<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 March 31, 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 1-6471
-----------------------------------------------
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 May
12, 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 March 31, 1995
Table of Contents
---------------------
<CAPTION>
Form 10-QSB
Page No.
------------
<C> <S> <C>
PART I Financial Information
Item 1 Financial Statements
Consolidated Statements of Financial Position
March 31, 1995 and December 31, 1994 3
Consolidated Statements of Operations
Three Months Ended March 31, 1995 and 1994 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 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 - 15
PART II Other Information
Item 1 Legal Proceedings 16
Item 2 Changes in Securities 16
Item 3 Defaults Upon Senior Securities 16
Item 4 Submission of Matters to a Vote of Security Holders 16
Item 5 Other Information 16
Item 6 Exhibits and Reports on Form 8-K 18 - 21
SIGNATURES 17
</TABLE>
-2-
<PAGE> 3
PGI INCORPORATED AND SUBSIDIARIES
PART I Financial Information
Item 1 Financial Statements
<TABLE>
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
($ in thousands)
<CAPTION>
March 31, December 31,
1995 1994
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash, including restricted cash of $1,156,000
and $1,235,000 $ 1,201 $ 1,261
Receivables on real estate sales - net 1,247 1,227
Other receivables 20 19
Land and improvement inventories 9,111 9,154
Property and equipment - net 109 119
Other assets 783 788
---------- ----------
$ 12,471 $ 12,568
========== ==========
LIABILITIES
Accounts payable $ 70 $ 79
Other liabilities 1,650 1,512
Accrued interest:
Primary lender 971 791
Debentures 4,751 4,388
Other 1,192 1,162
Credit agreements -
Primary lender 7,002 7,002
Notes and mortgages payable 4,080 4,250
Convertible subordinated
debentures payable 9,059 9,059
Convertible debentures payable 1,500 1,500
---------- ----------
30,275 29,743
---------- ----------
Commitments and contingencies
STOCKHOLDERS' 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 (33,834) (33,205)
---------- ----------
(17,804) (17,175)
---------- ----------
$ 12,471 $ 12,568
========== ==========
See accompanying notes to consolidated financial statements for Form 10-QSB.
</TABLE>
-3-
<PAGE> 4
PGI INCORPORATED AND SUBSIDIARIES
PART I Financial Information (Continued)
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands)
(Unaudited)
<CAPTION>
Three Months Ended
---------------------
March 31, March 31,
1995 1994
--------- ---------
<S> <C> <C>
REVENUES
Real estate sales $ 15 $ 1,758
Interest income 52 82
Other income 248 124
-------- --------
315 1,964
-------- --------
COSTS AND EXPENSES
Cost of real estate sales 11 1,387
Selling expenses 17 76
General & administrative expenses 162 245
Interest 643 551
Other expenses 111 106
-------- --------
944 2,365
-------- --------
NET INCOME (LOSS) $ (629) $ (401)
======== ========
NET INCOME (LOSS) PER SHARE <F*>
Primary and fully diluted $ (.24) $ (.17)
======== ========
<FN>
<F*> Considers the effect of cumulative preferred dividends in arrears
for the three months ended March 31, 1995 and 1994.
See accompanying notes to consolidated financial statements for form 10-QSB.
</TABLE>
-4-
<PAGE> 5
PGI INCORPORATED AND SUBSIDIARIES
PART I Financial Information (Continued)
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
1995 1994
---------- ----------
<S> <C> <C>
Net cash provided by operating activities $ 110 $ 159
---------- ----------
Cash flows from investing activities:
Proceed from fixed asset sales - -
Purchase of property and equipment - -
---------- ----------
Net cash used in investing activities - -
---------- ----------
Cash flows from financing activities:
Principal payments on debt (170) (232)
---------- ----------
Net cash used in financial activities (170) (232)
---------- ----------
Net decrease in cash (60) (73)
Cash at beginning of period 1,261 1,521
---------- ----------
Cash at end of period $ 1,201 $ 1,448
========== ==========
See accompanying notes to consolidated financial statements for Form 10-QSB.
</TABLE>
-5-
<PAGE> 6
PGI INCORPORATED AND SUBSIDIARIES
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, however, to remain in default under the
indentures governing its convertible unsecured subordinated debentures
(the "Indentures") (See Management's Discussion and Analysis of
Financial Condition and Results of Operations). However, as more fully
discussed in Note 10 to the Company's consolidated financial statements
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 statements 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 March 31,
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
Notes to Consolidated Financial Statements (continued)
(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 three months ended March 31, 1995 and 1994. The average
number of common shares outstanding for the three months ended March 31,
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 three
months ended March 31, 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 three
months ended March 31, 1995 and 1994 was $ 70,000 and $114,000,
respectively.
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
(5) Restricted Cash
Restricted cash included cash and certificates of deposit pledged
to agencies in various states and local Florida governmental units
related to land development and environmental matters, escrowed receipts
related to pledged receivables on real estate sales and the servicing of
sold receivables and, as a result of sales agreements and Company
policies, customer payments and deposits related to homesite and housing
contracts.
-7-
<PAGE> 8
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
<TABLE>
(6) Receivables on Real Estate Sales
Net receivables on real estate sales consisted of:
<CAPTION>
March 31, December 31,
1995 1994
---------- ------------
($ in thousands)
<S> <C> <C>
Contracts receivable on homesite sales $ 2,026 $ 2,187
Other 291 123
---------- ----------
2,317 2,310
Less: Allowance for cancellations (976) (976)
Unamortized valuation discount (94) (107)
---------- ----------
$ 1,247 $ 1,227
========== ==========
</TABLE>
<TABLE>
(7) Land and Improvements
Land and improvement inventories consisted of:
<CAPTION>
March 31, December 31,
1995 1994
---------- ------------
($ in thousands)
<S> <C> <C>
Unimproved land $ 8,730 $ 8,730
Land being improved - -
Fully improved land 381 424
Completed and in progress homes held for sale - -
---------- ----------
$ 9,111 $ 9,154
========== ==========
</TABLE>
<TABLE>
(8) Property and Equipment
Property and equipment consisted of:
<CAPTION>
March 31, December 31,
1995 1994
---------- ------------
($ in thousands)
<S> <C> <C>
Furniture, fixtures and other equipment $ 407 $ 407
Construction in progress 2 2
---------- ----------
409 409
Less: Accumulated depreciation (300) (290)
---------- ----------
$ 109 $ 119
========== ==========
</TABLE>
<TABLE>
(9) Other Assets
Other assets consisted of:
<CAPTION>
March 31, 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 34 42
Deposit with Trustee of 6-1/2% debentures 116 114
Other 12 11
---------- ----------
$ 783 $ 788
========== ==========
</TABLE>
-8-
<PAGE> 9
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
<TABLE>
(10) Other Liabilities
Other Liabilities consisted of:
<CAPTION>
March 31, December 31,
1995 1994
---------- ------------
($ in thousands)
<S> <C> <C>
Accrued property taxes
- current $ 276 $ 238
- delinquent 286 303
Other accrued expenses 222 234
Deposits, advances and escrows 393 419
Estimated recourse liability for
receivables sold 300 300
Other 173 18
---------- -----------
$ 1,650 $ 1,512
========== ===========
</TABLE>
<TABLE>
(11) Primary Lender Credit Agreements, Notes and Mortgages Payable
and Convertible Subordinated Debentures Payable
Credit agreements with the Company's primary lender and notes and
mortgages payable consisted of the following:
<CAPTION>
March 31, 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 - $2,117,000
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 4,080 4,250
---------- -----------
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
---------- -----------
$ 21,641 $ 21,811
========== ===========
</TABLE>
-9-
<PAGE> 10
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
<TABLE>
(12) Real Estate Sales and Other Income
Real estate sales and cost of sales for the three months ended
March 31, 1995 and 1994 consisted of:
<CAPTION>
Three Months Ended
-------------------
March 31, March 31,
1995 1994
--------- ---------
($ in thousands)
<S> <C> <C>
Revenues:
Homesite sales $ 15 $ 64
Home sales --- 1,349
Acreage sales --- ---
--------- ---------
$ 15 $ 1,758
========= =========
Cost of Sales:
Homesite sales $ 11 $ 19
Home sales --- 1,291
Acreage sales --- 77
--------- ---------
$ 11 $ 1,387
========= =========
</TABLE>
<TABLE>
Other income for the three months ended March 31, 1995 and 1994
consisted of:
<CAPTION>
Three Months Ended
-------------------
March 31, March 31,
1995 1994
--------- ---------
($ in thousands)
<S> <C> <C>
Commission income $ 78 $ 96
Installment sale income 37 ---
Other income 133 28
--------- ---------
$ 248 $ 124
========= =========
</TABLE>
(13) Commitments and Contingencies
The aggregate outstanding balances of all receivables sold and
exchanged with recourse totaled $544,000 and $618,000 at March 31, 1995
and December 31, 1994, respectively. Based on its collection experience
with such receivables, the Company maintained allowances at both March
31, 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
-10-
<PAGE> 11
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
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:
<S> <C>
Deferred tax asset:
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>
-11-
<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 has had 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 three months of 1995 decreased by $1.6 million
to $315,000 from $1.7 million for the comparable 1994 period. A net
loss of $629,000 was incurred for the first three months of 1995
compared to a net loss of $401,000 for the first three months of 1994.
After consideration of cumulative preferred dividends in arrears,
totaling $160,000 for each of the three months ended March 31, 1995 and
1994 ($.05 per share of common stock), net losses per share of $.24 and
$.17, respectively, were reported for the three month periods ended
March 31, 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). 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.
Company management has determined that the Company's primary activity
must concentrate on one goal - the sale of sufficient additional acreage
as soon as possible to again substantially reduce the primary lender
debt as well as pay the 1993 and 1994 property taxes which will be owed
on the Sugarmill Woods acreage.
-12-
<PAGE> 13
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
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
$1.5 million gain related to the sale of the Southern Woods development.
The 1994 Secured lender Transaction has been treated as a non-cash
transaction in the Company's Statement of Cash Flows.
The resulting principal and interest due to its primary lender
retains a maturity date of July 8, 1997. Effective with the closing,
the Company's interest rate was reduced from the default rate of prime
plus 5% to prime plus 1.5%. The primary lender has granted the Company
a moratorium until May 1995 on any principal and interest payments other
than release payments associated with the sale of properties. On May 1,
1995, the Company failed to pay all accrued interest due as of that
date, as well as, pay the 1993 and 1994 property taxes owed on any
properties serving as collateral for the primary debt.
Sales revenue by major components for real estate operations,
excluding the effect of the Company's adoption of the installment method
of reporting homesite sales for the three month periods ended March 31,
1995 and 1994, were:
<TABLE>
Real estate sales and cost of sales for the three months ended
March 31, 1995 and 1994 consisted of:
<CAPTION>
Three Months Ended
-------------------
March 31, March 31,
1995 1994
--------- ---------
($ in thousands)
<S> <C> <C>
Revenues:
Homesite sales $ 15 $ 64
Home sales --- 1,349
Acreage sales --- ---
--------- ---------
$ 15 $ 1,758
========= =========
Cost of Sales:
Homesite sales $ 11 $ 19
Home sales --- 1,291
Acreage sales --- 77
--------- ---------
$ 11 $ 1,387
========= =========
</TABLE>
<TABLE>
Other income for the three months ended March 31, 1995 and 1994 consisted of:
<CAPTION>
Three Months Ended
-------------------
March 31, March 31,
1995 1994
--------- ---------
($ in thousands)
<S> <C> <C>
Commission income $ 78 $ 96
Installment sale income 37 ---
Other income 133 28
--------- ---------
$ 248 $ 124
========= =========
</TABLE>
-13-
<PAGE> 14
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Gross homesite sales revenues decreased by $49,000 from $64,000 for
the first three months of 1994 to $15,000 for the same period in 1995.
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. Gross margin on homesite sales
increased from 21.1% for the first three months of 1994 to 26.6% profit
for the first three months of 1995.
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 quarter of 1995
and subsequent reporting periods. As a result there were no home sales
during the first quarter 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 three months ended
March 31, 1995 was $110,000 compared to $159,000 for the comparable 1994
period. During the first three months of 1995, financing activities
utilized $170,000 in cash flow for normal debt repayment as compared to
$232,000 for the same period in 1994.
Analysis of Financial Condition
<TABLE>
Assets totaled $12.5 million at March 31, 1995 compared to $12.6
million at December 31, 1994, reflecting the following changes:
<CAPTION>
March 31, December 31, Increase
1995 1994 (Decrease)
---------- ------------ ----------
($ in thousands)
<S> <C> <C> <C>
Cash $ 1,201 $ 1,261 $ (60)
Receivables 1,267 1,246 21
Land and improvement inventories 9,111 9,154 (43)
Net property and equipment 109 119 (10)
Other assets 783 788 (5)
---------- ---------- ----------
$ 12,471 $ 12,568 $ (97)
========== ========== ==========
</TABLE>
-14-
<PAGE> 15
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
<TABLE>
Liabilities were $30.3 million at March 31, 1995 compared to 29.7
million at December 31, 1994, reflecting the following changes among
categories.
<CAPTION>
March 31, December 31, Increase
1995 1994 (Decrease)
---------- ------------ ----------
($ in thousands)
<S> <C> <C> <C>
Accounts payable $ 70 $ 79 $ (9)
Other liabilities 1,650 1,512 138
Accrued interest 6,914 6,341 573
Credit agreements - primary lender 7,002 7,002 -
Notes and mortgages payable 4,080 4,250 (170)
Convertible subordinated
debentures payable 9,059 9,059 -
Convertible debentures payable 1,500 1,500 -
---------- ---------- ----------
$ 30,275 $ 29,743 $ 532
========== ========== ==========
</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 was unsuccessful in
consummating a large land transaction to meet the May 1st obligation.
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>
March 31, 1995
-----------------------
Principal Unpaid
Amount Due Interest
---------- ----------
($ in thousands)
<S> <C> <C>
Convertible subordinated debentures due June 1, 1991 $ 1,034 $ 343
Convertible subordinated debentures due May 1, 1992 8,025 2,684
---------- ---------
$ 9,059 $ 3,027
========== =========
</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 and could results 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.
-15-
<PAGE> 16
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 March
31, 1995.
-16-
<PAGE> 17
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: May 12, 1995 /s/Laurence A. Schiffer
--------------------------------- ------------------------------
Laurence A. Schiffer
President
-17-
<PAGE> 18
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................................................. 19-20
15. Inapplicable.
18. Inapplicable.
19. Inapplicable.
22. Inapplicable.
23. Inapplicable.
24. Inapplicable.
27. Financial Data Schedule.................................. 21
-18-
</TABLE>
<PAGE> 1
PGI INCORPORATED AND SUBSIDIARIES
<TABLE>
EXHIBIT 11
Page 1 of 2 FACTS FOR THE COMPUTATIONS OF NET INCOME/(LOSS) PER SHARE
<CAPTION>
Three Months Ended
--------------------------
March 31, March 31,
1995 1994
---------- ----------
<S> <C> <C>
1) Net income/(loss) for period $ (629,000) $ (401,000)
========== ==========
2) Average common shares outstanding 3,317,555 3,317,555
========== ==========
3) Shares outstanding at beginning of
period 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
========== ==========
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
========== ==========
9) Average shares outstanding from assumed
conversion of debentures 1,341,076 1,341,076
========== ==========
10) Cumulative preferred dividends in arrears
for period $ 160,000 $ 160,000
========== ==========
11) Interest and amortized charge against
income for debentures during period $ 190,000 $ 190,000
========== ==========
ADJUSTMENT OF NET INCOME/(LOSS):
Primary
Net income/(loss) for period (Line 1) $ (629,000) $ (401,000)
Less cumulative preferred dividends
in arrears (Line 10) 160,000 160,000
---------- ----------
12) Adjusted net income/(loss) for primary
net income/(loss) per share (789,000) (561,000)
Fully Diluted
Add cumulative preferred dividends in
arrears on preferred stock assumed
converted (Line 10) 160,000 160,000
Add interest and amortization charged
against income for debentures
(Line 11) 190,000 190,000
Less tax effect on Line 11 - <FA> - <FA>
---------- ----------
13) Adjusted net income/(loss) for fully
diluted net income/(loss) per share $ (439,000) $ (211,000)
========== ==========
-19-
<PAGE> 2
<CAPTION>
PGI INCORPORATED AND SUBSIDIARIES
EXHIBIT 11
Page 2 of 2 FACTS FOR THE COMPUTATIONS OF NET INCOME/(LOSS) PER SHARE (Continued)
Three Months Ended
--------------------------
March 31, March 31,
1995 1994
---------- ----------
<S> <C> <C>
ADJUSTMENT OF AVERAGE SHARES OUTSTANDING:
Primary
Average shares outstanding (Line 6) 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
========== ==========
Fully Diluted
Average shares outstanding (Line 6) 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
Add average shares outstanding
from assumed conversion of
debentures (Line 9) 1,341,076 1,341,076
---------- ----------
15) Shares assumed outstanding for fully
diluted net income/(loss) per share 8,418,631 8,418,631
========== ==========
NET INCOME/(LOSS) PER SHARE:
Before Adjustment
(Line 1/Line 2) $ (.19) $ (.12)
========== ==========
Primary
(Line 12/Line 14) $ (.24) $ (.17)
========== ==========
Fully Diluted <FB>
(Line 13/Line 15) $ (.24) $ (.17)
========== ==========
<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>
-20-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,201,000
<SECURITIES> 0
<RECEIVABLES> 2,243,000
<ALLOWANCES> (976,000)
<INVENTORY> 9,111,000
<CURRENT-ASSETS> 0<F1>
<PP&E> 409,000
<DEPRECIATION> (300,000)
<TOTAL-ASSETS> 12,471,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 21,641,000
<COMMON> 332,000
0
2,000,000
<OTHER-SE> (20,136,000)
<TOTAL-LIABILITY-AND-EQUITY> 12,471,000
<SALES> 15,000
<TOTAL-REVENUES> 315,000
<CGS> 11,000
<TOTAL-COSTS> 28,000
<OTHER-EXPENSES> 273,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 643,000
<INCOME-PRETAX> (629,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (629,000)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
<FN>
<F1>CURRENT ASSETS AND CURRENT LIABILITIES VALUES ARE ZERO BECAUSE OF AN UNCLASSIFIED BALANCE SHEET
</FN>
</TABLE>
