<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 September 30, 1996
-------------------------------------
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
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(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)
212 SOUTH CENTRAL, SUITE 100; ST. LOUIS, MISSOURI 63105
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(Address of principal executive offices)
(314) 512-8650
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(Issuer's telephone number)
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(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 12, 1996
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 September 30, 1996
Table of Contents
---------------------
<CAPTION>
Form 10-QSB
Page No.
-----------
<S> <C>
PART I Financial Information
Item 1 Financial Statements
Consolidated Statements of Financial Position
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations
Three & Nine Months Ended September 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 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 - 20
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>
Sept. 30, December 31,
1996 1995
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash, including restricted cash of $1,114,000
and $1,102,000 $ 1,123 $ 1,165
Receivables on real estate sales - net 341 682
Other receivables 17 11
Land and improvement inventories 9,020 9,031
Property and equipment - net 54 81
Other assets 752 766
----------- ------------
$ 11,307 $ 11,736
=========== ============
LIABILITIES
Accounts payable $ 108 $ 91
Other liabilities 1,525 1,143
Accrued interest:
Primary lender 2,214 1,541
Debentures 6,557 5,628
Other 1,407 1,302
Credit agreements -
Primary lender 7,283 7,287
Notes and mortgages payable 3,613 3,802
Convertible subordinated
debentures payable 9,059 9,059
Convertible debentures payable 1,500 1,500
----------- ------------
33,266 31,353
----------- ------------
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 (37,989) (35,647)
----------- ------------
(21,959) (19,617)
----------- ------------
$ 11,307 $ 11,736
=========== ============
See accompanying notes to consolidated financial statements for Form 10-QSB.
</TABLE>
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<PAGE> 4
PGI INCORPORATED AND SUBSIDIARIES
PART I Financial Information (Continued)
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ---------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Real estate sales $ - $ - $ - $ 15
Interest income 19 37 73 136
Other income 219 112 388 564
--------- --------- --------- ---------
238 149 461 715
--------- --------- --------- ---------
COSTS AND EXPENSES
Cost of real estate sales - - - 11
Selling expenses 1 7 10 32
General & administrative expenses 162 167 654 495
Interest 646 575 1,857 1,796
Other expenses 109 83 282 293
--------- --------- --------- ---------
918 832 2,803 2,627
--------- --------- --------- ---------
NET INCOME (LOSS) $ (680) $ (683) $ (2,342) $ (1,912)
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE<F*>
Primary and fully diluted $ (.25) $ (.25) $ (.85) $ (.72)
========= ========= ========= =========
<FN>
<F*> Considers the effect of cumulative preferred dividends in arrears for
the three and nine months ended September 30, 1996 and 1995.
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>
Nine Months Ended
---------------------------------
Sept. 30, Sept. 30,
1996 1995
--------- ---------
<S> <C> <C>
Net cash provided by operating activities $ 148 $ 319
--------- ---------
Cash flows from investing activities:
Proceed from fixed asset sales - 1
Purchase of property and equipment - -
--------- ---------
Net cash used in investing activities - 1
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings 150 -
Principal payments on debt (340) (398)
--------- ---------
Net cash used in financial activities (190) (398)
--------- ---------
Net decrease in cash (42) (78)
Cash at beginning of period 1,165 1,261
--------- ---------
Cash at end of period $ 1,123 $ 1,183
========= =========
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, 1995.
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,
1995, as contained in the Company's Annual Report on Form 10-KSB,
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 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
and nine months ended September 30, 1996 are not necessarily
indicative of operations to be expected for the fiscal year ending
December 31, 1996 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 additional accumulation of 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 nine months ended September 30, 1996 and
1995. The average number of common shares outstanding for the
nine months ended September 30, 1996 and 1995 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 nine months ended September 30, 1996 and
1995, 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 for the nine
months ended September 30, 1996 and 1995 was $149,000 and
$193,000, respectively.
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.
(5) Restricted Cash
Restricted cash included cash and certificates of deposit pledged
to agencies in various states and local Florida governmental units
related to land development and environmental matters, escrowed
receipts related to pledged receivables on real estate sales and
the servicing of sold receivables and, as a result of sales
agreements and Company policies, customer payments and deposits
related to homesite and housing contracts.
-7-
<PAGE> 8
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(6) Receivables on Real Estate Sales
Net receivables on real estate sales consisted of:
<TABLE>
<CAPTION>
Sept. 30, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Contracts receivable on homesite sales $ 1,172 $ 1,599
Other 98 128
--------- ------------
1,270 1,727
Less: Allowance for cancellations (876) (976)
Unamortized valuation discount (53) (69)
--------- ------------
$ 341 $ 682
========= ============
</TABLE>
(7) Land and Improvements
Land and improvement inventories consisted of:
<TABLE>
<CAPTION>
Sept. 30, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Unimproved land $ 8,724 $ 8,724
Fully improved land 296 307
--------- ------------
$ 9,020 $ 9,031
========= ============
</TABLE>
(8) Property and Equipment
Property and equipment consisted of:
<TABLE>
<CAPTION>
Sept. 30, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Furniture, fixtures and other equipment $ 364 $ 405
Less: Accumulated depreciation (310) (324)
--------- ------------
$ 54 $ 81
========= ============
</TABLE>
(9) Other Assets
Other assets consisted of:
<TABLE>
<CAPTION>
Sept. 30, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Guaranteed future connections related to
sale of utility plants and equipment, net $ 621 $ 621
Prepaid loan and debenture costs - 13
Deposit with Trustee of 6-1/2% debentures 124 120
Other 7 12
--------- ------------
$ 752 $ 766
========= ============
</TABLE>
-8-
<PAGE> 9
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(10) Other Liabilities
Other Liabilities consisted of:
<TABLE>
<CAPTION>
Sept. 30, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Accrued property taxes
- current $ 156 $ 37
- delinquent 479 249
Other accrued expenses 283 243
Deposits, advances and escrows 337 346
Estimated recourse liability for
receivables sold 252 252
Other 18 16
--------- ------------
$ 1,525 $ 1,143
========= ============
</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:
<TABLE>
<CAPTION>
Sept. 30, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Credit agreements - primary lender:
maturing July 8, 1997, bearing interest
at prime plus 5%: $ 7,283 $ 7,287
--------- ------------
Notes and mortgages payable - $1,447,000
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 3,613 3,802
--------- ------------
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
--------- ------------
$ 21,455 $ 21,648
========= ============
</TABLE>
-9-
<PAGE> 10
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(12) Real Estate Sales and Other Income
Real estate sales and cost of sales for the three and nine
months ended September 30, 1996 and 1995 consisted of:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ---------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
--------- --------- --------- ---------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Revenues:
Homesite sales $ - $ - $ - $ 15
Home sales - - - -
Acreage sales - - - -
--------- --------- --------- ---------
$ - $ - $ - $ 15
========= ========= ========= =========
Cost of Sales:
Homesite sales $ - $ - $ - $ 11
Home sales - - - -
Acreage sales - - - -
--------- --------- --------- ---------
$ - $ - $ - $ 11
========= ========= ========= =========
</TABLE>
Other income for the three and nine months ended September 30,
1996 and 1995 consisted of:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ---------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
--------- --------- --------- ---------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Commission income $ 107 $ 54 $ 245 $ 212
Installment sale income - 53 - 151
Other income 112 5 143 201
--------- --------- --------- ---------
$ 219 $ 112 $ 388 $ 564
========= ========= ========= =========
</TABLE>
(13) Commitments and Contingencies
The aggregate outstanding balances of all receivables sold and
exchanged with recourse totaled $276,000 and $384,000 at September
30, 1996 and December 31, 1995, respectively. Based on its
collection experience with such receivables, the Company
maintained allowances at both September 30, 1996 and December 31,
1995, classified in other liabilities, of $252,000 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
-10-
<PAGE> 11
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
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, 1995, 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.
The following summarizes the temporary differences of the Company
at December 31, 1995 at the current statutory rate:
Deferred tax asset:
<TABLE>
<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>
-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 and will not be in
a position to do so until its debt obligations have been substantially
reduced. The reason the Company is no longer pursuing its core business
is set forth with more particularity below.
During the fiscal year ended December 31, 1995, 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 parcels or by selling in bulk.
Results of Operations
Revenues for the first nine months of 1996 decreased by $254,000 to
$461,000 from $715,000 for the comparable 1995 period. A net loss of
$2,342,000 was incurred for the first nine months of 1996 compared to
a net loss of $1,912,000 for the first nine months of 1995. After
consideration of accumulation of preferred dividends in arrears,
totaling $480,000 for each of the nine months ended September 30, 1996
and 1995 ($.15 per share of common stock), net losses per share of $.85
and $.72, respectively, were reported for the nine month periods ended
September 30, 1996 and 1995.
On March 28, 1996, the Company's primary lender, First Union National
Bank of Florida, a national banking association ("First Union") assigned
to PGIP L.L.C., a Missouri limited liability company ("PGIP") all of
First Union's right, title and interest in and to the documents (the
"Loan Documents") evidencing and securing its primary credit agreements
with the Company and the Company's subsidiaries, Sugarmill Woods, Inc.,
Burnt Store Marina, Inc. and Gulf Coast Credit Corporation
(collectively, the "Borrowers"), which credit agreements are in default
and the maturity of the indebtedness secured thereby has been
accelerated.
The Company has been advised by PGIP that it will be the policy of
PGIP not to proceed with collection of the principal and interest
evidenced and secured by the Loan Documents so long as PGI pursues
satisfactory efforts to market and sell the Property. PGIPs policy,
but not its contractual obligation, will be to facilitate sales of the
Property by agreeing to the release of Property to be sold from the lien
of the Loan Documents against payments of the net sale proceeds
therefrom, after all expenses, closing costs and the like incurred by
PGI in connection with any such sale, in a manner to be agreed upon by
PGIP and PGI.
-12-
<PAGE> 13
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
PGIP is managed by Love Savings Holding Company ("LSHC"), Andrew S.
Love, Jr. and Laurence A. Schiffer. Messrs. Love and Schiffer are
directors and executive officers of LSHC and own slightly more than half
of all the issued and outstanding voting stock of LSHC. Messrs. Love
and Schiffer serve as executive officers and directors of the Company
and the other Borrowers and the Guarantors.
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.
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 $1.5 million gain related to the sale of the Southern Woods
development. The 1994 Secured lender Transaction has been treated as
a non-cash transaction in the Company's Statement of Cash Flows.
Sales revenue by major components for real estate operations,
excluding the effect of the Company's adoption of the installment method
of reporting homesite sales for the three and nine month periods ended
September 30, 1996 and 1995, were:
Real estate sales and cost of sales for the three and nine months
ended September 30, 1996 and 1995 consisted of:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ---------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
--------- --------- --------- ---------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Revenues:
Homesite sales $ - $ - $ - $ 15
Home sales - - - -
Acreage sales - - - -
--------- --------- --------- ---------
$ - $ - $ - $ 15
========= ========= ========= =========
Cost of Sales:
Homesite sales $ - $ - $ - $ 11
Home sales - - - -
Acreage sales - - - -
--------- --------- --------- ---------
$ - $ - $ - $ 11
========= ========= ========= =========
</TABLE>
Other income for the three and nine months ended September 30,
1996 and 1995 consisted of:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ---------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
--------- --------- --------- ---------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Commission income $ 107 $ 54 $ 245 $ 212
Installment sale income - 53 - 151
Other income 112 5 143 201
--------- --------- --------- ---------
$ 219 $ 112 $ 388 $ 564
========= ========= ========= =========
</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 to zero for the first nine
months of 1996 from $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.
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.
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 nine months ended
September 30, 1996 was $148,000 compared to $319,000 for the comparable
1995 period. During the first nine months of 1996, financing activities
utilized $190,000 in cash flow with $340,000 for normal debt repayment
as compared to $398,000 for the same period in 1995.
Analysis of Financial Condition
Assets totaled $11.3 million at September 30, 1996 compared to
$11.7 million at December 31, 1995, reflecting the following changes:
<TABLE>
<CAPTION>
Sept. 30, December 31, Increase
1996 1995 (Decrease)
--------- ------------ ----------
($ in thousands)
<S> <C> <C> <C>
Cash $ 1,123 $ 1,165 $ (42)
Receivables 358 693 (335)
Land and improvement inventories 9,020 9,031 (11)
Net property and equipment 54 81 (27)
Other assets 752 766 (14)
--------- ------------ ---------
$ 11,307 $ 11,736 $ (429)
========= ============ =========
</TABLE>
-14-
<PAGE> 15
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Liabilities were $33.3 million at September 30, 1996 compared to $31.4
million at December 31, 1995, reflecting the following changes among
categories.
<TABLE>
<CAPTION>
Sept. 30, December 31, Increase
1996 1995 (Decrease)
--------- ------------ ----------
($ in thousands)
<S> <C> <C> <C>
Accounts payable $ 108 $ 91 $ 17
Other liabilities 1,525 1,143 382
Accrued interest 10,178 8,471 1,707
Credit agreements - primary lender 7,283 7,287 (4)
Notes and mortgages payable 3,613 3,802 (189)
Convertible subordinated
debentures payable 9,059 9,059 -
Convertible debentures payable 1,500 1,500 -
--------- ------------ ----------
$ 33,266 $ 31,353 $ 1,913
========= ============ ==========
</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.
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:
<TABLE>
<CAPTION>
Sept. 30, 1996
----------------------------------
Principal Unpaid
Amount Due Interest
---------- --------
($ in thousands)
<S> <C> <C>
Convertible subordinated debentures due June 1, 1991 $ 1,034 $ 450
Convertible subordinated debentures due May 1, 1992 8,025 3,642
---------- --------
$ 9,059 $ 4,092
========== ========
</TABLE>
The Company does not have funds available to make any payments of
either principal or interest on the above debentures. The Company has
investigated the consequences of a bankruptcy filing and believes that
such a course is not in the best interest of either the debenture or
equity holders because a bankruptcy filing would negatively impact the
Company's business and its ability to maximize its results from bulk
sales of land.
-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 September
30, 1996.
-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: November 13, 1996 /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
15. Inapplicable.
18. Inapplicable.
19. Inapplicable.
22. Inapplicable.
23. Inapplicable.
24. Inapplicable.
27. Financial Data Schedule.................................. 20
</TABLE>
-18-
<PAGE> 19
<TABLE>
PGI INCORPORATED AND SUBSIDIARIES
FACTS FOR COMPUTATION OF NET LOSS PER SHARE
<CAPTION>
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
---------------------------- ---------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
1) Net loss for period $ (680,000) $ (683,000) $(2,342,000) $(1,912,000)
2) Average shares outstanding before assumed exercise of stock
options and conversion of preferred stock and debentures 3,317,555 3,317,555 3,317,555 3,317,555
========== ========== =========== ===========
3) Average shares outstanding from assumed exercise of stock options:
Primary - - - -
========== ========== =========== ===========
Fully diluted - - - -
========== ========== =========== ===========
4) Average shares outstanding from assumed conversion of preferred
stock 3,760,000 3,760,000 3,760,000 3,760,000
========== ========== =========== ===========
5) Average shares outstanding from assumed conversion of debentures 1,341,076 1,341,076 1,341,076 1,341,076
========== ========== =========== ===========
6) Cumulative preferred dividends in arrears $ 160,000 $ 160,000 $ 480,000 $ 480,000
========== ========== =========== ===========
7) Interest and amortization charged against income for debentures
during period $ 190,000 $ 190,000 $ 569,000 $ 569,000
========== ========== =========== ===========
ADJUSTMENT OF NET LOSS:
- ----------------------
Primary
-------
Net loss for period (Line 1) $ (680,000) $ (683,000) $(2,342,000) $(1,912,000)
Less cumulative preferred dividends in arrears (Line 6) (160,000) (160,000) (480,000) (480,000)
---------- ---------- ----------- -----------
8) Adjusted net loss for primary net loss per share $ (840,000) $ (843,000) $(2,822,000) $(2,392,000)
========== ========== =========== ===========
Fully Diluted
-------------
Adjusted net loss for primary net loss per share (Line 8) $ (840,000) $ (843,000) $(2,822,000) $(2,392,000)
Add cumulative preferred dividends in arrears on preferred stock
assumed converted (Line 6) 160,000 160,000 480,000 480,000
Add interest and amortization charged against income for
debentures during period (Line 7) 190,000 190,000 569,000 569,000
Tax effect on Line 7 -<FA> -<FA> -<FA> -<FA>
---------- ---------- ----------- -----------
9) Adjusted net loss for fully diluted net loss per share $ (490,000) $ (493,000) $(1,773,000) $(1,343,000)
========== ========== =========== ===========
ADJUSTMENT OF AVERAGE SHARES OUTSTANDING
- ----------------------------------------
Primary
-------
Average shares outstanding (Line 2) 3,317,555 3,317,555 3,317,555 3,317,555
Average shares outstanding (Line 3) - - - -
---------- ---------- ----------- -----------
10) Shares assumed outstanding for primary net loss per share 3,317,555 3,317,555 3,317,555 3,317,555
========== ========== =========== ===========
Fully Diluted
-------------
Average shares outstanding (Line 2) 3,317,555 3,317,555 3,317,555 3,317,555
Average shares outstanding from assumed exercise of stock
options (Line 3) - - - -
Average shares outstanding from assumed conversion of preferred
stock (Line 4) 3,760,000 3,760,000 3,760,000 3,760,000
Average shares outstanding from assumed conversion of debentures
(Line 5) 1,341,076 1,341,076 1,341,076 1,341,076
---------- ---------- ----------- -----------
11) Shares assumed outstanding for fully diluted net loss per share 8,418,631 8,418,631 8,418,631 8,418,631
========== ========== =========== ===========
NET LOSS PER SHARE:
- -------------------
Before Adjustment
- -----------------
(Line 1 divided by Line 2) $ (.20) $ (.21) $ (.71) $ (.58)
====== ====== ====== ======
Primary
- -------
Net loss
(Line 8 divided by Line 10) $ (.25) $ (.25) $ (.85) $ (.72)
====== ====== ====== ======
Fully Diluted<FB>
- -------------
Net loss<FB> $ (.25) $ (.25) $ (.85) $ (.72)
====== ====== ====== ======
<FN>
- --------------------------
<FA> No tax calculation has been made because of full utilization of all available tax benefits for financial account purposes.
<FB> Fully diluted net loss per share is the same as primary net loss per share due to anti-dilutive effect of assumed exercise of
stock options and conversion of preferred stock and debentures to common stock.
</TABLE>
-19-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,123,000
<SECURITIES> 0
<RECEIVABLES> 1,234,000
<ALLOWANCES> (876,000)
<INVENTORY> 9,020,000
<CURRENT-ASSETS> 0<F1>
<PP&E> 364,000
<DEPRECIATION> (310,000)
<TOTAL-ASSETS> 11,307,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 21,455,000
<COMMON> 332,000
0
2,000,000
<OTHER-SE> (24,291,000)
<TOTAL-LIABILITY-AND-EQUITY> 11,307,000
<SALES> 0
<TOTAL-REVENUES> 238,000
<CGS> 0
<TOTAL-COSTS> 1,000
<OTHER-EXPENSES> 271,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 646,000
<INCOME-PRETAX> (680,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (680,000)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
<FN>
<F1>CURRENT ASSETS AND CURRENT LIABILITIES VALUES ARE ZERO BECAUSE OF AN
UNCLASSIFIED BALANCE SHEET.
</TABLE>
