<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, 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)
515 OLIVE STREET, SUITE 1400; ST. LOUIS, MISSOURI 63101
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(Address of principal executive offices)
(314) 982-0780
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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 May 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 March 31, 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
March 31, 1996 and December 31, 1995 3
Consolidated Statements of Operations
Three Months Ended March 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 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>
March 31, December 31,
1996 1995
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash, including restricted cash of $1,122,000
and $1,102,000 $ 1,130 $ 1,165
Receivables on real estate sales - net 488 682
Other receivables 13 11
Land and improvement inventories 9,028 9,031
Property and equipment - net 73 81
Other assets 754 766
---------- ----------
$ 11,486 $ 11,736
========== ==========
LIABILITIES
Accounts payable $ 73 $ 91
Other liabilities 1,199 1,143
Accrued interest:
Primary lender 1,724 1,541
Debentures 5,931 5,628
Other 1,336 1,302
Credit agreements -
Primary lender 7,283 7,287
Notes and mortgages payable 3,658 3,802
Convertible subordinated
debentures payable 9,059 9,059
Convertible debentures payable 1,500 1,500
---------- ----------
31,763 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 (36,307) (35,647)
---------- ----------
(20,277) (19,617)
---------- ----------
$ 11,486 $ 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
------------------------
March 31, March 31,
1996 1995
--------- ---------
<S> <C> <C>
REVENUES
Real estate sales $ - $ 15
Interest income 30 52
Other income 92 248
-------- --------
122 315
-------- --------
COSTS AND EXPENSES
Cost of real estate sales - 11
Selling expenses 6 17
General & administrative expenses 104 162
Interest 573 643
Other expenses 99 111
-------- --------
782 944
-------- --------
NET INCOME (LOSS) $ (660) $ (629)
======== ========
NET INCOME (LOSS) PER SHARE<F*>
Primary and fully diluted $ (.25) $ (.24)
======== ========
<FN>
<F*> Considers the effect of cumulative preferred dividends in arrears
for the three months ended March 31, 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>
Three Months Ended
------------------------
March 31, March 31,
1996 1995
--------- ---------
<S> <C> <C>
Net cash provided by operating activities $ 113 $ 110
--------- ---------
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 (148) (170)
--------- ---------
Net cash used in financial activities (148) (170)
--------- ---------
Net decrease in cash (35) (60)
Cash at beginning of period 1,165 1,261
--------- ---------
Cash at end of period $ 1,130 $ 1,201
========= =========
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 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, 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 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, 1996 and 1995. The average number of common
shares outstanding for the three months ended March 31, 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 three months ended March 31, 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 three
months ended March 31, 1996 and 1995 was $53,000 and $70,000,
respectively.
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
(5) Restricted Cash
Restricted cash included cash and certificates of deposit pledged
to agencies in various states and local Florida governmental
units related to land development and environmental matters,
escrowed receipts related to pledged receivables on real estate
sales and the servicing of sold receivables and, as a result of
sales agreements and Company policies, customer payments and
deposits related to homesite and housing contracts.
-7-
<PAGE> 8
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(6) Receivables on Real Estate Sales
Net receivables on real estate sales consisted of:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Contracts receivable on homesite sales $ 1,427 $ 1,599
Other 100 128
---------- ----------
1,527 1,727
Less: Allowance for cancellations (976) (976)
Unamortized valuation discount (63) (69)
---------- ----------
$ 488 $ 682
========== ==========
</TABLE>
(7) Land and Improvements
Land and improvement inventories consisted of:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Unimproved land $ 8,724 $ 8,724
Fully improved land 304 307
---------- ----------
$ 9,028 $ 9,031
========== ==========
</TABLE>
(8) Property and Equipment
Property and equipment consisted of:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Furniture, fixtures and other equipment $ 405 $ 405
Less: Accumulated depreciation (332) (324)
---------- ----------
$ 73 $ 81
========== ==========
</TABLE>
(9) Other Assets
Other assets consisted of:
<TABLE>
<CAPTION>
March 31, 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 6 13
Deposit with Trustee of 6-1/2% debentures 121 120
Other 6 12
---------- ----------
$ 754 $ 766
========== ==========
</TABLE>
-8-
<PAGE> 9
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(10) Other Liabilities
Other Liabilities consisted of:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Accrued property taxes
- current $ 51 $ 37
- delinquent 249 249
Other accrued expenses 272 243
Deposits, advances and escrows 359 346
Estimated recourse liability for
receivables sold 252 252
Other 16 16
---------- -----------
$ 1,199 $ 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>
March 31, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Credit agreements - primary lender:
(maturing July 8, 1997, bearing interest
at prime plus 5%):
Revolving land loan line of credit $ 4,297 $ 4,297
Receivable loan payable 2,705 2,705
Real estate taxes payable 266 270
Legal fees payable 15 15
---------- -----------
7,283 7,287
---------- -----------
Notes and mortgages payable - $1,640,000
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 3,658 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
---------- -----------
$ 21,500 $ 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 months ended
March 31, 1996 and 1995 consisted of:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <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 months ended March 31, 1996 and 1995
consisted of:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Commission income $ 78 $ 78
Installment sale income - 37
Other income 14 133
---------- ------------
$ 92 $ 248
========== ============
</TABLE>
(13) Commitments and Contingencies
The aggregate outstanding balances of all receivables sold and
exchanged with recourse totaled $344,000 and $384,000 at March 31,
1996 and December 31, 1995, respectively. Based on its collection
experience with such receivables, the Company maintained
allowances at both March 31, 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,
-10-
<PAGE> 11
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
deferred taxes were recognized using the tax rate applicable to the year
of the calculation and were not adjusted for subsequent changes in tax
rates. Based on the Company's current tax status and current tax laws,
adoption of SFAS No. 109 did not have a material effect on the Company's
financial position.
At December 31, 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:
<TABLE>
<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.
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 properties or by selling
in bulk.
Results of Operations
Revenues for the first three months of 1996 decreased by $193,000
to $122,000 from $315,000 for the comparable 1995 period. A net loss
of $660,000 was incurred for the first three months of 1996 compared
to a net loss of $629,000 for the first three months of 1995. After
consideration of cumulative preferred dividends in arrears, totaling
$160,000 for each of the three months ended March 31, 1996 and 1995
($.05 per share of common stock), net losses per share of $.25 and
$.24, respectively, were reported for the three month periods ended
March 31, 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 disposition 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 $1.5 million gain related to the
sale of the Southern Woods development. The 1994 Secured lender
Transaction has been treated as a non-cash transaction in the
Company's Statement of Cash Flows.
Sales revenue by major components for real estate operations,
excluding the effect of the Company's adoption of the installment
method of reporting homesite sales for the three month periods ended
March 31, 1996 and 1995, were:
Real estate sales and cost of sales for the three months ended
March 31, 1996 and 1995 consisted of:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Revenues:
Homesite sales $ - $ 15
Home sales - -
Acreage sales - -
---------- -----------
$ - $ 15
========== ===========
Cost of Sales:
Homesite sales $ - $ 11
Home sales - -
Acreage sales - -
---------- -----------
$ - $ 11
========== ===========
Other income for the three months ended March 31, 1996 and 1995 consisted of:
<CAPTION>
Three Months Ended
-------------------------
March 31, December 31,
1996 1995
--------- ------------
($ in thousands)
<S> <C> <C>
Commission income $ 78 $ 78
Installment sale income - 37
Other income 14 133
---------- -----------
$ 92 $ 248
========== ===========
</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
three 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 three months ended
March 31, 1996 was $113,000 compared to $110,000 for the comparable
1995 period. During the first three months of 1996, financing
activities utilized $148,000 in cash flow for normal debt repayment as
compared to $170,000 for the same period in 1995.
Analysis of Financial Condition
Assets totaled $11.5 million at March 31, 1996 compared to
$11.7 million at December 31, 1995, reflecting the following
changes:
<TABLE>
<CAPTION>
March 31, December 31, Increase
1996 1995 Decrease
--------- ------------ --------
($ in thousands)
<S> <C> <C> <C>
Cash $ 1,130 $ 1,165 $ (35)
Receivables 501 693 (192)
Land and improvement inventories 9,028 9,031 (3)
Net property and equipment 73 81 (8)
Other assets 754 766 (12)
---------- ---------- ---------
$ 11,486 $ 11,736 $ (250)
========== ========== =========
</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 $31.8 million at March 31, 1996 compared to $31.4
million at December 31, 1995, reflecting the following changes among
categories.
<TABLE>
<CAPTION>
March 31, December 31, Increase
1996 1995 Decrease
--------- ------------ --------
($ in thousands)
<S> <C> <C> <C>
Accounts payable $ 73 $ 91 $ (18)
Other liabilities 1,199 1,143 56
Accrued interest 8,991 8,471 520
Credit agreements - primary lender 7,283 7,287 (4)
Notes and mortgages payable 3,658 3,802 (144)
Convertible subordinated
debentures payable 9,059 9,059 -
Convertible debentures payable 1,500 1,500 -
---------- --------- ----------
$ 31,763 $ 31,353 $ 410
========== ========= ==========
</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>
March 31, 1996
-----------------------------
Principal Unpaid
Amount Due Interest
---------- --------
($ in thousands)
<S> <C> <C>
Convertible subordinated debentures due June 1, 1991 $ 1,034 $ 414
Convertible subordinated debentures due May 1, 1992 8,025 3,315
---------- ---------
$ 9,059 $ 3,729
========== =========
</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 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.
-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, 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: May 12, 1996 /s/Laurence A. Schiffer
--------------------------- --------------------------------
Laurence A. Schiffer
President
-17-
<PAGE> 18
<TABLE>
PGI INCORPORATED AND SUBSIDIARIES
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
<TABLE>
PGI INCORPORATED AND SUBSIDIARIES
FACTS FOR COMPUTATION OF NET LOSS PER SHARE
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
---- ----
<S> <C> <C>
1) Net loss for period $ ( 660,000) $ ( 629,000)
2) Average shares outstanding before assumed exercise of
stock options and conversion of preferred stock and
debentures 3,317,555 3,317,555
=========== ===========
3) 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
=========== ===========
5) Average shares outstanding from assumed conversion of
debentures 1,341,076 1,341,076
=========== ===========
6) Cumulative preferred dividends in arrears $ 160,000 $ 160,000
=========== ===========
7) Interest and amortization charged against income for
debentures during period $ 190,000 $ 190,000
=========== ===========
ADJUSTMENT OF NET LOSS:
- -----------------------
Primary
-------
Net loss for period (Line 1) $ ( 660,000) $ ( 629,000)
Less cumulative preferred dividends in arrears (Line 6) ( 160,000) ( 160,000)
----------- -----------
8) Adjusted net loss for primary net loss per share $ ( 820,000) $ ( 789,000)
=========== ===========
Fully Diluted
-------------
Adjusted net loss for primary net loss per share (Line 8) $ (820,000) $ (789,000)
Add cumulative preferred dividends in arrears on preferred
stock assumed converted (Line 6) 160,000 160,000
Add interest and amortization charged against income for
debentures during period (Line 7) 190,000 190,000
Tax effect on Line 7 -<FA> -<FA>
----------- -----------
9) Adjusted net loss for fully diluted net loss per share ($470,000) $ (439,000)
=========== ===========
ADJUSTMENT OF AVERAGE SHARES OUTSTANDING
- ----------------------------------------
Primary
- -------
Average shares outstanding (Line 2) 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
=========== ===========
Fully Diluted
- -------------
Average shares outstanding (Line 2) 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
Average shares outstanding from assumed conversion of
debentures (Line 5) 1,341,076 1,341,076
----------- -----------
11) Shares assumed outstanding for fully diluted net loss
per share 8,418,631 8,418,631
=========== ===========
NET LOSS PER SHARE:
- -------------------
Before Adjustment
- -----------------
(Line 1 + Line 2) $ (.20) $ (.19)
Primary ====== ======
- -------
Net loss
(Line 8 + Line 10) $ (.25) $ (.24)
====== ======
Fully Diluted<FB>
- -------------
Net loss<FB> $ (.25) $ (.24)
====== ======
- --------------------------
<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> MAR-31-1996
<PERIOD-START> JAN-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,130,000
<SECURITIES> 0
<RECEIVABLES> 1,477,000
<ALLOWANCES> (976,000)
<INVENTORY> 9,028,000
<CURRENT-ASSETS> 0<F1>
<PP&E> 405,000
<DEPRECIATION> (332,000)
<TOTAL-ASSETS> 11,486,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 21,500,000
<COMMON> 332,000
0
2,000,000
<OTHER-SE> (22,609,000)
<TOTAL-LIABILITY-AND-EQUITY> 11,486,000
<SALES> 0
<TOTAL-REVENUES> 122,000
<CGS> 0
<TOTAL-COSTS> 6,000
<OTHER-EXPENSES> 203,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 573,000
<INCOME-PRETAX> (660,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (660,000)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
<FN>
<F1> CURRENT ASSETS AND CURRENT LIABILITIES VALUES ARE ZERO BECAUSE
OF AN UNCLASSIFIED BALANCE SHEET.
</TABLE>
