacturing segment for the first six
months of 1996 totaled $19,968,000 as compared to $18,996,000 in 1995. The
sales improvement was driven by a significant increase over the prior year
in window unit shipments. This segment had a loss from operations of
$70,000 for the six months ended June 30, 1996 compared to income of
$2,451,000 for the prior year. The decrease in operating income of
$2,521,000 is primarily attributable to a $1,632,000 special charge
associated with Greenwald's move, a $372,000 writedown of certain obsolete
inventories and a disruption in business activities caused by the move.
Revenues for the Company's services segment decreased by 20%
to $4,607,000 for the first six months in 1996 from $5,731,000 in 1995.
The revenue decline was primarily due to a significant reduction in production
employee headcount versus 1995. The services segment had a loss from
operations of $138,000 for the six months ended June 30, 1996 as compared
to income of $232,000 for the comparable 1995 period. The decline is due
to certain operating inefficiencies and lower contract margins. In response
to the decline in income from operations, OSM reduced headcount and
implemented spending and other controls in the first quarter of 1996.
On March 29, 1996, the Company sold substantially all of the
assets of Fenwal Electronics, Inc. ("Fenwal") for $25,300,000 in cash,
plus the assumption of certain liabilities. On July 16, 1996, the buyer
paid the Company an additional $1,183,000 representing an adjustment to the
purchase price based on the closing date net book value of the Fenwal assets
sold. On February 16, 1996, the Company sold substantially all of the
assets of Bright Star Industries Incorporated ("Bright Star") for $5,500,000,
plus the assumption of certain liabilities. The buyer paid $5,300,000 in
cash at closing. Of the remaining $200,000 of the purchase price, $100,000
was to be held in escrow to cover potential price adjustments. On June 17,
1996, this amount was released from escrow to the Company together with an
additional $40,000 payment representing such adjustment. The
balance of the purchase price, or $100,000, will be held in escrow for up
to one year to cover potential indemnity adjustments, which are not expected
to be material. The sales of Fenwal and Bright Star resulted in a pretax
gain of $15,110,000 which was offset by a charge in lieu of income taxes of
$4,894,000 and income taxes payable of $1,452,000. An amount equal to the
charge in lieu of income taxes has been credited to additional paid-in capital.
Liquidity
During the first six months of 1996, cash, including short-term
investments, increased by $8,075,000. Operating activities consumed cash of
$10,550,000, investing activities provided cash of $29,847,000 and
financing activities consumed cash of $11,222,000. Operating activities
principally consisted of the loss from continuing operations coupled with a
reduction in accrued liabilities associated with the environmental payments
to the United States and Commonwealth of Pennsylvania. Investing activities
consisted of proceeds of $30,740,000 from the sale of Fenwal and Bright Star
offset by capital expenditures of $893,000. Financing activities consisted
of repayments of the Company's %13 Subordinated Notes, revolving credit line,
term loans and notes payable of $11,787,000 offset by $565,000 of proceeds
from the issuance of common shares upon the exercise of stock options.
On October 11, 1995, the Company entered into a three year
$17,060,000 credit agreement ("Loan Agreement"). The Loan Agreement
provides for a revolving credit line ("Revolver"), term promissory notes
("Term Notes") and acredit 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).
In connection with the sale of discontinued operations, the
outstanding borrowings under the Revolver and the Term Loans related to
Fenwal and Bright Star were repaid. As of June 30, 1996, the Company has
borrowing availability under the Revolver based on eligible accounts
receivable and inventories, as defined, of approximately $3,700,000.
On April 19, 1996, the Company redeemed all of its outstanding
13% Subordinated Notes due December 15, 1996. The redemption price was
equal to the principal amount of $7,500,000, plus accrued interest to the
redemption date.
As discussed in Part II Item 1 - Legal Proceedings, on April 12,
1996, the Consent Decree that settles the Company's environmental litigation
th the United States and the Commonwealth of Pennsylvania was
entered by the U.S. District Court for the Eastern District of Pennsylvania,
and became effective. The Company previously funded $4,500,000 into a court
administered escrow account. Following the entry of the Consent Decree,
dditional payments totaling $4,850,000 were made in April and May of 1996.
Further payments totaling $5,000,000 plus interest will be made to the United
States and the Commonwealth of Pennsylvania over a six year period.
As previously mentioned, the Company completed the sale of
substantially all of the assets of Bright Star and Fenwal in the first
quarter of 1996. The Company has also entered into a non-binding letter of
intent to sell substantially all of the assets of Masterview Window Company.
There can be no assurance that the parties will enter into a definitive
agreement or ultimately consummate the proposed sale of Masterview. Also, the
Company has recently begun to explore the possible sale of Greenwald
Industries. There can be no assurance that the Company will be successful
in finding a buyer for Greenwald on terms that it would find acceptable,
or whether any offer would result in a sale of the Greenwald business.
During the first six months of 1996, the Company's capital
expenditures totaled $893,000. The Company anticipates that its level of
capital expenditures for 1996 will be less than those of 1995. The 1995
capital expenditures of $2,801,000 included $2,100,000 related to a facility
purchase in Chester, Connecticut. 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 1996 with its available cash resources and its other cash flows as
well as through capital equipment financing.
At June 30, 1996, approximately $94 million of U.S. tax loss
carryforwards (subject to review by the Internal Revenue Service), expiring
from 1997 through 2010, were available to offset future taxable income.
On July 11, 1996, the New York Stock Exchange ("NYSE") announced
that trading in the Company's common stock would be suspended before the
opening of trading on August 1, 1996. The NYSE indicated that its decision
to delist was based on consideration of certain qualitative listing criteria,
including the reduction in operations due to recent and proposed subsidiary
sales, as well as the Company's failure to meet certain quantitative listing
criteria, including average net income for the last three years and net
tangible assets. On August 1, 1996, the Company's common stock began trading on
the OTC Bulletin Board under the symbol PLKR. <PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Environmental Matters - Philadelphia, Pennsylvania
This matter has been settled
The Company was 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 sought 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 sought to recover money
allegedly expended by its Department of Environmental Protection ("PADEP") in
connection with hazardous substances at the site. In 1992, at the parties
request, the case was placed on the Court's inactive docket.
During the fourth quarter of 1993, the Company recorded a liability
of $14,350,000 to cover the estimated costs of settling this litigation. On
April 6, 1995, pursuant to an Agreement in Principle to settle the
litigation, the Company deposited $4,500,000 in a Court-administered escrow
account 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.
On April 12, 1996, the Court gave final approval to and entered a
Consent Decree among the EPA, the U.S. Department of Justice, PADEP, and the
Company which resolves all of the United States' and PADEP's claims against
the Company, as well as the Company's counterclaim against the United States.
In accordance with the Consent Decree, on May 13, 1996, the Company made an
additional payment of $4,500,000 into the Court-administered escrow account.
Funds in the escrow account totaling $9,000,000, plus interest, will be
disbursed to the United States after resolution by the parties or, if
necessary, by theCourt of the Company's potential right to a refund of
a portion of the costs which the United States may have incurred as a
result of possibly fraudulent charges by an EPA contractor who performed
response actions at the Site. The Company will make further payments to
the United States totaling $4,350,000, plus interest, over a six year period,
with approximately equal annual payments, plus interest, commencing on April
12, 1997, and continuing each year thereafter through and including April 12,
2002.
Under the Consent Decree, the Company will also pay the
Commonwealth of Pennsylvania a total of $1,000,000. On April 22, 1996,
the Company made an intial payment of $350,000 to the Commonwealth
and will make further payments to the Commonwealth totaling $650,000,
plus interest, over a four year period. The Company will make equal
annual payments, plus interest, commencing on April 12, 1997,
and continuing each year thereafter through and including April 12, 2000.
The foregoing payments are in settlement of all of the United
States' and the Commonwealth of Pennsylvania's claims against the Company and
the Company's counterclaims against the United States relating to the
Philadelphia site, subject only to certain "reopener" provisions in the
event future discovery of certain defined types of presently unknown
conditions or information pertaining to the site.
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. Certain
claims are 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) Exhibits required by Item 601 of Regulation S-K.
Exhibit 11: Calculation of earnings per share
(b) Reports on Form 8-K: During the second quarter of 1996, the Company
filed two reports:
Form 8-K dated April 15, 1996, as amended by Form 8-K/A dated May 14,
1996, relating to the sale of substantially all of the assets of the
Company's Fenwal Electronics, Inc. subsidiary.
Form 8-K dated April 16, 1996, relating to the settlement of
litigation between the Company and the U.S. Environmental Protection
Agency and the Pennsylvania Department of Environmental Protection.
<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: August 12, 1996 /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<PAGE>
CALCULATION OF EARNINGS PER SHARE Exhibit 11
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996(a) 1995 (b) 1996 (a) 1995 (b)
(in thousands except per share data)
Net income (loss) $(359) $ 418 $ 7,140 $ 421
Add - Interest savings, net
of tax effect 27 - 48 -
Adjusted net income (loss) $ (332) $ 418 $ 7,188 $ 421
Average common shares 15,391 14,729 15,192 14,693
Add - Stock options and
common stock purchase
warrants 1,240 - 1,240 -
Adjusted common shares 16,631 14,729 16,432 14,693
Earnings per common share $ (.02) $ .03 $ .44 $ .03
(a) Earnings per common share is computed using the modified treasury method.
In accordance with this method, proceeds from the exercise of stock options
and warrants are first used to buy back up to 20% of the Company's common
stock at the average price for the period. Any remaining proceeds are used
to retire debt. An adjustment is made to net income to reflect interest
assumed to be saved on the debt retirement,net of income taxes.
(b) Earnings per common share is computed using the weighted average number
of common shares outstanding during each period. The effect of stock options
and warrants not included as they were antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> JUN-30-1996 JUN-30-1995
<CASH> 8,949,000 1,920,000
<SECURITIES> 0 0
<RECEIVABLES> 7,336,000 8,119,000
<ALLOWANCES> 299,000 209,000
<INVENTORY> 4,262,000 4,645,000
<CURRENT-ASSETS> 664,000 952,000
<PP&E> 8,591,000 5,446,000
<DEPRECIATION> 2,651,000 2,159,000
<TOTAL-ASSETS> 33,382,000 42,220,000
<CURRENT-LIABILITIES> 11,735,000 19,828,000
<BONDS> 0 0
<COMMON> 1,600,000 1,528,000
0 0
0 0
<OTHER-SE> 7,229,000 (3,584,000)
<TOTAL-LIABILITY-AND-EQUITY> 33,382,000 42,220,000
<SALES> 12,572,000 12,450,000
<TOTAL-REVENUES> 12,572,000 12,450,000
<CGS> 9,138,000 8,956,000
<TOTAL-COSTS> 13,004,000 11,908,000
<OTHER-EXPENSES> 73,000 249,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 115,000 583,000
<INCOME-PRETAX> (620,000) (290,000)
<INCOME-TAX> (261,000) 0
<INCOME-CONTINUING> (359,000) (290,000)
<DISCONTINUED> 0 708,000
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (359,000) 418,000
<EPS-PRIMARY> (.02) (.03)
<EPS-DILUTED> (.02) (.03)
</TABLE>
