<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, 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
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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)
515 OLIVE STREET, SUITE 1400; ST. LOUIS, MISSOURI 63101
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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
PGI INCORPORATED AND SUBSIDIARIES
FORM 10-QSB
For the Quarter Ended June 30, 1996
<TABLE>
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
June 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations
Three and Six Months Ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 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>
June 30, December 31,
1996 1995
---------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash, including restricted cash of $1,111,000
and $1,102,000 $ 1,115 $ 1,165
Receivables on real estate sales - net 357 682
Other receivables 15 11
Land and improvement inventories 9,022 9,031
Property and equipment - net 62 81
Other assets 758 766
---------- ----------
$ 11,329 $ 11,736
========== ==========
LIABILITIES
Accounts payable $ 78 $ 91
Other liabilities 1,441 1,143
Accrued interest:
Primary lender 1,968 1,541
Debentures 6,241 5,628
Other 1,370 1,302
Credit agreements -
Primary lender 7,283 7,287
Notes and mortgages payable 3,668 3,802
Convertible subordinated
debentures payable 9,059 9,059
Convertible debentures payable 1,500 1,500
---------- ----------
32,608 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 (37,309) (35,647)
---------- ----------
(21,279) (19,617)
---------- ----------
$ 11,329 $ 11,736
========== ==========
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 Six Months Ended
-------------------- --------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Real estate sales $ - $ - $ - $ 15
Interest income 24 47 54 99
Other income 77 204 169 452
-------- -------- -------- --------
101 251 223 566
-------- -------- -------- --------
COSTS AND EXPENSES
Cost of real estate sales - - - 11
Selling expenses 3 8 9 25
General & administrative
expenses 388 166 492 328
Interest 638 578 1,211 1,221
Other expenses 74 99 173 210
-------- -------- -------- --------
1,103 851 1,885 1,795
-------- -------- -------- --------
NET INCOME (LOSS) $ (1,002) $ (600) $ (1,662) $ (1,229)
======== ======== ======== ========
NET INCOME (LOSS) PER SHARE <F*>
Primary and fully diluted $ (.35) $ (.23) $ (.60) $ (.47)
======== ======== ======== ========
<FN>
<F*> Considers the effect of cumulative preferred dividends in arrears
for the three and six months ended June 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>
Six Months Ended
----------------------
June 30, June 30,
1996 1995
-------- --------
<S> <C> <C>
Net cash provided by operating activities $ 88 $ 234
-------- --------
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:
Proceeds from borrowings 115 -
Principal payments on debt (253) (295)
-------- --------
Net cash used in financial activities (138) (295)
-------- --------
Net decrease in cash (50) (61)
Cash at beginning of period 1,165 1,261
-------- --------
Cash at end of period $ 1,115 $ 1,200
======== ========
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 six months ended June 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
six months ended June 30, 1996 and 1995. The average number of
common shares outstanding for the six months ended June 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 six months ended June 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 six months
ended June 30, 1996 and 1995 was $103,000 and $134,000,
respectively.
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
(5) Restricted Cash
Restricted cash included cash and certificates of deposit pledged
to agencies in various states and local Florida governmental units
related to land development and environmental matters, escrowed
receipts related to pledged receivables on real estate sales and
the servicing of sold receivables and, as a result of sales
agreements and Company policies, customer payments and deposits
related to homesite and housing contracts.
-7-
<PAGE> 8
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(6) Receivables on Real Estate Sales
<TABLE>
Net receivables on real estate sales consisted of:
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
($ in thousands)
<S> <C> <C>
Contracts receivable on homesite sales $ 1,292 $ 1,599
Other 98 128
-------- --------
1,390 1,727
Less: Allowance for cancellations (976) (976)
Unamortized valuation discount (57) (69)
-------- --------
$ 357 $ 682
======== ========
</TABLE>
(7) Land and Improvements
<TABLE>
Land and improvement inventories consisted of:
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
($ in thousands)
<S> <C> <C>
Unimproved land $ 8,724 $ 8,724
Fully improved land 298 307
-------- --------
$ 9,022 $ 9,031
======== ========
</TABLE>
(8) Property and Equipment
<TABLE>
Property and equipment consisted of:
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
($ in thousands)
<S> <C> <C>
Furniture, fixtures and other equipment $ 396 $ 405
Less: Accumulated depreciation (334) (324)
-------- --------
$ 62 $ 81
======== ========
</TABLE>
(9) Other Assets
<TABLE>
Other assets consisted of:
<CAPTION>
June 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 8 13
Deposit with Trustee of 6-1/2% debentures 122 120
Other 7 12
-------- --------
$ 758 $ 766
======== ========
</TABLE>
-8-
<PAGE> 9
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(10) Other Liabilities
<TABLE>
Other Liabilities consisted of:
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
($ in thousands)
<S> <C> <C>
Accrued property taxes
- current $ 103 $ 37
- delinquent 476 249
Other accrued expenses 254 243
Deposits, advances and escrows 340 346
Estimated recourse liability for
receivables sold 252 252
Other 16 16
-------- --------
$ 1,441 $ 1,143
======== ========
</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,
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 - $1,535,000
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 3,668 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
-------- --------
$ 21,510 $ 21,648
======== ========
</TABLE>
-9-
<PAGE> 10
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(12) Real Estate Sales and Other Income
<TABLE>
Real estate sales and cost of sales for the three and six months
ended June 30, 1996 and 1995 consisted of:
<CAPTION>
Three Months Ended Six Months Ended
----------------------- -----------------------
June 30, June 30, June 30, June 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>
<TABLE>
Other income for the three and six months ended June 30, 1996 and
1995 consisted of:
<CAPTION>
Three Months Ended Six Months Ended
----------------------- -----------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Commission income $ 60 $ 80 $ 138 $ 158
Installment sale income - 61 - 98
Other income 17 63 31 196
--------- --------- --------- ---------
$ 77 $ 204 $ 169 $ 452
========= ========= ========= =========
</TABLE>
(13) Commitments and Contingencies
The aggregate outstanding balances of all receivables sold and
exchanged with recourse totaled $305,000 and $384,000 at June 30,
1996 and December 31, 1995, respectively. Based on its collection
experience with such receivables, the Company maintained allowances
at both June 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 calculation and were
-10-
<PAGE> 11
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
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.
<TABLE>
The following summarizes the temporary differences of the Company
at December 31, 1995 at the current statutory rate:
<CAPTION>
Deferred tax asset:
<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 six months of 1996 decreased by $343,000 to
$223,000 from $566,000 for the comparable 1995 period. A net loss of
$1,662,000 was incurred for the first six months of 1996 compared to a
net loss of $1,229,000 for the first six months of 1995. After
consideration of accumulation of preferred dividends in arrears,
totaling $320,000 for each of the six months ended June 30, 1996 and
1995 ($.10 per share of common stock), net losses per share of $.60 and
$.47, respectively, were reported for the six month periods ended June
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. PGIP's 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 $1.5 million gain related to the sale of the Southern Woods
development. The 1994 Secured lender Transaction has been treated as
a non-cash transaction in the Company's Statement of Cash Flows.
Sales revenue by major components for real estate operations,
excluding the effect of the Company's adoption of the installment method
of reporting homesite sales for the three and six month periods ended
June 30, 1996 and 1995, were:
<TABLE>
Real estate sales and cost of sales for the three and six months
ended June 30, 1996 and 1995 consisted of:
<CAPTION>
Three Months Ended Six Months Ended
----------------------- -----------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
($ 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>
<TABLE>
Other income for the three and six months ended June 30, 1996 and
1995 consisted of:
<CAPTION>
Three Months Ended Six Months Ended
----------------------- -----------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
($ in thousands) ($ in thousands)
<S> <C> <C> <C> <C>
Commission income $ 60 $ 80 $ 138 $ 158
Installment sale income - 61 - 98
Other income 17 63 31 196
--------- --------- --------- ---------
$ 77 $ 204 $ 169 $ 452
========= ========= ========= =========
</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 six
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 six months ended June
30, 1996 was $88,000 compared to $234,000 for the comparable 1995
period. During the first six months of 1996, financing activities
utilized $138,000 in cash flow with $253,000 for normal debt repayment
as compared to $295,000 for the same period in 1995.
Analysis of Financial Condition
<TABLE>
Assets totaled $11.3 million at June 30, 1996 compared to $11.7
million at December 31, 1995, reflecting the following changes:
<CAPTION>
June 30, December 31, Increase
1996 1995 (Decrease)
-------- ------------ ----------
($ in thousands)
<S> <C> <C> <C>
Cash $ 1,115 $ 1,165 $ (50)
Receivables 372 693 (321)
Land and improvement inventories 9,022 9,031 (9)
Net property and equipment 62 81 (19)
Other assets 758 766 (8)
--------- ---------- --------
$ 11,329 $ 11,736 $ (407)
========= ========== ========
</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 $32.6 million at June 30, 1996 compared to $31.4
million at December 31, 1995, reflecting the following changes among
categories.
<CAPTION>
June 30, December 31, Increase
1996 1995 (Decrease)
-------- ------------ ----------
($ in thousands)
<S> <C> <C> <C>
Accounts payable $ 78 $ 91 $ (13)
Other liabilities 1,441 1,143 298
Accrued interest 9,579 8,471 1,108
Credit agreements - primary lender 7,283 7,287 (4)
Notes and mortgages payable 3,668 3,802 (134)
Convertible subordinated
debentures payable 9,059 9,059 -
Convertible debentures payable 1,500 1,500 -
--------- ---------- --------
$ 32,608 $ 31,353 $ 1,255
========= ========== ========
</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.
<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, 1996
-------------------------
Principal Unpaid
Amount Due Interest
---------- ---------
($ in thousands)
<S> <C> <C>
Convertible subordinated debentures due June 1, 1991 $ 1,034 $ 432
Convertible subordinated debentures due May 1, 1992 8,025 3,478
---------- ---------
$ 9,059 $ 3,910
========== =========
</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 June
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: August 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> 1
PGI INCORPORATED AND SUBSIDIARIES
<TABLE>
FACTS FOR COMPUTATION OF NET LOSS PER SHARE
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
1) Net loss for period $ (1,002,000) $ (600,000) $ (1,662,000) $ (1,229,000)
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 $ 320,000 $ 320,000
============= ============ ============= =============
7) Interest and amortization charged against income for
debentures during period $ 190,000 $ 190,000 $ 380,000 $ 380,000
============= ============ ============= =============
ADJUSTMENT OF NET LOSS:
- -----------------------
Primary
-------
Net loss for period (Line 1) $ (1,002,000) $ (600,000) $ (1,662,000) $ (1,229,000)
Less cumulative preferred dividends in arrears
(Line 6) (160,000) (160,000) (320,000) (320,000)
------------- ------------ ------------- -------------
8) Adjusted net loss for primary net loss per share $ (1,162,000) $ (760,000) $ (1,982,000) $ (1,549,000)
============= ============ ============= =============
Fully Diluted
-------------
Adjusted net loss for primary net loss per share
(Line 8) $ (1,162,000) $ (760,000) $ (1,982,000) $ (1,549,000)
Add cumulative preferred dividends in arrears on
preferred stock ssumed converted (Line 6) 160,000 160,000 320,000 320,000
Add interest and amortization charged against income
for debentures during period (Line 7) 190,000 190,000 380,000 380,000
Tax effect on Line 7 -<FA> -<FA> -<FA> -<FA>
------------- ------------ ------------- -------------
9) Adjusted net loss for fully diluted net loss per share ($812,000) ($410,000) ($1,282,000) $(849,000)
============= ============ ============= =============
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) $ (.30) $ (.18) $ (.50) $ (.37)
======= ======= ======= =======
Primary
- -------
Net loss
(Line 8 divided by Line 10) $ (.35) $ (.23) $ (.60) $ (.47)
======= ======= ======= =======
Fully Diluted <FB>
- -------------
Net loss <FB> $ (.35) $ (.23) $ (.60) $ (.47)
======= ======= ======= =======
<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> JUN-30-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,115,000
<SECURITIES> 0
<RECEIVABLES> 1,348,000
<ALLOWANCES> (976,000)
<INVENTORY> 9,022,000
<CURRENT-ASSETS> 0 <F1>
<PP&E> 396,000
<DEPRECIATION> (334,000)
<TOTAL-ASSETS> 11,329,000
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 21,510,000
<COMMON> 332,000
0
2,000,000
<OTHER-SE> (23,611,000)
<TOTAL-LIABILITY-AND-EQUITY> 11,329,000
<SALES> 0
<TOTAL-REVENUES> 101,000
<CGS> 0
<TOTAL-COSTS> 3,000
<OTHER-EXPENSES> 462,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 638,000
<INCOME-PRETAX> (1,002,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,002,000)
<EPS-PRIMARY> (.35)
<EPS-DILUTED> (.35)
<FN>
<F1>CURRENT ASSETS AND CURRENT LIABILITIES VALUES ARE ZERO BECAUSE OF AN
UNCLASSIFIED BALANCE SHEET.
</TABLE>
