<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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, 1995
-------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ----------- to ----------------------
Commission File Number ---------------------------------------------
PGI INCORPORATED
--------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
FLORIDA 59-0867335
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
515 OLIVE STREET, SUITE 1400; ST. LOUIS, MISSOURI 63101
--------------------------------------------------------------------
(Address of principal executive offices)
(314) 982-0780
--------------------------------------------------------------------
(Issuer's telephone number)
--------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if changed
since last report)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 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 .
----- -----
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: As of
August 14, 1995 there were 3,317,555 shares of the Registrant's
common stock outstanding.
Transitional Small Business Disclosure Format (Check One):
Yes No X
----- -----
-1-
<PAGE> 2
<TABLE>
PGI INCORPORATED AND SUBSIDIARIES
FORM 10-QSB
For the Quarter Ended June 30, 1995
Table of Contents
-------------------------
<CAPTION>
Form 10-QSB
Page No.
-----------
<S> <C>
PART I Financial Information
Item 1 Financial Statements
Consolidated Statements of Financial Position
June 30, 1995 and December 31, 1994 3
Consolidated Statements of Operations Three
and Six Months Ended June 30, l995 and 1994 4
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 1995 and 1994 5
Notes to Consolidated Financial Statements
for Form 10-QSB 6 - 11
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 16
PART II Other Information
Item 1 Legal Proceedings 17
Item 2 Changes in Securities 17
Item 3 Defaults Upon Senior Securities 17
Item 4 Submission of Matters to a Vote of Security
Holders 17
Item 5 Other Information 17
Item 6 Exhibits and Reports on Form 8-K 17
SIGNATURES 18
</TABLE>
-2-
<PAGE> 3
PGI INCORPORATED AND SUBSIDIARIES
PART I Financial Information
Item 1 Financial Statements
<TABLE>
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
($ in thousands)
June 30, December 31,
1995 1994
--------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash, including restricted cash
of $1,131,000 and $1,235,000 $ 1,200 $ 1,261
Receivables on real estate sales - net 1,027 1,227
Other receivables 22 19
Land and improvement inventories 9,103 9,154
Property and equipment - net 99 119
Other assets 776 788
--------- ---------
$ 12,227 $ 12,568
========= =========
LIABILITIES
Accounts payable $ 88 $ 79
Other liabilities 1,599 1,512
Accrued interest:
Primary lender 1,159 791
Debentures 5,037 4,388
Other 1,232 1,162
Credit agreements:
Primary lender 7,002 7,002
Notes and mortgages payable 3,955 4,250
Convertible subordinated debentures payable 9,059 9,059
Convertible debentures payable 1,500 1,500
--------- ---------
30,631 29,743
--------- ---------
Commitments and contingencies
STOCKHOLDER'S EQUITY
Preferred stock, par value $1.00 per share;
authorized 5,000,000 shares; 2,000,000 Class A
cumulative convertible shares issued and
outstanding; (liquidation preference of
$4.00 per share or $8,000,000) 2,000 2,000
Common stock, par value $.10 per share;
authorized 25,000,000 shares; 3,317,555 shares
issued and outstanding 332 332
Paid in capital 13,698 13,698
Accumulated deficit (34,434) (33,205)
--------- ---------
(18,404) (17,175)
--------- ---------
$ 12,227 $ 12,568
========= =========
</TABLE>
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<PAGE> 4
PGI INCORPORATED AND SUBSIDIARIES
See accompanying notes to consolidated financial statements for Form 10-QSB.
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Real estate sales $ --- $ 465 $ 15 $ 2,223
Interest income 47 83 99 165
Other income 204 1,564 452 1,688
------- ------- ------- -------
251 2,112 566 4,076
------- ------- ------- -------
COSTS AND EXPENSES
Cost of real estate sales --- 443 11 1,830
Selling expenses 8 45 25 121
General & administrative
expenses 166 339 328 584
Interest 578 529 1,221 1,080
Other expenses 99 127 210 233
------- ------- ------- -------
851 1,483 1,795 3,848
------- ------- ------- -------
NET INCOME (LOSS) $ (600) $ 629 $(1,229) $ 228
======= ======= ======= =======
NET INCOME (LOSS) PER SHARE<F*>
Primary and fully diluted $ (.23) $ .14 $ (.47) $ (.03)
======= ======= ======= =======
<FN>
<F*> Considers the effect of cumulative preferred dividends in arrears
for the three and six months ended June 30, 1995 and 1994.
</TABLE>
-4-
<PAGE> 5
PGI INCORPORATED AND SUBSIDIARIES
See accompanying notes to consolidated financial statements for Form 10-QSB.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
<CAPTION>
Six Months Ended
June 30, June 30,
1995 1994
<S> <C> <C>
Net cash provided by operating activities $ 234 $ 227
------- -------
Cash flows from investing activities:
Proceed from fixed asset sales --- 8
Purchase of property and equipment --- ---
------- -------
Net cash used in investing activities --- 8
------- -------
Cash flows from financing activities:
Principal payments on debt (295) (520)
------- -------
Net cash used in financial activities (295) (520)
------- -------
Net decrease in cash (61) (285)
Cash at beginning of period 1,261 1,521
------- -------
Cash at end of period $ 1,200 $ 1,236
======= =======
</TABLE>
-5-
<PAGE> 6
PGI INCORPORATED AND SUBSIDIARIES
See accompanying notes to consolidated financial statements for Form 10- QSB.
Notes to Consolidated Financial Statements
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-QSB
and therefore do not include all disclosures necessary for fair
presentation of financial position, results of operations and
cash flows in conformity with generally accepted accounting
principles. The Company's independent accountants included an
explanatory paragraph regarding the Company's ability to continue
as a going concern in their opinion on the Company's consolidated
financial statements for the year ended December 31, 1994.
The Company continues to remain in default under its primary
lender agreement and the indentures governing its convertible
unsecured subordinated debentures (the Indentures) (See
Management's Discussion and Analysis of Financial Condition and
Results of Operations). As more fully discussed in Note 10 to
the Company's consolidated financial statement for the year ended
December 31, 1994, as contained in the Company's Annual Report on
Form 10-K, the Company's management is seeking purchasers for its
remaining undeveloped land.
The financial statement's do not include any adjustments relating
to the recoverability of recorded asset amounts or the amounts of
liabilities that might be necessary should the Company be
unsuccessful in its sales and refinancing efforts.
In the opinion of management, subject to the effects on the
Company's unaudited consolidated financial statements of such
adjustments, if any, as might have been required had the outcome
of the matters discussed in the preceding paragraph been known,
all other adjustments (consisting of only normal recurring
accruals) necessary for fair presentation of financial position,
results of operations and cash flows have been made. The results
for the three months ended June 30, 1995 are not necessarily
indicative of operations to be expected for the fiscal year
ending December 31, 1995 or any other interim period.
(2) Recognition of Real Estate Sales
The Company has adopted the installment method of profit
recognition for all homesite sales effective January 1, 1990 and
thereafter. For sales consummated prior to January 1, 1990, the
Company recognized profit under the full accrual or percentage-
of-completion methods as appropriate. The full accrual method
recognizes the entire profit when minimum down payments and other
requirements are met. Under the percentage-of-completion method,
profit is recognized by the relationship of costs incurred to
total estimated costs to be incurred. The installment method
recognizes gross profit as down payments and principal payments
on contracts are received.
-6-
<PAGE> 7
PGI INCORPORATED AND SUBSIDIARIES
(3) Per Share Data
Primary per share amounts are computed by dividing net income
(loss), after considering cumulative dividends in arrears on the
Company's preferred stock, by the average number of common shares
and common stock equivalents outstanding. For this purpose, the
Company's cumulative convertible preferred stock, convertible
subordinated debentures and collateralized convertible debentures
are not deemed to be common stock equivalents, but outstanding
vested stock options are considered as such. However, under the
treasury stock method, no vested stock options were assumed to be
exercised, and therefore no common stock equivalents existed, for
the calculation of primary per share amounts for the six months
ended June 30, 1995 and 1994. The average number of common
shares outstanding for the six months ended June 30, 1995 and
1994 was 3,317,555, respectively.
Fully diluted per share amounts are computed by dividing net
income (loss) by the average number of common shares outstanding,
after adjusting both for the estimated effects of the assumed
exercise of stock options and the assumed conversion of all
cumulative convertible preferred stock, convertible subordinated
debentures and collateralized convertible debentures into shares
of common stock. For the six months ended June 30, 1995 and
1994, no stock options were assumed to be exercised and the
effect of the assumed exercise of stock options and the assumed
conversion of all cumulative convertible preferred stock,
convertible subordinated debentures and collateralized
convertible debentures would have been anti-dilutive.
(4) Statement of Cash Flows
The Financial Accounting Standards Board issued Statement No. 95,
"Statement of Cash Flows", which requires a statement of cash
flows as part of a full set of financial statements. For
quarterly reporting purposes, the Company has elected to condense
the reporting of its net cash flows. Interest paid, net of
amounts capitalized, for the six months ended June 30, 1995 and
1994 was $134,000 and $141,000, respectively.
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
(5) Restricted Cash
Restricted cash included cash and certificates of deposit pledged
to agencies in various states and local Florida governmental units
related to land development and environmental matters, escrowed
receipts related to pledged receivables on real estate sales and the
servicing of sold receivables and, as a result of sales agreements
and Company policies, customer payments and deposits related to
homesite and housing contracts.
-7-
<PAGE> 8
PGI INCORPORATED AND SUBSIDIARIES
(6) Receivables on Real Estate Sales
<TABLE>
Net receivables on real estate sales consisted of:
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
($ in thousands)
<S> <C> <C>
Contracts receivable on homesite sales $ 1,876 $ 2,187
Other 212 123
---------- ----------
2,088 2,310
Less: Allowance for cancellations (976) (976)
Unamortized valuation discount (85) (107)
---------- ----------
$ 1,027 $ 1,227
========== ==========
</TABLE>
(7) Land and Improvements
<TABLE>
Land and improvement inventories consisted of:
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
($ in thousands)
<S> <C> <C>
Unimproved land $ 8,730 $ 8,730
Land being improved --- ---
Fully improved land 373 424
Completed and in progress
homes held for sale --- ---
---------- ----------
$ 9,103 $ 9,154
========== ==========
</TABLE>
(8) Property and Equipment
<TABLE>
Property and equipment consisted of:
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
($ in thousands)
<S> <C> <C>
Furniture, fixtures and other equipment $ 407 $ 407
Construction in progress --- 2
---------- ----------
407 409
Less: Accumulated depreciation (308) (290)
---------- ----------
$ 99 $ 119
========== ==========
</TABLE>
-8-
<PAGE> 9
PGI INCORPORATED AND SUBSIDIARIES
(9) Other Assets
<TABLE>
Other assets consisted of:
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
($ in thousands)
<S> <C> <C>
Guaranteed future connections related to
sale of utility plants and equipment, net $ 621 $ 621
Prepaid loan and debenture costs 27 42
Deposit with Trustee of 6-1/2% debentures 117 114
Other 11 11
---------- ----------
$ 776 $ 788
========== ==========
</TABLE>
(10) Other Liabilities
<TABLE>
Other Liabilities consisted of:
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
($ in thousands)
<S> <C> <C>
Accrued property taxes
- current $ 110 $ 238
- delinquent 507 303
Other accrued expenses 224 234
Deposits, advances and escrows 350 419
Estimated recourse liability for
receivables sold 300 300
Other 108 18
---------- ----------
$ 1,599 $ 1,512
========== ==========
</TABLE>
(11) Primary Lender Credit Agreements, Notes and Mortgages Payable and
Convertible Subordinated Debentures Payable
<TABLE>
Credit agreements with the Company's primary lender and notes and
mortgages payable consisted of the following:
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
($ in thousands)
<S> <C> <C>
Credit agreements - primary lender:
(maturing July 8, 1997, bearing interest
at prime plus 1.5%):
Revolving land loan line of credit $ 4,297 $ 4,297
Receivable loan payable 2,705 2,705
---------- ----------
7,002 7,002
---------- ----------
Notes and mortgages payable - $1,996,000
bearing interest at 12-1/4%, $1,176,000
bearing interest at prime plus 2%, the
remainder bearing interest at varying
rates to 23%; maturing through 2000 3,955 4,250
---------- ----------
-9-
<PAGE> 10
PGI INCORPORATED AND SUBSIDIARIES
Convertible subordinated debentures payable:
At 6-1/2% interest; due June 1991; convertible
into shares of common stock at
$18.00 per share $ 1,034 $ 1,034
At 6% interest; due May 1, 1992; convertible
into shares of common stock at
$19.50 per share 8,025 8,025
---------- ----------
$ 9,059 $ 9.059
---------- ----------
Collateralized convertible debentures payable:
At 14% interest; due July 8, 1997, convertible
into share of common stock at
$1.72 per share 1,500 1,500
---------- ----------
$ 21,516 $ 21,811
========== ==========
</TABLE>
(12) Real Estate Sales and Other Income
<TABLE>
Real estate sales and cost of sales for the three and six months
ended June 30, 1995 and 1994 consisted of:
<CAPTION>
Three months ended Six months ended
------------------ ----------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Revenues:
Homesite sales $ --- $ 26 $ 15 $ 90
Home sales --- 439 --- 1,788
Acreage sales --- --- --- 345
--------- --------- --------- ---------
$ --- $ 465 $ 15 $ 2,223
========= ========= ========= =========
Cost of Sales:
Homesite sales $ --- $ 9 $ 11 $ 28
Home sales --- 434 --- 1,725
Acreage sales --- --- --- 77
--------- --------- --------- ---------
$ --- $ 443 $ 11 $ 1,830
========= ========= ========= =========
</TABLE>
<TABLE>
Other income for the three and six months ended June 30, 1995 and
1994 consisted of:
<CAPTION>
Three months ended Six months ended
------------------ ----------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Commission income $ 80 $ 72 $ 158 $ 168
Installment sale income 61 --- 98 ---
Other income 63 1,492 196 1,520
--------- --------- --------- ---------
$ 204 $ 1,564 $ 452 $ 1,688
========= ========= ========= =========
</TABLE>
-10-
<PAGE> 11
PGI INCORPORATED AND SUBSIDIARIES
(13) Commitments and Contingencies
The aggregate outstanding balances of all receivables sold and
exchanged with recourse totaled $476,000 and $618,000 at June 30,
1995 and December 31, 1994, respectively. Based on its collection
experience with such receivables, the Company maintained allowances
at both June 30, 1995 and December 31, 1994, classified in other
liabilities, of $300,000 for the recourse provisions related to all
receivables sold.
(14) Income Taxes
Effective January 1, 1993 the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which requires a change from the deferred method to the asset and
liability method of accounting for income taxes. Under the asset
and liability method, deferred income taxes are recognized for the
tax consequences of "temporary differences" by applying enacted
statutory tax rates applicable to future years to differences
between the financial statement carrying amounts and the tax bases
of existing assets and liabilities. Under SFAS No. 109, the effect
on deferred taxes of a change in tax rates is recognized in income
in the period that includes the enactment date. Under the deferred
method, deferred taxes were recognized using the tax rate applicable
to the year of the calculation and were not adjusted for subsequent
changes in tax rates. Based on the Company's current tax status and
current tax laws, adoption of SFAS No. 109 did not have a material
effect on the Company's financial position.
At December 31, 1994, the Company had an operating loss carryforward
of approximately $28,000,000 to reduce future taxable income. These
operating losses expire at various dates through 2,009.
<TABLE>
The following summarizes the temporary differences of the Company at
December 31, 1994 at the current statutory rate:
Deferred tax asset:
<CAPTION>
<S> <C>
Net operating loss carryforward $10,352,000
Adjustments to reduce land to
net realizable value 311,000
Expenses capitalized under IRC 263(a) 57,000
ITC carryforward 731,000
Other 7,000
Valuation allowance (8,972,000)
-----------
2,486,000
-----------
Deferred tax liability
Basis difference of land and
improvement inventories 2,452,000
Excess tax over book depreciation 34,000
-----------
2,486,000
-----------
Net deferred tax asset $ 0
===========
</TABLE>
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<PAGE> 12
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
Preliminary Note
The description of the Company's business in the Quarterly Report on
Form 10-QSB focuses on its traditional core business of selling
individual homes and homesites and the construction of residences.
Readers should understand as they read the report, however, that the
Company is not presently pursuing its core business until its debt
obligations have been substantially eliminated. The reason the Company
is no longer pursuing its core business is set forth with more
particularity below.
As of May 1, 1995 the Company is in default of its primary credit
agreements with First Union. The Company was unsuccessful in
consummating a large land sale to meet the May 1st obligations and does
not have funds available to make any payments of either principal or
interest. The Company continues to have discussions with First Union
with the objective of securing an extension of its obligation and a cure
of the default with no success as of this date.
During the fiscal year ended December 31, 1994, the Company's business
focus and emphasis changed substantially as it concentrated its sales
and marketing efforts almost exclusively on the disposition in bulk of
its undeveloped, platted, residential real estate. This change was
prompted by it's continuing financial difficulties due to the principal
and interest owed on its debt and managements' conclusion that a bulk
sale was the best way to reduce the Company's debt service obligations.
If the Company is successful in its sale of this undeveloped land, its
remaining inventory will consist of undeveloped commercial property.
There can be no assurance that the Company will be successful in its
efforts to effect a bulk sale. Assuming a bulk sale occurs, the Company
intends to decide at that point whether it will pursue the development
and sale of the commercial property in accordance with its traditional
core business plans or whether it will attempt to sell such property in
bulk. That decision will depend, in part, on whether the Company
believes it can generate more revenue by developing and selling
individual commercial properties or by selling in bulk.
Results of Operations
Revenues for the first six months of 1995 decreased by $3.5 million
to $566,000 from $4.1 million for the comparable 1994 period. A net
loss of $1.2 million was incurred for the first six months of 1995
compared to a net income of $228,000 for the first six months of 1994.
After consideration of cumulative preferred dividends in arrears,
totaling $320,000 for each of the six months ended June 30, 1995 and
1994 ($.10 per share of common stock), net losses per share of $.47
and $.03, respectively, were reported for the six month periods ended
June 30, 1995 and 1994.
With the completion of the Second Secured Lender Transaction more
specifically described below, the Company has sold all of its developed
Sugarmill Woods inventory. It retains 4,800 acres of undeveloped property
planned and platted into 8,000 single family homesites and a 600 acre
undeveloped commercially zoned tract (all acreage numbers are approximate).
-12-
<PAGE> 13
PGI INCORPORATED AND SUBSIDIARIES
Additionally, the Company has a small scattering of unsold lots remaining in
its Charlotte County developments which it is selling in the normal course
of business through the local broker network.
In 1994 the Company successfully completed the Second Secured Lender
Transaction. The transaction was comprised of a series of agreements
executed in April 1994 wherein the Company sold the remainder of its
Southern Woods developed homesites inventory (approximately 72
homesites), the remainder of the undeveloped acreage of Southern Woods
(approximately 200 acres) and 162 prepaid water and sewer connections
in exchange for a $2.4 million reduction in the principal due to its
primary lender, a net $310,000 reduction in accrued interest due to
the primary lender, the satisfaction of $362,000 in other liabilities
and additional closing costs of $71,000. Included in the 1994
earnings is a $1.5 million gain related to the sale of the Southern
Woods development. The 1994 Secured lender Transaction has been
treated as a non-cash transaction in the Company's Statement of Cash
Flows.
The resulting principal and interest due to its primary lender
retains a maturity date of July 8, 1997. Effective with the closing,
the Company's interest rate was reduced from the default rate of prime
plus 5% to prime plus 1.5%. The primary lender had granted the
Company a moratorium until May 1995 on any principal and interest
payments other than release payments associated with the sale of
properties. On May 1, 1995, the Company failed to pay all accrued
interest due as of that date, as well as, pay the 1993 property taxes
owed on any properties serving as collateral for the primary debt.
As a result the loan remains in default.
Sales revenue by major components for real estate operations,
excluding the effect of the Company's adoption of the installment
method of reporting homesite sales for the three and six month periods
ended June 30, 1995 and 1994, were:
<TABLE>
Real estate sales and cost of sales for the three and six months
ended June 30, 1995 and 1994 consisted of:
<CAPTION>
Three months ended Six months ended
------------------ ----------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Revenues:
Homesite sales $ --- $ 26 $ 15 $ 90
Home sales --- 439 --- 1,788
Acreage sales --- --- --- 345
--------- --------- --------- ---------
$ --- $ 465 $ 15 $ 2,223
========= ========= ========= =========
Cost of Sales:
Homesite sales $ --- $ 9 $ 11 $ 28
Home sales --- 434 --- 1,725
Acreage sales --- --- --- 77
--------- --------- --------- ---------
$ --- $ 443 $ 11 $ 1,830
========= ========= ========= =========
</TABLE>
-13-
<PAGE> 14
PGI INCORPORATED AND SUBSIDIARIES
<TABLE>
Other income for the three and six months ended June 30, 1995
and 1994 consisted of:
<CAPTION>
Three months ended Six months ended
------------------ ----------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Commission income $ 80 $ 72 $ 158 $ 168
Installment sale income 61 --- 98 ---
Other income 63 1,492 196 1,520
-------- -------- -------- --------
$ 204 $ 1,564 $ 452 $ 1,688
======== ======== ======== ========
With the completion of the Second Secured Lender Transaction the
Company has sold all of its developed Sugarmill Woods inventory. The
homesite sales sold in the first quarter of 1995 represent various lot
sales from the Charlotte County inventory.
With the assignment of the remaining building contracts to another
Sugarmill Woods builder during 1994, the Company's activity related
to home construction has been suspended during the first six months
of 1995 and subsequent reporting periods. As a result there were no
home sales during the first six months of 1995.
Effective January 1, 1990 the Company implemented the installment
method of homesite sales reporting in accordance with Statement of
Financial Accounting Standard No. 66 "Accounting for Sales of Real
Estate" (see Item I - Note 2 - Recognition of Real Estate Sales).
This method will be utilized for all installment sales regardless of
the down payment percentage. As a result of the Secured Lender
Transaction non-recourse sale of receivables, all previously deferred
profits were recognized during 1992.
Cash provided by operating activities for the six months ended June
30, 1995 was $234,000 compared to $227,000 for the comparable 1994
period. During the first six months of 1995, financing activities
utilized $295,000 in cash flow for normal debt repayment as compared
to $520,000 for the same period in 1994.
</TABLE>
<TABLE>
Analysis of Financial Condition
Assets totaled $12.2 million at June 30, 1995 compared to $12.6
million at December 31, 1994, reflecting the following changes:
<CAPTION>
June 30, December 31, Increase
1995 1994 (Decrease)
-------- ------------ ----------
($ in thousands)
<S> <C> <C> <C>
Cash $ 1,200 $ 1,261 $ (61)
Receivables 1,049 1,246 (197)
Land and improvement inventories 9,103 9,154 (51)
Net property and equipment 99 119 (20)
Other assets 776 788 (12)
--------- --------- -------
$ 12,227 $ 12,568 $ (341)
========= ========= =======
</TABLE>
-14-
<PAGE> 15
PGI INCORPORATED AND SUBSIDIARIES
<TABLE>
Liabilities were $30.6 million at June 30, 1995 compared to 29.7
million at December 31, 1994, reflecting the following changes among
categories.
<CAPTION>
June 30, December 31, Increase
1995 1994 (Decrease)
-------- ------------ ----------
($ in thousands)
<S> <C> <C> <C>
Accounts payable $ 88 $ 79 $ 9
Other liabilities 1,599 1,512 87
Accrued interest 7,428 6,341 1,087
Credit agreements - primary lender 7,002 7,002 ---
Notes and mortgages payable 3,955 4,250 (295)
Convertible subordinated
debentures payable 9,059 9,059 -
Convertible debentures payable 1,500 1,500 -
-------- -------- --------
$ 30,631 $ 29,743 $ 888
======== ======== ========
</TABLE>
The company has aggressively taken steps to curtail and simplify
operations as well as concentrate on major bulk sales of its
undeveloped acreage. The Company remains totally dependent upon the
sale of property to fund its operations and debt service requirements.
As was stated earlier, the Company is in default of its primary
credit agreements with First Union. The Company continues to market
its undeveloped acreage in an effort to consummate a bulk sale but has
been unsecured to date. Although the Company has had financing
arrangements with its primary lender since 1985 and has been successful
in renegotiating its credit agreements, the primary lender,
BancFlorida, was acquired by another banking institution, First Union,
on August 1, 1994. The Company is hopeful that the new institution and
new personnel will be willing to work with the Company if necessary,
but has no assurance that a mutually satisfactory working relationship
can be established.
<TABLE>
The Company remains in default of the entire principal plus interest
on its convertible subordinated debentures. The amounts due are as
indicated in the following table:
<CAPTION>
June 30, 1995
--------------------------
Principal Unpaid
Amount Due Interest
---------- --------
($ in thousands)
<S> <C> <C>
Convertible subordinated debentures due June 1, 1991 $ 1,034 $ 360
Convertible subordinated debentures due May 1, 1992 8,025 2,840
------- -------
$ 9,059 $ 3,200
======= =======
</TABLE>
The Company does not have funds available to make any payments of either
principal or interest on the above debentures. If a debenture holder or
Trustee institutes action to collect on the debentures, such action could
prohibit the Company from continuing to operate, (see Notes 10 and 11 to the
consolidated financial statements under Item 8 as contained in the Company's
1994 Form 10-K) which would cause an acceleration of the primary lender debt
-15-
<PAGE> 16
PGI INCORPORATED AND SUBSIDIARIES
and could result in a bankruptcy filing. The Company has investigated the
consequences of a bankruptcy filing and believes that such an event is not
in the best interest of either the debenture or equity holders because a
bankruptcy filing would negatively impact the Company's business, as
well as cause an acceleration of the primary lender ("First Union")
debt, certain other notes and mortgages, and secured debenture debt.
-16-
<PAGE> 17
PGI INCORPORATED AND SUBSIDIARIES
PART II Other Information
Item 1 Legal Proceedings
Not applicable.
Item 2 Changes in Securities
Not applicable.
Item 3 Defaults Upon Senior Securities
See discussion in Item 2 with respect to defaults on the
Company's convertible subordinated debentures and collateralized
convertible debentures, which discussion is incorporated herein by
this reference.
Item 4 Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5 Other Information
Not applicable.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits - reference is made to the Exhibit Index contained on
page 18 herein for a list of exhibits filed under this Item.
(c) No report on Form 8-K was filed during the quarter ended June
30, 1995.
-17-
<PAGE> 18
PGI INCORPORATED AND SUBSIDIARIES
SIGNATURES
In accordance with the requirement of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PGI INCORPORATED
--------------------------------------
(Registrant)
Date: August 14, 1995 /s/Laurence A. Schiffer
------------------------------------------ ---------------------------
Laurence A. Schiffer
President
-18-
<PAGE> 19
PGI INCORPORATED AND SUBSIDIARIES
<TABLE>
EXHIBIT INDEX
-------------
<CAPTION>
Sequential
Page
Number
<S> <C>
2. Inapplicable.
3. Inapplicable.
4. Inapplicable.
10. Inapplicable.
11. Statements re: Computations of Per Share Earnings, filed
herewith. . . . . . . . . . . . . . . . . . . . . . . . . . 20 - 22
15. Inapplicable.
18. Inapplicable.
19. Inapplicable.
22. Inapplicable.
23. Inapplicable.
24. Inapplicable.
27. Financial Data Schedule . . . . . . . . . . . . . . . . . . . . .23
</TABLE>
-19-
<PAGE> 1
PGI INCORPORATED AND SUBSIDIARIES
<TABLE>
EXHIBIT 11
Page 1 of 3 FACTS FOR THE COMPUTATIONS OF NET INCOME/(LOSS) PER SHARE
<CAPTION>
Three Months Ended Six months ended
--------------------------- -------------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1) Net income/(loss) for period $ (600,000) $ 629,000 $(1,229,000) $ 228,000
========== ========= =========== ==========
2) Average common shares outstanding 3,317,555 3,317,555 3,317,555 3,317,555
========== ========= =========== ==========
3) Shares outstanding at beginning of
period 3,317,555 3,317,555 3,317,555 3,317,555
4) Shares issued on stock options
exercised and preferred stock
and debentures converted
during period, weighted --- --- --- ---
5) Treasury stock transactions,
net, weighted --- --- --- ---
---------- --------- ----------- ----------
6) Average shares outstanding
before assumed exercise of
stock options and conversions
of preferred stock and debentures 3,317,555 3,317,555 3,317,555 3,317,555
========== ========= =========== ==========
7) Average shares outstanding
from assumed exercise of stock
options:
Primary --- --- --- ---
---------- --------- ----------- ----------
Fully diluted --- --- --- ---
========== ========= =========== ==========
8) Average shares outstanding from
assumed conversion of
preferred stock 3,760,000 3,760,000 3,760,000 3,760,000
========== ========= =========== ==========
9) Average shares outstanding from
assumed conversion of debentures 1,341,076 1,341,076 1,341,076 1,341,076
========== ========= =========== ==========
10) Cumulative preferred dividends
in arrears for period $ 160,000 $ 160,000 $ 320,000 $ 320,000
========== ========= =========== ==========
11) Interest and amortized charge
against income for debentures
during period $ 190,000 $ 190,000 $ 380,000 $ 380,000
========== ========= =========== ==========
ADJUSTMENT OF NET INCOME/(LOSS):
Primary
Net income/(loss) for
period (Line 1) $ (600,000) $ 629,000 $(1,229,000) $ 228,000
Less cumulative preferred
dividends in arrears (Line 10) 160,000 160,000 320,000 320,000
---------- --------- ----------- ----------
-20-
<PAGE> 2
PGI INCORPORATED AND SUBSIDIARIES
EXHIBIT 11
Page 2 of 3 FACTS FOR THE COMPUTATIONS OF NET INCOME/(LOSS) PER SHARE
12) Adjusted net income/(loss) for
primary net income/(loss)
per share (760,000) 469,000 (1,549,000) (92,000)
Fully Diluted
Add cumulative preferred
dividends in arrears on
preferred stock assumed
converted (Line 10) 160,000 160,000 320,000 320,000
Add interest and amortization
charged against income for
debentures (Line 11) 190,000 190,000 380,000 380,000
Less tax effect on Line 11 ---<FA> ---<FA> ---<FA> ---<FA>
---------- --------- ----------- ----------
13) Adjusted net income/(loss) for
fully diluted net income/(loss)
per share $(410,000) $ 819,000 $ (849,000) $ 608,000
========== ========= =========== ==========
ADJUSTMENT OF AVERAGE SHARES OUTSTANDING:
Primary
Average shares outstanding
(Line 6) 3,317,555 3,317,555 3,317,555 3,317,555
Add average shares outstanding
from assumed exercise of
stock options (Line 7) --- --- --- ---
---------- --------- ----------- ----------
14) Shares assumed outstanding for
primary net income/(loss)
per share 3,317,555 3,317,555 3,317,555 3,317,555
========== ========= =========== ==========
Fully Diluted
Average shares outstanding
(Line 6) 3,317,555 3,317,555 3,317,555 3,317,555
Add average shares outstanding
from assumed exercise of
stock options (Line 7) --- --- --- ---
Add average shares outstanding
from assumed conversion of
preferred stock (Line 8) 3,760,000 3,760,000 3,760,000 3,760,000
Add average shares outstanding
from assumed conversion of
debentures (Line 9) 1,341,076 1,341,076 1,341,076 1,341,076
---------- --------- ----------- ----------
15) Shares assumed outstanding for
fully diluted net income/(loss)
per share 8,418,631 8,418,631 8,418,631 8,418,631
========== ========= =========== ==========
-21-
<PAGE> 3
PGI INCORPORATED AND SUBSIDIARIES
EXHIBIT 11
Page 3 of 3 FACTS FOR THE COMPUTATIONS OF NET INCOME/(LOSS) PER SHARE
NET INCOME/(LOSS) PER SHARE:
Before Adjustment
(Line 1/Line 2) $ (.18) $ .19 $ (.37) $ .07
========== ========= =========== ==========
Primary
(Line 12/Line 14) $ (.23) $ .14 $ (.47) $ (.03)
========== ========= =========== ==========
Fully Diluted <FB> $ (.23) $ .14 $ (.47) $ (.03)
========== ========= =========== ==========
<FN>
----------------------------------
<FA> No tax calculation has been made because of full utilization
of all available tax benefits for financial accounting
purposes.
<FB> Fully diluted net loss per share is the same as primary net
income/(loss) per share due to anti-dilutive effect of assumed
exercise of stock options and conversions of preferred stock
and debentures to common stock.
</TABLE>
-22-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,200,000
<SECURITIES> 0
<RECEIVABLES> 2,025,000
<ALLOWANCES> (976,000)
<INVENTORY> 9,103,000
<CURRENT-ASSETS> 0<F1>
<PP&E> 409,000
<DEPRECIATION> (308,000)
<TOTAL-ASSETS> 12,227,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 21,516,000
<COMMON> 332,000
0
2,000,000
<OTHER-SE> (20,736,000)
<TOTAL-LIABILITY-AND-EQUITY> 12,227,000
<SALES> 0
<TOTAL-REVENUES> 251,000
<CGS> 0
<TOTAL-COSTS> 8,000
<OTHER-EXPENSES> 265,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 578,000
<INCOME-PRETAX> (600,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (600,000)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
<FN>
<F1>CURRENT ASSETS AND CURRENT LIABILITIES VALUES ARE
ZERO BECAUSE OF AN UNCLASSIFIED BALANCE SHEET.
</TABLE>
