<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, 1998
------------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ----------------- to --------------------
Commission File Number 1-6471
--------------------------------------------------
PGI INCORPORATED
------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
FLORIDA 59-0867335
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
212 SOUTH CENTRAL, SUITE 100; ST. LOUIS, MISSOURI 63105
------------------------------------------------------------------------
(Address of principal executive offices)
(314) 512-8650
------------------------------------------------------------------------
(Issuer's telephone number)
------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if changed since
last report)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No .
----- ---
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: As of May 15, 1998 there
were 5,317,758 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, 1998
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, 1998 and December 31, 1997 3
Consolidated Statements of Operations
Three Months Ended March 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1998 and 1997 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 16
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,
1998 1997
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 3 $ 2
Restricted Cash 1,194 1,173
Receivables on real estate sales - net 139 156
Other receivables 32 28
Land and improvement inventories 8,991 8,992
Property and equipment - net 15 18
Other assets 775 759
---------- ----------
$ 11,149 $ 11,128
========== ==========
LIABILITIES
Accounts payable $ 259 $ 285
Other liabilities 1,800 1,727
Accrued interest:
Primary lender 3,711 3,461
Debentures 8,595 8,238
Other 1,679 1,629
Credit agreements -
Primary lender 7,499 7,344
Notes and mortgages payable 3,780 3,750
Convertible subordinated
debentures payable 9,059 9,059
Convertible debentures payable 1,500 1,500
---------- ----------
$ 37,882 $ 36,993
---------- ----------
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; 5,317,758
shares issued and outstanding 532 532
Paid in capital 13,498 13,498
Accumulated deficit (42,763) (41,895)
---------- ----------
(26,733) (25,865)
---------- ----------
$ 11,149 $ 11,128
========== ==========
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,
1998 1997
--------- ---------
<S> <C> <C>
REVENUES
Interest income 4 11
Other income 89 134
--------- ---------
93 145
--------- ---------
COSTS AND EXPENSES
Selling expenses 5 2
General & administrative expenses 212 150
Interest 669 654
Other expenses 75 126
--------- ---------
961 932
--------- ---------
NET INCOME (LOSS) $ (868) $ (787)
========= =========
NET INCOME (LOSS) PER SHARE (<F*>)
Primary and fully diluted $ (.19) $ (.29)
========= =========
<FN>
<F*> Considers the effect of cumulative preferred dividends in arrears for
the three months ended March 31, 1998 and 1997.
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,
1998 1997
----------- ---------
<S> <C> <C>
Net cash (used in) operating activities $ (185) $ (10)
----------- --------
Cash flows from financing activities:
Proceeds from borrowings 196 67
Principal payments on debt (10) (59)
----------- --------
Net cash provided by (used in) financial activities 186 8
----------- --------
Net increase (decrease) in cash 1 (2)
Cash at beginning of period 2 12
----------- --------
Cash at end of period $ 3 $ 10
=========== ========
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, 1997.
The Company remains in default under the indentures governing its
convertible unsecured subordinated debentures and in default of its
primary debt obligations. A significant payment on the primary debt
obligation occurred with the sale of the undeveloped land in Citrus
County upon closing May 13, 1998. (See Management's Discussion and
Analysis of Financial Condition and Results of Operations and Notes 10
and 11 to the Company's consolidated financial statements for the year
ended December 31, 1997, as contained in the Company's Annual Report on
Form 10-KSB).
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,
1998 are not necessarily indicative of operations to be expected for
the fiscal year ending December 31, 1998 or any other interim period.
(2) Recognition of Real Estate Sales
The Company has adopted the installment method of profit recognition
for all homesite sales effective January 1, 1990 and thereafter. For
sales consummated prior to January 1, 1990, the Company recognized
profit under the full accrual or percentage-of-completion methods as
appropriate. The full accrual method recognizes the entire profit when
minimum down payments and other requirements are met. Under the
percentage-of-completion method, profit is recognized by the
relationship of costs incurred to total estimated costs to be incurred.
The installment method recognizes gross profit as down payments and
principal payments on contracts are received.
-6-
<PAGE> 7
PGI INCORPORATED AND SUBSIDIARIES
(3) Per Share Data
Primary per share amounts are computed by dividing net income (loss),
after considering cumulative dividends in arrears on the Company's
preferred stock, by the average number of common shares and common
stock equivalents outstanding. For this purpose, the Company's
cumulative convertible preferred stock, convertible subordinated
debentures and collateralized convertible debentures are not deemed to
be common stock equivalents, but outstanding vested stock options are
considered as such. However, under the treasury stock method, no
vested stock options were assumed to be exercised, and therefore no
common stock equivalents existed, for the calculation of primary per
share amounts for the three months ended March 31, 1998 and 1997. The
average number of common shares outstanding for the three months ended
March 31, 1998 and 1997 was 5,317,758 and 3,317,555, respectively. On
May 15, 1997, preferred dividends accrued through April 25, 1995 were
paid in the form of 2,000,203 shares of common stock.
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, 1998 and 1997, 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.
The following is a summary of the calculations used in computing basic
and diluted loss per share for March 31, 1998 and 1997:
<TABLE>
<CAPTION>
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Net Loss (868,000) (787,000)
Preferred Dividends (160,000) (160,000)
---------- ---------
Loss Available to
Common Shareholders (1,028,000) (947,000)
========== =========
Weighted Amount of Shares
Outstanding 5,317,758 3,317,555
Basic and Diluted Loss Per
Share (.19) (.29)
</TABLE>
(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, 1998
and 1997 was $12,000 and $42,000, respectively.
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
-7-
<PAGE> 8
PGI INCORPORATED AND SUBSIDIARIES
(5) Restricted Cash
Restricted cash included cash and certificates of deposit pledged to
agencies in various states and local Florida governmental units related
to land development and environmental matters, escrowed receipts
related to pledged receivables on real estate sales and the servicing
of sold receivables and, as a result of sales agreements and Company
policies, customer payments and deposits related to homesite and
housing contracts.
(6) Receivables on Real Estate Sales
Net receivables on real estate sales consisted of:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ------------
($ in thousands)
<S> <C> <C>
Contracts receivable on homesite sales $ 797 $ 816
Other 89 89
---------- ----------
886 905
Less: Allowance for cancellations (706) (706)
Unamortized valuation discount (41) (43)
---------- ----------
$ 139 $ 156
========== ==========
</TABLE>
(7) Land and Improvements
Land and improvement inventories consisted of:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ------------
($ in thousands)
<S> <C> <C>
Unimproved land $ 8,724 $ 8,724
Fully improved land 267 268
---------- ----------
$ 8,991 $ 8,992
========== ==========
</TABLE>
(8) Property and Equipment
Property and equipment consisted of:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ------------
($ in thousands)
<S> <C> <C>
Furniture, fixtures and other equipment $ 212 $ 212
Less: Accumulated depreciation (197) (194)
---------- ----------
$ 15 $ 18
========== ==========
</TABLE>
-8-
<PAGE> 9
PGI INCORPORATED AND SUBSIDIARIES
(9) Other Assets
Other assets consisted of:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
($ in thousands)
<S> <C> <C>
Guaranteed future connections, net $ 621 $ 621
Deposit with Trustee of 6-1/2% debentures 133 131
Other 21 7
---------- ----------
$ 775 $ 759
========== ==========
</TABLE>
(10) Other Liabilities
Other Liabilities consisted of:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
($ in thousands)
<S> <C> <C>
Accrued property taxes
- current $ 291 $ 230
- delinquent 722 745
Other accrued expenses 358 342
Deposits, advances and escrows 355 336
Estimated recourse liability for
receivables sold 58 58
Other 16 16
---------- -----------
$ 1,800 $ 1,727
========== ===========
</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,
1998 1997
--------- ------------
($ in thousands)
<S> <C> <C>
Credit agreements - primary lender:
(maturing July 8, 1997, bearing interest
at prime plus 5%): $ 7,499 $ 7,344
Notes and mortgages payable - $1,253,000
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 3,780 3,750
---------- -----------
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
---------- -----------
</TABLE>
-9-
<PAGE> 10
PGI INCORPORATED AND SUBSIDIARIES
Collateralized convertible debentures payable:
<TABLE>
<S> <C> <C>
At 14% interest; due July 8, 1997, convertible
into share of common stock at
$1.72 per share 1,500 1,500
---------- -----------
$ 21,838 $ 21,653
========== ===========
</TABLE>
(12) Real Estate Sales and Other Income
There were no real estate sales for the three months ended March 31,
1998 and 1997.
Other income for the three months ended March 31, 1998 and 1997
consisted of:
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, March 31,
1998 1997
--------- ----------
($ in thousands)
<S> <C> <C>
Commission income $ 79 $ 102
Other income 10 32
--------- ---------
$ 89 $ 134
========= =========
</TABLE>
(13) Commitments and Contingencies
The aggregate outstanding balances of all receivables sold and
exchanged with recourse totaled $130,000 and $145,000 at March 31, 1998
and December 31, 1997, respectively. Based on its collection experience
with such receivables, the Company maintained allowances at both March
31, 1998 and December 31, 1997, classified in other liabilities, of
$58,000 for the recourse provisions related to all receivables sold.
(14) Income Taxes
Effective January 1, 1993 the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which requires a change from the deferred method to the asset and
liability method of accounting for income taxes. Under the asset and
liability method, deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the
financial statement carrying amounts and the tax bases of existing
assets and liabilities. Under SFAS No. 109, the effect on deferred
taxes of a change in tax rates is recognized in income in the period
that includes the enactment date. Under the deferred method deferred
taxes were recognized using the tax rate applicable to the year of the
calculation and were not adjusted for subsequent changes in tax rates.
Based on the Company's current tax status and current tax laws,
adoption of SFAS No. 109 did not have a material effect on the
Company's financial position.
-10-
<PAGE> 11
PGI INCORPORATED AND SUBSIDIARIES
At December 31, 1997, the Company had an operating loss carryforward of
approximately $37,000,000 to reduce future taxable income. These
operating losses expire at various dates through 2,012.
The following summarizes the temporary differences of the Company at
December 31, 1997 at the current statutory rate:
<TABLE>
<S> <C>
Deferred tax asset:
Net operating loss carryforward $ 13,690,000
Adjustments to reduce land to
net realizable value 12,000
Expenses capitalized under IRC 263(a) 56,000
ITC carryforward 215,000
Valuation allowance (11,510,000)
------------
2,463,000
------------
Deferred tax liability
Basis difference of land and
improvement inventories 2,453,000
Excess tax over book depreciation 10,000
------------
2,463,000
------------
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
Readers should understand as they read this report 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, 1996, 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. Upon the sale of this
undeveloped land, its remaining inventory will consist of undeveloped
commercial property. At this point the Company intends to make a decision as
to 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.
On January 31, 1997, Sugarmill Woods, Inc., a Florida corporation and a
wholly-owned subsidiary of the Company, and Love-PGI Partners, L.P. ("L-PGI")
(collectively as "Seller"), entered into an Option Agreement For Sale and
Purchase ("Sale Agreement") with The Nature Conservancy, Inc., an unrelated
nonprofit District of Columbia corporation ("Purchaser"), for the sale of and
purchase of approximately 5,240 acres of certain undeveloped real estate
located in Citrus County and Hernando County, Florida ("Property").
Approximately 4,890 acres of the Property is owned by the Company, and 350
acres is owned by L-PGI.
Shareholder approval of the sale of the property was obtained at the
Annual Meeting of the Company on December 22, 1997. The Company consummated
the transaction on May 13, 1998.
Results of Operations
Revenues for the first three months of 1998 decreased by $52,000 to
$93,000 from $145,000 for the comparable 1997 period. A net loss of $868,000
was incurred for the first three months of 1998 compared to a net loss of
$787,000 for the first three months of 1997. After consideration of
cumulative preferred dividends in arrears, totaling $160,000 for each of the
three months ended March 31, 1998 and 1997 ($.05 per share of common stock),
net losses per share of $.19 and $.29, respectively, were reported for the
three month periods ended March 31, 1998 and 1997.
-12-
<PAGE> 13
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
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.
The largest investor in PGIP is Love Savings Holding Company ("LSHC")
which holds approximately a 75% interest. Messrs. Love and Schiffer own
approximately 52% of LSHC and serve as the only directors and executive
officers of LSHC. Messrs. Love, Schiffer and LSHC are the managers of PGIP.
Messrs. Love and Schiffer serve as executive officers and directors of the
Company and the other Borrowers and the Guarantors.
There were no real estate sales for the three months ended March 31,
1998 and 1997.
Other income for the three months ended March 31, 1998 and 1997
consisted of:
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, March 31,
1998 1997
--------- ---------
($ in thousands)
<S> <C> <C>
Commission income $ 79 $ 102
Other income 10 32
-------- ---------
$ 89 $ 134
======== =========
</TABLE>
-13-
<PAGE> 14
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
The Company suspended the construction of homes and sale of homes and
homesites in 1994. Starting in January 1996, the Company began concentrating
on disposing in bulk of its undeveloped, platted, residential real estate in
order to decrease its debt obligations. The Company envisioned selling off
such property and retaining its undeveloped commercial real estate for future
development or bulk sales depending on the profitability. The Company's
management closed on the sale of its undeveloped land in Citrus County on
May 13, 1998.
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 used in operating activities for the three months ended March 31,
1998 was $185,000 compared to $10,000 for the comparable 1997 period. During
the first three months of 1998, financing activities provided $186,000 in
cash flow with $196,000 in proceeds from borrowings. Net cash used in
financing activities was $10,000 for normal debt repayment as compared to
$59,000 for the same period in 1997.
Analysis of Financial Condition
Assets totaled $11.15 million at March 31, 1998 compared to $11.13
million at December 31, 1997, reflecting the following changes:
<TABLE>
<CAPTION>
March 31, December 31, Increase
1998 1997 (Decrease)
--------- ------------ ----------
($ in thousands)
<S> <C> <C> <C>
Cash and Cash Equivalents $ 3 $ 2 $ 1
Restricted Cash 1,194 1,173 21
Receivables 171 184 (13)
Land and improvement inventories 8,991 8,992 (1)
Net property and equipment 15 18 (3)
Other assets 775 759 16
---------- ---------- ---------
$ 11,149 $ 11,128 $ 21
========== ========== =========
</TABLE>
Liabilities were $37.9 million at March 31, 1998 compared to $37.0
million at December 31, 1997, reflecting the following changes among
categories.
-14-
<PAGE> 15
PGI INCORPORATED AND SUBSIDIARIES
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
<TABLE>
<CAPTION>
March 31, December 31, Increase
1998 1997 (Decrease)
--------- ------------ ----------
($ in thousands)
<S> <C> <C> <C>
Accounts payable $ 259 $ 285 $ (26)
Other liabilities 1,800 1,727 73
Accrued interest 13,985 13,328 657
Credit agreements - primary lender 7,499 7,344 155
Notes and mortgages payable 3,780 3,750 30
Convertible subordinated
debentures payable 9,059 9,059 -
Convertible debentures payable 1,500 1,500 -
---------- ---------- ----------
$ 37,882 $ 36,993 $ 889
========== ========== ==========
</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, 1998
---------------------------------
Principal Unpaid
Amount Due Interest
---------- --------
($ in thousands)
<S> <C> <C>
Convertible subordinated debentures due June 1, 1991 $ 1,034 $ 557
Convertible subordinated debentures due May 1, 1992 8,025 4,664
---------- ---------
$ 9,059 $ 5,221
========== =========
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.
-15-
<PAGE> 16
PGI INCORPORATED AND SUBSIDIARIES
PART II Other Information
Item 1 Legal Proceedings
In 1994, the Citrus County Tax Appraiser denied agricultural exemption
status for the undeveloped Sugarmill Woods property and the Company was
forced to sue the County to reclaim the tax benefit. In 1995, the Citrus
County Tax Appraiser again denied agricultural exemption status for the
undeveloped Sugarmill Woods property, but was overruled by the Value
Adjustment Board. As a result, the Tax Appraiser sued Sugarmill Woods, and
was again successful in denying the agricultural exemption for the property.
The Company has filed an appeal to reinstate the exemption. At this time the
outcome of the appeal cannot be determined.
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, 1998.
-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 15, 1998 /s/ Laurence A. Schiffer
------------------------- -------------------------------
Laurence A. Schiffer
President
-17-
<PAGE> 18
PGI INCORPORATED AND SUBSIDIARIES
</TABLE>
<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.
(See Note 3 to the consolidated financial statements.)
15. Inapplicable.
18. Inapplicable.
19. Inapplicable.
22. Inapplicable.
23. Inapplicable.
24. Inapplicable.
27. Financial Data Schedule. 19
</TABLE>
-18-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,197,000
<SECURITIES> 0
<RECEIVABLES> 877,000
<ALLOWANCES> (706,000)
<INVENTORY> 8,991,000
<CURRENT-ASSETS> 0<F1>
<PP&E> 212,000
<DEPRECIATION> (197,000)
<TOTAL-ASSETS> 11,149,000
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 21,838,000
<COMMON> 532,000
0
2,000,000
<OTHER-SE> (29,265,000)
<TOTAL-LIABILITY-AND-EQUITY> 11,149,000
<SALES> 0
<TOTAL-REVENUES> 93,000
<CGS> 0
<TOTAL-COSTS> 5,000
<OTHER-EXPENSES> 287,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 669,000
<INCOME-PRETAX> (868,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (868,000)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
<FN>
<F1> CURRENT ASSETS AND CURRENT LIABILITIES VALUES
ARE ZERO BECAUSE OF AN UNCLASSIFIED BALANCE SHEET.
</TABLE>
