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, 1997
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.)
One Post Road, Fairfield, Connecticut 06430
(Address of principal executive offices)
(203) 254-3900
(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, 1997:
13,705,597
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS AS OF
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(in thousands of dollars)
September 30, December 31,
1997 1996
(unaudited)
ASSETS
Current assets:
Cash, including short-term investments of
$13,573 in 1997 and $18,173 in 1996 $ 13,545 $18,318
Trade receivables, less allowance for
doubtful accounts (1997 - $65; 1996 - $92) 4,069 3,008
Inventories 2,372 2,506
Other 712 667
Total current assets 20,698 24,499
Property, plant and equipment:
Land 234 234
Buildings 2,326 2,326
Machinery and equipment 3,514 3,322
Less - accumulated depreciation (2,111) (1,778)
3,963 4,104
Goodwill 2,692 2,752
Other assets 1,649 1,740
$ 29,002 $ 33,095
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term obligations, including current maturities $ 123 $ 489
Trade accounts payable 1,243 1,564
Accrued liabilities 4,765 5,012
Total current liabilities 6,131 7,065
Long-term debt 1,182 1,273
Other non-current liabilities 9,980 10,761
Total liabilities 17,293 19,099
Shareholders' equity:
Common shares, $0.10 par value,
Authorized, 40,000,000 shares
Issued - 16,551,849 shares in 1997 and
16,037,937 in 1996 1,655 1,604
Additional paid-in capital 49,922 48,240
Accumulated deficit (since January 1, 1984) (32,777) (31,737)
Common shares held in treasury, at cost (7,091) (4,111)
Total shareholders' equity 11,709 13,996
$ 29,002 $ 33,095
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(in thousands of dollars except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Sales and revenues:
Sales of goods $ 4,166 $ 4,393 $ 13,238 $ 11,871
Revenues from services 2,487 2,261 6,412 6,855
6,653 6,654 19,650 18,726
Costs and expenses:
Cost of sales 2,830 3,225 9,195 9,488
Cost of services 1,565 1,606 4,224 4,729
General and administrative
expenses 1,783 1,903 5,580 6,596
Selling expenses 301 324 897 884
Warrant expense 768 - 768 -
Relocation charge - - - 1,632
7,247 7,058 20,664 23,329
Income (loss) from operations (594) (404) (1,014) (4,603)
Other (income) expenses:
Interest income (175) (106) (525) (276)
Interest expense 91 127 291 721
Cost of pensions-nonoperating 172 185 597 555
Other costs (17) (20) 272 8
71 186 635 1,008
Income (loss) from continuing
operations before income taxes (665) (590) (1,649) (5,611)
Income tax benefit - 248 - 2,357
Income (loss) from continuing
operations (665) (342) (1,649) (3,254)
Discontinued operations:
Income (loss) from
discontinued operations - 357 - 1,645
Gain on sale of discontinued
operations 609 - 609 8,764
Net income (loss) $ (56) $ 15 $(1,040) $ 7,155
Earnings (loss) per common share:
Continuing operations $(.05) $(.02) $ (.11) $ (.19)
Discontinued operations .05 .02 .04 .62
$ - $ - $ (.07) $ .43
Common shares used in calculation
of earnings per share 13,598,435 17,229,000 14,222,345 17,047,545
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(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 -
Dec. 31,1996 $16,037,937 $1,604 $48,240 $(31,737) $(4,111) $13,996
Issuance of
common shares:
Stock option plans 27,000 2 29 - - 31
Stock purchase
warrants 486,912 49 885 - - 934
Expense related to
on stock purchase
warrant extension - - 768 - - 768
Purchase of treasury
shares - - - - (2,980) (2,980)
Net loss - - - (1,040) - (1,040)
Balance-
Sept. 30, 1997 16,551,849 $1,655 $49,922 $(32,777) $(7,091)$11,709
(1) Represents 2,846,252 and 678,352 of common shares held in
treasury at September 30, 1997 and December 31, 1996, respectively.
<PAGE>
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(in thousands of dollars)
(unaudited)
Nine Months Ended
September 30,
1997 1996
Cash flows from operating activities:
Income (loss) from continuing operations $(1,649) $(3,254)
Adjustments to reconcile income (loss) to net cash
provided by (used in) continuing operations:
Income tax benefit - (2,357)
Depreciation and amortization 590 602
Warrant expense 768 -
Changes in operating assets and liabilities:
Restricted cash - 4,500
Trade receivables (1,061) (84)
Inventories 134 720
Other current assets (45) 249
Other assets (29) 260
Trade accounts payable (321) (1,532)
Accrued liabilities (513) (8,639)
Other non-current liabilities (781) (997)
Net cash provided by (used in)
continuing operation (2,907) (10,532)
Income from discontinued operations 609 10,409
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 - 6,085
Increase in net assets of discontinued operations (898) (3,888)
Net cash provided by (used in)
discontinued operations (289) (1,052)
Net cash provided by (used in) operating
activities (3,196) (11,584)
Cash flows from investing activities:
Proceeds from sale of discontinued operations 1,164 31,923
Capital expenditures (269) (997)
Net cash provided by (used in)
investing activities 895 30,926
Cash flows from financing activities:
Redemption of 13% Subordinated Notes - (7,500)
Repayments of revolving credit lines - (4,012)
Repayments of term loans and notes payable (457) (1,210)
Proceeds from the issuance of common shares 965 636
Purchase of treasury stock (2,980) (113)
Net cash provided by (used in)
financing activities (2,472) (12,199)
Net increase (decrease) in cash (4,773) 7,143
Cash - beginning of period 18,318 874
Cash - end of period $ 13,545 $ 8,017
<PAGE>
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated 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, 1997 and the results of
their operations and their cash flows for the three and nine months ended
September 30, 1997 and 1996. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted. These
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, 1996.
Cash Flow Information
Cash paid for interest during the nine months ended September 30, 1997
and 1996 was approximately $381,000 and $579,000, respectively. Cash paid
for income taxes was $1,336,000 for the nine months ended September 30, 1996.
No cash was paid for income taxes during the first nine months of 1997.
Net Income (Loss) Per Common Share
Net income (loss) per common share for 1996 was computed using the
weighted average number of common shares and the dilutive effect of share
equivalents (stock options and warrants) outstanding using the modified
treasury method. The effect of stock options and warrants on the computation
for 1997 were not included as they were antidilutive.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS No. 128") which establishes new standards for computing and presenting
earnings per share ("EPS"). SFAS No. 128 replaces the presentation of primary
EPS with basic EPS for which common stock equivalents are not considered in
the computation and also revises the computation of diluted EPS. The
statement is effective for financial statements issued for periods ending
after December 15, 1997. Had EPS been determined in accordance with SFAS No.
128, the Company's basic and diluted EPS for the nine months ended September
30, 1996 would have been $.47 and $.45, respectively. The application of
SFAS No. 128 would have no effect on EPS reported for 1997 or for the three
months ended September 30, 1996.
Note 2 - DISCONTINUED OPERATIONS
In 1996, the Company completed the sale of substantially all of the
assets of Masterview Window Company, Inc. ("Masterview"), Fenwal Electronics,
Inc. ("Fenwal") and Bright Star Industries Incorporated ("Bright Star"). The
aggregate sales price for the dispositions was $47,771,000. A portion of the
sales prices amounting to $1,919,000 at December 31, 1996, was held in escrow to
cover potential purchase price adjustments, indemnity claims and certain
environmental remediation activities. In the first nine months of 1997, an
additional $1,164,000 in cash was received principally relating to the
finalization of the Masterview purchase price adjustment.
Masterview, Fenwal and Bright Star have been reflected as discontinued
operations in the accompanying 1996 financial statements. Net sales of
discontinued operations for the nine months ended September 30, 1996 were
$24,991,000. The aggregate pre-tax gain on sale of discontinued operations
recorded in 1996 of $15,110,000 was offset by a provision for income taxes of
$6,346,000, of which $4,894,000 was credited directly to paid-in-capital due to
the utilization of pre-corporate reorganization tax loss carryforwards. The
pre-tax income from discontinued operations in 1996 of $2,836,000 was offset by
a provision for income taxes of $1,191,000 which was also credited directly
to paid-in-capital (see Note 6).
Note 3 - DEBT
In 1995, the Company entered into a three year $17,060,000 credit
agreement ("Loan Agreement"). The Loan Agreement provided for a revolving
credit line ("Revolver"), term promissory notes ("Term Notes") and a credit
facility for future capital expenditure financing. The Loan Agreement was
secured by substantially all of the Company's assets. In connection with
the sale of discontinued operations, the outstanding borrowings under the
Revolver and the Term Loans related to Masterview, Fenwal and Bright Star
were repaid. On February 28, 1997, the Company repaid the remaining balances
outstanding under the Revolver and Term Notes and terminated the
Loan Agreement. The Company recorded a charge associated with the termination
amounting to $210,000 in the first quarter of 1997.
In April 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 September 30, 1997 and December 31, 1996, consisted of the
following:
September 30, December 31,
1997 1996
(in thousands)
Raw materials and supplies $ 1,593 $ 1,589
Work in process 258 250
Finished goods 521 667
$ 2,372 $ 2,506
Note 5 - STOCKHOLDERS' EQUITY
In August 1996, the Board of Directors of the Company authorized the
repurchase of up to 1,000,000 shares of the Company's common stock. The
Board of Directors increased the Company's share repurchase authorization to
2,000,000 shares in March 1997 and to 2,300,000 shares in September 1997.
Through September 30, 1997, the Company repurchased 2,288,100 shares of
common stock under the buy-back program for an aggregate cost of $3,174,000.
In connection with an offering of 13% Subordinated Notes in December
1986, the Company issued 3,600,000 warrants ("Warrants") to purchase shares
of the Company's common stock for five years, which period was subsequently
extended by five years. In addition, the Company issued 1,200,000 Underwriter's
Warrants to purchase the Company's common stock for five years, which period
was subsequently extended by five years. Each Warrant and Underwriter Warrant
entitled its holder to purchase 1.024 shares of common stock for $1.95 per
share (subject to adjustment in certain circumstances). Unexercised warrants
were to expire on December 15, 1996 (December 17, 1996, in the case of the
Underwriter's Warrants).
On November 8, 1996, the Company's Board of Directors, acting upon the
recommendation of a special committee of disinterested directors, determined
it would be in the Company's best interests to modify the Warrants and
Underwriter's Warrants owned by any holder who exercises, at the current
exercise price of $1.95 per share of common stock, 25% of the warrants owned on
December 15, 1996 (December 17, 1996, in the case of the Underwriter's
Warrants). Shareholders of the Company subsequently approved the
modification on July 2, 1997 ("Approval Date"). As of July 2, 1997, a total of
2,257,050 warrants were outstanding entitling the warrant holders to
purchase an aggregate of 2,311,220 shares of common stock. Members of the
Company's Board of Directors held 2,190,000 warrants.
The modification resulted in the following changes to the holders'
unexercised Warrants and Underwriter's Warrants (i.e., the 75% balance of the
warrants owned on December 15, 1996 or December 17, 1996, as the case may be)
(the "Remaining Modified Warrants"):
(a)Five-Year Extension The expiration date of the Remaining
Modified Warrants was extended to July 2, 2002.
(b)Increased Exercise Price The exercise price of the
Remaining Modified Warrants was increased from $1.95 per
share to (i) $2.00 per share, during the year ending on the
first anniversary of the Approval Date, (ii) $2.10 per share,
during the year ending on the second anniversary of the
Approval Date, (iii) $2.20 per share, during the year
ending on the third anniversary of the Approval Date, (iv)
$2.30 per share, during the year ending on the fourth
anniversary of the Approval Date, and (v) $2.40 per share,
during the year ending on the fifth anniversary of the
Approval Date.
In September 1997, a total of 486,912 shares of common stock were issued
pursuant to the exercise of 475,500 warrants. The total proceeds received
amounted to $934,000. As of September 30, 1997, there are 1,426,500
Remaining Modified Warrants. A non-cash charge to income of $768,000 was
recorded in the third quarter of 1997 based on the fair value of the
Remaining Modified Warrants.
Note 6 - INCOME TAXES
As of September 30, 1997, approximately $90,000,000 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 September 30, 1997, approximately $12,000,000 of the
Company's U.S. tax loss carryforwards predated the corporate revaluation.
As of September 30, 1997, deferred tax assets of approximately
$30,000,000 relating to the tax benefit of the Company's U.S. tax loss
carryforwards were offset by a full valuation allowance. As of September 30,
1997, approximately $4,000,000 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 nine months ended September 30, 1996, the Company recorded a
charge in lieu of income taxes of $3,728,000 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. No income tax benefit was recognized
in 1997 because the tax benefit associated with the Company's operating
losses were offset in full by an increase in the valuation allowance. In the
third quarter of 1997, the Company reversed $609,000 of tax reserves provided
in 1996 relating to the sales of certain subsidiaries.
Note 7 - 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 U.S.
District Court for the Eastern District of Pennsylvania which resolved all of
the United States' and PADEP's claims against the Company for recovery of
costs incurred in responding to releases of hazardous 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. In April 1997, the Company made
additional payments totaling $796,000 plus interest. Further payments
totaling $4,204,000 plus interest will be made to the United States and
Commonwealth of Pennsylvania over the next five years.
Note 8 - 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 nine
months of 1996 which included $668,000 in severance costs associated with 110
terminated employees, $246,000 for lease termination costs and $718,000 for
costs through September 30, 1996, related to plant and employee relocation,
recruiting and training new personnel and for temporary living allowances.
The move was completed by April 30, 1996.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
Operating Results - Third Quarter
Publicker's consolidated sales and revenues of $6,653,000 for the third
quarter of 1997 were unchanged from $6,654,000 for the third quarter of 1996.
Cost of sales and services decreased from $4,831,000 in 1996 to $4,395,000 in
1997 principally as a result of manufacturing productivity improvements. General
and administrative expenses for the third quarter of 1997 decreased by
approximately 6% to $1,783,000 from $1,903,000 in 1996 as a result of
overhead expense reductions. The Company's pre-tax loss from operations for
the third quarter of 1997 totaled $665,000 compared to a loss of $590,000 for
the third quarter of 1996. A non-cash charge to income of $768,000 was
recorded in the third quarter of 1997 related to the extension and modification
of certain common stock purchase warrants. Excluding this charge, the Company
reported income from continuing operations in the third quarter of 1997 of
$103,000.
The Company reported a net loss of $56,000 for the third quarter of 1997
compared to a net income of $15,000 for the third quarter of 1996. The 1997
results included a loss from continuing operations of $665,000, or $.05 per
share, and income from discontinued operations of $609,000 or $.05 per share.
The income from discontinued operations relates to the reversal of certain tax
reserves provided in 1996 on the sale of several subsidiaries. The 1996 third
quarter results included a loss from continuing operations of $342,000, or
$.02 per share, and income from discontinued operations of $357,000, or $.02
per share.
Sales for the Company's manufacturing segment (which consists of one
subsidiary company, Greenwald Industries, Inc.) for the third quarter of 1997
were $4,166,000 compared to $4,393,000 for the third quarter of 1996. The
decrease in sales was due to a 7% decrease in volume offset by a 2% increase in
selling prices. This segment had income from operations of $805,000 for the
third quarter of 1997 compared to $663,000 for the same period in 1996.
Revenues for the Company's services segment (which consists of one
subsidiary company, Orr-Schelen-Mayeron & Associates, Inc.) increased by
approximately 10% to $2,487,000 for the third quarter of 1997 compared to
$2,261,000 for the third quarter of 1996. The improvement was due to a 1%
increase in OSM's fee schedule coupled with an increase in production
employee headcount and chargeability versus 1996. The services segment had
income from operations for the third quarter of 1997 of $205,000 compared to
income of $97,000 for the same period in 1996.
Operating Results - Nine months
Publicker's consolidated sales of $19,650,000 for the first nine months of
1997 increased by approximately 5% from $18,726,000 for the first nine months of
1996. The improvement in sales was due to a volume increase at the Company's
manufacturing segment which was partially offset by a volume reduction at the
Company's services segment. Cost of sales and services decreased from
$14,217,000 in 1996 to $13,419,000 in 1997 as manufacturing productivity
improvements more than offset the effect of increased sales and revenues.
General and administrative expenses for the first nine months of 1997
decreased by approximately 15% to $5,580,000 from $6,596,000 in 1996 as
a result of overhead expense reductions. The Company's pre-tax loss from
operations for the first nine months of 1997 totaled $1,649,000 compared to a
loss of $5,611,000 for 1996.
The Company reported a net loss of $1,040,000, or $.07 per share, for the
first nine months of 1997 compared to net income of $7,155,000, or $.43 per
share, for 1996. The 1997 results included a loss from continuing operations of
$1,649,000, or $.11 per share, and income from discontinued operations of
$609,000, or $.04 per share. The 1996 results included a loss from continuing
operations of $3,254,000, or $.19 per share, and income and gains from
discontinued operations of $10,409,000, or $.62 per share.
Sales for the Company's manufacturing segment for the first nine months of
1997 were $13,238,000 compared to $11,871,000 for 1996. The increase in sales
was due primarily to a volume improvement. This segment had income from
operations of $2,323,000 for the first nine months of 1997 compared to a loss
from operations of $990,000 for the same period in 1996. The 1996 results were
negatively impacted by a $1,632,000 special charge associated with Greenwald's
move to a new facility in early 1996, 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 approximately 6%
to $6,412,000 for the first nine months of 1997 compared to $6,855,000 for 1996.
The revenue decrease was principally due to a reduction in production employee
headcount versus 1996. The services segment had income from operations for the
first nine months of 1997 of $93,000 compared to a $41,000 loss for the same
period in 1996.
Liquidity
During the first nine months of 1997, cash, including short-term
investments, decreased by $4,773,000 to $13,545,000 at September 30, 1997.
Operating activities consumed cash of $3,196,000, investing activities provided
cash of $895,000 and financing activities consumed cash of $2,472,000.
Operating activities principally consisted of the loss from continuing
operations, the annual payment under the settlement of the environmental
litigation and an increase in working capital. Investing activities consisted of
additional proceeds of $1,164,000 received from the sale of discontinued
operations offset by capital expenditures of $269,000. Financing activities
consisted of repayments of the Company's term loans and notes payable of
$457,000 and treasury stock purchases of $2,980,000 offset by $965,000 of
proceeds from the issuance of common shares upon the exercise of common stock
purchase warrants and stock options.
On April 12, 1996, a Consent Decree that settled the Company's
environmental litigation with 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, additional payments totaling $4,850,000 were made in April and May of
1996. In April 1997, the Company made additional payments totaling $796,000
plus interest. Further payments totaling $4,204,000 plus interest
will be made to the United States and the Commonwealth of Pennsylvania over the
next five years.
In August 1996, the Board of Directors of the Company authorized the
repurchase of up to 1,000,000 shares of the Company's common stock. The Board
of Directors increased the Company's share repurchase authorization to 2,000,000
shares in March 1997 and to 2,300,000 shares in September 1997. Through
September 30, 1997, the Company repurchased 2,288,100 shares of common stock
under the buy-back program for an aggregate cost of $3,174,000.
During the first nine months of 1997, the Company's capital expenditures
totaled $269,000. The Company anticipates that its level of capital
expenditures for 1997 will be less than those of 1996. 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 1997 with its available cash resources as well as through
capital equipment financing.
At September 30, 1997, approximately $90 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.
Outlook
The Company's primary objective for 1997 is to identify a suitable
acquisition candidate. As mentioned above, in 1996 and 1997, the Company met
its obligations under the terms of the settlement of its environmental
litigation and also repaid the remaining balances outstanding under the
Revolver and Term Notes and terminated the Loan Agreement. As of September 30,
1997, the Company had approximately
$13,500,000 in cash on hand. The Company intends to use such funds, together
with other potential indebtedness, to finance the acquisition purchase price.
The Company has not yet identified any potential acquisition candidates or
determined the amount or source of any indebtedness which would be incurred to
finance future acquisitions.
Special Note Regarding Forward-Looking Statements: A number of statements
contained in this discussion and analysis are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 that involve
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied in the applicable statements. These risks and
uncertainties include but are not limited to: Greenwald's dependance on the
mechanical coin meter market and its potential vulnerability to technological
obsolescence; OSM's dependence on key personnel and general economic
conditions in the Midwest; and the Company's ability to successfully
implement its business strategy including the identification, financing
and consummation of an acquisition.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
General Litigation
Various legal proceedings are 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 2, 1997, an annual meeting of the shareholders of the Company was
held at which directors were elected to serve until their successors shall have
been elected and shall have qualified. Shareholders approved modifications to
certain outstanding warrants to purchase common stock of the Company. The
appointment of the Company's outside auditors for the year ending December 31,
1997 was also ratified. The number of votes cast for, against or withheld/
abstained and the number of broker non-votes with regard to each nominee or
matter are set forth below:
Withheld/ Broker
For Against Abstained Non-votes
Election of directors:
Harry I. Freund 10,618,430 N/A 247,543 -
Jay S. Goldsmith 10,608,430 N/A 257,543 -
Clifford B. Cohn 10,614,329 N/A 251,644 -
David L. Herman 10,618,257 N/A 247,716 -
L.G. Schafran 10,619,532 N/A 246,441 -
James J. Weis 10,613,533 N/A 252,440 -
Approval of modification
to certain outstanding
warrants 9,619,016 274,900 368,760 603,297
Ratification of
Auditors 10,780,532 63,571 21,870 -
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
Exhibit 27: Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K:
Form 8-K dated August 15, 1997 relating to Amendment No.1 to
Warrant Agreements between Registrant and Harry I. Freund and Jay
S. Goldsmith
<PAGE>
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
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, 1997 /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>
Exhibit 11
PUBLICKER INDUSTRIES INC.
AND SUBSIDIARY COMPANIES
CALCULATION OF EARNINGS PER SHARE
(Unaudited)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
1997(a) 1996(b) 1997(a) 1996(b)
(in thousands except per share data)
Income (loss) from continuing
operations $ (665) $ (342) $ (1,649) $ (3,254)
Add - Interest savings, net
of tax effect - 53 - 118
Adjusted income (loss) from
continuing operations (665) (289) (1,649) (3,136)
Income and gains from
discontinued operations 609 357 609 10,409
Adjusted net income (loss) $ (56) $ 68 $ (1,040) $ 7,273
Average common shares 13,598 15,453 14,222 15,271
Add - Stock options and
common stock purchase warrants - 1,776 - 1,776
Adjusted common shares 13,598 17,229 14,222 17,047
Earnings (loss) per common share
Continuing operations $ (.05) $ (.02) $ (.11) $ (.19)
Discontinued operations .05 .02 .04 .62
$ - $ - $ (.07) $ .43
(a) 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 were not included as they were antidilutive.
(b) 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.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 13,545
<SECURITIES> 0
<RECEIVABLES> 4,134
<ALLOWANCES> 65
<INVENTORY> 2,372
<CURRENT-ASSETS> 20,698
<PP&E> 6,074
<DEPRECIATION> 2,111
<TOTAL-ASSETS> 29,002
<CURRENT-LIABILITIES> 6,131
<BONDS> 1,182
<COMMON> 1,655
0
0
<OTHER-SE> 10,054
<TOTAL-LIABILITY-AND-EQUITY> 29,002
<SALES> 6,653
<TOTAL-REVENUES> 6,653
<CGS> 4,395
<TOTAL-COSTS> 7,247
<OTHER-EXPENSES> (20)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 91
<INCOME-PRETAX> (665)
<INCOME-TAX> 0
<INCOME-CONTINUING> (665)
<DISCONTINUED> 609
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (56)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
