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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[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 0-19737
NOEL GROUP, INC.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-2649262
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
667 Madison Avenue, New York, New York 10021-8029
- ---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
(212) 371-1400
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 8, 1998
- ------------------------------- ---------------------------
Common Stock - $.10 Par Value 20,567,757
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NOEL GROUP, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
Part I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Statements of Net Assets in Liquidation (Liquidation Basis)
March 31, 1998 and December 31, 1997 3
Statement of Changes in Net Assets in Liquidation (Liquidation Basis)
Three Months Ended March 31, 1998 4
Consolidated Statement of Operations (Going-Concern Basis)
Three Months Ended March 31, 1997 5
Condensed Consolidated Statement of Cash Flows (Going-Concern Basis)
Three Months Ended March 31, 1997 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 3. Defaults upon Senior Securities 17
Item 6. Exhibits and Reports on Form 8-K 17
</TABLE>
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PART 1 - FINANCIAL INFORMATION
Item 1. - Financial Statements
NOEL GROUP, INC.
STATEMENTS OF NET ASSETS IN LIQUIDATION
(Liquidation Basis)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents ......................... $ 356 $ 3,493
Short-term investments............................. 1,886 9,697
-------- ---------
Total cash and short-term investments ............. 2,242 13,190
Investments (Note 2) .............................. 60,122 58,183
Income taxes (Note 4) ............................. 695 5,134
Other assets ...................................... 11,534 12,405
-------- --------
Total assets ...................................... 74,593 88,912
-------- --------
LIABILITIES
Accounts payable .................................. -- 281
Accrued expenses (Note 5) ......................... 4,016 5,070
--------- ---------
Total liabilities ................................. 4,016 5,351
--------- ---------
Net assets in liquidation ......................... $70,577 $83,561
======= =======
Number of common shares outstanding ............... 20,567,757 20,567,757
========== ==========
Net assets in liquidation per outstanding share ... $3.43 $4.06
===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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NOEL GROUP, INC.
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(Liquidation Basis)
(Unaudited, dollars in thousands)
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31, 1998
--------------
<S> <C>
Net assets in liquidation at January 1 .......................................................... $83,561
Changes in estimated liquidation values of assets and liabilities (Note 3) ...................... 1,413
Distribution to shareholders (Note 6) ........................................................... (14,397)
-------
Net assets in liquidation at March 31 ......................................................... $70,577
=======
</TABLE>
The accompanying notes are an integral part of this financial statement.
4
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NOEL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Going-Concern Basis)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1997
---------------------
<S> <C>
SALES.............................................................. $38,473
Cost and Expense Items:
Cost of sales...................................................... 20,711
Selling, general, administrative and other expenses................ 17,220
Loss on disposal of Carlyle's thread division...................... 4,364
Depreciation and amortization...................................... 862
-------
43,157
-------
Operating loss .................................................... (4,684)
-------
OTHER INCOME (EXPENSE):
Gain on sale of HealthPlan Services Corporation .................. 15,098
Other income ...................................................... 237
Loss from equity investments....................................... (354)
Interest expense................................................... (1,670)
Minority interest.................................................. 501
-------
13,812
-------
Income from continuing operations before income taxes.............. 9,128
Provision for income taxes ........................................ (10,437)
-------
Net loss...................................................... $(1,309)
=======
BASIC EARNINGS PER SHARE FROM:
Net loss ..................................................... $(0.06)
======
Weighted average shares outstanding ............................... 20,402,891
==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
5
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NOEL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Going-Concern Basis)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31, 1997
--------------
<S> <C>
Net Cash Used for Operating Activities........................... $(5,949)
--------
Cash Flows From Investing Activities:
Purchases of short-term investments, net ........................ (2,752)
Sales of investments ............................................ 26,400
Sales of investments ............................................ 51,924
Purchases of property, plant and equipment ...................... (787)
Other, net ...................................................... (148)
--------
Net cash provided from investing activities...................... 74,637
--------
Cash Flows Used for Financing Activities:
Borrowings from revolving credit line and long-term debt......... 41,121
Repayments of revolving credit line and long-term debt........... (76,698)
Issuance of common stock, net.................................... 910
Change in other long-term liabilities............................ 90
Other, net....................................................... (19)
--------
Net cash used for financing activities........................... (34,596)
--------
Effect of exchange rates on cash................................. (38)
--------
Net increase in cash and cash equivalents ....................... $34,054
========
Supplemental Disclosure of Cash Flow Information:
Interest paid ................................................... $1,993
========
Taxes paid ...................................................... $ 43
========
</TABLE>
The accompanying notes are an integral part of this financial statement.
6
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NOEL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
This Report on Form 10-Q contains, in addition to historical
information, certain forward-looking statements, including those regarding
valuation of assets and liabilities. Such statements, including, as more fully
set forth below, those relating to management's estimates of the net value of
the Company's assets in liquidation, involve certain risks and uncertainties,
including, without limitation, those risks and uncertainties discussed below.
Should one or more of these risks or uncertainties materialize, actual outcomes
may vary materially from those indicated.
LIQUIDATION BASIS STATEMENTS
1. PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION
On March 19, 1997, the shareholders of Noel Group, Inc. ("Noel")
approved a Plan of Complete Liquidation and Dissolution (the "Plan"), which was
adopted by Noel's Board of Directors on May 21, 1996. Under the Plan, Noel is
being liquidated (i) by the sale of such of its assets as are not to be
distributed in kind to its shareholders, and (ii) after paying or providing for
all its claims, obligations and expenses, by cash and in-kind distributions to
its shareholders pro rata and if required by the Plan or deemed necessary by the
Board of Directors, by distributions of its assets from time to time to one or
more liquidating trusts established for the benefit of the then shareholders, or
by a final distribution of its then remaining assets to a liquidating trust
established for the benefit of the then shareholders.
As a result of the adoption of the Plan by the shareholders, Noel
adopted the liquidation basis of accounting as of April 1, 1997. Under the
liquidation basis of accounting, assets are stated at their estimated net
realizable values and liabilities are stated at their anticipated settlement
amounts. See Note 2 for a specific discussion of the methods used to determine
estimated net realizable values of investments.
The valuation of assets and liabilities necessarily requires many
estimates and assumptions and there are substantial uncertainties in carrying
out the provisions of the Plan. The actual value of any liquidating
distributions will depend upon a variety of factors including, but not limited
to, the actual market prices of any securities distributed in-kind when they are
distributed, the actual proceeds from the sale or other disposition of any of
Noel's assets, the ultimate settlement amounts of Noel's liabilities and
obligations, actual costs incurred in connection with carrying out the Plan,
including administrative costs during the liquidation period and the actual
timing of distributions.
The valuations presented in the accompanying Statements of Net Assets
in Liquidation represent management's estimates, based on present facts and
circumstances, of the net realizable values of assets and costs associated with
carrying out the provisions of the Plan based on the assumptions set forth in
the accompanying notes, which assumptions management believes to be reasonable,
based on present facts and circumstances. The actual values and costs are
expected to differ from the amounts shown herein and could be higher or lower
than the amounts recorded. Accordingly, it is not possible to predict the
aggregate net values ultimately
7
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distributable to shareholders and no assurance can be given that the amount to
be received in liquidation will equal or exceed the price or prices at which
Noel Common Stock has generally traded or is expected to trade in the future.
2. INVESTMENTS AND OTHER ASSETS
Investments:
Investments are recorded at their estimated net realizable value in
liquidation. For investments where a public market exists, and the entity is
subject to the periodic reporting requirements of the Securities Exchange Act of
1934, as amended, the estimated liquidation basis amount is calculated by
multiplying the market price by the number of common shares owned without
adjustment for whether the shares owned are registered for sale, any other
restriction on transfer, control premiums, or whether the market has sufficient
liquidity to support the sale of the volume of securities owned at the quoted
prices.
This valuation may not be reflective of actual amounts obtained when
and if these investments are distributed or of prices that might be obtained in
actual future transactions. Because of the inherent uncertainty of the valuation
of securities both where a public market exists and where it does not exist, the
estimated liquidation basis amounts shown may materially differ from the actual
amounts which may be received in the future.
Noel's holding of the common shares of Lincoln Snacks Company
("Lincoln") and Career Blazers Inc. ("Career Blazers", formerly Staffing
Resources, Inc.) are unregistered except for 421,000 shares of Lincoln which are
subject to restrictions under Rule 144. Lincoln trades on the Nasdaq Stock
Market's Small Cap Market under the symbol SNAX.
<TABLE>
<CAPTION>
Estimated
Common Liquidation
Shares Price Per Basis Amount
Owned Share March 31, 1998
----- --------- ---------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C>
Career Blazers (a) 2,026,104 $11.000 $22,287
Carlyle Industries, Inc. ("Carlyle") preferred stock (b) 21,000
Ferrovia Novoeste, S.A. ("Novoeste") (c) 8,000
Lincoln (d) 3,769,755 2.125 8,011
Other holdings 824
---------
Total investments at estimated liquidation basis
amounts $60,122
---------
</TABLE>
8
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(a) Recorded based upon Noel's review of an analysis completed by Career
Blazers and its independent advisors. This analysis determined Career
Blazers's value based upon actual and projected results in relation to
comparable companies. Compared to the quoted price on the limited
trading market for Career Blazers shares, Noel believes that, at the
present time, this analysis is a better estimate of the value in
liquidation of its Career Blazers shares at March 31, 1998, because the
trading market for Career Blazers is so limited, Career Blazers is not
subject to periodic reporting requirements under the Securities
Exchange Act of 1934, as amended, and Noel's shares of Career Blazers
are not registered to trade in this market. This valuation may not be
reflective of actual amounts obtained when and if this investment is
distributed or of prices that might be obtained in an actual future
transaction. The closing over-the-counter bid price on March 31, 1998
and May 8, 1998, was $6.25 and $6.75 per common share of Career
Blazers, respectively. Noel management is currently assessing the most
advantageous way to realize its investment in Career Blazers and does
not expect a transaction to occur until the second half of 1998, at the
earliest.
Subsidiaries of Staffing Resources, Inc. and Career Blazers Personnel
Services, Inc. and its affiliated companies merged on December 31,
1997, to form Career Blazers. The merged company was renamed Career
Blazers effective March 31, 1998. Career Blazers offers training,
temporary and permanent staffing services across the Northeastern,
Mid-Atlantic, Southeastern, Southwestern and Rocky Mountain regions
of the United States, as well as Canada and Puerto Rico.
(b) Recorded based on management's assessment of a variety of market
factors including, but not limited to, comparisons to transactions of
publicly traded preferred stock, and an evaluation of the projected
operating results of Carlyle. Because of the unique characteristics of
the investment in Carlyle and non-marketability of the Carlyle
preferred stock, the valuation of this investment is highly judgmental
and subject to an unusual degree of uncertainty. The eventual amount
realized in an actual transaction may be substantially less than the
recorded value. Also, for various reasons, included those stated below,
there may be delays in realizing Noel's holding of Carlyle preferred
stock.
Noel holds 19,312,837.5 shares of Carlyle series B preferred stock
which has an annual dividend rate of 6%. As of March 31, 1998, Carlyle
is in default on its obligation to Noel to redeem $15,450,270 of the
liquidation preference of its preferred stock plus accumulated unpaid
dividends of approximately $4,095,000 through March 31, 1998, to the
extent of its legally available funds. Noel and Carlyle are engaged in
discussions with a view of satisfying Carlyle's obligations to the
holders of the preferred stock in accordance with the terms of its
charter and consistent with Carlyle's resources. Discussions have dealt
with the amount and timing of payments and possible modifications of
the terms of the preferred stock. Any such modifications would require
the agreement of Carlyle and the holders of the preferred stock.
Carlyle has informed Noel that it intends to fulfill its obligations to
its preferred shareholders, as required by Carlyle's charter, to the
extent that Carlyle has cash resources in excess of those required to
operate its business. Carlyle has also informed Noel that, as Carlyle
believes that it does not currently have such excess resources, its
ability to make payments on account of the preferred stock in the
future will depend on Carlyle's future cash flow, the timing of the
settlement of the liabilities recorded on its financial statements, the
outcome of its negotiations with Noel described above and the ability
of Carlyle to obtain additional financing.
9
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The Carlyle board of directors is continuing its review of Carlyle's
strategic alternatives, including, among other things, the sale of
Carlyle through merger, sale of stock or otherwise, possible
acquisitions by Carlyle and possible refinancing. Any such transaction
and/or the discussions between the companies may result in the
modification of the terms of the preferred stock or in the acceleration
of the redemption of the preferred stock and/or the reduction in the
total amounts eventually received by Noel for its holdings of Carlyle
preferred stock.
In addition, Carlyle has agreed to notify the Pension Benefits Guaranty
Corporation ("PBGC") prior to making any dividend or redemption
payments. Carlyle's decision to make any such payments will depend on
the successful resolution of any issues which may arise with the PBGC
relating to Carlyle's unfunded liability to its benefit plan.
In December 1997, Carlyle notified the PBGC that it intends to redeem
$10 million of preferred stock as soon after year end as is
practicable, but only to the extent of legally available funds as
determined by its board of directors and after appropriate bank
financing has been satisfactorily obtained. Following such notice, the
PBGC indicated that it would not take any action with respect to such
payments. Carlyle has engaged an investment bank to assist its board in
determining the extent of legally available funds and is currently
exploring the possibility of securing bank financing which would enable
such payments to be made, assuming the board of directors determines
that there are sufficient legally available funds.
(c) Recorded at cost. This investment was made in March and June of 1996.
Novoeste was organized to acquire a railroad in Brazil via a
privatization transaction. In the absence of a ready market, or other
transactional evidence, Noel management believes that cost is the best
indicator of the value of this investment. Realization of this
investment is dependent upon establishing successful operations in
Brazil and a sale by Noel of its interest in Novoeste and is subject to
the risks of operations in Brazil, including foreign currency risk. The
actual amount realized for this investment could be lower or higher
than the amount recorded.
(d) Recorded based on the closing market price of the common stock on March
31, 1998. Using the closing market price of $1.9375 on May 8, 1998,
this investment would have been valued at $7,304,000.
10
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Other Assets:
The components of other assets are as follows (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------- ----------------
<S> <C> <C>
Note receivable for Curtis sale $10,454 $10,454
TDX distribution receivable -- 892
Other 1,080 1,059
-------- --------
$11,534 $12,405
======= ========
</TABLE>
On November 6, 1997, an agreement was signed merging Curtis Industries, Inc.
("Curtis") with a subsidiary of Paragon Corporate Holdings, Inc. Under the
agreement, Noel received $14,712,000 for its entire holding of Curtis,
comprising $4,258,000 in cash and a two-year 7% interest bearing note for
$10,454,000, which is included in other assets in the Statement of Net Assets in
Liquidation. This note was repaid at face value in April, 1998.
3. CHANGES IN ASSETS IN LIQUIDATION
The changes in the estimated liquidation values of assets and
liabilities were as follows (dollars in thousands):
<TABLE>
<S> <C>
To adjust investments to estimated liquidation value, net $2,199
To adjust estimated accrued expenses 122
To adjust estimated income taxes (908)
-------
Total adjustments $1,413
=======
</TABLE>
4. INCOME TAXES
The income tax asset at March 31, 1998, reflects the liquidation basis
of accounting. Estimated income taxes are calculated at a 35% rate on the
taxable income and losses which would be generated if the assets were realized
and liabilities settled at the amounts shown. This estimate is subject to
significant variation if, among other things, the actual values of assets
distributed, sold or otherwise disposed of varies from current estimates. The
income tax asset is projected to be realized in part through the filing of the
1998 tax return and assumes that the liquidation will be completed by December
31, 1998.
11
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The components of the income tax asset are as follows (dollars in
thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ------------
<S> <C> <C>
Net unrealized capital gain $(1,029) $ (222)
Net realized capital gain 42 (16,130)
Realized net operating loss carryforwards -- 3,280
Loss from the settlement of recorded
liabilities 1,111 8,442
Estimated taxes paid in 1997 and refund
carryforwards -- 9,764
Estimated tax refund due for 1997 571 --
---------- ----------
Net income tax asset $ 695 $ 5,134
========== ==========
</TABLE>
Noel had additional net operating loss carryforwards of approximately
$8,117,000 at December 31, 1997, which expire from 2003 through 2011. Noel has
undergone "ownership changes" within the meaning of Section 382 of the Internal
Revenue Code of 1986, as amended. Consequently, future utilization of these
Federal tax loss carryforwards is significantly limited. If Noel's assets and
liabilities are realized at the values recorded at March 31, 1998, these
carryforwards will not be realizable because Noel will not generate future
taxable income.
In February 1998, Noel received $3,531,000 as a partial refund of the
over-payment of estimated taxes paid to the IRS in 1997.
5. ACCRUED EXPENSES
Accrued expenses include estimates of costs to be incurred in carrying
out the Plan and provisions for known liabilities. These costs include a
provision for costs to be incurred in connection with the distribution, sale or
other disposition of Noel's investments including legal and investment banking
fees and salaries and related expenses of officers and employees assigned to
effect the distribution, sale or other disposition of specific investments.
The components of accrued expenses are as follows (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------- -----------
<S> <C> <C>
Salaries and benefits $1,592 $2,414
Rent and other expenses 809 1,147
Professional fees 855 823
Other, net 760 686
------ ------
$4,016 $5,070
====== ======
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The actual costs incurred could vary significantly from the related
accrued expenses due to uncertainty related to the length of time required to
complete the Plan, the exact method by which each of Noel's assets will be
realized and contingencies.
For the three months ended March 31, 1998, Noel's cash operating expenses
exceeded the return on its cash and cash equivalents and short-term investments
by $573,000.
Noel's cash operating expenses for the three months ended March 31, 1998,
were as follows (dollars in thousands):
Salaries and benefits $254
Rent and other expenses 309
Professional fees 185
-----
$748
=====
6. LIQUIDATING DISTRIBUTIONS
On April 25, 1997, Noel distributed 3,754,675 shares of HPS common stock
valued at $14.375 per HPS share for a total value of $53,974,000 to Noel
shareholders of record at the close of business on April 18, 1997. The
distribution rate was 0.1838631 of a share of HPS common stock per share of Noel
Common Stock and the value of the distribution was $2.6430 per share of Noel
Common Stock.
On October 6, 1997, Noel distributed 412,601 shares of HPS common stock
valued at $21.1565 per HPS share for a total value of $8,729,000 to Noel
shareholders of record at the close of business on September 29, 1997. The
distribution rate was 0.02006 of a share of HPS common stock per share of Noel
Common Stock and the value of the distribution was $.4244 per share of Noel
Common Stock.
On December 1, 1997, Noel distributed 2,205,814 shares of Carlyle common
stock valued at $1.40 per Carlyle share for a total value of $3,088,000 to Noel
shareholders of record at the close of business on November 21, 1997. The
distribution rate was .107246 of a share of Carlyle common stock per share of
Noel Common Stock and the value of the distribution was $.1501 per share of Noel
Common Stock.
On March 27, 1998, Noel distributed $.70 per outstanding Noel share for a
total value of $14,397,000 to shareholders of record at the close of business on
March 20, 1998.
On April 30, 1998, Noel distributed $.45 per outstanding Noel share for a
total value of $9,255,000 to shareholders of record at the close of business on
April 22, 1998.
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7. COMMITMENTS AND CONTINGENCIES
Certain of Noel's holdings are involved in various legal proceedings
generally incidental to their businesses. While the result of any litigation
contains an element of uncertainty, management believes that the outcome of any
known, pending or threatened legal proceeding or claim, or all of them combined,
will not have a material adverse effect on Noel's financial position.
GOING-CONCERN BASIS STATEMENTS
8. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
Prior to the approval of the Plan, Noel conducted its principal operations
through small and medium-sized companies in which Noel held controlling or other
significant equity interests.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. It is recommended that these
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in Noel's 1997 annual
report.
The consolidated financial statements include the accounts of Noel and its
subsidiaries, Carlyle, Curtis, and Lincoln, (collectively the "Company"), after
the elimination of significant intercompany transactions.
14
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ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Quarterly Report on Form 10-Q contains, in addition to historical
information, certain forward-looking statements regarding future financial
condition and results of operations. Such statements involve certain risks and
uncertainties, including, without limitation, those risks and uncertainties
discussed below and in the footnotes to the liquidation basis financial
statements previously discussed. Should one or more of these risks or
uncertainties materialize, actual outcomes may vary materially from those
indicated.
LIQUIDITY AND CAPITAL RESOURCES:
On March 31, 1998, Noel had cash and short-term investments of $2.2
million. The future cash needs of Noel will be dependent on the implementation
of the Plan. It is management's intention that Noel's liquidity will be
available to fund Noel's working capital requirements and to meet its other
obligations through the remainder of the liquidation period. Pursuant to the
Plan, subject to the payment or the provision for payment of the Company's
obligations, the cash proceeds of any asset sales together with other available
cash will be distributed from time to time pro rata to the holders of the Common
Stock on record dates selected by the Board of Directors with respect to each
such distribution. Noel believes that its cash and short-term investments are
sufficient to fund its working capital requirements through the completion of
the Plan.
In February 1998, Noel received a $3.5 million refund of estimated
taxes paid during 1997. On March 27, 1998, Noel paid a liquidating distribution
of $.70 per outstanding share of Common Stock to shareholders of record at the
close of business on the March 20, 1998 record date, for a total of $14.4
million.
On April 1, 1998, Noel was repaid $10.5 million, the face amount of a
note from Paragon Corporate Holdings, Inc. Noel had received this note as
partial payment of the sale of its interest in Curtis Industries, Inc. in
November 1997.
On April 30, 1998, Noel paid a liquidating distribution of $.45 per
outstanding share of Common Share to shareholders of record at the close of
business on the April 22, 1998 record date, for a total of $9.3 million.
Sources of potential liquidity include the sale or refinancing of
current holdings, dividends and preferred stock redemptions from current
holdings. Noel does not currently receive, nor expect to receive in the
immediate future, cash dividends from any of its holdings. See Footnote 2 of
Notes to Financial Statements for a discussion of Carlyle. Lincoln is prohibited
from paying dividends by existing borrowing agreements.
STATEMENTS OF NET ASSETS IN LIQUIDATION:
Cash and short-term investments decreased by $10.9 million. In addition
to funding operating expenses in the quarter, Noel paid a liquidating
distribution of $14.4 million and received a $3.5 million refund of estimated
taxes paid in 1997, and a $.9 million distribution receivable from TDX
Corporation.
15
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Investments increased $1.9 million primarily because of the increase in
the liquidation value of Lincoln of $2.1 million.
The income tax asset decreased by $4.4 million primarily as a result of
Noel's receipt of the $3.5 million refund of estimated taxes paid in 1997, and
the increased tax liability of $.7 million related to the higher liquidation
valuation of Lincoln.
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION:
The increase in estimated liquidation values of assets and liabilities
of $1.4 million primarily relates to the increase in the liquidation value of
Lincoln of $2.1 million offset by the related increase in the tax liability of
$.7 million.
16
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PART II - OTHER INFORMATION
Item 1. - Legal Proceedings
There are no pending material legal proceedings to which Noel or its
subsidiaries is a party or to which any of their property is subject, other than
ordinary routine litigation incidental to their respective businesses, other
than as disclosed in Noel's Form 10-K for the year ended December 31, 1997.
Item 3. - Defaults upon Senior Securities
a) None
b) Noel is the holder of 19,312,837.5 shares (approximately 93%) of Series
B Preferred Stock of Carlyle. Carlyle is in default of its mandatory
redemption obligations to the holders of such Preferred Stock to the
extent of its legally available funds. As of March 31, 1998, the
accrued but unpaid dividends amounted to approximately $4,554,000.
Item 6. - Exhibits and Reports on Form 8-K
a) Exhibits
</TABLE>
<TABLE>
<CAPTION>
Item No. Item Title Exhibit No.
- ------- ---------- -----------
<S> <C> <C>
(2) Plan of Complete Liquidation and Dissolution of Noel Group, Inc. (a)
(3) Articles of Incorporation and By-Laws.
(A) Certificate of Incorporation, as amended. (b)
(B) By-Laws, as amended and restated. (c)
(4) Instruments defining the rights of security holders, including indentures.
(A) Excerpts from Certificate of Incorporation, as amended. (b)
(B) Excerpts from By-Laws, as amended and restated. (c)
(10) None.
(11) Statement re: computation of per share earnings is not required
because the relevant computations can be clearly determined from
the material contained in the financial statements included herein.
(15) None.
(18) None.
</TABLE>
17
<PAGE>
<PAGE>
(19) None.
(22) None.
(23) None.
(24) None.
(27) Financial Data Schedule.
(99) None.
- -------------------------
(a) This exhibit was filed as an exhibit to Noel's Proxy Statement
for the Special Meeting of Shareholders held on March 19,
1997, which exhibit is incorporated herein by reference.
(b) These exhibits were filed as exhibits to Noel's Registration
Statement on Form S-1, Registration No. 33-44178, effective
January 29, 1992, and are incorporated herein by reference.
(c) These exhibits were filed as exhibits to Noel's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994, and
are incorporated herein by reference.
b) Reports on Form 8-K
None.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Signature
NOEL GROUP, INC.
Date: May 13, 1998
By: \s\ Todd K. West
--------------------------------------
Todd K. West
Vice President - Finance and
Secretary (As both a duly authorized
officer of Registrant and as chief
financial officer of Registrant).
18
<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> MAR-30-1998 DEC-31-1997
<CASH> 0 <F1> 0 <F1>
<SECURITIES> 0 <F1> 0 <F1>
<RECEIVABLES> 0 <F1> 0 <F1>
<ALLOWANCES> 0 <F1> 0 <F1>
<INVENTORY> 0 <F1> 0 <F1>
<CURRENT-ASSETS> 0 <F1> 0 <F1>
<PP&E> 0 <F1> 0 <F1>
<DEPRECIATION> 0 <F1> 0 <F1>
<TOTAL-ASSETS> 0 <F1> 0 <F1>
<CURRENT-LIABILITIES> 0 <F1> 0 <F1>
<BONDS> 0 <F1> 0 <F1>
<COMMON> 0 <F1> 0 <F1>
0 <F1> 0 <F1>
0 <F1> 0 <F1>
<OTHER-SE> 0 <F1> 0 <F1>
<TOTAL-LIABILITY-AND-EQUITY> 0 <F1> 0 <F1>
<SALES> 0 <F2> 0 <F2>
<TOTAL-REVENUES> 0 <F2> 0 <F2>
<CGS> 0 <F2> 0 <F2>
<TOTAL-COSTS> 0 <F2> 0 <F2>
<OTHER-EXPENSES> 0 <F2> 0 <F2>
<LOSS-PROVISION> 0 <F2> 0 <F2>
<INTEREST-EXPENSE> 0 <F2> 0 <F2>
<INCOME-PRETAX> 0 <F2> 0 <F2>
<INCOME-TAX> 0 <F2> 0 <F2>
<INCOME-CONTINUING> 0 <F2> 0 <F2>
<DISCONTINUED> 0 <F2> 0 <F2>
<EXTRAORDINARY> 0 <F2> 0 <F2>
<CHANGES> 0 <F2> 0 <F2>
<NET-INCOME> 0 <F2> 0 <F2>
<EPS-PRIMARY> 0 <F2> 0 <F2>
<EPS-DILUTED> 0 <F2> 0 <F2>
<FN>
<F1> See March 31, 1998 Statement of Net Assets in Liquidation
<F2> See March 31, 1998 Statement of Changes in Net Assets in Liquidation
</FN>
</TABLE>
